New Delhi, March 7
Asserting that exemptions will be provided only to the deserving, finance minister P Chidambaram said today government wanted to make way for an exemption-free regime.

All exemptions on taxes will be examined and removed if possible, or will be ‘snipped away,’ Chidambaram said addressing the National Council of the Confederation of Indian Industry here.

The finance minister insisted that exemptions must be restricted to the most vulnerable sections of society, such as senior citizens, and for specific areas such as R&D and frontier knowledge areas.

“This would make way for an exemption-free tax regime with some few deserving exceptions in the future,” he stressed.

He made it clear to the captains of industry that exemptions have been removed in the budget after deep analysis and he would not restore them.

“Every exemption has a founding father and an explanation as to why it was imposed,” Chidambaram said, adding “every criticism on the budget boils down to exemption.”

On clarifications on dividend distribution tax (DDT), MAT on companies under section 10A and 10 B, and venture capital pass-through for certain sectors, Chidambaram said these came under the general category of exemptions, which were in the process of being reduced in one way or the other.

Elaborating further on DDT, the finance minister said 80 M was abolished some years back. However, if the need for reintroduction of 80M is very compelling, then it is not beyond the ministry to consider it.

Responding to questions on inflation control, he said it would be moderated as fiscal and monetary measures are being taken. However, over the long-term, the supply side issues would need to be addressed to ensure that inflation is within reasonable limits.

He said in the budget of this year, the focus, therefore, has been on credit, seeds, water, fertiliser and electricity for the farm sector to address the stagnating production of wheat, rice and pulses in particular.

Stating that the design of the budget was geared towards implementing NCMP promises, he stressed that attention and money had been provided for a new thrust to the agriculture and social sectors.

He emphasised that India’s strong growth story would continue, based on robust growth of the global economy, high rates of investment and savings, the adaptability of the Indian corporate sector to new technology, and expanding external sector.

Responding to a question on infrastructure, he said different infrastructure sectors had different growth drivers and, therefore, different models in place. The budget provides for increase in investments in irrigation, water bodies, equity investments in PSEs, etc. However, there is also a plan B in place of Rs 7000 crore for projects identified by the Planning Commission. A plan C will address off-budget resources such as foreign exchange reserves being considered under the interim report of the Deepak Parekh Committee.

On ITIs, the finance minister said a tripartite agreement between state governments, the central government and the private sector is being proposed, where the state governments would regulate admissions and fee structures, and the central government would provide funds of Rs 2.5 crore for each institute.

New Delhi, March 7
In a veiled threat to excise duty evaders, finance minister P. Chidambaram said today the Revenue Department would pay focussed attention during 2007-08 on tracking evasion of excise duty.

“While there has been a substantial increase in the collection of income tax and corporate income tax, there has not been a commensurate increase in the excise duty collections, signifying that there is evasion of excise duty. In 2007-08, there would be a concerted effort to check evasion of excise duty,” Chidambaram said launching the electronic accounting system in excise and service tax (EASIEST) here today.

For all assessees paying excise and service tax to the tune of Rs. 50 lakh and above per annum, it would be mandatory to make the payment through e-mode from April 1, 2007, Chidambaram said.

Stating that e-payment was the most convenient method for payment of excise and service tax, Chidambaram said that in course of time everyone would be required to use the e-payment mode.

The Central Board of Excise and Customs in association with Principal Chief Controller of Accounts, RBI and 28 scheduled banks has introduced a simplified electronic accounting system for central excise and service tax payments called EASIEST.

New Delhi, March 7
Cement manufacturers have assured Finance Minister P. Chidambaram that they would pass on to the consumer all benefits of any tax concession that the government may consider for bringing down the prices of the construction material.

"We are willing to pass on all benefits of tax concession that the government may give us to consumers," Manoj Gaur, president of the Cement Manufacturers Association, said.

Chidambaram had invited a delegation of cement producers yesterday in a bid to persuade them to lower the prices.

The cement manufacturers are very competitive despite being taxed at the highest rate in the entire South-East Asia, Gaur said, adding that there was no import of the commodity despite it being given the benefit of 'nil' customs duty.

Cement manufacturers have decided not to roll back the hike in prices announced within hours of the Union Budget, which increased the excise duty by Rs 200 to Rs 600 a tonne on cement sold above Rs 190 a bag of 50 kg.

When asked why cement producers were not cutting prices while their counterparts in steel have done that, Gaur said the steel sector was much less taxed than the cement industry.

While basic raw material for steel — iron ore — attracted a royalty of just Rs 17 per tonne, the main input in cement — limestone — draws a levy of Rs 67 per tonne.

Besides, finished steel product was taxed at the VAT rate of 4 per cent while cement was taxed at 12.5 per cent VAT. — PTI

New Delhi, March 7
Agriculture minister Sharad Pawar has emphasised the importance of increasing trade relations with African countries in key areas like resource management, inputs, mechanisation, backward and forward linkages, credit and markets.

Inaugurating the first-ever India Africa Agrifood Summit here today, he pointed out the significance of holding the summit in agriculture and said that with this a new era in cooperation had begun.

Stressing the need for share experience for mutual benefit, Pawar hoped that the summit will address key areas like resource management, inputs, mechanisation, backward and forward linkages, credit and markets.

Recalling that India and Africa have an age-hold relationship, he said that now there was a new mood of buoyancy and optimism to expand cooperation.

The minister said that training and empowerment of human resources continued to remain India’s strength and a large number of experts from Sub-Saharan Africa had received training in India.

With India’s fastest growing economy, the minister said the country was poised for the second green revolution, which would be realised through knowledge-based intervention.

He spoke at length about the government’s efforts to address problems in key areas. One of the thrust areas of agricultural development is to have larger participation of private and non-governmental sectors.

Regarding agricultural marketing reforms, Pawar said that these provided greater flexibility to the farmers as well as to buyers to interact in the market and benefit from improved market efficiency.

He said there were opportunities in collaboration in agricultural research, crop varieties that required less water, eco-friendly fertilisers, high-tech agricultural and soil and water management.

India had always been a keen collaborator in development of technologies and scientific researches and sharing it with other developing countries as the pioneer of South-South cooperation, he added. — UNI

Geneva, March 7
Hoping to turn the tables on Japanese rival Maruti Suzuki’s ‘Swift’, Korean car major Hyundai will launch a new version of its premium hatchback ‘Getz’ under a new name ‘Getz Prime’ by month-end in India both for exports and the domestic market.

While it will retain the name ‘Getz’ for exports to the European market, we will launch it as ‘Getz Prime’ in the domestic market,” Hyundai Motor India managing director H.S. Lheem said here.

‘Getz Prime’ would come in two petrol engine variants of 1.1 litre and 1.3 litre, enabling it to partly qualify for the benefit of excise duty on small cars.

As per finance ministry’s definition, small cars have been defined as petrol cars with an engine capacity not exceeding 1,200 cc and not exceeding 4,000 mm in length, and diesel cars of engine capacity not exceeding 1,500 cc and not exceeding 4,000 mm in length.

“Towards the third quarter we are planning to bring the diesel variant of Getz Prime with 1.5 litre common rail direct injection (CRDi) engine, similar to the one in Verna,” Lheem said. — PTI

Patna, March 7
After completing 15 months in office, the ruling NDA in Bihar finally called a spade a spade by catching the previous RJD government for its "financial mismanagement", leading to the downfall of the state in respect of all socio-economic parameters.

The findings was based on the first-ever economic survey of Bihar legislature by Asian Development Research Institute (ADRI), an NGO, aiming at ensuring greater accountability for the Nitish Government.

Armed with the survey report, Deputy Chief Minister Sushil Kumar Modi, who is in charge of finance portfolio, too, today challenged the opposition for a debate on developmental works done in the 15 years of Lalu-Rabri regime and the progress made by the current NDA government in the past 15 months.

The survey, tabled in the Assembly, indicates that despite agriculture being the mainstay of Bihar's economy, it has grown by just 3.5 to 4.5 per cent since 2000-01. This was in comparison to a growth of around 6 per cent till 1990.

As a result, share of agriculture in the state's economy has fallen from 48.8 per cent in 1993-94 to 42 per cent in 2004-05.

Simultaneously, both manufacturing and industry, known as key sectors to generate employment, also witnessed a decline from 6.59 per cent in 2000-01 to 4.17 per cent in 2004-05.

Further, the survey indicates that Bihar has lagged behind other states on all developmental indices. The state ranks at the bottom with respect to human development indicator (HDI) with the HDI for Bihar being about 20 per cent lower than the national HDI.

Besides, 43 per cent of an estimated 92 million population in the state lives below the poverty line.

The per capita income varies widely between Rs 6,958 (in Patna) to Rs 2,219 (in Sheohar).

While the state's development expenditure was supposed to constitute an average of about 60 per cent of its total expenditure, its share has declined from 67 per cent in 2001-02 to 56 per cent in 2006-07.

The state's total debt, about Rs 42,000 crore, constitutes 71 per cent of its gross state domestic product.

Modi said the government's goal now was to check poverty and unemployment in the state by 2008, with priority on road construction, without which economic development was merely a pipe dream. "While opening new industries in the state is of utmost importance in the development of any state, we will not do it at the cost of Bihar's farmers," Modi said.

New Delhi, March 7
MNCs setting up offshore business units in India for saving costs is an old story — the latest trend is to hive off their Indian units, with over two dozen MNCs considering to sell off of their BPO units in the country through a gradual process of exiting.

While British Airways was among the first to spin off its Indian outsourcing unit in 2002, which is today known as WNS Holdings, this trend is catching up fast with the global companies operating in India.

US conglomerate General Electric (GE) sold off its Indian outsourcing operations about two years ago for about $500 million, London-based United Utilities sold its Vertex unit last year, while global PC giant Hewlett-Packard is also expected to follow the suit.

At least over two dozen of firms are evaluating options to sell off their Indian outsourcing units through a gradual exit process, global technology research firm Forrester's India head and Senior analyst Sudin Apte said.

While all may not go for straight forward sell off, most firms will opt for soft way, part outsource first and increase that share over the period, and this trend is already happening in the industry, Apte said.

According to Forrester, if the size of company's own facility is small with up to 100 employees, then it is actually counter productive, with savings in staffing costs getting over shadowed by management overhead. And if size becomes too big, over 3,000 persons, then the issues of people, processes and costs emerge, which are time consuming. — PTI

New Delhi, March 7
The Dabhol power plant, which is being run on naphtha, may get LNG supplies for one unit next month while the other two units may start power generation by November instead of April-August scheduled earlier.

"The first and the third blocks of the Dabhol plant would start its operations in November... we expect the supply of LNG from Petronet by April end... We are working on this at war footing," Power Minister Sushilkumar Shinde told reporters on the sidelines of a conference here.

Earlier, Block III was scheduled to open in April and Block I was to start its operations in August.

While the total capacity of the three units of Dabhol is around 2,150 MW, only Block II is producing around 350 MW power at the moment on naphtha.

Shinde also dismissed reports that one of the blocks would be converted into a merchant power plant for selling electricity to consumers other than the Maharashtra government.

Maharashtra, which faces a shortage of about 5,000 MW, had last month petitioned the Centre to start the remaining two units on its scheduled dates in April and August so that relief could be brought to the energy-deficit state. — PTI

New Delhi, March 7
The deal between the telecom major Hutch and Vodafone has been challenged in the Delhi High Court on the ground that the new company has more than 89 per cent foreign shares against the foreign direct investment (FDI) cap of 74 per cent in telecom policy.

Filing a PIL before the high court, Telecom Watchdog, a voluntary agency, has alleged that with the purchase of the majority shares of Hutch by Vodafone, the FDI in the telecom service provider had crossed 89.03 per cent.

When the petition came up for hearing today, a division bench of Chief Justice M.K. Sarma and Sanjiv Khanna directed the petitioner to provide copies of the petition to the respondents — ministry of communication and information technology, finance ministry, Telecom Regulatory Authority of India (TRAI), Hutchison International (HTIL) and other shareholders.

The matter will come up for hearing on Friday. — UNI