New Delhi, September 17
Exporters, who were losing their margins due to hardening of rupee against the dollar, got the much needed relief today with the government announcing that they would be exempted from tax on services rendered by ports, road transport and railway.

The government has issued a notification providing refund of service tax paid by exporters on four taxable services, which are not in the nature of input services but could be linked to export goods, a Finance Ministry statement said here.

The Central Board of Excise and Customs (CBEC) has issued the notification no. 40/2007-ST in this regard.

The government collects 12 per cent service tax along with 3 per cent education cess on services.

Exporters already get refund of service tax paid by them on input services used for exports. Drawback scheme also factors service tax paid on input services used for exporting goods.

In July, the Finance Ministry had provided a financial package of Rs 1,400 crore to exporters, especially to the textile, handloom, handicraft and other labour-intensive industries, to cushion the impact of rupee appreciation. The Indian unit has appreciated by over 8 per cent since January this year.

Although Commerce and Industry Minister Kamal Nath had announced government's intention to exempt exporters from the service tax in the April supplement of annual Foreign Trade Policy, the finance ministry took about six months to issue a notification in this regard.

Exporters are already eligible for service tax exemption for some input services - like those of solicitors and chartered accountants - that are used for export.

While port, road transport and rail freight services were not found to be input services in the real sense, the finance ministry felt an exemption could be given since they can be linked to exports.

"The issue of extending refund of service tax paid on taxable services that are not input services but could be attributable to export goods was examined. The government held discussions with stakeholders and identified the above mentioned taxable services for which refund could be provided wherever use of the said taxable services could be linked to exports," said an official statement.

Meanwhile, exports by Indian micro, small and medium enterprises are estimated to have touched $50 billion in 2006-07, accounting for 40 per cent of the country's total merchandise exports, an official statement said here today.

There are 12.5 million MSMEs in the country providing employment to 30 million persons and contributing around 50 per cent of the country’s industrial production.

The major MSME export products include readymade garments, chemicals, pharmaceuticals, engineering goods, processed foods, leather products, and marine products.

New Delhi, September 17
A slowdown in industrial growth in July notwithstanding, Asian Development Bank (ADB) has raised projection for India's economic growth to 8.5 per cent during 2007-08 and 2008-09 from the earlier forecast of 8 and 8.3 per cent, respectively.

However, the Manila-based multilateral development bank warned of inflation risks mainly due to food prices and forecast that inflation would remain steady at 5 per cent in the two fiscals.

"Robust investment, buoyant industrial expansion and moderate agricultural growth will ensure that India's economy remains on a solid growth path in 2007 and 2008, Manila-based ADB said in its Asian Development Outlook, 2007.

Indian economy grew by 9.3 per cent during the first quarter of this fiscal and at a scorching pace of 9.4 per cent in 2006-07, highest in the last 18 years.

The report warned that inflation risks persist and any shock to food prices could stoke price pressure.

"While the Indian economy has moved to a higher growth trajectory, a major challenge for policymakers is to find ways to expand the market-based reforms so that the benefits flow to all sections of the population," ADB Chief Economist Ifzal Ali said in a statement.

The report said accelerating growth and the capacity bottlenecks have piled pressure on prices that are also feeling the heat from fast rising prices for imported foodstuffs. Indian consumers are still being shielded from the costs of oil in the international market.

The ADB report said the Reserve Bank of India (RBI), while ensuring that the credit and interest rate environment supports exports and investment demand, is successfully containing inflation pressures.

"Higher interest rates have not dampened business investment as a very buoyant long-term economic outlook has outstripped a cyclical rise in borrowing costs," Ali said.

Hike in interest rate, however, will discourage consumer spending, leading to moderation of demand for consumer durables and a slowdown in the pace of construction activities.

The report warned that shocks which may undermine fiscal or monetary discipline and adversely affect food or fuel prices pose risks to India's economic outlook.

A further appreciation of the rupee is also likely to hurt exports and profits of domestic companies in export- oriented sectors.

The ADB report also said developing Asian economies will register solid economic growth in 2007, driven by fast growth in China and India.

ADB has raised growth projection for China's economy to 11.2 per cent this year as well, up from an earlier estimate of 10 per cent. — PTI 

New Delhi, September 17
Bharat Heavy Electricals Limited (BHEL) today said it is looking at mergers and acquisition to fuel inorganic growth and targets a turnover of Rs 45,000 crore by 2012, after achieving an all-time high turnover of Rs 18,739 crore and net profit of Rs 2415 crore during fiscal 2006-07.

The company has drawn what it calls 'Strategic Plan 2012' to ensure sustainable profitable growth over the next five years with the objective of reaching a turnover level of Rs 45,000 crore, BHEL chairman and managing director A.K. Puri said at the shareholders meeting here.

''The merger and acquisition route will be pursued to avail inorganic growth opportunities to enlarge the company’s operations both in domestic as well as export markets,'' he said.

Outlining the company's future course, he said the growth planks for the next five years will be driven by capacity and capability enhancement that will leverage BHEL's efforts in its core area of power supported by industry, transmission, exports and spares and services businesses.

Riding on the robust demand, BHEL's turnover hit an all-time high of Rs 18,739 crore, registering a growth of 29 per cent, while net profit increased by 44 per cent to touch Rs 2,415 crore in 2006-07.

He also declared a final dividend of 60 per cent on the enhanced paid-up share capital consequent to 1:1 bonus issue.

The company paid the highest-ever dividend of nearly Rs 600 crore for 2006-07, which is 245 per cent of the paid-up capital pre-bonus, he said.

Puri said while the turnover and orders inflow doubled in three years, the profit before tax and net profit doubled in just two years.

He said BHEL secured the highest-ever orders worth Rs 35,643 crore in a single year, and with an order book position of Rs 55,000 crore, at the close of the financial year, the company expected to achieve robust growth in 2007-08 and beyond.

The company is well on its way to increasing its size of operations supported by phased manufacturing capacity expansion where a capacity of 10,000 MW per annum will be completed by December 2007 and 15,000 MW per annum by December 2009, he said.

Outlining the trends in the global and domestic economies, he said the global macroeconomic environment appears healthy with a growth rate of around 5 per cent in the last 3 years and may moderate somewhat during 2008.

Growth is expected to remain very strong among emerging markets and developing countries, he said, adding that these trends have been driving the global demand for capital goods.

On the export market, he said the company continued to expand its international footprint by entering new markets and building existing ones. 

Dubai, September 17
Reliance Telecom and Airtel are among 12 companies in the fray for Qatar's second mobile licence as the deadline for submission of bids ended.

Seventeen firms had originally applied for the licence but the figure has since come down to 12, with several big players in the mix.

The deadline, which ended yesterday after a two-week extension over the previous date of September 2, allowed the firms to finalise their bids, according to the country's telecom regulatory body, ictQATAR.

The 12 firms are Airtel, Reliance Telecom Verizon Argos, AT&T, Batelco, Digicel, Etisalat, Jordan Telecom, MTC (Kuwait), Orascom Telecom, Omantel-Belgacom, and Vodafone, Peninsula daily reported today.

The new entrant will have to construct its own network, as Qatar Telecom (Qtel) is assured of exclusive rights to its own networks.

According to experts, a new entrant into the country's mobile telephony sector can easily grab 15 to 20 per cent of the market share in its first year of operations, with the figures gradually rising in the ensuing years.

Although considered to be a small market, mobile phone penetration in Qatar is at way above 100 per cent with the figure growing daily.

Qatar also plans to award a fixed-line licence before year-end. — PTI 

Chennai, September 17
With the influx of investments and boom in information and communication technology in Tamil Nadu, Chief Minister M. Karunanidhi today assured the captains of the industry, at a CII meet, of proving world class class infra-structure to support it.

He said: “I am acutely conscious that the human resources of the state have to be further strengthened. On my initiative, the union government is setting up an Indian Institute of Information Technology for Design and Manufacturing near Chennai. I have also requested the centre to set up an additional IIT at Madurai, IISER at Tiruchirappalli and an IIM at Coimbatore.”

He urged the CII to enter into joint ventures with the state government for creating a model of inclusive development.

New Delhi, September 17
Gold buyers in India will be keenly watching the news from the United States, where the US central bank will take a call on interest rates tomorrow - an event billed as a major driver of the precious metal prices across the world going ahead.

In the wake of subprime crisis in the US, the Federal Reserve is expected to cut benchmark interest rate, which, in turn, could put a downward pressure on the US dollar and in the process could make dollar-priced gold cheaper for those buying the precious metal in other currencies.

In global markets, gold has remained somewhat steady near $700 an ounce, while in India, it has already gained, factoring in the rate cut expectations. The spot price at NCDEX jumped to Rs 9,418 per 10 gram on Friday, from Rs 9,300 on Monday. Today, it was trading near Rs 9,370 level.

"Since the domestic gold prices are likely to take cues from the US data, gold investors can pitch into the bullion market to take leverage from the current gold prices (which is trading at $710.60 an ounce) before it skyrockets in the coming weeks," a metals analyst at Kotak Commodities Sahil Kapoor told PTI.

"Prospects for gold are buoyed by the combination of forecasts for dollar weakness and oil price strength. Gold prices are expected to increase, extending its rally to a fifth week, on speculation the dollar will decline further against the euro, boosting demand for the precious metal as an alternative investment," analysts of Karvy Comtrade said.

Gold prices have been trading near $700 level for last few weeks boosted by the dollar against major currencies.

The oil price, which reached a record high of $80.18 a barrel last week, has given further support. The expectations for a rate cut by the Fed at its monetary policy meeting tomorrow is being seen as part of its efforts to minimise the impact of housing slump and the associated credit squeeze on the economy. Any rate cut would be instrumental in determining the fate of dollar and gold, market analysts believe.

"Analysts and market specialists are expecting that there would be reduction in the US interest rates and it is likely that dollar would witness a downward pressure, making dollar-priced gold cheaper for investors in other currencies," experts said.

However, some analysts are cautioning the long-term gold investors from entering at the current level. "This is not the right time for long-term investors to pump their money into physical gold market and ETFs. Instead, they should try their luck in gold futures because gold prices are speculated to rise in the coming months which may even touch $742 level," Kotak Commodities' Kapoor said. — PTI

New Delhi, September 17
Dismayed by the poor penetration of broadband services, telecom regulator TRAI today brought out a new draft that recommends subsidising the service in remote and hilly areas.

Such subsidies could be accessed by broadband service providers after they are made eligible for support from the universal service obligation (USO) fund, to which telecom companies contribute a portion of their profits.

In the draft suggestions, it said USO funds be provided as subsidy for providing broadband services through satellite in remote and hilly areas, where back haul charges were initially up to 40 per cent.

The recommendation, on which TRAI has sought the industry’s response, is born out of the regulator’s concern over less-than-expected growth in broadband despite existence of a policy.

In all, India had 2.47 million broadband connections as of July, a far cry from the Department of Telecom’s target of 20 million broadband subscribers by 2010.

Earlier, TRAI had suggested opening up BSNL/MTNL’s last mile copper connections to private players to reach more customers. The proposal was rejected by DoT citing potential losses to the PSUs.

Last week, TRAI issued a regulation on unblocking the PSUs domestic leased circuit or local bandwidth network.

TRAI, in a statement, observed that even after taking various initiatives, the growth is slow and below than the expected level.

Further, to increase the competition to provide broadband in rural areas, at least two service providers seeking minimum subsidy should be identified, TRAI suggested.

Based on the feedback of stakeholders, draft recommendations would be finalised and sent to the government.

The authority felt an urgent need to identify various impediments affecting the growth of broadband and adopted measures to address all such impediments.

Accordingly, the regulator has suo-moto undertaken an in-house study and analysed various methodologies to provide broadband keeping in view the constraints and present regulatory framework.

It also felt that BSNL and MTNL should be encouraged to appoint franchisees for providing broadband services to supplement their efforts.

TRAI also said Indian manufacturers should be encouraged to produce more customer premise equipment, that is used to provide broadband using DSL technology.

The authority also said the government should expedite decision on its recommendations regarding mechanism and pricing of spectrum for 3G and broadband wireless access. — PTI