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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

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B U S I N E S S

Exemption-free regime on FM’s radar
Rules out restoration of exemptions removed
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.


FM cautions excise duty evaders
E-filing of excise and service tax must from April 1
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.
Finance minister P. Chidambaram being welcomed by SBI managing director Yogesh Agarwal at the launch of a simplified electronic accounting system for central excise and service tax payment in New Delhi on Wednesday.
Finance minister P. Chidambaram being welcomed by SBI managing director Yogesh Agarwal at the launch of a simplified electronic accounting system for central excise and service tax payment in New Delhi on Wednesday. — Tribune photo by Mukesh Aggarwal
In video (56k)

Cement price cut ‘not possible’ without duty sops
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.

SGX buys stake in BSE
Mumbai, March 7
The Bombay Stock Exchange (BSE) and Singapore Exchange Limited (SGX) today entered into an agreement under which the SGX would invest in a 5 per cent stake in the BSE, subscribing to the shares of BSE at Rs 5,200 per share for Rs 189 crore.

 

Officials of Samsung launch their new mobile phone series in Beijing on Tuesday.
Officials of Samsung launch their new mobile phone series in Beijing on Tuesday. The sale of mobile phones in China increased 40 per cent year on year to 120 million units in 2006, as China had become one of the world's largest handset markets. — AFP

EARLIER STORIES

 
A cleaner wipes the bonnet of a Ferrari 430 spider during the second media day of the 77th Geneva car show at Palexpo in Geneva on Wednesday.
A cleaner wipes the bonnet of a Ferrari 430 spider during the second media day of the 77th Geneva car show at Palexpo in Geneva on Wednesday. — Reuters

Pawar for higher trade with African nations
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.

Hyundai Getz ready to take on Swift
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.

SBI to raise personal loan rates by 0.75 pc
New Delhi, March 7
The SBI will shortly raise car and other personal loan rates, excluding housing and education, by an average of 0.75 per cent.

Share of farm sector in Bihar’s economy falls: Survey
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.

Trend to hive off Indian units catches fancy of MNCs
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.

Dabhol delayed, two units to start in Nov
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.

Vodafone deal challenged
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.

Corus takeover by Tatas okayed
London, March 7
Shareholders of Corus Group Plc agreed to Tata Steel Ltd.'s £6.2 billion ($12 billion) takeover of the UK steelmaker, sealing the largest foreign acquisition by an Indian company.

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Exemption-free regime on FM’s radar
Rules out restoration of exemptions removed
Tribune News Service

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.

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FM cautions excise duty evaders
E-filing of excise and service tax must from April 1
Tribune News Service

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.

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Cement price cut ‘not possible’ without duty sops

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

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SGX buys stake in BSE

Mumbai, March 7
The Bombay Stock Exchange (BSE) and Singapore Exchange Limited (SGX) today entered into an agreement under which the SGX would invest in a 5 per cent stake in the BSE, subscribing to the shares of BSE at Rs 5,200 per share for Rs 189 crore.

BSE MD and CEO Rajnikant Patel along with SGX CEO Hsieh Fu Hua said: ''The two exchanges have agreed to actively explore collaboration in various areas relating to listings and product development, leveraging on SGX's leading position as a regional hub for derivatives and international listings and the BSE's strong presence in India.'' This strategic tie-up will offer the Asian advantage to the BSE.

SGX is Asia-Pacific's first demutualised and integrated securities and derivatives exchange. They bring a huge amount of learning to this partnership. This move will also complement our association with Deutsche Borse, he said.

''We look forward to supporting the BSE's goal to strengthen their international position.

The premier exchange reaches out to more than 400 cities and towns in India and has 4,800 listed companies on the board, with over 7,500 scrips being traded. — UNI

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Pawar for higher trade with African nations

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

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Hyundai Getz ready to take on Swift

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

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SBI to raise personal loan rates by 0.75 pc

New Delhi, March 7
The SBI will shortly raise car and other personal loan rates, excluding housing and education, by an average of 0.75 per cent.

"We have announced a hike in the benchmark prime lending rates by 75 basis points...consequently, we will be raising rates of all (personal) loans, except for housing and education, by 75 basis points on an average," SBI MD Ashok Aggarwal said on the sidelines of the launch of electronic system for excise and service taxes.

He, however, clarified that some loan rates might rise by 1per cent and some by.5 per cent, but the average would be.75 per cent. The interest rate hike would be announced in a few days, he added.

Aggarwal's statement came amid reports that ICICI and Kotak are increasing the auto interest rates by 0.75-1 per cent this weekend. — PTI

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Share of farm sector in Bihar’s economy falls: Survey
Tribune News Service

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.

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Trend to hive off Indian units catches fancy of MNCs

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

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Dabhol delayed, two units to start in Nov

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

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Vodafone deal challenged

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

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Corus takeover by Tatas okayed

London, March 7
Shareholders of Corus Group Plc agreed to Tata Steel Ltd.'s £6.2 billion ($12 billion) takeover of the UK steelmaker, sealing the largest foreign acquisition by an Indian company.

Investors representing 97 per cent of the shares backed the purchase, the company said following an extraordinary general meeting today. The acquisition is scheduled to take effect on April 2 and Corus shares will stop trading on exchanges on March 29. — Bloomberg

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BRIEFLY

Ranbaxy gets nod for 20 new drugs
New Delhi, March 7
Generic drug-maker Ranbaxy Laboratories Ltd said today its Romanian unit, Terapia, has received market authorisation to sell 20 new products to be launched in the coming months. ''The list of market authorisations (MAs) granted by the National Agency of Medicine refers to products from different therapeutic areas, mainly from the cardiovascular, antibiotics or CNS segments,'' said Dragos Damian, CEO, Terapia Ranbaxy. — UNI

People's phone
Mumbai, March 7
Spice Mobile Phone today launched its Spice People's phone at a price less than Rs 1,000 to make it available to every common man. Spice, a group company of Mcorp Global, launched the people's phone at a time when few big cellphone companies are holding sway over the market. Chairman of Mcorp Global B.K. Modi said the new mobile phone would be able to register a market share of 10 per cent by 2010. The phone was formally launched by Bollywood actor Katrina Kaif. — PTI

Home calling cards
Chennai, March 7
Hutch today launched home calling cards (HCC), which enable Indians travelling abroad to make calls at almost 90 per cent discounted rates as compared to roaming charges. The service, which does not require a Hutch cellular subscription, includes calling cards sold online, as well as physical calling cards. HCC customers will be able to make international calls from about 95 countries by accessing a toll-free number. — IANS

Barclaycard
London, March 7
Barclaycard, a division of UK bank Barclays Plc, will shift some of its operations to India in Delhi and Mumbai as the credit card firm is closing its Manchester call centre in July. The company will also move part of the work to its centre on the Teesdale Business Park, in Stockton, which already employs about 800 persons. — UNI

IPCL merger
Mumbai, March 7
Reliance Industries Ltd said today its board would consider amalgamation of Indian Petrochemicals Corporation Ltd (IPCL) with itself. A meeting of the board of directors will be held on March 10 to discuss the merger. — PTI

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