New Delhi, November 29
Union finance minister P Chidambaram today announced a fresh additional relief package, including 2 per cent additional subvention in pre-shipment and post-shipment credit, for certain export sectors hard hit by rupee appreciation against the US dollar.

Replying to a debate on supplementary demand for grants in the Lok Sabha, Chidambaram also announced the decision to exempt three more services — storage and warehousing services, specialised cleaning services (fumigation and disinfection) and business exhibition services) from the ambit of service tax.

The total subvention of 2 per cent (in addition to the 2 per cent already offered earlier) on pre-shipment and post-shipment credit will be subject to the condition that the interest rate, after subvention, will not fall below 7 per cent, which is the rate applicable to the agriculture sector under priority lending, he said.

The additional subvention would be applicable to leather and leather manufacturers, marine products, all categories of textile under the existing scheme, including RMG and carpets, excluding man-made fibre, handicrafts, the minister said.

The new subvention rule will be valid from November 1, 2007, to March 31, 2008, he said, adding the term of credit would be 180 days for pre-shipment and 90 days for post-shipment, excepting the carpet sector for which the term would be 270 days for pre-shipment and 90 days (like other sectors) for post-shipment.

Noting that the exporters have been hit hard by the appreciation of rupee, which surged 9.7 per cent against US dollar between April 3, 2007, and November 20, 2007, he said the government has also decided to extend the provision of interest payment like in the case of delay in reimbursement of drawback claims beyond 30 days, to delays in payment of Terminal Excise Duty (TED) and Central Sales Tax (CST).

Between October 2006 and October 2007, the appreciation of the rupee against US Dollar was 15.1 per cent.

The allocation for reimbursement of TED and CST has been raised from Rs 300 crore and Rs 600 crore in the second supplementary grant.

Presently, 6 per cent interest is paid for delay in reimbursement of drawback claims beyond 30 days and for payment within 30 days, no interest will be payable.

The process of payment of interest will be finalised shortly, the minister said.

He said that the customs duty on PSF and PFY is being reduced from current 7.5 per cent to 5 per cent, and on other man-made fibres from 10 per cent to 5 per cent.

Customs duty on intermediates for PSF and PFY viz. Polyester chips, DMT, PTA and MEG would also be reduced from 7.5 per cent to 5 per cent and on paraxylene (a raw material for PTA) from 2 per cent to nil, he said, adding no change in customs duty for nylon chips, nylon yar, caprolactum, rayon grade wood pulp and acrylonitrile.

A notification in this regard would be issued shortly, he said, adding a decision on the demand made by respective councils in the textile sector for revision of drawback rates, would be taken after the Drawback Committee makes its recommendations to the government. The councils have been asked to submit relevant data to the Drawback Committee for consideration.

The government had announced a Rs 1,400-crore package for the exporters in July 2007 and followed it up with a second relief package in October, mainly focussing on service tax, provision to pay interest on EEFC accounts of exporters and interest subvention.

Meanwhile, the Federation of Indian Exporters Organisation (FIEO) welcomed the government’s announcement, but strongly felt that some more measures were needed to really translate the measures into total relief for the exporters.

New Delhi, November 29
Health insurance products from state-owned Life Insurance Corporation of India (LIC) are expected to hit the market by December-end, providing millions of policy holders access to health insurance at their door-step.

"We are awaiting clearance from the Insurance Regulatory and Development Authority (IRDA), and hope to launch health insurance products by the third week of December," a senior LIC official, associated with company's health division, told PTI.

He said initially the health insurance operations would be a part of the life insurance business.

The company expects to provide cover to at least one crore families within a year of launch of these products. LIC is also planning to launch a special senior citizens health insurance policy in due course, a source said.

The source said the company hopes to mop up around Rs 5,000 crore by selling its unit-linked health insurance policy in the first year.

The company's prospects in health insurance business may brighten once the premium rates are liberalised by the IRDA early next year, as the group health insurance premium rates would go up.

"Presently, mediclaim settlement rates are in the range of 140-150 per cent, which would come down after the detariffing of premium shortly," IRDA chairman C S Rao said on the sidelines of a conference on health insurance organised by Ficci.

The product, likely to be called LIC Health Plus, will give the policyholder the option to take health insurance cover for his immediate family. LIC has roped in reinsurer Munich Re to structure the new product. — PTI 

New Delhi, November 29
India today expressed its keenness to conclude Free Trade Agreement (FTA) with the European Union (EU) by the end of 2008, even as the latter stressed that content of the pact is more important than a deadline.

"India is as ambitious for the FTA as is the European Union…We hope to conclude the agreement by next year end," commerce and industry minister Kamal Nath told the visiting EU trade commissioner Peter Mandelson at a business summit organised by apex chambers CII and Ficci here.

Nath said while India is ready to open 90 per cent of its fast- growing market for EU companies, it would expect its partner to reciprocate with 95 per cent of their market.

"Substance on the FTA is more important than time... I am impatient to get it done," said Mandelson, who is here for the annual India-EU Summit tomorrow.

Later addressing a press conference, Mandelson said he shared Nath's optimism and hoped "to conclude (the free trade talks) by the end of 2008."

"The free trade pact would provide a big boost to both economies and shore up global demand if the world economy begins to cool," he added.

The 27-member EU wants to deepen discussions on sensitive areas with India such as removing barriers to trade in services, intellectual property protection and public procurement.

New Delhi, November 29
Mobile operator Bharti Airtel today stepped up pressure on the government for reviewing the spectrum allocation norms, hitting out at the way telecom ministry calculated the parameters for giving the airwaves.

"The government must put its mathematics right... Ignorance is not an excuse to change the norms," Bharti Airtel chairman Sunil Mittal told reporters on the sidelines of India-EU Business Summit.

Private GSM mobile players such as Airtel have opposed the norms of spectrum allocation as recommended by the Telecom Engineering Centre (TEC) and do not want new players to be issued licenses in absence of assured frequency.

The Cellular Operators Association of India (COAI), the lobby of GSM players, has already petitioned telecom tribunal TDSAT challenging the government's decision to alow dual technology for mobile services and also spectrum allocation norms as suggested by the telecom regulator TRAI.

Mittal also said current stalemate over the spectrum issue would hurt investors' confidence. "Foreign investment has played a key role in the growth of telecom sector and they (foreign investors) are a worried lot," he said.

On the issue of stake sale in his tower company, Mittal said: "We are open to the idea of selling stake". He, however, declined to elaborate. — PTI 

Houston/London, November 29
An explosion crippled the biggest pipeline supplying Canadian crude to the US Midwest refineries, shutting off more than one million barrels per day of imports to the world's biggest consumer.

The cause of the explosion on Wednesday that killed two employees was not immediately known.

The US crude oil prices on Thursday vaulted more than $4 a barrel to just over $95 in early trade.

It later eased to just over $93 a barrel after news the main fire was out and two of four connected lines had restarted, but analysts were still worried about the impact on supplies ahead of peak winter demand.

"The timing is pretty bad. We are coming to the strongest demand period for crude with the approach of the northern winter," said Mark Pervan of ANZ.

During the third quarter, the pipeline had carried around 1.5 million barrels per day of Canadian crude, or around 15 per cent of the US imports.— Reuters

Kuala Lumpur, November 29
The CEO of ICICI Bank, K V Kamath, has been named Businessman of the Year for 2007 by Forbes Asia, for his steadiness at steering ICICI into one of Asia's top banks.

Under Kamath's watch since 1996, ICICI's market capitalisation has risen to $31 billion today, placing it among the region's top 10 banks.

"By this measure, it is bigger than Singapore's DBS Group and Korea's Kookmin Bank, and has attracted big stakeholders such as Singapore's Temasek Holdings and CLSA and Merrill Lynch funds," a press release issued by Forbes said.

Sixty-year old Kamath's win puts him in the company of fellow countrymen Nandan Nilekani of Infosys Technologies, last year's winner, and Ratan Tata, the 2004 businessman of the year.

His addition means three Indian executives have won the accolade in the last four years. Tim Ferguson, editor, Forbes Asia, said: "Kamath's leadership has been outstanding. His focus on serving India's growing middle class by providing First World banking service at affordable prices is largely the reason behind the phenomenal growth of ICICI." Kamath will receive the Businessman of the Year award here next week. — PTI

New Delhi, November 29
Industry chamber PHDCCI has suggested that the effective corporate tax rate inclusive of surcharge, cess and other levies should be maintained at a peak level of 30 per cent for the domestic companies from present level of 33.99 per cent and gradually lowered to 25 per cent.

In its pre-budget memorandum submitted to the government, the chamber pointed out that the aggregate tax burden on companies is significantly higher than other developing and developed countries, particularly in the Asia-Pacific region, which are the major competitors of India in terms of attracting investment, supplying machinery and in exports.

“Lower incidence of corporate tax is a barometer that captures the competitiveness of an economy and enables business entities to plough back resources internally accrued for expansion and diversification purposes,” PHDCCI president Sanjay Bhatia said.

The chamber also pitched for a reduction in the tax rate in view of the government’s effort to make the tax structure linear by withdrawing the tax exemptions and incentives. Maintaining the tax rate at the present level and doing away with the exemptions and incentives would add to the tax burden of the companies.

Pitching for total withdrawal of the dividend distribution tax or substantial reduction of the rates to boost investment, it pointed out that the tax burden cast on the companies by way of dividend distribution tax at 17 per cent inclusive of 10 per cent surcharge, 2 per cent education cess and 1 per cent additional cess is very high.

The chamber also presented a ‘wish list’ on fringe benefit tax (FBT) to reduce the burden cast even on legitimate business expenses incurred wholly and exclusively for business purposes such as sales promotion and publicity, samples, telephones, travel costs, hotel and board and lodging etc.

The chamber’s demand is that FBT should be withdrawn or made simpler without insisting on segregating expenditure under various heads. 

New Delhi, November 29
Public sector exploration major ONGC has turned down an offer of equity stake in oil blocks in Iran and Angola made by Norsk Hydro of Norway, saying the blocks were not very prospective.

Norsk Hydro had offered ONGC a stake in its Anaran block in Iran and another block in Angola in exchange for equity in the state-run firm's gas-rich eastern offshore Krishna-Godavari basin.

"Norsk brought to us two blocks for participation but we didn't find the blocks too exciting. We have decided against taking stake in any of the two blocks," a top ONGC official said.

The Norwegian company has taken 10 per cent stake in ONGC's KG-DWN-98/2 block that lies adjacent to Reliance Industries' prolific KG-D6 block in deepwaters of Bay of Bengal.

Norsk has the option of doubling the stake in the ONGC block. Petrobras of Brazil has taken 15 per cent stake in the block that also has Cairn India as the third foreign partner with 10 per cent.

ONGC has the remaining 65 per cent interest in the block.

Petrobras too has an option of doubling its stake in the block at a later date.

The official said Norsk Hydro has so far not made offer to any fresh block. — PTI