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Obama’s Strictures
IT industry not perturbed

Bangalore, May 6
The proposed inauguration here tomorrow of the IT major Wipro’s “Next Generation Product Compliance Facility” by former President APJ Abdul Kalam shows the gay mood of the IT industry here despite the US President Barack Obama’s latest fiat against outsourcing by American companies.

Indian cos may become more competitive
Mumbai, May 6
Indian software companies are cautious in their reactions to the US President Barack Obama's planned withdrawal of tax breaks on American companies outsourcing jobs to countries like India. Indian software companies believe that the restrictions sought to be imposed by the US administration may actually benefit them.

Violence in Nepal hits Indian Cos
New Delhi, May 6
The violence and instability in Nepal has badly hit the industries due to shortage of power and raw material. Industry sources say that diesel and petrol supplies have run out and labour unrest is leading to a slowdown in production. The major Indian companies operating out of Nepal include Dabur Foods, Asian Paints, and GMR group, among others.





EARLIER STORIES



After Nano, Tatas offer flat at Rs 3.91 lakh
Mumbai, May 6
Tata Housing, the real estate development arm of the Tatas, has announced construction of low-priced flats under its Shubh Griha brand. The first of the projects priced at below Rs 4 lakh will be kicked off on the outskirts of Mumbai. It would subsequently be extended to other cities across the country.

US progress to be slow, says Fed chief
Washington, May 6
Expressing hopes that the country's economy will turn up later this year, US Federal Reserve chairman Ben S Bernanke yesterday said the pace of recovery was likely to be slow and could see higher unemployment in the coming months. "We continue to expect economic activity to bottom out, then to turn up later this year.

A model displays a rare fancy vivid blue diamond at an auction preview at Sotheby's in Geneva
A model displays a rare fancy vivid blue diamond at an auction preview at Sotheby's in Geneva on Wednesday. The diamond was found in 2008 in the historic Cullinan mine in South Africa and weights 7.03 carats. It is estimated to fetch some $5,800,000 to 8,500,000 when it comes under the hammer in Geneva on May 12.
— Reuters

Indian economy to rebound by year-end: IMF
New Delhi, May 6
Multilateral agency International Monetary Fund has said, the Indian economy, facing slowdown amid global financial slowdown is expected to rebound near the end of the current calendar year.

No service tax on lotteries: SC
New Delhi, May 6
The Supreme Court yesterday held that service tax cannot be levied on lotteries in the country. A Bench headed by Justice S B Sinha has upheld the Sikkim High Court's order that quashed the Excise Department's notice demanding service tax to the tune of over Rs 2,000 crore from Coimbatore-based Martin Lottery Agencies (MLA) between July 2003 and December 2006.

A watch, retailing for £17,300, is seen at the Ferrari store in central London. Currently, a chain of 20 outlets worldwide, the first Ferrari store in Britain opened
A watch, retailing for £17,300, is seen at the Ferrari store in central London. Currently, a chain of 20 outlets worldwide, the first Ferrari store in Britain opened on Wednesday, sells the whole range of the Italian sports car manufacturer's merchandise.
— Reuters

Microsoft warns of more job cuts
New York, May 6
Less than four months after announcing plans to slash 5,000 jobs, software giant Microsoft has warned of more job cuts depending on the impact of the economic slowdown.

ICICI Bank to open 580 more branches
Mumbai, May 6
Top private lender ICICI Bank plans to open nearly 600 branches this year, but will not hire as part of the current workforce would be redeployed to manage the expanded network of 2,000 branches.

Maruti to launch ‘Ritz’ on May 15
New Delhi, May 6
Market leader Maruti Suzuki India (MSI) yesterday said it would launch the country's first Bharat Stage IV emission norms compliant car, Ritz, on May 15 in both petrol and diesel variants.

MCX-SX launches website in Punjabi
Chandigarh, May 6
As part of its continued efforts to reach out and connect to the regional language speaking population, MCX-SX (MCX Stock Exchange), today announced the formal launch of its 11th regional website in Punjabi.





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Obama’s Strictures
IT industry not perturbed
Shubhadeep Choudhury
Tribune News Service

Bangalore, May 6
The proposed inauguration here tomorrow of the IT major Wipro’s “Next Generation Product Compliance Facility” by former President APJ Abdul Kalam shows the gay mood of the IT industry here despite the US President Barack Obama’s latest fiat against outsourcing by American companies.

While announcing his proposed tax reforms on Monday, Obama said he would change the “tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.”

Indian IT behemoth Infosys has reacted to the statement, saying, “the current proposal, as we understand, is to close corporate tax loopholes on the US multinational corporations and crack down on their overseas tax havens. We do not believe that it has anything to do with IT outsourcing done by US corporations.”

Nasscom, known as the voice of IT and software industry in India, has also echoed similar views. “Current law in the US states that any income that is earned outside the US is not taxed until such time it is brought back into the US,” the Obama proposal aims to alter that to raise the revenues of the US government,” Nasscom said.

The White House plan, it is understood, is primarily aimed at putting a check on American corporations from parking their overseas business earnings indefinitely outside the US and avoiding paying of the US taxes, a practice known as deferral. The plan will change the legal treatment of many international subsidiaries that American companies have used to shift earnings into low-tax offshore havens. Finally, if the proposal is passed by the Congress and becomes a law, it will put new limits on corporations' ability to use offshore subsidiaries to generate unjustified foreign-tax credits.

Under deferral, a company does not have to pay the US corporate tax until it brings the earnings to US. It can retain the income overseas or reinvest it abroad. But if it brings the income home or pays it as dividends, the tax becomes due.

Nasscom points out that Japanese or European companies face no such quandary. It pays tax to the country where it has set up its shop and it is exempted from further taxation at home.

The overriding feeling here is that the Indian companies are not going to get hurt by the US move. On the fate of American companies having offices in Bangalore and elsewhere in India, Nasscom has said, “since global companies that earn profits here are subject to a tax rate of 33.9 per cent (including surcharge and cess), the impact of the proposed reforms on them would be marginal.” It is, however, unclear how the US companies will avoid getting adversely affected if they are stripped of the tax benefit given to them in the USA.

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Indian cos may become more competitive
Shiv Kumar
Tribune News Service

Mumbai, May 6
Indian software companies are cautious in their reactions to the US President Barack Obama's planned withdrawal of tax breaks on American companies outsourcing jobs to countries like India. Indian software companies believe that the restrictions sought to be imposed by the US administration may actually benefit them. "Indian software companies may actually become more competitive against global giants like IBM, Accenture and other companies," says a senior manager of a software company here.

Hours after President Obama singled out Bangalore as an off-shoring destination in his gun sights, Indian software companies have embarked on a damage-control mission. Analysts are worried that such statements could hurt the software industry over the short-term by weakening sentiment. “However, in the medium and long-term, companies will realise that Indian software companies offer more cost-effective solutions,” says the official.

Withdrawal of tax-breaks could affect American companies with operations in India and other destinations since under the income-tax rule of that country, corporations can claim tax breaks on profits of foreign subsidiaries not repatriated back to the US. Should these concessions be withdrawn, American companies, which are trying to muscle into the software outsourcing business dominated by Indian companies like TCS and Infosys, would have to pay higher taxes, feel software company officials here.

However, Indian software companies are still wary about the US administration coming up with newer ways and means to curb off-shoring jobs to foreign locations.

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Violence in Nepal hits Indian Cos
Bhagyashree Pande
Tribune News Service

New Delhi, May 6
The violence and instability in Nepal has badly hit the industries due to shortage of power and raw material. Industry sources say that diesel and petrol supplies have run out and labour unrest is leading to a slowdown in production. The major Indian companies operating out of Nepal include Dabur Foods, Asian Paints, and GMR group, among others.

The Maoist Trade Union has threatened officials of Dabur Foods with a agitation during the strike period. These trade unions unilaterally decided to stop work from August last year. The union leaders have announced that the factory would be pushed out of Nepal to Raxaul along with all officials, according to a Ficci survey.

When The Tribune spoke to Dabur Foods, which has the largest exports from Nepal, it said, “we are watching the situation and will take a decision accordingly.” Dabur exports juices to India from Nepal and has Rs 250-crore turnover from Nepal.

However, new project developers have different approach. Nepal Infrastructure Development Co (P) Ltd., which is a joint venture of IL&FS in Nepal, says that the new projects would be delayed and ongoing projects for infrastructural development of Nepal would move slowly.

S N Agarwal of Bhoruka group said they have stalled the feasibility studies on the proposed 100 MW power project that it was planning to put there. According to the survey, the plight of Indian companies is exemplified by what Dabur Foods had to undergo during the past six months.

The FMCG major, which has a significant presence in Nepal since 1989, is facing the onslaught of Maoists, trade unionism since the past six months. This strike breached the long-term agreement signed between the workers and officials and also did not abide by the procedures laid down in the Labour Law. Just this closure has resulted in a sales loss of approximately Rs 1.3 crore per day to the company. However, there are companies like GMR group, which says it is likely to carry on its feasibility studies on the proposed power plants in Nepal.

As regards the solution, Dr Amit Mitra, secretary-general, Ficci, says “we propose to take up the matter with the authorities in Nepal so that industrial operations are resumed at the earliest.”

The survey reveals that while Indian companies in Nepal have a very few expatriates, a larger number of management is Nepalese, and they are also threatened for going to work. The operations of most of the companies have severely affected due to this.

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After Nano, Tatas offer flat at Rs 3.91 lakh
Tribune News Service

Mumbai, May 6
Tata Housing, the real estate development arm of the Tatas, has announced construction of low-priced flats under its Shubh Griha brand. The first of the projects priced at below Rs 4 lakh will be kicked off on the outskirts of Mumbai. It would subsequently be extended to other cities across the country.

Announcing the launch here, Brotin Banerjee, managing diector and CEO, Tata Housing, said the flats would initially be priced at between Rs 3.9 lakh and Rs 6.7 lakh. Delivery of the flats will begin two years after construction begins.

There is, however, a catch. The first project at Boisar near Mumbai is 45 km away from Virar, the last railway station on Mumbai's suburban railway route. Western Railway is still in the process of extending the suburban network from Virar to Palghar, 60 km away.

According to Banerjee, the flats will have an area ranging from 283 sqft for a one room and kitchen flat to bigger flats measuring 465 sq ft each. Tata Housing will invest up to Rs 100 crore to build the township with 1,200 houses, according to the company. Over the next few years, it plans to construct 15,000 budget houses across the country.

Cities to be covered included Delhi and Bangalore apart from Mumbai.

Banerjee added that the company was keeping costs low and would be spending around Rs 700 per sq ft as construction costs. The company also has bought land from owners on a profit-sharing basis to lower costs.

Buyers would have to pay an initial booking amount of Rs 10,000 at the time of application. Flats would be allotted to buyers by lottery, Banerjee said. The project to be built in a township format spread over 63.58 acres would have a hospital, school and a community hall in addition to open spaces.

PTI adds: Tata Housing, Banerjee said, would also start such projects in Chennai and Kolkata and subsequently to other Tier-I and tier-II cities. "We observed that since most of the people in the low-income bracket live away from their families to earn a livelihood in big cities, there is a large percentage of migrant population with people living in either rented or company-provided accommodation," he said.

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US progress to be slow, says Fed chief

Washington, May 6
Expressing hopes that the country's economy will turn up later this year, US Federal Reserve chairman Ben S Bernanke yesterday said the pace of recovery was likely to be slow and could see higher unemployment in the coming months.

"We continue to expect economic activity to bottom out, then to turn up later this year. Key elements of this forecast are our assessments that the housing market is beginning to stabilise and that the sharp inventory liquidation that has been in progress will slow over the next few quarter," he said in his testimony on economic outlook before the US Congress.

The US economy, which slipped into recession in December 2007, has shrunk at a staggering rate of more than 6 per cent in the last two consecutive quarters.

Noting that economic recovery would only gradually "gain momentum and that economic slack will diminish slowly", the Fed chief asserted that businesses are likely to be cautious about hiring. This, in turn, would imply that the jobless rate could remain high for a time, even after economic growth resumes, he added.

In the last 15 months, the world's largest economy has lost more than five million jobs. "... we are likely to see further sizable job losses and increased unemployment in coming months," Bernanke said.

According to the Fed chief, few indicators tentatively suggest that decline in foreign economic activity may also be moderating.

"And, as has been the case in the United States, investor sentiment and the functioning of financial markets abroad have improved somewhat," Bernanke added.

The statement from the Fed chief comes amid hopes that green shoots are slowly emerging in the economy. The optimism has been primarily fuelled by robust first quarter results from the nation's financial institutions including Wells Fargo and Citigroup. — PTI

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Indian economy to rebound by year-end: IMF

New Delhi, May 6
Multilateral agency International Monetary Fund has said, the Indian economy, facing slowdown amid global financial slowdown is expected to rebound near the end of the current calendar year.

"For India, we expect growth to slow markedly in 2009 before starting to rebound toward year end," the IMF said in its latest 'Regional Economic Outlook: Asia and Pacific'.

The IMF, which recently slashed its 2009 GDP forecast for India to 4.5 per cent from 5.1 per cent estimated earlier, said its fourth quarter (October-December 2009) outlook is 4.8 per cent.

On the country's slow growth in 2009, it said despite India's relatively low dependence on exports, the country will be particularly affected by the financial shock.

"... because the strong investment growth in recent years owed much to favourable credit conditions. With external financing having tightened and the domestic credit cycle having turned, investment growth is expected to be severely curtailed, and so is GDP growth," IMF said.

The multilateral agency said the last quarter of the next year is also expected to be higher than the overall growth in the full year 2010.

According to IMF, India's GDP is expected to grow at 5.6 per cent in 2010, lower than prior projection of 6.5 per cent, and the view for the fourth quarter (Oct-Dec) of 2010 is 5.9 per cent. — PTI

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No service tax on lotteries: SC

New Delhi, May 6
The Supreme Court yesterday held that service tax cannot be levied on lotteries in the country.

A Bench headed by Justice S B Sinha has upheld the Sikkim High Court's order that quashed the Excise Department's notice demanding service tax to the tune of over Rs 2,000 crore from Coimbatore-based Martin Lottery Agencies (MLA) between July 2003 and December 2006.

"We have no other option but to hold that the high court judgement, albeit for different reasons, warrants no interference," the bench said while dismissing the Centre's appeal. It also imposed cost of Rs one lakh on the government.

It further said the notice issued to MLA by the government had "rightly been held to be liable to be set aside. Subject to the constitutionality of the Act, in view of the explanation appended to this, we are of the opinion that the service tax, if any, would be payable only with effect from May 2008 and not with retrospective effect".

The Bench said it had decided the issue keeping in view various decisions of the apex court holding that lottery being gambling comes within the purview of the doctrine of res extra commercium.

It said that "organising lottery by a state is tolerated as an economic activity on its part so as to enable it to raise revenue. Raising of revenue by the state, in our opinion, by itself cannot amount to rendition of any service... The word 'service' has not been defined in the Act." However the bench said that "...a substantive law may also be introduced. If a substantive law is introduced, it will have no retrospective effect". — PTI

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Microsoft warns of more job cuts

New York, May 6
Less than four months after announcing plans to slash 5,000 jobs, software giant Microsoft has warned of more job cuts depending on the impact of the economic slowdown.

"As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure, including additional job eliminations," Microsoft CEO Steve Ballmer said in a memo to employees on Tuesday.

In January, the software major announced that it would trim 5,000 jobs over the next 18 months.

"Microsoft will eliminate up to 5,000 jobs in R&D, HR, marketing, sales, finance, legal, and IT over the next 18 months, including 1,400 jobs today," the company had said on January 22.

Ballmer in the memorandum said the firm was implementing the "second phase" of the plan to bring down spending and cut jobs. The latest action would include positions within and outside the US.

The Microsoft chief noted that affected employees in the US would be notified directly by their managers while in other countries, local leadership teams would provide the details.

"With this announcement, we are mostly but not all done with the planned 5,000 job eliminations by June 2010.

Rattled by the adverse global economic conditions, Microsoft posted a fall in quarterly revenue for the first time in 23 years, last month. — PTI

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ICICI Bank to open 580 more branches

Chanda Kochhar Mumbai, May 6
Top private lender ICICI Bank plans to open nearly 600 branches this year, but will not hire as part of the current workforce would be redeployed to manage the expanded network of 2,000 branches.

"We will set up 580 new branches this year ... one and half years ago we had 750 branches and one year from now, once we open these 580 branches, we will have 2,000 branches," ICICI Bank managing director and CEO Chanda Kochhar told PTI in an interview.

Kochhar, however, noted that the bank might not increase the headcount, currently at about 36,000, as it would be "re-skilling and re-training" some people in accordance with the needs of the expanded branch network.

Asked whether the employees could expect some kind of reward in the form of salary hike or other monetary benefits, Kochhar said, "Well, what we have done is (we have) already announced a moderate hike for the year. But, it's a moderate hike ... it's kind of moderate increase in salaries and that's about it." Kochhar took over as ICICI Bank MD & CEO this month from her predecessor K V Kamath, who has become non-executive chairman.

Asked whether ICICI Bank was reducing its ATM network, Kochhar said the matter needed to be seen in a context.

When asked whether the bank's plan to open close to 600 new branches without any fresh hiring indicated redundancies in the workforce, Kochhar said, "No. As I said, our structure is changing. Earlier these people were engaged in making sales happen through the outside agencies, supervise outside agencies, supervising sales channels and all that.

"Now the branches are going to do all that work. In that sense, it is more about change in the structure of the bank." Asked about her message to the employees, Kochhar said, "We have to believe in the long-term potential for India, but at the same time, we have to recognise (that) the current time is the time of posterity. What we have to concentrate on is skilling of personnel and giving their best to the organisation." To a question whether some employees did not appreciate the decision to forego bonuses, especially when the bank was asking for their best, Kochhar said, "But, why so. If you see what is happening in the economic environment, I think that's appropriately the right stand to take." — PTI

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Maruti to launch ‘Ritz’ on May 15

New Delhi, May 6
Market leader Maruti Suzuki India (MSI) yesterday said it would launch the country's first Bharat Stage IV emission norms compliant car, Ritz, on May 15 in both petrol and diesel variants.

"Ritz will be the first passenger car in India to be compliant with the BS-IV emission norms, in petrol as well as diesel variants," MSI said in a statement. The small car would hit the roads on May 15 and would be positioned in the premium A2 segment, it added.

"With Ritz, MSI aims to consolidate its leadership in the highly competitive compact car segment. The company commands the largest market share of 58 per cent in the A2 segment," the statement said.

MSI will offer Ritz with two different engine options — K-series 1.2-litre petrol engine and 1.3-litre diesel engine. — PTI

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MCX-SX launches website in Punjabi
Tribune News Service

Chandigarh, May 6
As part of its continued efforts to reach out and connect to the regional language speaking population, MCX-SX (MCX Stock Exchange), today announced the formal launch of its 11th regional website in Punjabi.

The website went live on April 30. An official release said that Punjab was one of the largest export regions in the country. With the Punjabi version of the website, exporters, importers, banks, corporate houses and SMEs across Punjab will be able to understand benefits of currency futures market more clearly in their native language, said U. Venkataraman, CEO, MCX-SX.

He said the new regional language websites would feature frequently asked questions (FAQs) section, currency futures price ticker, real-time rendering of charts (i.e., built-in auto page refresh facility), online charts with magnification facility, market and membership-related information in the users’ mother tongue.

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BRIEFLY

Tata Industries sells TCS shares worth Rs 635 cr
Mumbai:
Tata Industries has sold shares worth Rs 634.80 crore of the country's largest software exporter Tata Consultancy Services (TCS) through an open market transaction. According to bulk deal data available on the National Stock Exchange, TCS promoter group firm Tata Industries has sold 1.03 crore shares of TCS at Rs 615.04 a piece, aggregating to over Rs 634.80 crore. — PTI

Videocon to start DTH service in Punjab
Jalandhar:
Videocon Industries Limited on Wednesday said it would launch its Direct-To-Home (DTH) service in Punjab by next month. "We would enter into new venture in the field of DTH, with the launch of Videocon DTH services next month," Videocon vice- chairman and CEO K R Kim told reporters here. — PTI

Sahara MF plans debt scheme with Rs 10 SIP
New Delhi:
Sahara Mutual Fund on Wednesday filed an offer document with SEBI for a new fund offering in the debt segment with a minimum investment option of as low as Rs 10. The fund is a Systematic Investment Plan (SIP) and would be open-ended, investing mainly in debt-related instruments. — PTI

BIS Dy Director-General
Chandigarh:
D K Mathur has taken over as Deputy Director-General of the Northern Regional Office of Bureau of Indian Standards (BIS) here. He will monitor the product and management certification activity of BIS in Punjab, Himachal Pradesh, Haryana, Jammu & Kashmir, parts of Uttar Pradesh and Chandigarh. — TNS

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