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The Manmohan Singh government has finally bitten the bullet. Despite stiff opposition from allies in the UPA government, the Cabinet Committee on Political Affairs (CCPA) hiked the price of diesel by Rs 5 per litre excluding value added tax (VAT).In a move to decontrol LPG (liquefied petroleum gas) prices, it has restricted the number of subsidized LPG cylinders to six in a year. This means that during the current financial year, subscribers will be entitled to another three subsidized LPG cylinders. Consumers can get any number of additional LPG cylinders at market prices. While LPG cylinders cost Rs 399 in Delhi, oil marketing companies will announce the market rate of LPG on a monthly basis.However, petrol and kerosene prices are unchanged.Out of the Rs 5 per litre increase in diesel prices, Rs 1.50 per litre is on account of increase in excise duty. The balance increase of Rs. 3.50 per litre will help reduce the under-recovery of oil marketing companies by about Rs 15,000 crore for the remaining part of the fiscal. The under-recovery on sale of diesel during 2012-13 after this price hike is estimated to be over Rs 103,000 crore. In Delhi diesel will retail at 46.95 per litre from the current Rs 41.32 per litre.Prices of petrol remain unchanged, despite an under-recovery of about Rs 6 per litre. The loss to the oil companies will be offset by a reduction in excise duty by Rs 5.30 per litre.Restricting subsidised LPG cylinders to six is expected to reduce the under-recovery by about Rs 5,300 crore for the remaining part of the financial year. The under-recovery on sale of LPG during 2012-13 even after this measure is estimated to be over Rs 32,000 crore.These decisions are expected to reduce the under-recovery of OMCs by about Rs 20,300 crore and the under-recovery for 2012-13 will be about Rs 1,67,000 crore which is more than the under-recovery of Rs 1,38,541 crore incurred by OMCs during 2011-12.New Delhi subsidises the prices of diesel, cooking gas and kerosene to dampen inflation and protect the poor, a popular policy that has nevertheless put a severe strain on public finances.However, fears of a political backlash mean pump prices have remained unchanged for more than a year. The price increase will almost certainly trigger street and political protests ahead of state elections.The government has always acknowledged that a price hike is essential for curbing the fiscal deficit, a pre-condition for reviving growth in Asia's third largest economy.A price increase will also aggravate inflation, as costs, such as road freight rates, will rise.
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A ministerial panel on 8 October gave the go-ahead to a proposal to charge mobile phone carriers a one-time fee for their existing second-generation airwave holdings over and above 4.4MHz at the auction-determined price for the balance period of their licences. The government expects to raise Rs 27,000 crore revenue from the one-time spectrum fee from existing telecom operator. However, the final decision on this is expected to be taken by the Union Cabinet next week. The move will affect older carriers including Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications. The EGoM also decided to refund licence fee of companies whose telecom licences stand cancelled but have no criminal charge against them. "If there is no case or no action is going on against telecom companies for no fault on their part (in obtaining licence in 2008), then the amount (licence fee of Rs 1,658 crore) will be refunded," an official said. He said the government will adjust this Rs 1,658 crore against the final price of spectrum that companies, whose licences were cancelled, will have to pay at the end of the November auction of airwaves. The decision on the one-time fee has been delayed for quite some time. At the last meeting of the empowered group of ministers (EGoM) on October 3, no decision was taken since it was awaiting the opinion of the Attorney General on the issue. Refusing to comment on the decisions taken by the EGoM, Sibal told the media, "Till the matter goes to the Cabinet, I couldn't possibly tell you the details of the decision but all the issues placed that were placed before the EGoM have been resolved." Sibal said the timing of the Cabinet meeting depends on the Prime Minister's Office. "If the Cabinet meets on October 16, we will try that the Cabinet takes a decision on all issues... We are trying to resolve all these issues before October 19." The decision taken is different from the four suggestions provided by the Department of Telecommunications (DoT). The DoT proposals included –no charge; a one-time levy on all spectrum held by existing telecom operators; a fee on spectrum held beyond the start-up of 4.4 MHz; or levy a fee on airwaves held beyond the contracted spectrum of 6.2 MHz. The idea behind the one-time fee is to provide a level playing field to operators who will start bidding for nationwide spectrum in the November auction at Rs 14,000 crore. They will compete with existing players were allocated pan-India permits with 4.4 Mhz of airwaves at Rs 1,658 crore.The Union government hopes to raise upwards of Rs 27,000 crore by levying a one-time charge, prospectively, on telecom companies which hold over 4.4 Mhz of GSM spectrum, or over 2.5 Mhz of CDMA spectrum. (With input from agencies)
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While the Department of Telecommunications (DoT) is getting all set to conduct the auction of spectrum in the 1800MHz band later this month, there are other battles that have to be fought on the telecom front. The big fight relates to the notices to the Government of India for compensation on investments made by foreign investors in the sector.Communications and IT minister Kapil Sibal has sent a note to the new law minister Ashwani Kumar to be prepared for a legal battle with Russia’s Sistema over cancellation of its 21 licences. In his letter Sibal says “Sistema JSFC, Russia may seek arbitration, hence it is important to take all requisite necessary measures like appointment of arbitrator, finalisation of legal team/counsel, firming up the stand of the Government for any eventuality.” Sibal has asked Kumar to expedite the “finalisation of panel of arbitrators from the Indian side having domain knowledge of telecom.”This becomes all the more important since Sistema is not participating in the current auctions. It has filed a curative petition in the Supreme Court, seeking a review of the verdict cancelling its licences, since its case was different from that of the GSM service providers.While the Department of Telecom has indicated that it will back Sistema’s petition, the final decision will come from the court.Sibal wants the law ministry to set up a panel of arbitrators in case Sistema approaches the international court. Sistema had earlier sent a legal notice invoking the bilateral investment treaty signed between India and Russia. The deadline of August 28 for resolving the dispute is also over. However, Sistema can approach the international court only after all legal options are over.Stepping up pressure on India, Russia has warned it that it will go for international arbitration if the issue of was not resolved in Indian courts. "If the issue of cancellation of 2G license to Sistema is not resolved in Indian courts, we will go for international arbitration," Russian Ambassodor to India Alexander Kadakin said on the sidelines of a cultural event recently.Sistema holds 56.68 per cent stake in Sistema Shyam Teleservices Ltd (SSTL) whose 21 out of 22 licences were cancelled by the Supreme Court in February on the grounds that the 122 permits issued by the then telecom minister A Raja were "arbitrary and unconstitutional". Russian government holds 17.14 per cent stake in SSTL. Russia had previously asserted it will not let Sistema's $3.1 billion investment in its Indian telecom venture go waste due to "internal problems" here. It remains to be seen how quickly the new law minister reacts to Sibal's letter.
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The Union government has decided to seek an extension from the Supreme Court for conducting the auction for 2G spectrum in the 1800MHz and 800MHz band. It is believed that the government will seek time till around mid-November to conduct the auctions. The Supreme Court had given a deadline of August 31 for the auction after it cancelled 122 telecom licences on 2 February this year. It had later extended the validity of the quashed licences till 7 September.Now that Gurgaon-based Times Internet Ltd has been appointed as the auctioneer, the process should move quite fast. The process had got delayed as a decision on the base price of spectrum was not taken till last week.According to sources, as per the schedule provided by the auctioneer, the Information Memorandum for the auctions will be out sometime in late September. That by all means will be a pretty aggressive timeline. The auctions are crucial for telecom operators like Uninor and Sistema Shyam to continue operations in the country. However, operators are likely to be selective in bidding for spectrum. The country is selling second-generation mobile radio spectrum through open auction for the first time, after the top court ruled that a 2008 government grant process was flawed and ordered to revoke all 122 zonal permits granted that year.The auction was due by end-August, as the affected carriers' current permits are valid until September 7, but was widely expected to be delayed as the sale starting price and other rules had not been finalised in time.A delay in the auction could mean that the affected carriers get more time to operate. Their licences were originally ordered to be revoked in early June, but the court allowed them to operate for four more months as the auction was delayed.The Supreme Court's order affects eight carriers - including the Indian units of Norway's Telenor and Russia's Sistema and Idea Cellular.
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Things have finally begun to move on the much delayed auction of 2G spectrum. On 6 August, Times Internet Ltd, Gurgaon, (TIL) was issued a letter of intent to be the auctioneer. This is a follow-up to the Cabinet announcing the base price for nationwide spectrum at Rs 14,000 crore last week.In all, there were three technical bids for the spectrum auction. The bidders included Times Internet, Gurgaon; Karnataka State Electronics Development Corporation and NCDEX Mumbai. However, the financial bid of only Times Internet was opened.This time round, fewer companies were in the fray to be auctioneers than in 2010 when the 3G auctions were conducted. The auctioneer's fee is fixed as a percentage of the difference between the base price and the closing price. With the base price at a much higher Rs 14,000 crore, the expectations are that the final price will not be too high. As a result, few companies showed interest to be the auctioneer.It is believed that the Empowered Group of Ministers will seek an extension of the August 31 deadline for the auctions at its next meeting scheduled for 7 August morning. The auctioneer will have to come up with an Information memorandum to conduct the auctions first. On 3 August, the Cabinet, headed by Prime Minister Manmohan Singh, decided to fix the reserve price at the lower end of the Rs 14,000 crore to Rs 15,000 crore band that was recommended by the EGoM.The Cabinet approved the levy of an annual spectrum usage charge of 3 to 8 per cent on different slabs of revenue as was recommended by the EGoM headed by finance minister P Chidambaram.The reserve price fixed was a disappointment for the telecom industry which had been pitching for a 80 per cent cut in the Rs 18,000-crore reserve price suggested by the Telecom Regulatory Authority of India (Trai) which they felt would lead to up to 100 per cent hike in mobile telephone charges.The auction is crucial for companies like Uninor and Sistema Shyam Teleservices, who have time till September 7 to offer their services after which they will be forced to close down their operations in case they fail to get a licence.
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Things are about to change. That’s what the Nokia teaser had promised over the last few days. Things did change. A couple of days before the launch of the Nokia Lumia 920, several pictures were posted on Twitter by @evleaks. On September 5 at Centre 548 adjoining the Hudson River in New York, Nokia tried to get in some of the flavor usually associated with the launch of Apple products. Nokia CEO Stephen Elop said the company’s strategy is to offer an alternative to the faceless ‘black and grey monobloc smartphones available’ in the market. That was just the beginning. Soon after came the colour. Jo Harlow, Nokia’s head of mobile phone business displayed the canary yellow Lumia 920 saying: “This is the Lumia and it’s time to change.” The Lumia is available in canary yellow, red, black and white. Steve Ballmer with Stephen Elop at the 920 launch in New York (AP)The Lumia 920 is the result of an 18-month long partnership with Microsoft. While no prices were disclosed, the Lumia 920 will be available in select global markets next quarter, says Elop. “First, wejoined the Windows ecosystem to create a new smartphone experience. The Nokia Lumia 610 has allowed us to expand our presence in China, India, South America and Europe. As a result, the Windows Phone market share is rising.” It is to this market that it has launched the 920 which has a 4.5 inch curved screen and sports an 8.7 megapixel camera with PureView imaging. It also has floating lens technology that helps take images that till now were only possible with an SLR camera. The navigation tools include Nokia Maps, Nokia Drive and Nokia Transport. It also has Nokia City Lens that allows the user to get information on city restaurants and facilities by simply pointing the camera at a city street. And, of course it has a super sensitive touch screen that can be operated even while wearing gloves, as displayed by Kevin Shields, senior vice president, Nokia Windows Program. The focus on imaging is important. According to IDC, during 2012, the images taken on smartphones will overtake those taken on camera. It is estimated that daily 1.4 billion images are taken with mobile phones, of which 683 million are posted on social networking sites. This is the market that Nokia is looking to tap with the Lumia 920. Among the unique features included is a built in wireless charger that allows the user to charge the phone by placing it on a mat—the Fatboy. Says Ilari Nurmi, vicve president, product marketing, smart devices: “This could well be the way all phones are charged in the future.” The success of the Lumia 920 and 820 is critical for Nokia. This could well be the last chance for Nokia to be in the race for the smartphone market. The recent court case between Apple and Samsung has provided it a small window to grab its share of the rising smartphone segment. The Euro 38.6 billion Nokia has seen revenues fall 8.9 per cent in 2011 from the Euro 42.4 billion in 2010, while recording a loss of Euro 1.3 billion in 2011. The Lumia is equally important for Microsoft, which has seen increasing competition from Android and iOS. Speaking on the occasion, Microsoft CEO Steve Ballmer said that this will be the year for Windows — be it on the phone, tablet and the PC. A lot is at stake for leadership in the smartphone market. Samsung has increased its lead over Apple, according to Gartner. While Samsung has a whole range of smartphones based on android, it has also launched its Windows Phone 8 version recently in Berlin. But, is Nokia looking to expand into the tablet space too? "We have not announced any plans to introduce a tablet product on Windows or any other platform," Elop said at the event. "But what is quite clear is that the digital experience that people expect today is one that spans multiple different environments: the phone, the tablet, the PC...Certainly, with Nokia's strength in mobility, this is an area we're looking at very closely, and hope to be able to talk more broadly soon about what our perspective is on how to approach that opportunity. It's a real opportunity." ... That’s a whole new space. Nokia has put its cards on the table, while the competition is getting ready to show their cards. Over the next few weeks there are launches of smart phones from HTC, Motorola and possibly Apple. That is when the true competition will emerge. That could well decide the future of Nokia and to a large extent that of Microsoft.
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The recent gujarat High Court order mandating that all four-wheelers registered in the state shift to natural gas within a year will be a tough one for car owners in the state.It'll also hit entrepreneurs who have set up petrol pumps across Gujarat. While the court order hopes to rein in vehicular pollution, existing petrol pumps in the state will have to get hooked to the gas pipeline. Besides, does the state have enough companies that can install CNG kits in cars and ensure that they do not leak? That could be critical to the lives of millions of Gujaratis. That said, Gujarat is the only state that can shift to natural gas quickly. That's because it already has a gas pipeline network of close to 5,000 kilometres in place. Gujarat State Petronet has a 1,500-kilometre pipeline, Gujarat Gas Company 2,700 kilometres and GAIL 350 kilometres. Another 320 kilometres is currently under construction. Being close to the sources of gas supply also helps.Strictly BusinessAeromexico, Mexico's largest airline, has placed an $11-billion order with Boeing for asmany as 90 737- 8 Max and eight 787-9 Dreamliner aeroplanes. This is by far the biggest aircraft investment by a Mexican airline.(This story was published in Businessworld Issue Dated 06-08-2012)
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The gates at India's leading carmaker Maruti Suzuki India's Manesar plant are shut. The campus is teeming with hundreds of policemen. That's a fall-out of the violence that gripped the plant after workers turned violent, attacked executives and burnt cars and parts of the office on Wednesday. In the fracas, Awanish Kumar Dev, general manager (HR) was burnt to death. At least 88 other executives have been injured. Close to a 100 workers have been arrested post the arson.Ei Mochizuki, a Tokyo-based spokesman for Suzuki Motor Corp, which controls Maruti Suzuki, told Reuters two Japanese employees had been hospitalised after the unrest.The provocation was the suspension of a worker, who had ostensibly beaten a supervisor. The workers' union demanded his reinstatement. According to a statement issue by Maruti Suzuki, "the first act of violence by the mob was to forcibly shut the main gate and prevent managers from leaving the premises after working hours. Thereafter, armed with iron rods and door beams of cars, the mob spread out in groups in the factory area and targeted supervisors, managers and executives." They also reportedly ransacked offices, damaged property and finally, set the offices on fire. The statement points out that the office facilities have been burnt beyond repair.However, the assembly line has not been hit. Therefore, it is possible to restart production at the plant that makes the Swift, A-Star and SX4 models once the situation is under control. The plant can produce close to 1,500 cars a day.The standoff between the workers and management at Maruti Suzuki is nothing new. After three strikes totaling 45 days in 2011, this is the first flush of worker activism this year. During the last fiscal, Maruti recorded a 28.6 per cent decline in net profits from Rs 2288.7 crore (in 2010-11) to Rs 1m635.1 crore (2011-12). Car production during the year also fell from 1.27 million to 1.13 million. Labour unrest cost the company more than Rs 2,500 crore in lost production during 2011.Shares in Maruti, which saw its sales fall 11 per cent in the fiscal year to March, partly due to the protracted labour strikes, fell 8.9 per cent on Thursday, their biggest daily per centage drop since July 26, 2010.Suzuki's shares closed down 3.8 per cent in Tokyo to their lowest price since February 2009.Maruti Suzuki is not the only automobile company to face labour problems in India. Others including Honda, Hyundai, Ford and General Motors have faced labour problems from time to time, but in the case of Maruti Suzuki it is quite a regular feature. Meanwhile, Maruti has announced plans to set up a Rs 4,000-crore plant in Gujarat. That could be a means to reduce its dependence on Haryana, where labour problems have been on the rise.The Maruti Suzuki statement goes on to add that "it is an orchestrated act of mob violence at a time when operations had been normal over the past many months." The violence at the plant has been condemned by industry. "Assocham expresses its anguish and strongly condemns the violence at Maruti Suzuki premises," says secretary general D S Rawat.He said that India could not afford any disruption in economic activity when industrial growth was declining.That could be critical in the coming months for both the carmaker and its workers.
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The corner room on the third floor of New Delhi’s Ashok Hotel overlooks a sea of green. The decor is classy, yet subtle. The shelf behind the desk has an assortment of books and a Buddha statue. The beige sofa is splashed with colourful cushions and paintings adorn the walls. It is from here that Amitabh Kant, CEO and managing director of Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC), is overseeing India’s biggest ever infrastructure project. The $90-billion Delhi-Mumbai Industrial Corridor (DMIC) is expected to finally cover a 150-200 km belt on either side of the 1,483 km dedicated freight corridor (DFC) connecting Dadri near Delhi to Dighi port south of Mumbai. The DMIC is on the lines of the Japanese Pacific Ocean Belt Area project, which concentrated several economic resources between Tokyo and Osaka, along the Pacific Ocean, in the 1960s. The DMICDC, funded by India and soft loans from Japan, plans to build seven National Manufacturing and Investment Zones (NMIZs) along the DFC in the first phase. Two of these are in Maharashtra, while Gujarat, Rajasthan, Madhya Pradesh (MP), Haryana and Uttar Pradesh (UP) have one each. The NMIZs will have two airports, five power plants, four multi-modal logistics parks, two exhibition-cum-convention centres and mass rapid transit systems. Click on the graph to view an enlarged image While these projects will be set up over a longer period, the DMICDC has identified early bird projects. These include the multi-modal logistics parks, exhibition-cum-convention centres, an industrial park and the two airports. While the plans sound grand, are they likely to roll out? Skeptics have repeatedly termed the DMIC project over-ambitious. However, it will be a critical building block for developing a strong manufacturing base, quite like what Japan did after World War II. It is among the key components of the National Manufacturing Policy that aims to raise the share of manufacturing from 16 per cent of GDP to 25 per cent within a decade, while creating 100 million jobs. Says Kant: “The manufacturing hubs that the DMIC is creating will be critical for future growth.” Again, it is only if manufacturing grows at 14-15 per cent for the next 30 years that the economy will grow at 8-9 per cent per annum. That is what the NMIZs hope to achieve. The DMIC project revolves around the DFC. Once completed, the DFC — the entire stretch will have no level crossings — will enable movement of freight from Delhi to Mumbai on double-stacked container wagons in less than 20 hours against the current 48-72 hours. The original deadline for the DFC was 2016; it has now been extended to 2017. Are the DFC and the DMIC likely to get further delayed? “Being a mega project, DFC requires time to go through all procedures appropriately. But, now that actual procurement has already started, we will further accelerate the process,” says Taro Okawa, representative, Japan International Cooperation Agency (JICA). He is confident that civil work on the DFC will begin in early 2013. Already, two consortia have qualified for the 640-km stretch from Rewari (Haryana) to Iqbalgarh (Gujarat). These are Mitsui-Ircon-Leighton India and Sojitz Corporation-L&T. R.K. Gupta, managing director, Dedicated Freight Corridor Corporation of India (DFCCIL), says that the entire land for the 640-km stretch has been acquired. He says: “We did have problems initially, but now it is on track.” Once the DFC is up and running, the bulk of the freight traffic will move on it. That will help increase speeds and also add more passenger trains on the existing track between Delhi and Mumbai. Meanwhile, the DMIC projects are still in their early stages because of land acquisition issues. Land for one multi-modal logistics park (MP), industrial park and airport (Gujarat) has already been acquired. Five power plants (two in Gujarat, two in Maharashtra and one in MP) too have got land. Maharashtra expects to complete land acquisition for the logistics park and exhibition centre in Dighi by March 2013. The Rajasthan government is currently in the process of acquiring land for the second airport. However, land acquisition could soon become a costly proposition for the projects under the DMIC. That’s because the monsoon session of Parliament is likely to take up the Land Acquisition and Rehabilitation and Resettlement Bill, 2011. Under the provisions of the Bill, the cost of acquiring land could rise by 3-3.5 times, severely affecting the viability of industrial projects across the board.break-page-breakThis probably explains why not everyone is excited. Says D.S. Rawat, secretary general, Assocham: “Other than Gujarat and Maharashtra, most states have not been able to acquire land for the project.” In MP and Rajasthan, the acquisition is slow because of vote bank politics. The moment there is opposition, the state governments tend to go slow. Arvind Mahajan, partner at global consultancy KPMG, points out that DMIC is a first for India. Many steps need to be taken before the vision is realised, which takes time. He says success depends on creating the trunk infrastructure; all other elements will come up around it. That’s true, but since Independence, India has built only one planned city — Chandigarh. So building seven cities at one go is a huge challenge. Says Kant: “This is an opportunity for India to make a quantum jump. We would rather do it well than rush and spoil things.” Already, Japanese companies are firming up plans to set up units in the NMIZs. Enquiries have also come in from Germany and the UK. The idea is to use technology to ensure the cities have quality infrastructure by the time people move in. IBM and Cisco are partnering DMIC to make these cities smart. In all of them, it will be possible to monitor utilities such as water, power, gas supply and traffic from a single control room. Over The Years The DMIC proposal has been around for many years now. Originally conceived in end-2006, it was one of the highlights of Japanese Prime Minister Shinzo Abe’s visit to India in August 2007. In January 2008, the government set up the Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC) as the nodal body to develop the project. At that time, the Union government had a 49 per cent stake while financial institutions held 51 per cent. It was only in December 2009 that India and Japan signed agreements for implementing the DMIC. When Prime Minister Yoshihiko Noda visited India in December 2011, it was pointed out that active participation of Japanese companies would provide an impetus to the DMIC. The joint statement issued on December 28 last year "welcomed Japan's active involvement through equity participation in DMICDC". While the Centre approved support of Rs 18,500 crore, the Japanese government agreed to provide $4.5 billion over five years. It was then that the proposal to restructure the DMICDC was moved. Post-restructuring, the government will retain its 49 per cent stake; 26 per cent will be held by Japan Bank for International Cooperation and the balance by financial institutions. The master planners for the NMIZs include UK’s Halcrow (for Gujarat and Uttar Pradesh), Singapore’s Jurong (Haryana), Kuiper Compagnons from the Netherlands (Rajasthan), LEA Associates (MP) and AECOM Asia (Maharashtra). One big advantage is that once the master plan is frozen, the states cannot change it without the approval of the DMICDC. As a first step, DMICDC signed memoranda of understanding with each of the states. It then prepared Draft Shareholder Agreements (SHAs) for each state in accordance with the approved Cabinet framework on the one hand, and relevant state statutes on the other. Draft SHAs for Maharashtra, Gujarat and MP have already been forwarded to the state governments for approval by the state Cabinet. Gujarat and Maharashtra have started work on the projects. Other states are still at the starting blocks. Says Mahajan: “We would have liked the states to move faster, but their execution skills are vastly different.” Land will be provided by the states as equity while the Centre will provide the funds for the trunk infrastructure. It is only after the trunk infrastructure is in place that private players will start work. The land needed for the cities ranges from 540 sq. km. for Gujarat, 354 sq. km. (Haryana), 120 sq. km. (Rajasthan and Uttar Pradesh), 115 sq. km. (Maharashtra) and 100 sq. km (MP). Gujarat has already acquired 75 per cent of the land needed, followed by Maharashtra (35 per cent). Rajasthan and MP have acquired 20 per cent each. The laggards are UP and Haryana (15 per cent). While it remains to be seen how soon states can acquire land, the slow pace of some poses the risk of the entire project not meeting deadlines. In Gujarat, land acquisition was easy since many areas were not inhabited. But not so with Haryana, where land prices are much higher. In Dholera, 100 km south of Ahmedabad, 400 sq. km of the 540 sq. km of land needed has been acquired. Gujarat has also acquired 1,700 hectares for the adjoining greenfield aviation hub that will emerge as the main airport for Ahmedabad. Work on the central spine (a six-lane road that in the future can be expanded to 12 lanes) has started. Says a Gujarat government official: “After acquiring 75 per cent of the land for the township, we have sent close to 200 engineers to Japan for training.” Gujarat has also introduced the Dholera SIR Act. SIR (special investment region) is quite different from an SEZ. While being larger, it is not restricted to export-oriented industry and services. Rather, it will be a full-fledged smart city. It is estimated that the first phase of the NMIZs should be up and running by 2019. While Gujarat is way ahead, it remains to be seen whether other states can get their act in place. Else, it could turn out to be one more dream that fails to materialise. It’s time the other states ramp up their act. That could be crucial in maintaining economic growth. anup (dot)jayaram (at)abp(dot)in (This story was published in Businessworld Issue Dated 20-08-2012)
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After going through many a twist and turn, a panel of ministers headed by former finance minister Pranab Mukherjee recently decided to auction between 8 MHz and 13.75 MHz of spectrum in the 1,800 MHz band later this year. When everything seemed to have been settled except the base price of spectrum, suddenly there is a twist in the tale.Recently, Reliance Communications (R-Comm) and then Aircel moved the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) seeking the government to provide them an additional 1.8 MHz of spectrum inkey circles at no additional cost. If that goes through, then the government plan to auction spectrum in the 1800 MHz band by August 31 as mandated by the Supreme Court could be hit. Much earlier, CDMAoperator Sistema Shyam Teleservices had filed a similar petition for a third carrier (1.25 MHz) in November 2011 for five circles.All these companies have sought that the Department of Telecommunications (DoT) fulfill its contractual obligations by providing these companies with the balance of the contracted spectrum before going ahead with the auction process. Both Aircel and RCom were given 4.4 MHz of spectrum in the 1800 MHz band in January 2008. These operators have sought additional spectrum under the subscriber addition norms.Aircel has asked the court to declare DoT's actions as a 'breach of terms of the licence' and award damages for the 'loss suffered due to withholding and non-grant of spectrum by DoT.' So what does this mean? Based on how the TDSAT responds to the applications, other telecom operators are likely to file their applications. Says an official of a leading telecom company: "The immediate impact would be that the entire process of auctioning spectrum could get delayed." That would benefit incumbents while putting pressure on new operators.Second, if spectrum is provided to these companies, the spectrum reserved in the 1800 MHz band for the proposed auction could come down. That would result in lower revenues for the government from the auction, while again putting pressure on companies bidding for spectrum.Says Rajan Mathews, director general, Cellular operators Association of India: "The real impact could be on the process of re-farming spectrum in the 900 MHz band. The TRAI has provided for spectrum in the 1800 MHz band for operators who would have to release their 900 MHz spectrum when their licences come up for renewal starting 2014. That process could be stuck for lack of spectrum."If other operators seek additional spectrum in the 1800 MHz band, then the amount of spectrum that the government had reserved for re-farming would be substantially reduced. While the government has to go ahead with auctioning spectrum under the Supreme Court order, the re-farming could get delayed. The other option is to get additional spectrum vacated from defence authorities.Says Hemant Joshi, Partner, Deloitte Haskins & Sells says: "What the country needs is a strategic and comprehensive view rather than ad hoc measures. That could help reduce the conflicts in the sector."Finally, it all depends on what TDSAT says. However, nothing stops the operators from moving the courts. In that case, the auction process could well get delayed. That's not something that the operators want.
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