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The rupee on Tuesday (8 July) recovered by 8 paise to 59.93 against the US in early trade at the Interbank Foreign Exchange market on increased selling of the American currency by exporters.Besides, strengthening of the euro and yen against the dollar in overseas market and a higher opening in the domestic equity market also supported the rupee, forex dealers said.The rupee had lost 29 paise, its biggest drop in nearly three weeks, to close at 60.01 against the dollar Monday (7 July) on rising demand for the US currency from custodian banks.Meanwhile, the benchmark BSE Sensex rose by 90.36 points, or 0.34 per cent, to trade at a new record high of 26,190.44 in opening trade Tuesday.(PTI)
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India, the world's biggest sugar consumer, raised the import duty on the sweetener to 25 per cent from 15 per cent as part of efforts to help regional mills struggling with lower prices and higher stocks.A rise in the duty will make imports unviable for port-based refiners despite a plunge in global prices due to ample supplies from top exporters Brazil and Thailand.In June, Food Minister Ram Vilas Paswan had said the import duty could be raised to 40 percent from 15 percent if mills pay farmers' dues, estimated at nearly 50 billion rupees.Mills say a 70-per cent jump in the price that they have to pay to farmers in the biggest cane-growing state of Uttar Pradesh and a meagre 7 per cent rise in sugar prices have worsened their finances, leading to cane dues."There was an import parity but mills were not signing deals, expecting revision in the import duty. At 25 percent duty, imports are not viable," said a Mumbai-based dealer with a global trading firm.In the current sugar year to September, India is likely to import just 30,000 tonnes compared with 680,000 tonnes a year earlier, an industry official told Reuters earlier this month.The benchmark sugar futures in India rose 1 per cent after the increase in the duty, while shares of sugar makers such as Bajaj Hindusthan Ltd, Shree Renuka Sugars Ltd and Balrampur Chini Mills Ltd rose more than 4 percent."The duty will certainly support prices, but local prices are unlikely to jump. Supplies are adequate," said Ashok Jain, president of the Bombay Sugar Merchants Association.Prices in India, the world's biggest producer after Brazil, fell below the cost of production in some states as the south Asian country produced surplus sugar for the four straight year.Even in the next year starting October, the country's output is likely to jump 4 per cent to 25.3 million tonnes because of higher cane yields in Maharashtra and Karnataka.Indians consume around 23 million tonnes of sugar annually.(Reuters)
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The newly elected government would be presenting the Finance budget on July 10. While India Inc expects a budget to be growth oriented and one which is able to boost India’s image as attractive investment destination, striking a balance between fiscal deficit and investment friendly reforms may not be a cakewalk for the Government. From an investor perspective, the key issue to address in this budget is to resurrect the Investors’ perception about India as an investment destination. The approach of tax authorities and the retrospective amendments in the tax laws over past couple of years have dampened the foreign investor’s confidence. Making these amendments prospective would help in restoring the investor confidence.Some of the other wish list items on the tax front which could be considered in this budget are discussed below:The rise in domestic withholding tax rates on payment of fees for technical services and royalties to non-residents from 10 per cent to 25 per cent last year has hit the Indian industry hard and is detrimental to the economy as India needs to import world class technology and tax treaties do not come to the rescue in many cases. The Government will do well if the rate is restored back to 10 per cent. There is a lot of thrust on the development of infrastructure sector. Substantial investments are required to be made in this sector with a long gestation period. Per the legal requirements most infrastructure activity is carried on in a Special Purpose Vehicle (SPV) floated specifically for that purpose. The SPV incurs losses in the gestation period whereas the Parent entity would typically earn business profits and pay tax thereon. Introduction of tax consolidation in these cases will lower the burden of taxes on these entities which are contributing to a national goal of infrastructure development by allowing offset of losses incurred by the infrastructure vehicles against the profits earned by the businesses.On the outbound investment front, a reduced rate of 15% was prescribed for taxing foreign dividends received by an Indian company, where it holds atleast 26% of the equity share capital. This reduced tax rate was to incentivize Indian companies to repatriate the income earned overseas back to India and was available till end of the financial year 2013-14. In line with international practice, providing exemption on dividends received from overseas entities or providing credit for the underlying taxes paid by the overseas operating entity may be considered. Alternatively, the concessional tax rate of 15% should be extended. The new corporate law permits outbound merger of an Indian entity with a foreign entity. This provision is yet to be notified. However, the tax laws are still not aligned to determine the taxability of such cross border mergers. Appropriate provisions could be enacted to remove ambiguities.The jury is still out on the need for enacting the proposed Direct Taxes Code (DTC). However, it would be helpful to clear the uncertainty surrounding its enactment over the last few years. Finally, all good polices are ineffective without good implementation. The Tax Policy Reforms Commission (‘TARC’) under the Chairmanship of Dr. Parthasarathi Shome has recently submitted its First Report (‘Report’). According to the Report, taxpayer services must comprise the first focus of a tax administration and prominence be given to “customer focus” to improve the experience of taxpayers with the tax department. The Report makes several key recommendations in the areas of existing organisational structure, existing business processes, existing mechanism for dispute resolution and taxpayer services and taxpayer education which highlight the underlying need to fundamentally reform the tax administration. In conclusion, the intention of this Government could be judged not by the concessions and sops it doles out to the industry and foreign investors but by its ability to boost taxpayer confidence and the level of tax administrative reforms to improve the taxpayer’s experience. The authors are Jatin P. Kanabar, Director and Pushkar A. Khire, Senior Manager, Deloitte Haskins & Sells LLP.
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The conglomerate headed by billionaire Ajay Piramal is hunting for road projects put up for sale by stressed developers, betting a change of government will stimulate growth and revive an infrastructure sector plagued with delays.Piramal Enterprises Ltd, which sells drugs and financial services, has earmarked Rs 5,000 crore ($837 million) for projects jeopardised by an economy struggling through its longest period of sub-5 per cent growth since the 1980s.New Prime Minister Narendra Modi has vowed to turn around a country where one of the world's most extensive road-building programmes over the past decade ended with at least Rs 60,000 crore worth of projects stalled and highways half-built."India has never had the balance sheet needed to absorb these investments. With no third parties coming in, contractors and developers have only stretched themselves further," Parvez Umrigar, co-head of Piramal's Structured Investment Group, told Reuters in a recent interview."We believe there is adequate appetite (among developers) in the market presently for assets to change hands."Piramal is branching out into roads because infrastructure is likely to be one of the more visible beneficiaries of any pro-growth government policies, and competition for assets is likely to be less than in other infrastructure sectors, Parvez said.The company targets 16 percent annual return from investing in road projects which it will find with State Bank of India acting as matchmaker, Parvez said.So far, Piramal expects to buy majority stakes before March in six projects spanning the country, said Parvez, who left Gammon Infrastructure Projects Ltd last year to join Piramal.Led by one of India's 50 richest people, Piramal has evolved from a textiles manufacturer in the mid-1980s into a group with interests in pharmaceuticals, glass, financial services and real estate.The group's flagship unit, Piramal Enterprises, has a market value of $2 billion, according to Thomson Reuters Eikon. Its shares have risen 27 percent this year, compared with a 23 percent rise in the benchmark stock index.Rising InterestPiramal's investment would likely be welcome relief to heavily indebted developers and could free them to invest in new projects, which in turn would contribute towards recovery in both the infrastructure sector and economy.Road projects typically involve a developer winning a contract to build an interstate four or six lane highway which they then operate for a multi-year period on a concession agreement, often charging tolls to generate revenue which they share with the government.But many developers won road contracts by taking on significant amounts of debt and then ran into trouble by taking in too little revenue from toll collection as fewer cars used the roads than forecast.Even so, strained public finances mean private developers are widely expected to become more involved with infrastructure. Competition for road assets is limited, but demand is rising from firms such as Piramal and private equity funds like the Macquarie SBI Infrastructure Fund."We are seeing an increase in interest from strategic investors and from financial investors for these sorts of assets," said Sanjay Sethi, Head of Infrastructure Group at Kotak Investment Banking.Roads were particularly in demand because of recent regulatory change that makes it easier for developers to exit projects, said Sethi."That demand could become wider as the (economic) cycle progresses."(Reuters)
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The rupee is trading at 60.52/53 versus the dollar after hitting 60.49, its highest since July 31 and higher than Thursday's close of 60.67/68. The pair is seen in a range of 60.40 to 60.80 during the session.Traders to monitor debt market flows after foreign funds bought $2.65 billion in a single session on Wednesday.The index of dollar versus six majors is marginally lower.Asian shares rise in early trading after upbeat US data sparked another record close on Wall Street.Local shares to be watched for cues on fund flows. The Nifty rises 0.4 per cent in early trade.(Reuters)
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The 10th edition of the BW | Businessworld Marketing Whitebook 2014-15 was launched on 11 June at Taj Lands End in Mumbai. Coinciding with the launch, BW organised a marketing conclave spread across seven sessions that looked at various aspects of marketing to different generations. The book was unveiled by Anurag Batra, chairman of GBN Media, Prosenjit Datta, editor of BW | Businessworld, D. Shivakumar, chairman and CEO, Pepsico India, Rama Bijapurkar, marketing strategy consultant, and Sanjay Mani, COO of Dainik Bhaskar. The who's who of the marketing and advertising fraternity attended the event, the highlight of which was insightful keynotes by Shivakumar and Bijapurkar.(This story was published in BW | Businessworld Issue Dated 28-07-2014)
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US-based economist Arvind Subramanian is poised to be named as chief economic adviser to Prime Minister Narendra Modi's government, two sources at the finance ministry said on Friday.If confirmed, the appointment would bring in a second economist of international renown to a key policy post following the naming of former International Monetary Fund chief economist Raghuram Rajan as central bank chief last year.The appointment of Subramanian, a senior fellow at the Peterson Institute for International Economics, was recommended by Finance Minister Arun Jaitley. Cabinet-level approval is expected to follow."He is likely to be appointed soon," one of the sources said.Modi stormed to a general election victory in May with a pledge to lift the economy out of its worst slowdown in a quarter of a century and put to work the one million young people who enter the workforce each month.The nationalist leader has abolished a Soviet-style Planning Commission, but made an otherwise slow start on economic reforms, disappointing some supporters who had hoped that he would take decisive action to promote a recovery.(Reuters)
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The Reserve Bank on Thursday (21 August) said the economy is likely to grow at 5.5 per cent in the current fiscal as it sees pick-up in manufacturing and investment."Signs of improvement in mining and manufacturing activity, expected pick-up in investments, improved availability of financial resources to the private sector with lower draft of government on financial savings of the households amid fiscal consolidation, improved external demand and stabilising global commodity prices are expected to support the recovery."Accordingly, the economy could grow in the range of 5.5 to 6 per cent this fiscal," the RBI said in its annual report for 2013-14.The central bank, however, warned that the downside risks to growth could play out if global recovery slows, geopolitical tensions intensify or monsoon weakens again in the rest of the season.The Economic Survey 2013-14 has projected a growth of 5.4 to 5.9 per cent in 2014-15.As of August 13, the all India cumulative rainfall deficiency in the current monsoon season was placed at 18 per cent of the long period average (LPA) as against an excess of 12 per cent in the year-ago period. The monsoon has improved since mid-July when the deficiency was 43 per cent.The report said even if rainfall is normal in the rest of the monsoon season, some rainfall deficiency will stay.The RBI said its inflation outlook remains unchanged from the baseline inflation trajectory it had indicated at the beginning of the year, when it committed to disinflationary glide path of taking consumer price index (CPI) inflation to 8 per cent by January 2015.After remaining above 8 per cent in April and May, retail inflation moderated to 7.5 per cent in June mainly due to favourable base effect.However, CPI increased to 8 per cent in July as prices of vegetables increased substantially on the back of deficient monsoon rainfall."Recent increase in inflation driven by vegetable price spike could be temporary as there are early indications that the price corrections are underway," the RBI said. The RBI said while inflation trends during the rest of 2014-15 will also be conditional on several risk factors and the timing and extent of further revisions in administered prices, the inflation projection for 2014-15 will remain within reach.The report said though the balance of risks around the medium-term inflation path and especially the target of 6 per cent by January 2016 is still to the upside, the RBI will remain committed to supporting the disinflationary process.The central bank further said the risks associated with twin deficit risks are expected to stay moderate. It said the fiscal deficit is likely to come down further this fiscal."The rebuilding of forex reserves in recent months will help the country buffer the economy against potential shocks," the central bank said. According to the latest RBI report, the forex kitty swelled to a little over USD 319 billion for the week to August 8.During this fiscal, the forex reserves swelled by 12 per cent to USD 316.14 billion as of June 30, 2014, up from USD 282.45 billion a year ago.The current account deficit though is likely to widen from the levels in 2013-14, it is expected to remain within the sustainable level, the report said."The external sector is far more resilient than before, but risks associated with quicker monetary tightening by advanced economies stay," the RBI said.(Agencies)
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“The way I look at it, it’s an investment in our people, in our company and in society. It is a win-win”—Howard Schultz, chairman and CEO, Starbucks, while announcing free tuition to all employees who work 20 hours a week or more“Markets expect more decisiveness in government policy formation as well as greater efficiency in implementation”—Raghuram Rajan, governor, Reserve Bank of India, in preface to RBI’s bi-yearly Financial Stability Report“India has the potential to become the largest economy in the world”—Sheryl Sandberg, chief operating officer, Facebook, at a conference“I think the dinner is unfortunate how much attention it’s gotten. I was late. I apologised to IPG at the time and in no way meant for it to be a slight to them”—Marissa Mayer, CEO of Yahoo, in an interview after facing criticism for arriving late to a dinner set up by Interpublic Group at the Cannes Lions festival“Our Mars mission is cheaper than the Hollywood movie ‘Gravity’”—Narendra Modi, PM, India, comparing the cost of sending an Indian rocket to space with the 2013 sci-fi thriller during the launch of the Polar Satellite Launch Vehicle (PSLV) C-23 from Sriharikota“The lesson of the Juncker debacle is that David Cameron and the Conservative Party now pose a real and present danger to our economy”—Ed Miliband, leader of the Labour Party, on how Cameron’s failure to stop the appointment of Jean-Claude Juncker to the European Union’s top job has taken the UK closer to exit, putting three million jobs and tens of thousands of businesses at risk(This story was published in BW | Businessworld Issue Dated 28-07-2014)
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Some of India's biggest companies are pouring billions of dollars into manufacturing guns, ships and tanks for the country's military, buoyed by the new government's commitment to upgrade its armed forces using domestic factories.India, the world's largest arms importer, will spend $250 billion in the next decade on kit, analysts estimate, to upgrade its Soviet-era military and narrow the gap with China, which spends $120 billion a year on defence.Under the last government, procurement delays and a spate of operational accidents - especially dogging the navy - raised uncomfortable questions over whether India's armed forces are capable of defending its sea lanes and borders.Even before his landslide election victory in May, Prime Minister Narendra Modi promised to assert India's military prowess and meet the security challenge posed by a rising China and long-running tensions with Pakistan.Within weeks of becoming prime minister, he boosted defence spending by 12 per cent to around $37 billion for the current fiscal year and approved plans to allow more foreign investment into local industry to jump-start production.Launching a new, Indian-built naval destroyer last week, Modi said: "My government has taken important steps in improving indigenous defence technology ... We can guarantee peace if our military is modernised."This build-up comes as Southeast Asian nations expand their own defence industries, spurred by tensions with China. India, reliant on a state defence industry that often delivers late and over budget, risks being caught flat-footed."The opportunity is huge," said M.V. Kotwal, president (Heavy Engineering) at Larsen and Toubro Ltd, one of India's biggest industrial houses."We really expect quicker implementation. There are signs that this government is very keen to grow indigenisation," added Kotwal, referring to increasing domestic production.Tata Sons, a $100 billion conglomerate, said last month it will invest $35 billion in the next three years to expand into new areas with a focus on a handful of sectors including defence.Larsen is putting $400 million into a yard to build ships for the navy, while Mumbai-based Mahindra Group is expanding a facility that makes parts for planes, including for the air force, and investing in armoured vehicle and radar production.The companies are being lured by the prospect of lucrative returns on their investments as the Modi government has pledged to make "buy Indian" the default option for future orders.Larsen is targeting a fourfold increase in annual defence revenue to $1 billion within the next five years.Critics of indigenisation argue that producing gear - especially in the lumbering state sector - is more costly than buying from abroad. Such deals can add layers of bureaucracy, increasing risks of corrupt dealings.Indian industry is renowned for its ability to adapt, yet questions remain whether the private sector can come up with the solutions needed to bring armed forces into the 21st century without sufficient access to world-class foreign technology.DelaysSome companies are also sceptical of the government's commitment to grow the private market given New Delhi's history of delays and order cancellations, and the traditionally strong ties between the military and state-run manufacturers.They cite the case of a $10 billion Future Infantry Combat Vehicle (FICV) programme. Conceived in 2009, the defence ministry invited three private players and the Ordnance Factory Board, a state entity, to bid for the 2,600-vehicle contract but suddenly withdrew the letter of intent in 2012.Bidders included Mahindra and Tata, which is developing a vehicle along with Lockheed Martin Corp and General Dynamics Corp that could compete for a future contract, said Rahul Gajare, an analyst at Edelweiss Securities.A quick decision to relaunch the programme would demonstrate Modi's resolve, said S.P. Shukla, who heads Mahindra's defence business. Past tenders have stalled amid wrangling over whether or not to allow state manufacturers to bid and under what terms.Larsen's Kotwal said its Kattupalli shipyard in south India has yet to receive any orders for warships or submarines despite being designed to do just that and despite past government pledges to build at least two submarines in private yards.In the meantime, the yard has switched to constructing and repairing commercial vessels."The policy in India has been right since 2006. The problem has been implementation," said Rahul Chaudhry, CEO at Tata Power SED, which makes rocket launchers, sensors and radars.Local firms have captured a fraction of the Indian defence market since it first opened to private participation in 2001. Consecutive governments have handed orders to state factories or to foreign giants like Boeing, Lockheed and BAE Systems.Gajare at Edelweiss estimates total India private sector revenues from defence, including overseas orders, at below $2 billion last year, less than 6 per cent of the country's defence spending.(Reuters)
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