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India and the US have reached the first commercial agreement on civilian nuclear power, five years after a landmark deal between the two countries was clinched. Addressing a joint media interaction after talks with Prime Minister Manmohan Singh, President Barack Obama disclosed that the two countries have sealed the agreement. "We've made enormous progress on the issue of civilian nuclear power, and in fact, have been able to achieve just in the last few days an agreement on the first commercial agreement between a US company and India on civilian nuclear power," Obama said. India's nuclear operator NPCIL (Nuclear Power Corporation of India Limited) and US firm Westinghouse have signed an agreement that will pave the way for setting up an atomic plant in India. However, there was no word on the tough nuclear liability clause in the Indian laws over which the US firms had strong objections. There was a major uproar in India last week over the agreement because of apprehensions that it entailed bypassing the Civil Nuclear Liability Law in place in the country by waiving the operator's right to recourse with the supplier. Reiterating his commitment for strong ties, Obama said India is not just a regional, but also a global power. Prime Minister Singh reciprocated the feelings, saying US is as an indispensable partner for India. "India, as a significant not just regional power but world power, has worked closely with us on a whole range of issues from climate change to how we can help feed the world, alleviate poverty and deal with disease," Obama told reporters in his Oval Office following their hour-long meeting. Praising the Prime Minister for his leadership in strengthening India-US ties, Obama said Singh has been a great friend and partner to the United States and to him personally. "Across the board, Prime Minister Singh has been an outstanding partner," Obama said, adding that India continues to grow at an amazing rate, but obviously there are a lot of people in India that are still trapped in poverty. He said US is a strong partner to help India realise that vision because if there is a strong India, that is good for the world and it's ultimately good for the US. In his remarks, Singh said Obama has imparted a powerful impetus to that process of the two countries being on the same page. "I have always believed that India and America are indispensable partners. During the time that I have been Prime Minister, and particularly during the time that President Obama and I have worked together, I think President Obama has made an outstanding contribution to strengthening, widening and deepening of our cooperation in diverse ways," he said. Singh said India and America are working together to build on the cooperation and widening, and deepening it in diverse directions. "We are cooperating in expanding the frontiers of trade investment in technology. Our bilateral trade today is USD 100 billion. Investments in India are $80 billion. And they are growing, despite the slowdown in the global economy," Singh said, referring to the increasing trade between the two sides. "Outside the area of trade technology and investment, we are exploring avenues of cooperation in new areas like energy cooperation, clean coal technology, energy-efficient technology, cooperation in the field of environment, cooperation in the field of defense and security-related, cooperation with regard to the intelligence gathering and counterterrorism. In all these areas, India needs the United States to be standing by our side," Singh said. (PTI)
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The finance ministry is in talks with the Reserve Bank of India (RBI) to make bank loans cheaper for exporters, Finance Minister P Chidambaram said on Friday, a move that could help reduce wide current account deficit by boosting export income.Exporters have been lobbying to be included in a category of priority lending that guarantees easier access to bank credit and lower interest rates, a privilege usually reserved for agriculture and small businesses.India's has the world's third largest current account deficit, a major factor in a recent rout of the rupee currency. Exports account for some 25 per cent of GDP.(Reuters)
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The controversial GAAR provision in India, which seeks to check tax avoidance by investors routing their funds through tax havens, will come into effect from 1 April 2016, a government notification said.The provision of General Anti Avoidance Rules (GAAR) will apply to entities availing tax benefit of at least Rs 3 crore, according to the notification dated 23 September.It will apply to foreign institutional investors (FIIs) that have claimed benefits under any Double Tax Avoidance Agreement (DTAA).Investments made by a non-resident by way of offshore derivative instruments or P-Notes through FIIs, will not be covered by the GAAR provisions.Investments made before 30 August 2010, will not be scrutinised under GAAR, it said, adding the provisions will apply to assessees that obtain tax benefits on or after 1 April 2015."Stockmarkets will have a lot to cheer as FIIs which do not seek to avail of treaty benefits will not be subjected to GAAR. Investment in Participatory Notes will not be subject to GAAR," Deloitte Haskins & Sells Partner N.C. Hegde said.The GAAR provisions were introduced in the 2012-13 Budget by then Finance Minister Pranab Mukherjee to check tax avoidance and were to have come into effect from April 1, 2014. The proposal generated controversy, with investors getting apprehensive about harassment by tax authorities.To soothe the nerves of jittery investors, Finance Minister P. Chidambaram in January announced the postponement of the implementation of Chapter X-A of the I-T Act (dealing with GAAR) by two years to 1 April 2016. A business arrangement can be termed 'impermissible' if its main purpose is to obtain tax benefit. Under the original GAAR proposals, the anti-tax avoidance provisions could be invoked "if one of the purposes" was to obtain tax benefit."Where a part of an arrangement is declared to be an impermissible avoidance arrangement, the consequences in relation to tax shall be determined with reference to such part only," the notification said.The assessing officer has to issue a show-cause notice, with reasons, to invoke GAAR provisions and also has to give an opportunity to an assessee to explain whether an arrangement was 'impermissible.' The government's decision to amend the provisions was in response to fears by investors that the tax department, armed with discretionary powers, would crack the whip even in cases where tax avoidance was not the intent.The notification is broadly in line with recommendations of the Parthasarathi Shome Committee, which was set up by Prime Minister Manmohan Singh in July last year to address the concerns of investors."From the notification, it is apparent that many recommendations of the Shome Committee have been accepted.However, the benefit of grandfathering has been limited - firstly, to investments made before 1 August 2010, and secondly, only for benefit up to March 31, 2015," said Rahul Garg, Direct Tax Leader at PwC India.(PTI)
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When Prime Minister Manmohan Singh last visited the White House in 2009 he was feted at US President Barack Obama's first state dinner, a star-studded affair that reflected the excitement about blooming ties between the two big democracies.Back then, optimists in Washington saw India as a counterbalance to a rising China and a new engine for the US economy. In a dinner toast, Obama talked of his "duty" to bring the two countries closer.That duty has only been partly fulfilled. As the two leaders prepare to meet again at the White House on Friday for a working bilateral meeting, Obama is under pressure from lobby groups and lawmakers seething at what they see as India's protectionism and lax enforcement of intellectual property rights.India's $60 billion trade with the United States is widely seen as less than it could be and is just an eighth of U.S. trade with China. Even India's national security adviser accepts there is a perception the relationship is drifting off course."It arises from the macro-economic situation. US friends mention concerns about economic reforms and specific policy issues in India. These concerns are not unique to the U.S. They are, first and foremost, of concern to Indians," National Security Adviser Shivshankar Menon said on Friday.India has still not shaken off memories of foreign domination through trade and it is increasingly hard for the government, ahead of elections next year, to push ahead with economic reforms and deals seen as favouring U.S. companies.In turn, Indian IT firms which operate in the United States are angered by restrictions on travel visas for skilled workers.In June, fourteen US business groups took the unusual step of forming a coalition specifically to pressure Obama over India's perceived protectionist measures, piracy and patent laws.Indian sourcing rules for retail, IT, medicine and clean energy technology are contentious and U.S. companies gripe about "unfair" imports from India of everything from shrimp to steel pipes. In July, more than 170 U.S. lawmakers signed a letter to Obama about Indian policies they said threatened U.S. jobs.Even U.S. Vice-President Joe Biden grumbled about India's reluctance to open up to U.S. companies, or align with the United States on the world stage, during a visit to Mumbai in July.Traditionally, India has been reluctant to get too close to any one big power and Singh is heading to Russia and China over the next two months on trips his staff have described as "economic diplomacy".Full SpectrumTo be sure, India and US ties are closer now than they have ever been, thanks in part to a 2008 civil-nuclear pact forged by Singh and then President George W. Bush that ended India's isolation after nuclear weapons tests and cleared the way for closer defence ties.Menon last week described a "full spectrum" relationship of defence, economic and commercial ties with the United States, a far cry from the wariness during the Cold War when India had warm ties with the Soviet Union.The United States still sees India as a counterbalance to China and in a sign of the level of trust, revelations in the Indian media about spying by the U.S. National Security Agency on Indian institutions, including its embassy in Washington. have not led to a spike in tension, at least in public.From almost zero in 2008, India is now buying billions of dollars of defence equipment from U.S. suppliers, including a $640 million deal to buy six C-130J Super Hercules from Lockheed Martin <LMT.N> that might be signed during Singh's visit.The Indian cabinet on Wednesday approved a preliminary contract with Toshiba's <6502.T> U.S. nuclear unit Westinghouse relating to a major nuclear power plant project - the first such deal under the 2008 agreement and likely to be signed in Washington.But the fact that it took five years to reach even a preliminary deal to work on reactors, because of worries about Indian liability laws for nuclear suppliers, underscores the problems U.S. companies face doing business in India."The Americans want to know what Singh and Sonia are ready to do to get the Indian economy back on track, and the Indians want to know what the Americans intend to do in Afghanistan and Pakistan after 2014," said Bruce Riedel, who advised four U.S. presidents on South Asian affairs, referring to Sonia Gandhi, the president of the ruling Congress party.India fears that the withdrawal by U.S. and other Western forces from Afghanistan next year will expose it to more Islamist violence, including attacks by Pakistan-based groups.(Reuters)
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The overseas unit of Indian state explorer Oil and Natural Gas Corp plans to raise $1.5 billion to refinance a bridge loan that it expects to finalise soon to buy a 10 per cent stake in Mozambique's Rovuma gas field from Videocon group."Currently the market conditions are good. We have time of about one year, but we will refinance the bridge loan in three to four months," ONGC Videsh finance director S.P Garg told reporters.ONGC, along with state firm Oil India, acquired a 10 per cent stake in the Mozambique gas field from Videocon for $2.48 billion. ONGC separately acquired another 10 per cent stake in the block from Anadarko Petroleum Corp for $2.64 billion later.(Reuters)
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The cabinet has approved auction of coal blocks to private companies, Coal Minister Sriprakash Jaiswal said on Tuesday, enabling the government to allot coal mining licences through competitive bidding for the first time.Coal mining licences used to be allocated on recommendations of a panel of top bureaucrats across ministries, but the federal auditor censured the process last year saying it lacked "transparency" and probably deprived the government of billions of dollars of potential revenue between 2004 and 2011.India relies on coal to fuel more than half of its power generation, but state-run monopoly Coal India Ltd, that accounts for around 80 percent of the country's output has been unable to dig out coal fast enough to feed the country's growing power demand.(Reuters)
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The cabinet approved its shale gas and oil exploration policy on Tuesday, 24 September, a minister said, but gave no further details.India, the world's fourth-largest consumer of energy, could be sitting on as much as 96 trillion cubic feet (tcf) of recoverable shale gas reserves, equivalent to about 26 years of the country's gas demand, according to the U.S. Energy Information Administration.But production from shale remains a long way off for India, which relies on imports for much of its energy needs.(Reuters)
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India's summer-sown grains output could rise only a little due to patchy rains but overall an above average monsoon will help boost output of other crops, helping curb food price inflation.Monsoon rains covered all of India almost a month ahead of schedule, but were below average in rice growing areas of eastern states Bihar, Jharkhand, West Bengal and Odisha.The output of summer-sown grains is expected to rise 0.9 per cent to 129.32 million tonnes in the crop year that began in July, government sources said.A marginal increase was due to better production estimates for pulses and oilseeds though there would a small fall in the rice harvest, said the sources, who did not wish to be named as Farm Minister Sharad Pawar is scheduled to release this year's official farm output numbers on Tuesday.Farmers in India plant rice, corn, cane, cotton, soybean in the rainy months of June and July. Harvests start from October.The output of summer-planted rice in the 2013/14 season is seen marginally lower at 92.32 million tonnes against 92.76 million tonnes in the previous year."Rainfall was patchy in key rice growing eastern states like West Bengal and Odisha at the start of the season. It affected transplanting. Heavy rainfall in some areas in August also dampened yields," said Nalini Rao, an analyst with India Infoline, a brokerage.Monsoon rains irrigate 55 per cent of farmland in India, one of the world's biggest producers and consumers of rice, sugar, soybean, edible oils and cotton.Analysts said a marginal fall in rice output is not a matter for concern as the government is sitting on huge stocks of the grain."A slight fall is rather good news for the government which has been grappling with storage problems. In terms of availability, India has more than ample stocks," said Tejinder Narang, advisor of Emmsons India Ltd, a trading company.On September 1, India's rice stocks at government warehouses were 21 million tonnes against a target of 9.8 million tonnes.Bumper harvests since 2007 have led to massive stocks of rice and wheat, forcing the government to store food in open fields where stocks are exposed to rains and rodents.Massive stocks have made it easier for the government to implement a $20 billion plan to give ultra cheap rice and wheat to 67 per cent of India's 1.2 billion people.Patches of heavy rains in the second half of the rainy season prompted some fears of vegetable crop damage in south, central and western India and stalled planting of onions, pushing food inflation to a three year high level in August.Conservative EstimateThe government updates its forecast as it gathers information about crop planting."It is the first estimate for the 2013-14 crop year and it is a conservative estimate which should be revised upwards as harvests progress," said another government official who did not wish to be named as he is not authorised to talk to the media.Any fall in rice output could be compensated in the winter season which begins from October, Narang said.Growers plant summer-sown rice from June, while the winter-planted variety is transplanted from October.(Reuters)
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Chidambaram's statement was in response to Modi's reported claim of economic growth rate during Vajpayee government being 8.4 per cent.Finance Minister P Chidambaram charged Gujarat Chief Minister Narendra Modi with staging a "fake encounter with facts" regarding his claims of economic growth during BJP-led NDA being 8.4 per cent and said nothing can be further from truth."The average for the six year period (under Atal Bihari Vajpayee government from 1998-99 to 2003-04) was 6.0 per cent and the average for the last five years (1999-2000 to 2003-04) was 5.9 per cent," he said in a statement here.In contrast, the average growth rate during Congress-led UPA's first term was 8.4 per cent and 7.3 per cent during the first four years of UPA-II, he said."The two worst years since the turn of the century were 2000-01 (4.3 per cent) and 2002-03 (4 per cent)," he said giving out yearly GDP growth rate during the six years of NDA rule under Vajpayee.Chidambaram's statement was in response to Modi's reported claim of economic growth rate during Vajpayee government being 8.4 per cent."Nothing can be further from the truth... I wonder why Shri Narendra Modi should stage a fake encounter with facts.Ultimately, facts will prevail," the Finance Minister said."If there was a golden period of growth, it was the five year period under UPA-1," he added.(PTI)
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Click to view the range of luxury accessories (This story was published in BW | Businessworld Issue Dated 07-10-2013)
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