What is the biggest deal brewing in town? It is the race to bag the government's $10.4-billion (about Rs 48,000 crore) tender for 126 medium multi-role combat aircraft (MMRCA) to replace India's ageing fleet of MiGs. The deal is now into its last lap — it is a two-way dogfight between Germany's Eurofighter Typhoon and France's Dassault Aviation's Rafale. Six months ago, all six contenders in the bid — Eurofighter, Dassault, Boeing (F/A-18 Super Hornet), Lockheed Martin (F-16), RSK (MiG-35), and SAAB Gripen — participated at a parade at the international aerospace and defence exhibition — Aero India — in Bangalore.The week gone by saw German Chancellor Angela Merkel make a case for the Eurofighter. Eurofighter topped Merkel's agenda for discussion when she met Prime Minister Manmohan Singh this week."The Eurofighter is the best on offer. We will not exert any influence on the procurement procedures," said Merkel. Eurofighter is the product of a four-nation consortium — UK, Germany, Italy and Spain — set up in 1986. That's after France dropped out!Incidentally, Merkel is not the only one to visit India with an ‘aircraft agenda'. This winter saw world leaders troop into Delhi to lobby for the deal: UK Prime Minister David Cameron, French President Nicolas Sarkozy, Russian president Dmitry Medvedev and US President Barack Obama. Now, who will win? Merkel or Sarkozy? That's a billion-dollar question. (This story was published in Businessworld Issue Dated 13-06-2011)
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On Thursday, US-based spice maker Mccormik & Co announced a joint venture with Kohinoor Foods, one of India's largest retailers of branded Basmati rice. The NYSE-listed company will invest $115 million in the JV, dubbed Kohinoor Speciality Foods India, for an 85 per cent stake. The deal marks the largest inbound M&A deal in the Indian agri-commodities sector.Since January 2010, the agri-commodities sector has seen 28-odd merger and acquisition deals, most of which have been domestic deals, according to research by Delhi-based VCCEdge. The last big inbound deal was the acquisition of Marico's Sweekar brand of cooking oil by US-based Cargill for approximately $75 million.McCormik has been shoring up presence in India through the M&A route. Last year, it bought 26 per cent in Kerala-based Eastern Condiments for $38 million. Earlier, it acquired 50 per cent in Chennai-based AVT (AV Thomas Group), which makes ready-to-use spices, for $10 million. Now, it will sell branded rice, spices, sauces, seasonings and ready-to-eat foods in India through Kohinoor's distribution network. "McCormik plans to make India the marketing hub of branded rice and condiments," says Gurnam Arora, joint managing director of Kohinoor Foods. The deal enables Kohinoor, which already sells branded rice in 65 countries, to enter new markets through McCormik's global network.The Indian branded rice market is estimated at Rs 600-700 crore. About 85 per cent of it is unbranded. "The financial performance of companies in this sector has been volatile and the margins are not very high. The deal will definitely improve the branded commodities market in India," says Sonam Udashi, head of research at IDBI Capital.The Rs 850-crore Kohinoor has a rice polishing and packaging unit in Haryana. It will source and supply rice and other spices to the JV. Its rice brands Kohinoor, Trophy and Charminar will be transferred to the JV. The parent company will focus more on the exports business, which accounts for about 50 per cent of its revenues. Most of the products will be marketed under the Kohinoor brand, but McCormick will also retail some of its own brands in India. Its global brands portfolio includes McCormik, Schilling, Zatrains and, most recently, Lawry's and Adolphs.The JV is also significant for the $5-billion Indian spice market. Of this a mere 10 per cent is branded, leaving enough headroom for both domestic and foreign players to grow. "Earlier the interest was only in sugar and coffee. There is now a growing interest in the branded commodities segment," says Ajay Parmar, head of research at Emkay Global.(This story was published in Businessworld Issue Dated 13-06-2011)
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After the 2G scandal, the telecom sector is all set for an image makeover. The Planning Commission has set up five committees to cleanse the telecom sector of the scam taint.The preliminary work on the draft the 12th plan (2012-2017) proposals for the telecom sector expects to enhance the image of the sector in India. The five committees have been asked to submit their reports by August 30, 2011.During the plan period, the main thrust will be on attracting investments in the rural sector, streamlining spectrum allocations, establishing a single-window clearance to promote manufacturing of telecom equipment in India including semiconductors and also creating service standards for operators to follow.Department of Telecommunications Secretary R. Chandrashekhar and the Planning commission team held discussions on Monday and decided to set up these committees to examine in detail each aspect of the sector. "It is needed to keep the growth in this sector and to make it robust for future," said a senior official who attended the meeting.Chandra Prakash, member (Technology) in DoT, will head the licensing and spectrum committee. He will examine the spectrum allocation and evaluation during the next plan period. It will be the responsibility of this committee to assess the revenue potential and spectrum availability during the Plan period.Ashok Jhunjhunwala, Professor, IIT Chennai, will lead another committee to examine special incentives that could be offered to improve manufacturing, research and development in telecom. It will also examine options to promote entrepreneurs in equipment manufacturing. Professor K Bhaskar of Indian Institute of Science (IISC) will lead a committee that will examine the security and strategic issues, products and services.Another committee under S.C Misra member (Services) is expected to suggest ways to determine the quality of service parameters, which the service providers will have to offer. This committee will also suggest methods to penalize those operators failing to offer service quality as per the norms prescribed. The suggestions would not be in conflict with the recommendations of the Telecom Regulatory Authority of India (Trai) but complement them, the official present in the meeting said.Sadhna Dikshit, advisor Finance, who is officiating as the member finance will head the committee to formulate policy suggestions that will have direct impact on the finances in this sector.The five committees are expected to meet soon with the members of the industry and other ministries. Sources in the Communications Ministry said the suggestions by these committees will also provide direction to the National Telecom Policy 2011.The telecom industry has been major revenue generator for the exchequer. The 3G spectrum and broadband wireless access spectrum auctioned last year generated more than One lakh crore.
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French Finance Minister Christine Lagarde said on Tuesday that Indian officials had positive views on her credentials as she contests for the head of the International Monetary Fund (IMF), and that she hoped to get a view on China's position later this week.But Lagarde did not say if the Indian government backed her candidacy, adding that many countries would wait until June 10 before announcing who they would support."Many African countries have expressed, publicly for some and privately for others, their support for my candidacy," Lagarde told CNBC TV."My suspicion frankly, is that a lot of countries are going to wait until June 10, because that is the closing of candidacy filing," she added.Lagarde described her meetings with Indian officials as "excellent". She is in India seeking support for her candidacy."I don't think I will betray their confidence in saying that they (Indian leaders) expressed positive views about my skills and credentials," she said.Lagarde added that a pending legal case in France involving her would not be an issue for her candidacy and that the case had no grounding.Finance Minister Pranab Mukherjee told reporters earlier on Tuesday that India had not given any commitment to support Lagarde. (Reuters)
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The Congress-led government and the main opposition Bharatiya Janata Party (BJP) took a small step towards forging consensus on Monday on introducing the country's first ever nationwide indirect tax, a reform seen as a major tool for faster economic growth in Asia's third largest economy.The government agreed to appoint Sushil Modi, a senior member of the BJP to head a panel on implementing the tax that aims to improve India's meandering tax regime. It is the first breakthrough for the two sides in moving the stalled tax reform forward.Prime Minister Manmohan Singh has been accused of running a lame duck government, though he recently won some praise from investors and analysts with some bold policy decisions, including raising fuel prices to ease the subsidy burden."It now looks as if sharp criticism has shaken them (government) out of lethargy," a research note by Macquarie Equities Research said of India's government.The government has since its re-election in 2009 failed to make headway on the so-called key Goods and Services Tax (GST) due to opposition among some of the 28 states who fear that they will lose their fiscal autonomy.The GST is intended to usher in a uniform market for goods and services, cut business costs and boost government revenues. At the moment, a manufacturer who wishes to move goods from one state to another has to struggle with a number of different taxes, as if taking goods across several countries.The law is as much in focus for investors and the public because it shows the difficulties policymakers have in simplifying India's bureaucratic regulatory landscape, a key obstacle to economic development.Hurdles AheadThe law needs to be approved by two-thirds of parliament and half of India's states, hence the need for the government to seek support from the opposition.The Congress government has in the past accused the BJP of stalling the bill for political advantage. Officials have said the bill would miss its April 1, 2012 deadline."Earlier there was a stalemate between the centre and some state governments ruled by the BJP. The process will at least start with this appointment," said N.R. Bhanumurthy, a New Delhi-based analyst.GST slashes through a maze of local taxes that can be raised or lowered at will by states at present, making life harder for firms navigating in a country of 1.2 billion people with notorious bureaucratic red tape.Speaking after his appointment, Modi -- Bihar's finance minister -- sought to dispel talk that the legislation had become a political football."It is not a political issue," he said. "It has nothing to do with the BJP or the Congress. Even in the BJP manifesto there is GST, but the empowered committee is concerned about states' revenues and other state issues," he added.But former finance minister Yashwant Sinha, a senior BJP leader who currently heads a separate parliamentary panel on the GST, played down the significance of the appointment."No, it does not mean anything of that kind at all," he told Reuters when asked whether the new appointment indicated the opposition party could agree to the tax.(Reuters)
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With the government toughening its stand against Baba Ramdev, the yoga guru on Monday said he forgave the Prime Minister for the crackdown on his agitation but history will not forgive him for the "political sin" he committed."The Prime Minister termed it (the police action) unfortunate. In a way he has accepted his sin. Since he has accepted his sin, I have forgiven him," Ramdev told reporters in Hardwar."I have personally forgiven him but the history of not only India but the whole world will never forgive him for the political sin he committed. He has tainted democracy," Ramdev, who is continuing his satyagraha in Hardwar, said.The yoga guru was reacting to Singh's remarks on Sunday that "it was unfortunate that the operation had to be conducted but quite honestly, there was no alternative."Baba Ramdev also attacked the Congress for ridiculing his escape in a women's dress from the ground, saying even Maratha warrior Shivaji had escaped in disguise to secure the nation."If anybody saves his life for securing the nation, they won't like it. Even Shivaji had saved his life. But these people do not accept Shivaji as their ideal. Their target is to protect terrorists and kill Baba."Congress general secretary Janardan Dwivedi had yesterday said, "A satyagrahi does not run away stealthily wearing women's dress. Satyagrahi is always ready to sacrifice his life".Ramdev also alleged there could be "five kinds of conspiracies" to eliminate him at the Ramlila ground from where he was evicted after his talks with the Government to end the fast failed.The yoga guru said that he suspects that the police would now edit the recordings made by the CCTV cameras installed at the ground in a bid to wipe out the evidence so that they escape action."We had put CCTV cameras in the camp, which recorded the events. If the police had not done anything wrong, why did they took away the footages forcibly. This is clear cut goondaism of the police."Our workers who had gone there have been embroiled in false cases under a conspiracy. The police will now edit the footage and then release after deleting portions so that no action follows against them," Ramdev said.He alleged that the police lobbed hundreds of tear gas shells in a bid to suffocate him to death where he was hiding.Ramdev said there could be conspiracies to kill him by strangulating, burning the stage on which he was sitting and shooting him.He said the government's argument that there was a threat of terrorist attack on him could be the fifth conspiracy to eliminate him and alleged that an e-mail has been "manufactured" by the government to make it convincing. (PTI)
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Economists have scaled down their growth expectations and raised inflation forecasts for the Indian economy, compared with their outlook just 10 weeks ago, a Reuters quarterly poll showed.A poll of more than 20 economists, taken over the past week, showed the median estimate for 2011/12 GDP growth in Asia's third largest economy was down to 7.9 percent from 8.3 percent in the previous poll in May."Just two months ago we were expecting an 8.8 per cent growth rate for this fiscal year but inflation is not showing signs of moderation, interest rates have surged and global uncertainty has increased so we were forced to revise it down to 8.1 per cent," said Arun Singh, senior economist at Dun & Bradstreet.The Indian economy grew 7.8 per cent in the March-quarter from a year ago, its slowest annual pace in five quarters, as rising interest rates crimped consumption and investment.Indian GDP is expected grow 7.8 per cent in the June-quarter and then slow to 7.5 percent in the next quarter, but pick up after that to stay above 8 percent until at least the end of 2012, according to the poll.In the previous poll, growth was seen above 8 per cent in all quarters of the fiscal year ending March 2012. The outlook for GDP growth in 2012-13 dipped marginally to 8.4 per cent from 8.5 per cent in the last poll.The Reserve Bank of India (RBI) has raised rates 10 times since March 2010, ranking it among the most aggressive central banks in the world, and is expected to raise rates again by 25 basis points at its quarterly review on July 26.While the biggest snags for the euro zone and the United States are ongoing debt crises, the holdup for emerging nations is rampant inflation.For India, headline inflation remains above 9 percent despite the spate of rate increases, spurring policy makers to also scale down their growth expectations."If need be we can live with slightly lower growth in order to have sustained long-run growth. So inflation needs to be controlled. There are no two ways about it," Kaushik Basu, chief economic adviser in the finance ministry, said on Thursday.This has caused a marked slowdown in investment and consumption but economists believe the macro economic fundamentals of the economy are strong and growth will pick up in the second half of the fiscal year."Growth will remain subdued for two quarters, until September, but I believe once inflation subsides and there is some visibility and clarity on the growth rate of the international economy, everything should be in line," said Dun & Bradstreet's Singh.Inflation, RatesDespite the predicted interest rate hike, median consensus from the latest poll also showed economists revising up their forecasts for inflation for this fiscal year and the next.Their forecast for inflation, as measured with the wholesale price index, is now at 8.5 perc ent for 2011-12 from 7.7 per cent in the previous poll, and 6.5 per cent for 2012-13.Rising global crude oil prices and food inflation have been the main drivers of inflation in India with the latest figure, released last week, showing wholesale prices rose 9.44 percent in June."It is going to come down extremely slowly as we go ahead. The main drivers will continue to be crude and the latent pressures that are already in the system and have to still spread out," said Sumita Kale, Chief Economist at Indicus Analytics."I think the RBI has already factored that in and will probably have another couple of rate hikes and then see how to go after September."Forecasts for the RBI's repo rate remained unchanged from a poll on June 14, with economists still expecting hikes of 25 basis points in the current quarter and next, taking the rate to 8 percent by end-2011, followed by unchanged interest rates until at least the end of December 2012.(Reuters)
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India's $4.1-billion shopping spree of 10 Boeing C-17 military cargo aircraft will support jobs at the aircraft major's beleaguered California plant, which has received a boost with the new order, a Boeing official said.The deal should keep things humming at the sprawling plant in Long Beach, California through 2014, Boeing spokesman Jerry Drelling said in a Los Angeles Times report.Drelling said the order "helps us keep the line alive and supports jobs".Boeing is the largest employer in Long Beach near Los Angeles. The plane has an estimated $5.8 billion annual economic impact and the jobs of about 25,000 workers in 44 states depend on it, Drelling said.India on Monday gave its go ahead to purchase 10 C-17 heavy-lift military aircraft in a deal worth $4.1 billion.The deal with Boeing is the biggest defence deal between India and the US."We are still waiting on the signatures, but the deal is 99.9 per cent done," the LA Times report quoted Stan Klemchuk, president of the United Aerospace Workers Local 148, which represents 1,600 workers at the Boeing factory."Folks are buzzing in Long Beach. It gives us one more year of work and could not come at a better time".In January, Boeing had said it would cut 900 of the 3,700 jobs at the plant.Last year, due to slowing orders from the Pentagon, Boeing had said it would cut production rates by one-third to 10 aircraft a year from 15. The production line had been slated for closure at the end of next year."This deal keeps the line open for more sales to come to fruition," Klemchuk said."It gets us through a crucial time".The Long Beach Boeing plant is the last major conventional aircraft factory in Southern California.Boeing said that in California, about 14,000 jobs, including many at small mom-and-pop machine shops depend on the programme."The India deal could open a brand new business market and signify a budding trade relationship between the two countries," the report said.
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Bihar Deputy Chief Minister and Finance Minister Sushil Kumar Modi was on Monday elected the new chairman of the Empowered Committee of State FMs, which is spearheading the implementation of Goods and Services Tax (GST).Modi, who also handles the finance portfolio in the Bihar government, replaces Asim Dasgupta, who had served in the post for over a decade since the formation of the body.The committee had earlier overseen implementation of the Value Added Tax (VAT) system across the states."The substantive bussines of today's meeting was the election of the chairman. Sushil Modi, the Deputy Chief Minister and Finance Minister of Bihar, has been elected unanimously as the chairman of the Empowered Committee of State Finance Ministers," Union Finance Minister Pranab Mukherjee told reporters here.Mukherjee had invited all state FMs to Delhi on Monday for the meeting of the Empowered Group after a gap of almost five months.The post of the chairman of the group fell vacant after the defeat of Dasgupta in the West Bengal Assembly polls in May. Dasgupta, who was the West Bengal Finance Minister, had headed the Committee since its formation in early 2000s.One of the major tasks before Modi, as the new chairman, would be to build a consensus on the proposed GST regime, which has been pending for years.Mukherjee, however, said that details of the agenda are still to be worked out."Now, they (state FMs) are having discussions. Some formalities will have to be worked out and after that, the committee will work out a detailed work programme," Mukherjee said. (PTI)
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The Swiss Central Bank has estimated the total liabilities of Swiss banks toward Indian accout holders at about $2.5 billion in 2010 as against the $1.5 trillion figure projected by some political parties and non-governmental organisations."The Swiss National Bank can only say that liabilities of Swiss banks toward Indian holders according to our annual statistics... were Swiss francs 1.945 billion (USD 2.5 billion( in 2010," the spokesperson for the Swiss National Bank President, Walter Meier, told PTI.He said the liabilities of the Swiss banks toward Indian account holders was 1.965 billion Swiss francs ($2.7 billion) in 2009 and 2.4 billion Swiss francs (about $3 billion) in 2008.In the aftermath of the financial crisis that engulfed the West after the collapse of Lehman Bank in the United States in 2008, Swiss private banks, particularly their largest bank UBS, had suffered huge losses.Subsequently, there were substantial withdrawals of funds from Swiss banks.Several legal cases against Swiss banks, especially UBS, for parking funds illegally subscribed by wealthy US citizens through tax evasion, as well as growing international pressure from the Paris-based OECD (Organisation for Economic Cooperation and Development) and G-20 financial regulations forced the Swiss government to considerably relax confidentiality provisions for numbered accounts.In an attempt to ward off possible censure by the G-20 leaders, the Swiss government has gradually relaxed its banking secrecy laws that provided the extreme forms of client confidentiality until two years ago.Following the Paris-based Organisation for Economic Cooperation and Development's (OECD) report about a list of "uncooperative" countries such as Switzerland, Luxembourg, Austria and Liechtenstein, among others, to the G-20, there was a panic reaction.The OECD formulated a set of strong rules and standards to curb banking secrecy laws in offshore tax havens, including the Isle of Man, Hong Kong, and Singapore, along with Switzerland, Liechtenstein Monaco, Austria and Andorra.Unconfirmed reports suggested that several Indian companies and private holders have moved funds from Switzerland to Singapore following the financial crisis in 2008.But the recent trends suggest that Switzerland continues to attract funds on a huge scale. The Swiss franc and its banks are now in robust health even as other industrialised countries are drowned in unprecedented fiscal crises."The strengthening of the Swiss frank against all major currencies over the last one year is a clear sign that funds are coming back to the Swiss banks," said an Indian banker in Geneva, preferring anonymity.Walter Meir said the Swiss government is holding negotiations with the governments on the proposal of having a "withholding tax" on assets held by foreign entities in Swiss banks, suggesting that he doesn't have any information about India looking at a similar arrangement.(PTI)
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