In his budget speech, the Finance Minister had proposed to revive Special Economic Zones and to make them effective instruments of industrial production, economic growth, export promotion and employment generation. This statement was widely welcomed and seen as a positive statement of intent to revive developer and investor interest in Special Economic Zones. However, since details of the measures being introduced have not been announced yet, it is not clear what lies in store for Special Economic Zones in the future. One of the major changes the industry was expecting in SEZ policy was the removal or reduction of MAT (minimum alternative tax). The rollback or reduction of MAT, however, looks unlikely. This was indicated by the Finance Minister while answering a query on MAT for SEZs.In that response statement, it was mentioned that companies were making huge profits and distributing dividend to their shareholders but were not paying any income tax due to the large number of exemptions and deductions available under the Income-Tax Act. Accordingly, MAT was levied on all companies to address inequality in taxation of corporate taxpayers. The press release by Ministry of Finance on 18 July 2014, mentioned that the removal of MAT from SEZ developers and units had no justification vis-à-vis other sectors of economy which were liable to pay MAT. Further, MAT paid by the company can be carried forward for set-off against regular tax payable during the subsequent year(s), up-to ten assessment years when the regular tax payable under the normal provisions of the Income-tax Act is more than the computation provided under MAT. This implies that MAT is most likely to be retained for special economic zones. MAT has been levied on developers and units operating in SEZs with effect from 1 April, 2012. Special economic zone developers and units have to pay 18.5 per cent MAT on their book profits.Tax sops, however, are not the only factor for revival of special economic zones. The government could also support in terms of infrastructure and consistency in application of the SEZ policy. In last two years both investors and developers interest dwindled due to uncertainties over many issues related to taxes and land acquisition policy. They have therefore opted to de-notify their SEZs. Once the land is de notified, the developer can either sell it or use it for any other purpose/development. SEZs can provide tremendous opportunity for growth but require a hassle free stable operating environment, apposite infrastructure and well defined policies for both developers and the companies to harness the full economic potential of this investment asset class.The author is Associate Director, Research, Colliers International
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A defiant Russian President Vladimir Putin added Crimea to the map of Russia on Tuesday (18 March) describing the move as correcting past injustice and responding to what he called Western encroachment upon Russia's vital interests, even as the Group of Eight (G8) suspended Russia’s membership of the group.To the Russian national anthem in Moscow, Putin and Crimean leaders signed a treaty on making Crimea part of Russia. During his address, Putin was interrupted by applause at least 30 times. France's foreign minister said that leaders of the Group of Eight world powers have suspended Russia's participation in the club amid tensions over Ukraine and Russia's incursion into Crimea.The other seven members of the group had already suspended preparations for a G8 summit that Russia is scheduled to host in June in Sochi.France's Laurent Fabius went further today, saying on Europe-1 radio that "concerning the G8 ... we decided to suspend Russia's participation, and it is envisaged that all the other countries, the seven leading countries, will unite without Russia."Fabius did not give further details.The US and European Union announced more sanctions against Russia over its actions in the Crimean Peninsula. Putin Dismisses Western CriticismIRussian President Vladimir Putinn an emotional 40-minute speech televised live from the Kremlin, Putin said "in people's hearts and minds, Crimea has always been an integral part of Russia."He dismissed Western criticism of Sunday's Crimean referendum in which residents of the strategic Black Sea peninsula overwhelmingly backed breaking off from Ukraine and joining Russia as a manifestation of the West's double standards.But the Russian leader insisted his nation has no intention to invade other regions of Ukraine, saying "we don't want a division of Ukraine, we don't need that."Putin referred to Ukraine as a state born out of an illegal secession from the Soviet Union. He also argued that today's Ukraine includes "regions of Russia's historic south" and was created on a whim by the Bolsheviks.The statement sounded as a clear warning to both the new Ukrainian government in Kiev and to the West to respect Russia's interests.In response, Ukraine's new government called Putin a threat to the whole world and US Vice President Joe Biden warned that the US and Europe will impose further sanctions against Moscow."The world has seen through Russia's actions and has rejected the flawed logic," Biden said, meeting today with anxious European leaders in Poland."Today's statement by Putin showed in high relief what a real threat Russia is for the civilized world and international security," Ukrainian Foreign Ministry spokesman Evhen Perebinis said on Twitter. "(The annexation) has nothing to do with law or with democracy or sensible thinking."Thousands of Russian troops have been massed along Ukraine's eastern border for the last few weeks Russia says that was for military training while the US and Europe view the troops as an intimidation tactic.Putin argued that the months of protests in the Ukrainian capital of Kiev which prompted President Viktor Yanukovych to flee to Russia had been instigated by the West in order to weaken Russia.He cast the new Ukrainian government as illegitimate, driven by radical "nationalists, neo-Nazis, Russophobes and anti-Semites."With strong emotion, Putin accused the West of cheating Russia and ignoring its interests in the years that followed the 1991 Soviet collapse. People attend a rally to support the annexation of Ukraine's Crimea to Russia in central St. Petersburg, March 18, 2014(Agencies)
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The city government on Tuesday (18 March) told the Delhi High Court that erstwhile Arvind Kejriwal-led cabinet's decision to give 50 per cent waiver on power arrears of people who did not pay their bills from October 2012 to December 2013 cannot be implemented due to non-allocation of funds for the same in the budget for 2013-14. In an affidavit submitted before a bench of acting Chief Justice B D Ahmed and Justice S Mridul, Delhi government said no provision was made in the budget to release funds, to the tune of Rs 6,821 crore, for providing the one-time relief to the electricity consumers who did not pay their bills. "Department of Power, GNCTD, vide letter dated February 14, 2014, submitted a revised final Excess and Saving statement for financial year 2013-14 towards making provisions for one-time relief to electricity consumers to the tune of Rs 6,821 crore and for creation of a new budget head... "The competent authority of the government has not made any provision in the budget for release of funds for the purpose and in absence of availability of funds, therefore, in the present circumstances it is not possible to implement the decision of the cabinet for providing relief to electricity consumers who stopped paying their bills anytime between October 2012 and May 2013 till December 2013," the government told the court. Advocate Vivek Sharma, on whose plea the court had stayed the operation of the cabinet decision to provide the 50 per cent waiver, contended since the government has only cited lack of funds as a reason for not implementing it, there is a possibility that it could come into force later when money is allocated for it. "They are not saying they will withdraw it (waiver)," he said. The court, after going through the affidavit and hearing Sharma's argument, fixed the matter for final disposal on May 22. Meanwhile, the stay on the operation of the cabinet's decision will continue, the court said. On February 21, the high court had stayed the operation of the February 12 Delhi cabinet decision to provide 50 per cent waiver on power arrears of people who did not pay their electricity bills from October 2012 to May 2013. The cabinet had approved as a "new service" the proposal "to provide 50 per cent relief on pending arrears to the tune of Rs 6,821 crore" and to direct finance department to allocate funds for the same as well as to inform the Delhi Electricity Regulatory Commission (DERC) of the decision. The court, while staying the implementation of the cabinet decision, had directed the government to file an affidavit stating its "current stand" on the issue. On February 19, the court had directed Delhi government to seek instructions and file an affidavit indicating the actual position regarding the proposal of the then Aam Aadmi Party (AAP) government. The court had passed the order as there was "no clarity" on whether the Delhi cabinet had taken a decision to implement the subsidy as claimed by Sharma. Pursuant to the high court's February 19 order, the Delhi government had submitted in its affidavit that comments were sought from the Legal, Finance and Planning departments on the proposed waiver as well as withdrawal of theft cases against the defaulters. The Legal department had said such a waiver can only be given prospectively and not retrospectively as per the statute, Electricity Act, 2003, the affidavit had said. It had also stated that the Planning department had said that the proposed exemption was "not appropriate" as it will be "tantamount to rewarding the defaulters at the cost of honest and regular paying consumers". The Finance department too had objected to the proposed waiver saying "it will give an advantage to the defaulters and disadvantage to the honest payers and thus it will create a bad precedent", the affidavit had said. Sharma has, in his plea, challenged the subsidy given by former AAP government to people who did not pay their power bills from October 2012 to December 2013. (Agencies)
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The White House forecast more robust economic growth in 2014 than last year and a further pickup in the economy in 2015. Under a White House projection, the US economy is expected to expand by 3.1 per cent this year, faster than last year’s 1.7 per cent. Growth will pick up to 3.4 per cent in 2015. The Barack Obama-led administration also forecast that unemployment will ease to an average of 6.9 per cent in 2014. The jobless rate, which reached a high of 10 per cent in 2009, fell to a five-year low of 6.6 per cent in January. Many economists say that the unemployment rate has dropped in part because many people have stopped looking for work. Almost five years after the end of the recession, the economy is still growing modestly and the unemployment rate, while declining, has remained persistently high. All’s In A NameSteven A. Cohen, whose hedge fund SAC Capital Advisors pleaded guilty to insider trading, is changing the name of his firm to Point72 Asset Management (effective 7 April) as it shifts focus to managing his own assets from serving as a hedge fund for wealthy investors following an agreement with the US government. “We have been through a great deal during the past few years. Our new name, combined with the other changes we have announced, are intended to help us move forward,” Tom Conheeney, SAC’s president, wrote to employees. Level UpKing Digital Entertainment, maker of hit mobile phone game Candy Crush Saga, expects to be worth up to $7.6 billion when it goes public in March in the US, amid concerns about its over-reliance on the game. King will hope to benefit from its focus on the estimated $17-billion market for mobile game apps and avoid the fate of rivals such as Zynga, which has struggled to make its games as popular on phones as they are online. King expects to price its IPO at $21-24 a share, valuing the company at up to $7.6 billion — slightly higher than Hasbro, the 90-year old maker of Monopoly and Scrabble. Key issuesFederal prosecutors are examining whether General Motors (GM) is criminally liable for failing to properly disclose problems with some of its vehicles that were linked to 13 deaths and led to a recall in February, said a source. Federal investigators are reviewing information about how GM handled reports of problems with ignition switches that first came to light 10 years ago. The failure is believed to be caused when weight on the ignition key, road conditions or some other jarring event causes the ignition switch to move out of the ‘run’ position, turning off the engine and most of the car’s electrical components mid-drive. GM has recommended that owners use only the ignition key with nothing else on the key ring. Bonus RoundBarclays faces a backlash from shareholders over its decision to raise bonuses despite profits falling by a third, with investors increasingly demanding CEO Antony Jenkins give more money to them and less to his staff. British banks have failed to rein in pay despite a new European Union cap, leading to a threat that politicians and regulators in both Brussels and London may impose more curbs. Jenkins said an exodus from Barclays’s investment bank in the US forced him to take this step that has resulted in paying staff three times more in bonuses than in dividends to owners, pushing shareholders to be more “aggressive”. On The Mend Italian PM Matteo Renzi recently presented a sweeping package of tax cuts, saying they could help economic recovery in the euro zone’s third largest economy without breaking EU budget deficit limits. Renzi said income tax would be reduced by a total of €10 billion annually for 10 million low- and middle-income workers from 1 May. The cuts will be financed by reductions in central government spending, extra borrowing and by resources freed up thanks to the recent fall in Italy’s borrowing costs, he said. Italy’s economy minister said the government will need to evaluate the effect of its measures on public finances and would need to seek EU approval if deficit and debt targets appeared in doubt.In The Cups?With the World Cup in June and July and a presidential election in October, many Brazilians aren’t thinking beyond 2014. But this year and the next may be memorable for all the wrong reasons in Latin America’s biggest economy. The next president will have to make deep budget cuts, raise taxes and take other painful steps to address Brazil’s growing financial imbalances. The fallout will likely be more damaging than many investors anticipate, resulting in a fourth straight year of disappointing growth — a fallback for a country that last decade was one of the world’s most dynamic emerging markets. Green DriveHyundai Motor plans to start selling its first battery-powered electric vehicle (EV) in 2016 as South Korea’s champion of fuel-cell cars hedges its bets in next-generation green technology. Hyundai has leant toward engines that turn hydrogen into electricity in response to stricter emission regulations in markets such as the US. Research and development partner Kia Motors Corp has focused on rechargeable batteries. Alongside, BMW’s i3 and Nissan Motor’s Leaf are widely expected to reach Korea this year, as will Kia’s Soul EV.FightbackChina allocated about $35 billion for environmental protection this year to combat toxic smog that frequently engulfs its cities, including capital Beijing. The government will take strong measures to prevent and control pollution with the focus on mega cities and regions with frequent occurrence of smog, Premier Li Keqiang said in a recent report. Hazardous smog, several times more dangerous than WHO limits, engulfs cities, raising serious health concerns, including lung cancer risk, among the public. Going PrivateChina will launch pilot programmes to test the development of privately owned banks in Tianjin, Shanghai, Zhejiang and Guangdong, the country’s bank regulator Shang Fulin said recently. The pilot, which was approved by China’s government in January, is the first tentative step by the country to open its hitherto closely guarded banking sector to private investors. A total of 10 firms will participate in the pilot. According to reports, e-commerce giants Alibaba and Tencent — which have been competing to market high-yielding wealth management products online — may have made the cut. (This story was published in BW | Businessworld Issue Dated 07-04-2014)
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A controversy erupted over a claim that WikiLeaks founder Julian Assange endorsed Narendra Modi as "incorruptible" even as the whistle-blower website disclosed a secret cable by a senior US diplomat eight years ago that described him as a "distrustful person" who reigns more by "fear and intimidation". The website while denying in a series of tweets that it had called the Gujarat Chief Minister "incorruptible" tweeted details of a number of observations made by the then Mumbai-based Consul General Michael S Owen on Modi's leadership in a cable after his visit to the state in 2006. "No WikiLeaks document say #Modi is 'incorruptable', rather he is popular because 'viewed' as 'incorruptable'," WikiLeaks said. Wikileaks said the term "incorruptible" was apparently used by a Gujarat Congress leader Manoharsinh Jadeja. "The Narendra #Modi "incorruptable" quote comes from Rajkot Congress party leader Manoharsinh Jadeja," it said. In another tweet, WikiLeaks accused BJP of using the "fake Assange-Modi endorsement" to raise funds. The website today accused Priti Gandhi, Co-Convener of Maharashtra BJP Communication Cell, of pushing the "fake endorsement" by WikiLeaks. Its clarification came against the backdrop of some BJP supporters circulating posters in Ahmedabad quoting Assange, saying that "America is scared of Modi because he is incorruptible." BJP, however, downplayed the WikiLeaks tweets. "We don't need a certificate from WikiLeaks or Assange on Modiji," BJP leader Mukhtar Abbas Naqvi had said. WikiLeaks went on to tweet a secret cable sent by the US Embassy in 2006 which criticised Modi's style of functioning. "Views remain divided on whether Modi's leadership style will help or harm him if he enters national politics. In public, Modi can be charming and likable. By all accounts, however, he is an insular, distrustful person... He reigns more by fear and intimidation than by inclusiveness and consensus, and is rude, condescending and often derogatory to even high level party officials. He hoards power...," one such diplomatic cable under a sub-heading "Modi's Leadership Style" said. The US Consulate, however, added that all of its interlocutors acknowledged that Modi is a modest man "who, unlike many elected officials in India, has not used his position to enrich himself or his family". "Most contacts also say that he has purged the state administration of petty corruption at the mid and lower levels of the bureaucracy. However, several people tell us that big ticket corruption is still common," it added. The secret cable following Owen's visit also stated that the US Embassy in Delhi had cleared the document.(Agencies)
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The rupee rose to a one-week high on Tuesday (18 March) as shares surged to a record high, but erased most of the gains to end flat as oil importers rushed in to buy dollars once the local unit strengthened above 61 to the dollar. The rupee is likely to be supported by strong foreign inflows that helped push up the BSE and Nifty indexes to record highs on Tuesday, but traders expect more narrow ranges given the lack of specific domestic triggers. Global factors will also be key this week, ahead of the Federal Reserve's two-day meeting ending on Wednesday, continued political tensions in Ukraine, and a weakening yuan currency in China. "There aren't any domestic data points so rupee should broadly hold in a 60.60 to 61.75 range with good demand from oil firms being seen," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank. "A breach of 60.60 on the downside for the pair can take it to 60.10 levels," he added. The partially convertible rupee closed at 61.19/20 per dollar, unchanged from Friday. Financial markets were closed on Monday for a local holiday. The rupee earlier rose to as high as 60.88 per dollar in early trade, its highest since March 11, as foreign investors continued to bolster blue chips in the lead-up to general elections. Overseas funds were net buyers of $160.6 million worth of shares on Friday, marking their 20th net buying session in the previous 21, for a net total of $1.6 billion, exchange and regulatory data shows. In the offshore non-deliverable forwards, the one-month contract was at 61.67 while the three-month was at 62.42. (Reuters)
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We do not believe this should be East vs West, Russia vs the United States. This is not Rocky IV”John Kerry, secretary of state, US, on the impact of Russia-Ukraine tensions on Russia-US relations “I stopped using Mt Gox this summer when it started to look like roach motel (a roach-bait device) ”Tyler Winklevoss, founder, Winklevoss Capital, and one half of the Winklevoss twins of Facebook fameGinni Rometty“There’s no ‘For Sale’ sign up on the company” Bill Barney, CEO, Reliance Globalcom, clarifying to a news agency that if need be they will go to the capital markets to raise money “We’re pretty sure that any information that’s inside of Google is safe from the government’s prying eyes, including the US government’s”Carl Schmidt, executive chairman, Google, at a summit “Get out of our way”Richard Branson, founder, Virgin Group, to those who deny climate change, in a blog “There is only good management and bad management. Traditional versus modern is, in my view, not important” Rahul Bajaj, non-executive chairman, Bajaj Auto, on traditional and modern business practices, to a magazine “Our performance did not meet our expectations”Ginni Rometty, chief executive officer, IBM, on the firm’s 2013 results, in a letter to investors (This story was published in BW | Businessworld Issue Dated 07-04-2014)
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Reuters Market Eye - Rupee trading at 60.22/23 versus its close of 60.30/31, as the dollar makes losses versus other Asian currencies with hopes of foreign fund inflows into the local sharemarket continuing to cheer.Foreign investors bought shares worth $26.73 million on Monday (21 July), a fourth straight day of purchases. The Nifty is trading up 0.43 per cent in preopen trade, raising hopes for more foreign fund inflows.Traders, however, expect some dollar demand from importers during the session, which will limit any sharp gains in the rupee. The Indian unit is seen moving in a 60.10 to 60.50 range during the day.(Reuters)
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