Maran holds the world in warm embrace
2nd hand jitters for truck majors
Thrust on pharma, gems
Export growth pegged at 20%
Growth in third quarter slips to 5.8%
HLL appoints Sharma as vice-chairman
Royal facelift for ITC hotels
Foreign Exchange, Bullion, Stock Indices

 
 
MARAN HOLDS THE WORLD IN WARM EMBRACE 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, March 31 
The export- import (Exim) policy for 2000-01 unveiled today by commerce minister Murasoli Maran promises to set up special economic zones, abolishes special import licences and rationalises export promotion schemes while permitting the import of second-hand capital goods.

The package contains a series of sector-specific initiatives for gems and jewellery, agro-chemicals, biotechnology, pharmaceuticals, leather, garments, silk and granites. The export promotion capital goods scheme (EPCG) has been extended to all sectors without any threshold limit on a payment of 5 per cent duty.

The special economic zones (SEZs) have been created to achieve a sustained export growth. To be set up in different parts of the country, they will be based on the Chinese model; the first two will come up in Gujarat and Tamil Nadu. Maran hoped the creation of these zones will ease procedural constraints, end delays and help attract foreign direct investment (FDI) in the export sector.

Companies in SEZs can import capital goods and raw materials duty free, and buy them from the domestic tariff area (DTA) as well. The existing export-processing zones at Santa Cruz, Kandla, Vizag and Cochin will be converted into SEZs.

State governments will be roped in to give the export drive a strong impetus. Besides, Rs 250 crore will be earmarked for this in the supplementary budget for this year. The Centre will request state governments to declare units exporting more than 50 per cent of their turnover as public utility services to help them meet their global export commitments.

In an effort to rationalise the existing export promotion schemes and to improve availability of inputs and raw materials, the government has decided to introduce a post-export, duty-free replenishment scheme for over 5,000 products.

Under this scheme, exporters will be able to obtain transferable duty-free replenishment certificates for importing inputs — the volume based on the standard input-output norms. The 10 per cent countervailing duty on imports made under the EPCG scheme has been withdrawn.

The changes will benefit the small-scale units which till now could import capital goods under EPCG only after paying a 10 per cent duty. The actual user, non-transferable advance licences for physical exports, and for intermediates used in exports, will be exempted from the payment of all levies —basic customs duty, countervailing duty, anti-dumping and safeguard duty.

The post-export Duty Entitlement Pass Book (DEPB) scheme will continue till March 31, 2002 after which it will be merged with the drawback scheme. The threshold limit of Rs 20 crore has been removed for the new drawback arrangement.

Deemed export benefits have been made uniform for all sectors. Maran has agreed to do away with customs bonding for information technology and other service sectors.

Maran said adequate safeguards and tariff protection will ensure that the Indian industry is not hurt by the scrapping of QRs.

Chambers happy

The apex chambers today welcomed the exim policy saying it would spur the growth of exports. They also appreciated the simplification and rationalisation of procedures. Confederation of Indian Industry (CII) president Rahul Bajaj said measures like setting up of special economic zones, involving state governments in exports and initiatives relating to e-commerce would go a long way in boosting exports.

The Associated Chamber of Commerce (Assocham) president G.P. Goenka said SEZs should be free from the operation of labour laws in line with the successful Chinese operations.

The president of Federation of Indian Export Organisations (FIEO), Navratan Samdria, said the policy was exporter-friendly with initiatives like the introduction of the post-export duty-free Rep scheme, removal of the Rs 20 crore threshold limit for fixing DEPB rates, allowing the import of second-hand capital goods as well as silk under SIL and setting up of SEZs. He, however, expressed concern over removal of the zero-duty route under the EPCG scheme.

The Calcutta-based chambers of commerce have also hailed the exim policy, terming it as “progressive and futuristic.”    


 
 
2ND HAND JITTERS FOR TRUCK MAJORS 
 
 
FROM SATISH JOHN
 
Mumbai, March 31 
Telco and Ashok Leyland were still struggling to understand the fine-print of an Exim policy that seeks to allow the imports of used commercial vehicles.

While Ashok Leyland managing director R Seshasayee said the proposal was limited to the imports of vehicles meant for the construction sector, Telco would only say the policy was ‘hazy and vague’. However, the Tata group company said it will seek clarification through industry associations.

“If it means the import of commercial vehicles, it is a retrograde step,” Telco said. However, Seshasayee said it was unlikely that there would be policy reversal after Maran’s statements at this year’s auto expo that there would be no import of used vehicles.

Telco said the decision to allow used HCV imports — if that is indeed the case — would be read as a sign that the government had buckled under the pressure of the WTO agreement. The company said it was strange to talk about introducing stiffer environmental legislation on the one hand, and allowing liberal import of used vehicles — with higher emissions — on the other. Seshasayee felt that even if used vehicles are allowed into India, it may not be much of a threat. Poor road conditions in the country and the preference for vehicles with high load carrying capacity and low power engines would keep customers loyal to locally made vehicles. Telco, in contrast, was more alarmed. “People tend to buy old vehicles if it comes cheap. It could harm an industry which is the backbone of the Indian economy,” the company said.

Auto analysts say the import of used vehicles will have a negative impact at a time when the industry was showing signs of recovery after more than two years of recession. They appeared convinced that the move poses a threat to the toplines of companies like Telco and Ashok Leyland. “It would certainly have a very negative impact. Unlike passenger cars, truck operators are known to opt for the cheapest option. Therefore, the availability of second-hand imported trucks will hit demand for locally made trucks,” Fayeza Feroz of Pranav Securities said.    


 
 
THRUST ON PHARMA, GEMS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 31 
Commerce minister Murasoli Maran has identified gems and jewellery, agrochemicals, biotechnology and pharmaceuticals as the thrust areas in the exim policy announced today.

To develop India as a major production centre for diamonds, the government will launch a diamond dollar account (DDA) scheme that will allow export proceeds from diamond sales to be retained in a dollar account.

The proceeds can be utilised to import rough diamonds as well as to purchase cut and polished diamonds from another DDA holder.

“This will go a long way in developing India as a major trading centre for diamonds,’’ Maran said.

The government has also allowed units in the export promotion zones (EPZs) and special economic zones (SEZs) to import studded jewellery for repairs, re-make and re-export.

The exim policy has also announced a replenishment licence scheme for gems and jewellery producers.    


 
 
EXPORT GROWTH PEGGED AT 20% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 31 
The Union commerce and industry minister Murasoli Maran today pegged the export growth target for 2000-01 at over 20 per cent in dollar terms and assured the domestic industry of protection via tariff barriers, anti-subsidy and anti-dumping mechanisms, following the phasing out of quantitative restrictions on 714 items.

Unveiling the exim policy, the minister however said a definite export target for 2000-01 would be fixed only after consulting all the export promotion councils.

Regarding the impact of the phasing out of QRs, Maran said, “I have written to Vasundhara Raje Scindia, minister for small-scale industries, to de-reserve items such as leather, textiles and toys, as the SSI sector will not be able to compete with imports.”

He said these sectors had tremendous potential for large-scale industries, which will be able to successfully compete with imported goods.

Reiterating that the quota policy has to end, Maran however added that in the event of a sudden surge in imports, the government may consider employing WTO compatible measures to protect industry, notably the tariff weapon.

“The industry can always approach either the Anti-Dumping Directorate or the Safeguard Directorate for appropriate relief.”

He said that an institutional mechanism will have to be evolved for recommending an appropriate tariff structure which will maintain the balance between the interests of producers and consumers, thereby suggesting that the Tariff Commission could be strengthened to play the role of an independent expert body.

The minister said the new economic zones announced in the policy will have their own rules and regulations and such zones could attract 100 per cent foreign direct investment.

Maran maintained that while software exports surged ahead, hardware electronics surged ahead. “I am therefore setting up a small group to quickly look into the various policy and procedural changes that are required to be introduced in various departments of government so as to enable us to achieve this objective.”

He accepted the fact that by not adopting vigorous policies India cedes FDI worth billions of dollars to its East Asian neighbours each year — flows that could have come to India.

“I learn that our cumbersome procedures, delays and an anti-FDI bias in some quarters are the reasons why FDI is not forthcoming into India for export purposes.” Despite this year’s double digit growth, “I don’t think our share will improve beyond 0.65 per cent, which is quite insignificant for a country of our size and capabilities,” he said.

Exports during the first 10 months of the current fiscal (April-January) recorded an 11.32 per cent increase at $ 30.22 billion over the previous corresponding period. Exports in rupee terms have shown an increase of 14.73 per cent at Rs 1,30,841.19 crore as against Rs 1,140,45.20 crore during April-September 1998-99.

Exports, however, declined in January 2000, recording a negative 2.33 per cent growth at $ 2.78 billion over the same period a year ago.

Exports during January were valued at $ 2.78 billion, down 2.33 per cent from $ 2.85 billion recorded in January 1999.

In a bid to encourage the use of information technology, Maran said licences shall be delivered within 24 hours if applications are filed electronically. He said he was considering a reduction in the application fee for these kind of applications.

For all status and green card holders, electronic filing of applications will be made mandatory from July 1. He said electronic data interface (EDI) will be operational in a few months.    


 
 
GROWTH IN THIRD QUARTER SLIPS TO 5.8% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 31 
Economic growth has declined to 5.8 per cent during the third quarter of 1999-2000 (October-December) compared with 7.8 per cent in the corresponding period of the previous year, getting dragged down by the poor performance of the agricultural sector. The Economic Survey for 1999-2000 has projected an overall growth rate of 5.9 per cent for the year.

The agricultural sector registered a measly 0.5 per cent growth rate during this period compared with 9.9 per cent in the previous year, according to quarterly estimates of gross domestic product (GDP) released by the Central Statistical Organisation(CSO).

However, the manufacturing sector registered a higher growth rate of 7.2 per cent compared with 2.9 per cent in the previous year.

Electricity, gas and water supply grew by 8.6 per cent, construction by 10.6 per cent, trade, hotels, transport and communication by 5.9 per cent and financing, insurance, real estate and business services by 10.4 per cent. The GDP growth in the first two quarters of 1999-2000 was 5.9 and 6 per cent compared with 5.4 and 5.5 per cent respectively in the previous year.

The mining and quarrying sector remained stuck on the slow growth path, recording just 0.1 per cent growth rate during the period compared with 1.5 per cent in the previous year. The agriculture, forestry and fishing sector grew just 0.5 per cent during this period. The sector grew by 1.8 per cent in the second quarter (July-September) compared with 0.8 per cent in the corresponding period of the previous year while in the first quarter it grew by 1.7 per cent compared with 2.9 per cent in the previous year.    


 
 
HLL APPOINTS SHARMA AS VICE-CHAIRMAN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 31 
Hindustan Lever Ltd (HLL), the FMCG major today revived the office of the vice-chairman and named HLL director (legal) M K Sharma to the post. HLL also set up a seven-member management committee.

Announcing this on a day when the HLL top brass were conducting an annual review of the company’s progress in 1999, the company, in a press release, added that noted management guru C K Prahalad and Homi R Khusrokhan, managing director of Glaxo India, would be non-executive independent directors on the HLL board.

Prahalad, a professor of business administration at the University of Michigan Business School, Ann Arbor USA, is a specialist in corporate strategy and the role of top management in large diversified multinational corporations. Khusrokhan is also the chairman of the Biddle Sawyer group of companies, besides being the president of the Organisation of Pharmaceutical Producers of India.

However, what raised eyebrows among corporate circles was Sharma’s elevation as the vice-chairman. It may be recalled that after R Gopalkrishnan’s exit, Hindustan Lever under Keki Dadiseth decided to do away with the post. Gopalkrishnan was the vice-chairman of the company, before he quit.

With M. S. Bagga taking over in May, the creation of the new post assumes significance. In a press release, HLL clarified that Sharma will continue to hold charge of the legal affairs of the company. With his thorough knowledge of Indian and international corporate legislation, Sharma has served on many government and industry committees. Most recently, he was a member of the government-appointed committee on the recodification of the Companies Act. Sharma is also chairman of the legal affairs committee of the Bombay Chamber of Commerce & Industry (BCCI).

Seven executive directors have also been appointed to the company’s management committee. They include Satish Dhall (plantations), Dalip Sehgal (new ventures), Anoop Mathur (chemicals and agri business), Arun Adhikari (personal products), Jitu Mehta (ice cream), S. Ravindranath (beverages) and Gunender Kapur (culinary products, edible fats and popular foods).    


 
 
ROYAL FACELIFT FOR ITC HOTELS 
 
 
FROM NANDITA ROY
 
New Delhi, March 31 
You could call it Bill’s legacy. Long after the President wrapped up his India visit and gave Maurya Sheraton the honour of hosting him in the capital, the ITC group has woken up to the realisation that its suites can be turned into opulent retreats for monarchs and state heads.

The company will soon upgrade its hotels to levels that suit the tastes of the royalty in a modernisation drive that will see its new investments in ongoing projects increase from Rs 1,500 crore to Rs 2,000 crore over the next five years. The fresh infusion of capital, cleared by the ITC board recently, will be raised by dipping into the company’s internal resources.

Hotel sources say the additional investments will be used to give rooms a suite-like look, make them larger with clearly defined spaces for working and living. Each room will boast of internet connections, artefacts, original paintings; bathrooms will be fitted with Jacuzzi and special shower cubicles.

The company is using the ITC prefix at its properties in Delhi. Its hotels in Calcutta and Mumbai are likely to sport the name soon. Other group properties which meet minimum standards in quality, will follow suit later. In doing so, ITC is trying to imitate its foreign franchisee Sheraton, which lends its brandname only when it is convinced that the product has meets its set of standards in quality.

While all ITC hotels will continue to be marketed and managed by the WelcomGroup, the company’s investments will be spread over hotels which already have the ITC prefix, and those which intend to attach it to their names later.

ITC’s brand push in hotels is part of a brand-extension drive that has the tacit approval of BAT nominees on the company board. Earlier, BAT was not happy with ITC’s expansion into non-tobacco/non financial services businesses. However, evidence that it has dropped its resistance emerged when BAT director Richard Green endorsed the tobacco major’s thrust on the hospitality sector at a ceremony held to launch the construction of ITC Sonar Bangla in Calcutta.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 
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