Govt readies package to boost FDI
Accor team to arrive for talks on Friday
Telecom giants likely to lease network to others
Call for review of laws on spectrum management
HM looks to Maharashtra for car sales
$ 110m Enron tab on ONGC, Reliance
Andhra Bank plans Rs 150 crore IPO
Cars for a song at Gwalior show

 
 
GOVT READIES PACKAGE TO BOOST FDI 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Dec 25: 
The government is planning to cobble together a package of measures to be announced in the forthcoming budget that is aimed at relaxing restrictions on foreign direct investment inflows into the country.

As part of the package, the finance ministry is considering permitting up to 100 per cent FDI in all infrastructure services that are considered “natural monopolies”.

Ministry officials feel in order to give a fillip to high cost infrastructure services such as facilities at airports and value-added telecom services, the government needs to allow up to 100 per cent foreign direct investment. Some of the measures will form part of next year’s budget.

“The Prime Minister has ordered us to push hard this year to attract a larger volume of FDI and we feel these are key areas where large dollops of foreign investment could come in,” top finance ministry officials said.

The finance ministry officials also want to raise the permissible limit for FDI in professional and educational services to 74 per cent, a move that is sure to earn the ire of various professional institutions in the country.

But their contention is that large transnationals like “to bring their baggage of support companies with them” and that denying them this facility often means prolonged delays in these “big firms” actually setting up base here.

Ministry officials said they have also obtained I&B minister Sushma Swaraj’s in principle agreement to moves to allow up to 100 per cent FDI through the automatic route in book and journal publishing and printing industries.

“For quite sometime, we have been pointing out that this is an area of high potential growth which quite a few South East Asian nations have tapped. But the proposal has been stalled till now because of resistance from local bodies,” they said.

The finance ministry also feels that the government should permit up to 100 per cent foreign direct investment in those companies which work in providing broadcasting facilities only. The foreign stake permitted in companies that actually engage in broadcasting has been pegged at just 26 per cent.

“We have also already quite sometime back circulated a note where we had said we favour allowing foreign airlines to take a limited stake in domestic aviation companies.

This has however not found favour with the parent ministry. If they agree, that too could form part of our package,” officials said.

   

 
 
ACCOR TEAM TO ARRIVE FOR TALKS ON FRIDAY 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Dec 25: 
A team from Accor Asia Pacific, the French hospitality giant which is interested in taking over Great Eastern Hotel, is coming to meet the West Bengal government on December 29 to work out the modalities of the agreement.

Sources in the state tourism department said the French firm was planning to sign a memorandum of understanding with the state government in early January.

Once the French firm submits the memorandum, it will be sent to the legal and finance departments for scrutiny.

“We will have to see whether Accor has incorporated all the state government’s observations in their memorandum,” a senior tourism ministry official said.

State tourism minister Manab Mukherjee had asked Accor to submit the memorandum of understanding by December 20.

The head office of Accor located at Bangkok is currently working on the memorandum and Delhi office had communicated to the West Bengal government that it would try to submit it within the stipulated time, sources said.

The state government is in a hurry to get the draft memorandum of understanding from the French hospitality giant since it wants to close the deal by March 31 next year.

Accor has offered to invest Rs 100 crore to develop Great Eastern as a heritage five-star hotel. The government will hand over the lease of the hotel for an initial period of 30 years.

The French firm has also said that it will spend Rs 15 crore on a separation package for the hotel’s 500 employees.

The hotel authorities have already directed no advance booking of banquet hall/room should be accepted beyond March 31. Any advance bookings that have already been accepted beyond that should be cancelled and the advance should be refunded forthwith.

The state tourism minister has already met the employees of Great Eastern Hotel for talks on the arrear wage payments arising from the recommendations of the Fourth Pay Commission. Atiar Rahman, president of Great Eastern Hotel Staff and Workers’ Association, said, “We have got our wage arrears for five months starting from April.

This has been a morale booster for the employees of the Great Eastern hotel. However, the minister did not talk about Accor’s privatisation proposal.”

   

 
 
TELECOM GIANTS LIKELY TO LEASE NETWORK TO OTHERS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Dec 25: 
Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited may lease out their networks to private companies to enable them to offer bulk pay phone lines. The move is expected to help to increase the easy access to telephones.

According to a senior official in Telecom Commission, a one-member committee has been set up to examine the suggestion made by Confederation of Indian Industry (CII) to the government.

“A few operators have already started offering pay phone lines in bulk to franchisees. Bharat Sanchar Nigam and Mahanagar Telephone Nigam are corporations and have a board to discuss such issue. On our part, we will not have any problems,” said sources in Telecom Commission.

CII had pointed out that India requires 2 million subscriber trunk dialling (STD) booths to achieve a penetration of one payphone per 500 people. Currently, it has only about 300,000 STD pay phones (one payphone per 3500 people) as against the 2.5 million payphones in the US (one per 120 people).

While some private basic operators have already entered into agreements for bulk subscription by private parties, pay phone operators through such arrangements are already offering public access and internet services in Madhya Pradesh and Maharashtra.

To enable these companies to offer similar innovative services in other parts of the country, Bharat Sanchar Nigam and Mahanagar Telephone Nigam need to extend the facilities for bulk subscription.

The teledensity in the country remains low and universal phone access is still many years away.

Industry experts feel bulk subscription of payphone lines will result in an increase in the distribution of payphones across the country and will be beneficial for the consumer as well.

These companies could introduce state-of-the-art telephone instruments that would be internet ready and offer value added services, the release added.

As per the current guidelines, 10 per cent of total exchange capacity is being set aside for payphones, allowing for 3 million pay phones in India. Taking into account the local call pay phones, this allocation is being underutilised.

Bharat Sanchar Nigam will have to play an important and dominant role in achieving the objectives provided in NTP-99. It will not only provide the lifeline services, but also encompass value added and cellular services.

However, Bharat Sanchar Nigam will have to reconstruct its business strategies based on best commercial principles.

To top it all, the new corporation, along with Mahanagar Telephone Nigam and VSNL, will utilise the synergy to open up new vistas for operations in other countries. These new organisational characteristics will develop only by going in for strategic alliances.

   

 
 
CALL FOR REVIEW OF LAWS ON SPECTRUM MANAGEMENT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Dec 25: 
The CII sub group on convergence has called for an urgent review of the laws governing spectrum management and licensing even as it underscored the fact that the convergence bill will reduce segmentation in the market place.

Emphasising the need to ensure that the Communication Commission of India remained an independent and autonomous body, CII has urged that the functions of the Commission should be spelt out in the Convergence Act itself.

The CII had set up a core group on convergence and has drawn up its recommendations in certain areas based on the final draft report of the sub-group on convergence.

The CII Sub-group had highlighted the need for a unified authority for spectrum management.

CII has recommended that frequency allocation be accounted for amply in the new convergence Act. The focus should be on a fair and efficient national playing field, it said.

At present, the Wireless Planning and Coordination (WPC) wing within the ministry of communications is the regulatory authority responsible for nationwide radio spectrum management.

According to CII, it is the regulator’s reliance on market forces rather than government oversight that allow for the most economical and efficient use of spectrum.

CII contends that the bifurcation of the role of spectrum manager to two authorities — one for the government spectrum and the second for the rest — is likely to reverse the trend for unified spectrum authorities around the world.

The chamber counts regulatory flexibility, technological neutrality and international outreach among principles that lead to optimal spectrum usage.

In the context of licensing, CII has stressed the need to promote an open licensing policy allowing any number of new entrants, except in specific cases constrained by resources such as the spectrum.

CII believes that it should be the duty of the communications commission to maintain effective competition and to prevent anti-competitive behaviour and practices.

   

 
 
HM LOOKS TO MAHARASHTRA FOR CAR SALES 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Dec 25: 
Hindustan Motors (HM) has approached the Maharashtra government to sell its CNG (compressed natural gas) 1800 ISZ Ambassadors for use as taxis.

The management has also met Bengal chief minister Buddhadeb Bhattacharjee and requested him to help sort problems over the sale of trekkers in the districts. “We have made presentations to the transport department of the Maharastra government.

A team will pursue the matter in Mumbai next week. We make the CNG cars in Delhi, but will soon roll them out from the Uttarpara factory,” senior vice-president of Hindustan Motors, Prabal Chatterjee, said.

The company is keen to grab the segment of the market now left vacant due to the halt in production of Premier Padmini cars. “If we get the clearance from Maharashtra, we hope to sell between 500-1000 cars every year,” Chatterjee said.

Earlier, Bengal’s assurance that it would have 1,000 trekker permits issued by authorities in Midnapur came to naught with a stay clamped by the district court there, and a ban imposed on the issue of fresh permits by the district magistrate.

The Hindustan Motors management has also told Bhattacharjee it is ready to offer incentives for taxi owners who want to equip their vehicles with Euro II engines.

“We have asked the government to provide a matching incentive,” sources said.

   

 
 
$ 110M ENRON TAB ON ONGC, RELIANCE 
 
 
FROM R. SASANKAN
 
New Delhi, Dec 25: 
Enron Oil and Gas India, the operator of oil and gas fields — Panna, Mukta and Tapti, has demanded $ 110 million by way of compensation from Reliance Industries and ONGC for their alleged failures to honour the cash calls.

According to sources close to Enron, the demand on ONGC is for $ 75 million and that on Reliance $ 35 million.

Being the operator of the fields, Enron issues cash calls to meet expenses which it feels are needed for developing these fields. The partners — ONGC and Reliance — did not honour certain calls as they differed with Enron on the need for such expenses.

Enron has dragged both of them for arbitration to London. These sources confirm that in the original notice, Enron had claimed only $ 7 million which has since been enhanced to $ 110 million. The revised claim has given a new dimension to the legal battle.

These proven fields had been awarded to a consortium led by Enron as part of the World Bank inspired privatisation programme. Though ONGC holds 40 per cent equity in these joint ventures, it is a silent partner with the other two, who hold stakes of 30 per cent each, running the show. Reliance could not become the operator as it has no previous experience in oil production.

Enron has not been getting on well with the partners for quite some time now. Their consistent differences over various issues will now be arbitrated in London. Former chief justice P.N. Bhagawati will defend ONGC.

Soon after serving the arbitration notice on its partners, Enron announced its decision to quit oil and gas fields in India. The announcement was made when the international oil prices were at their peak. The decision is not peculiar to India. Enron has already pulled out oil and gas ventures the world over except in India and China. Both Reliance and ONGC evinced interest in buying out the Enron stake. IOC will also join the race with either Petronas or ONGC.

   

 
 
ANDHRA BANK PLANS RS 150 CRORE IPO 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 25: 
The Hyderabad-based Andhra Bank is planning to raise funds from the capital market through an initial public offering (IPO) of Rs 150 crore which will reduce the government’s stake to around 67 per cent. At present, it is entirely held by the government.

The IPO comes close on the heels of the flotation by Vijaya Bank and at a time when banking stocks have been making huge gains on the secondary markets.

Senior officials of the bank told The Telegraph that the par issue is being primarily made to raise the capital adequacy ratio which now stands at around 12.50 per cent as against the minimum 9 per cent stipulated by the Reserve Bank of India (RBI). The bank, which posted a 34 per cent rise in net profits for the year ended March 31, 2000 at Rs 121 crore, has formulated a Vision 2005 plan in a bid to enhance its presence in the banking sector.

Officials said plans included the setting up of a subsidiary for primary dealership activities and focusing on corporate finance and retail lending. In addition to these areas, the bank is planning to enter into new areas which include insurance, leasing and hire purchase, and infrastructure financing through the joint venture route. Sources said the bank has turned in a good financial performance in recent times. Its other strengths included a very low non-performing asset (NPAs) ratio, wide branch base and presence of a strong regional brand.

The net NPAs of the bank are placed at a little below 3.50 per cent as on March 31, 2000. “The bank is now putting in place policies for a one-time settlement of chronic cases and focus on those cases where the recovery prospects are better,” the official added.

Of its 1000 branches all over the country, 200 are fully computerised. Plans are afoot to convert around 150 partially computerised branches to totally computerised ones.

   

 
 
CARS FOR A SONG AT GWALIOR SHOW 
 
 
BY AMIT CHAKRABORTY
 
Calcutta, Dec 25: 
Gwalior beckons car lovers. A bonanza awaits the them in this princely town of Madhya Pradesh, which has decided to offer hefty sales-tax rebates on vehicles that are sold at a mela to be organised there from January 1.

Automobile manufacturers and dealers are expecting a sales spike. They are busy with arrangements preparing to open shops at the month-long Mela.

A saving of Rs 6,000 on a purchase of Rs 1 lakh will be a tempting proposition for potential buyers.

Not only are they flocking to the central India’s fort-flanked town of the Scindias, dealers have been advising their clients to visit the mela to snap up cars at bargain-basement prices.

The Madhya Pradesh government has issued a notification, allowing concessional sales tax on various commodities and manufactured items, in certain cases to the extent of 50 per cent of the rate applicable nationally, for sales at the mela ground next month.

However, the move runs foul of the existing policy of having a uniform sales tax of 12 per cent. Under the uniform sales tax policy regime introduced after a consensus among all state governments in the country early this year, the sales tax rate on passenger cars and commercial vehicles has been pegged at a flat 12 per cent all over the country.

Expecting a customer rush to Gwalior where buyers will have the chance to make a big saving on their vehicle purchases, several dealers from various states, apart from the automobile companies, have decided to set up stalls at the mela.

According to sources in automobile industry and cars dealers in various states who have decided to participate at the fair, customers are being advised to book their cars at the mela to enjoy concessional sales tax. A few dealers could even book cars at the mela for subsequent delivery at their respective states and yet save 50 per cent of the sales tax.

Gwalior Mela, traditionally an annual affair in the town, has become more attractive this time because it is being organised after eight years.

The Congress government under the chief ministership of Digvijay Singh is pulling out all stops to attract people to the mela and introduced concessional sales tax to make it commercially successful.

But car dealers sources, at the same time, said the concessional tax notice issued by the Madhya Pradesh government had already been leaked to many state governments and the state chief minister might have to come up with a convincing explanation for flouting the consensus.

   
 

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