Prices of petrol, diesel set to go up tomorrow
Trade deficit shrinks as exports shoot up 18%
Drawback rates for 850 items revised
HCL Technologies buys US company for $ 10 m
Outsourcing key to Eli Lilly growth

 
 
PRICES OF PETROL, DIESEL SET TO GO UP TOMORROW 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, June 1: 
The government is likely to revise the prices of petrol and diesel on Monday in the wake of hardening of international crude oil prices in the last three months.

Though the petroleum sector was deregulated on April 1 this year, the government had, so far, persuaded state-run oil companies to maintain current prices to ensure smooth change-over from the administered price regime to a de-controlled market.

But with international crude oil prices now going up by around $ 5 per barrel, the pressure on public sector oil companies has been increasing by the day.

Naik and Sinha, who had a lengthy discussion today, later met Prime Minister Atal Bihari Vajpayee and briefed him on the scenario in the petroleum sector.

The price rise, it is learnt, is being kept within a margin of about Rs 1.50-3 a litre, though the actual impact of the recent global trend is estimated to be about Rs 3.20 a litre for petrol and Rs 2.90 a litre for diesel.

Lower prices are being set by getting the finance ministry to reduce duty on oil imports.

In January, the government had raised excise duty on petrol by nearly three-folds from 32 per cent to 90 per cent and by 25 per cent on diesel for a three-month period. The rates had then been raised because the ruling global prices had come down to about $ 21 a barrel compared with last year’s average of $ 26 even though domestic prices had remained constant.

Petroleum minister Ram Naik and finance minister Yashwant Sinha were locked in a two-and-a-half-hour long meeting to discuss the issue threadbare.

After the meeting, finance minister Yashwant Sinha said: “We have reached a consensus on some adjustments in excise duty and some increase in oil prices. Modalities are being worked out and a decision is likely on Monday.”

Naik told reporters that “we deliberated at length the impact of increase in crude oil prices. Now finance ministry and petroleum ministry would work out the finer details of the type of excise duty cut and the quantum of petro product price rise.”

   

 
 
TRADE DEFICIT SHRINKS AS EXPORTS SHOOT UP 18% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 1: 
India’s exports in the first month of the fiscal 2002-03 have registered an increase of over 18 per cent at $ 3.68 billion compared with $ 3.11 billion in the same month a year earlier.

The spurt in exports in April coupled with a marginal decline in imports, led to a significant improvement in the trade deficit which declined to $ 409.22 million from $ 978.97 million in April 2001.

According to provisional data compiled by the Directorate General of Commercial Intelligence and Statistics, imports during April this year posted a decline of 0.09 per cent at $ 4.090 billion as against $ 4.094 billion in the corresponding period a year earlier, an official release said.

The decline in imports was despite an 8.31 per cent increase in oil imports at $ 1.29 billion compared with $ 1.19 billion in the corresponding period of last year.

Non-oil imports during April were estimated at $ 2.79 billion which was 3.56 per cent lower than the level of such imports valued at $ 2.89 billion in April 2001.

In rupee terms, exports during April increased by over 23.56 per cent at Rs 18,006.29 crore from Rs 14,573.07 crore in April last year.

Imports in rupee terms also increased by 4.46 per cent at Rs 2,0008.12 crore as against Rs 19,153.03 crore in the corresponding period last year, the release said.

Trade deficit in rupee terms also improved to Rs 2001.83 crore from Rs 4579.96 crore in April 2001, it added.

Analysts with the Confederation of Indian Industry (CII) said, “This is a very positive trend but special efforts need to be made to continue with this trend. We have predicted a turnaround in the middle of this financial year. If trade deficit is under control, the aim will only be facilitated. If the exporters can keep the tempo up, we will be able to get out of the recession.”

   

 
 
DRAWBACK RATES FOR 850 ITEMS REVISED 
 
 
OUR BUREAU & PTI
 
New Delhi, June 1: 
Duty drawback, an export incentive to compensate duty borne on imported inputs, was today revised for about 850 items in the face of changes in customs duty in the Union budget.

Of the 850 items, duty drawback was reduced in case of 450-500 items, revised upwards in the case of 200-250 items and unchanged in the case of over 50 items, drawback commissioner S.S. Renjhen said.

The all-industry duty drawback rates are revised every year 90 days after the duty changes are announced in the budget.

Though duty on non-ferrous metals was reduced by over 30 per cent cumulatively, the government has ensured that decrease in duty drawback was not that steep in exportable items using these raw materials including handicrafts in view of the difficult export scenario.

In addition to the revision of the existing categories, around 50 new categories have been introduced in the drawback schedule, Renjhen said.

Renjhen also pointed out that no changes had been effected in the case of leather even though the import duty had been reduced from 35 to 30 per cent as leather is a major item of export.

There were also no changes for bicycle components as very little imported materials were used in their manufacture.

Reduction in case of knitted garments was 0.5 per cent while in case of woven garments it was 2.5 per cent, he said adding the cut in textiles drawback ranged from 0.5 per cent to 20 per cent.

Following the government’s decision to levy excise duty on hank yarn, the drawback rates for handloom products had been revised upwards, he said.

Asked if the government would re-consider some of the drawback rates, Renjhen said, “the drawback rates have been announced based on the inputs provided by the concerned councils”.

“As of now there is no such demand from any quarter for a revision,” he said adding as drawback rates are worked out in consultation with the councils the question of a revision did not arise.

Exporters upset

Meanwhile, exporters have said the cut in drawback rates, particularly for woven and knitted garments, could lead to a 15-20 per cent decline in exports in value terms and that they would approach the government early next week seeking a reconsideration.

“The 2.5 per cent cut in drawback rate for woven and 0.5 per cent cut in case of knits is bound to have a dampening effect on exports which could witness a decline of as much as 15-20 per cent in value terms,” senior vice-chairman of the Apparel Export Promotion Council Rajendra Hinduja said.

Describing the cut in duty drawback as a severe setback, he said the council would approach the government early next week seeking a re-consideration of the duty, particularly in view of the dismal export scenario.

With exports already down by around 15 per cent in 2001-02, maintaining the current level of Rs 30,000 crore of apparel exports might now become very difficult, he said, adding that reconsideration of duty drawback rates was needed to ensure exports remained competitive with respect to China and other countries.

Hinduja said the reduction in drawback has come despite data submitted by the council that supported continuation of duty drawback at around 14.5 per cent for apparels.

K.L. Madan, chairman, Garment Exporters’ Association, said commitments made by the Indian exporters for the next few months would suffer and exports would become non-competitive as prices would go up by around 2-2.5 per cent. “Keeping in view the present export scenario we were hoping the government would maintain the duty at the present level,” he said.

Madan said exports in value terms could decline by around 10-15 per cent.

   

 
 
HCL TECHNOLOGIES BUYS US COMPANY FOR $ 10 M 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 1: 
Shiv Nadar’s HCL Technologies Ltd has acquired 100 per cent stake in US-based Gulf Computers Inc, an infotech company providing application development support, in an over $ 10-million deal to expand its client base in America.

The acquisition has commenced with the payment of the first tranche of $ 8 million. A second tranche of $ 1.75 million will be paid after six months and the balance payment would be made in tranches concluding in three years, HCL Technologies informed the Bombay Stock Exchange today. “This acquisition is a strategic step forward in the implementation of HCL’s non-linear growth strategy,” company chairman, president and chief executive Shiv Nadar said.

“In Gulf Computers we perceive a synergistic fit, given their extensive experience of US clients and together we should be able to deliver enhanced value to existing customers and explore new areas of growth,” he added.

Gulf Computers would continue to be managed by the existing management team under the guidance of the board, it said.

The company headquartered in Quincy, Massachusetts has two offshore development centres in Mumbai and Bangalore manned by 189 employees and 77 of them are in the US across the company’s headquarters and project offices, HCL Technologies said.

Gulf Computers provides full life cycle support for customised application development for business process automation and clients, including government, Oracle, Sun and Microsoft Technologies, it added.

The company has worked extensively with various state governments and other clients in the US and is currently involved in multiple projects for the states of Tennessee, Florida, Georgia, Missouri and Maryland.

The acquisition would help to combine Gulf Computers’ strong client relationships and processes skills with HCL’s scalable offshore delivery capabilities for large sized government projects, Nadar said.

   

 
 
OUTSOURCING KEY TO ELI LILLY GROWTH 
 
 
FROM RAJA GHOSHAL
 
New Delhi, June 1: 
Eli Lilly plans to outsource more bulk drug manufacturing and contract research jobs in the country. It also plans to launch new drugs to combat erectile dysfunction and blood poisoning.

The company has roped in the Austin Shasun, the Chennai-based bulk drug manufacturer, to develop its anti-tuberculosis drug ‘Cycloserine,’ with technical support from Lilly. “Once bulk drug production starts here, the formulation development will be outsourced from Sun Pharmaceuticals or any other domestic company, before the drug is introduced in the Indian market,” a company source said.

The brand name of the drug for the Indian market has not yet been decided. The drug is for resistant tuberculosis, that is for patients who do not respond to normal drugs meant to combat the disease. The company estimates a market size of about Rs 20 crore in India for this disease. “Owing to the kind of patent regime we have, the drug is already available in its process variants here,” the source said.

At present, Lilly sources some bulk drugs from Austin Shasun for its global operations but not for its Indian portfolio of about 10 products. Of these, five are made in the country by a third party and the rest are all imported. Eli Lilly and Company (India) Pvt Ltd, a wholly owned subsidiary of its US parent, has no production facility of its own in India.

The company says its plans of setting up its own production facilities will depend on the unfolding patent scenario.

   
 

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