Govt mulls free tea import at 35% duty plus surcharge
State-owned telephony firms to cut Net rates
Vizag entry point for Project Oxygen
Enron India to pick up 49% in Ispat Energy
US Exim in pact to help infotech, small units
Full-fledged IRDA to be delayed
Calcutta port to revise handling charges
Singh to host Sahara dinner show for Packer

New Delhi, March 24 
The government is considering a proposal to take tea out of the restricted import list and shift it to the list of special agro products (SAP) which are permitted to be imported freely but with a customs impost of 35 per cent and a surcharge of 10 per cent. The new category was created in this year’s budget taking into account the need to permit imports of a large number of farm products to meet global treaty obligations.

This is a compromise formula being considered in the wake of strident protests from the tea industry to its decision to open up the Indian tea market under commitments that the country has made at the World Trade Organisation talks. The domestic tea industry has been seeking protection from cheaper imports from East African countries.

Tea plantation companies had been lobbying hard with both the Central Board of Excise and Customs and the commerce ministry to protect their market interests.

The finance ministry officials confirmed that they had been sounded out to place tea on the list of SAP products allowed into India and were likely to take a supportive view.

The tea industry is especially worried that once imports are permitted, Kenya, which is the world’s third largest producer of tea, will swamp the market with low-cost quality teas which could hit non-Darjeeling tea sales.

The domestic market is already in a turmoil because the government has opened up tea imports from Sri Lanka at a competitive tariff of 7.5 per cent. Consistent lobbying by tea producers was unable to overturn the government decision as the deal with Sri Lanka had been decided at the highest level.

A similar deal with Bangladesh is also in the offing but this is not a major concern for Indian tea industry as Bangladesh is not a major player in the tea market.

However, government officials feel that tea imports should not be totally discouraged as higher consumption demands within the domestic market is leaving little exportable surplus. India which produced about 850 million kgs in 1998-1999 and remained at the top of the league of tea producers ahead of China, is expected to also consume over 710 million kgs of tea next year, making it the nation with the largest number of tea drinker. Tea production in April-September 1999 was estimated at 504.62 million kgs against 539.29 million kgs in the previous year.    

New Delhi, March 24 
Mahanagar Telephone Nigam (MTNL) and Videsh Sanchar Nigam (VSNL) have decided to cut internet rates by 10-15 per cent to meet the challenge posed by the more aggressive private internet service providers (ISPs).

However, the two public sector telecom companies, while slashing charges and promising a variety of new packages, have ruled out free Net services — something that has been offered by companies like the Bharti Group (Mantraonline) in Madhya Pradesh and in Calcutta. However, MTNL is working on a new package under which unlimited internet access will be offered at a reduced pulse. “Currently, a local telephone call lasts 120 minutes. This can be reduced to 90 minutes to provide additional hours or, may be, even unlimited access,” MTNL chairman and managing director S. Rajagopalan said here today.

The company’s board is expected to meet soon to discuss the reduction in rates, and the issue of lower renewal charges for existing internet users. “The MTNL board will have to approve the cuts in charges for new subscribers and for renewals. We have to reduce charges to compete. There will be no free internet access but we will offer more packages,” Rajagopalan said. The new rate structure will be sent for approval to the Telecom Regulatory Authority of India (TRAI) and Department of Telecommunications (DoT) once the board clears them.

“Our competitors are not only cutting rates but are also providing free internet access. Therefore, we have decided to cut rates. Our main objective behind reducing charges is to stimulate demand for internet and other services in the country,” Rajagopalan said.

Meanwhile, Rajagopalan said MTNL will soon convert its 35 million global depository receipts (GDRs) into American Depository Receipts (ADRs). “We have received the necessary clearances but this has to be audited by an international auditor. The whole process is likely to take two to three months,” he said.

MTNL’s rate-cut announcement was matched by that of VSNL, which said it would reduce its charges soon. “We are awaiting for approval to reduce the existing rates. If MTNL announces a cut in rates, we are ready to do the same,” VSNL sources said. A senior VSNL official said his company was watching just how long firms can sustain their offer of providing free internet access.    

New Delhi, March 24 
Project Oxygen Ltd, an undersea cable optical fibre network will have Vishakhapatnam as its entry point in India. The $ 4.3 billion under-sea cable project will then be joined by an Indian company to extend it further into the country. This company will then lease out the capacity to internet service providers (ISPs).

“We will complete the network by July 2002, covering 24 countries and 45 access points. This project will cover North America, Europe, Asia Mediterranean and South Africa,” said Neil Tagare, chairman and chief executive officer of the project. “The project has an initial design capacity of 2.56 tetrabits per second (tbps) per under sea cable and 4 tbps per fibre pair on land,” said Tagare.

Tagare was also associated with Fibre Optic Link Around the Globe (FLAG), another undersea cable project, which is already under construction. Project Oxygen is expected to attract a variety of telecom providers and users, ISPs, existing and prospective international carriers, media and entertainment concerns and international satellite carriers.

Tagare said, “We would be able to provide network access at half the existing rate. Currently it is about $ 2.5 billion per 155 mbps link for a 25-year period.”    

Mumbai, March 24 
Enron India is picking up a 49 per equity stake in Ispat Energy, a subsidiary of Ispat Industries Ltd. The multinational is expected to pump in over $ 25 million as its equity contribution to the project.

In a separate deal announced today, Enron Energy Marketing Services, a wholly owned subsidiary of Enron Corp, agreed to supply natural gas to Ispat Energy’s captive power plant currently being set up in Dolvi, Maharashtra.

The gas supply agreement coincided with the visit of the US President Bill Clinton to the commercial capital of the country . Under the terms of the agreement, Enron will supply 200,000 tonnes per annum of LNG over a 20-year period to Ispat Energy. Gas deliveries are expected to commence in the third quarter of 2002.

Commenting on the deal under which Enron will pick up a 49 per cent stake in Ispat Energy, company officials said this would result in a drastic reduction of the company’s power costs. “Our power costs will come down by more than half which will make us the cheapest producers of steel in the country,’’ an Ispat spokesperson clarified. Earlier, Ispat Energy was a 100 per cent subsidiary of Ispat Industries. The company is implementing a captive power project at a total cost of over Rs 1,500 crore. The agreement on the stake acquisition by Enron was reached early this week.

On the gas supply agreement, Enron officials said gas will be transported from the LNG processing terminal at Dabhol via a pipeline to Ispat’s plant in Dolvi. Metropolis Gas Pvt Ltd, a wholly owned subsidiary of Enron, is currently developing the pipeline.

Ispat Energy’s Dolvi plant has a planned capacity of about 353 mw and is being developed as a captive power plant for an integrated steel plant of Ispat Industries and Ispat Metallics India Ltd at Dolvi. The association with Enron is expected to benefit Ispat Energy in achieving higher operational efficiency.

Enron is the world’s leading electricity, natural gas and communications company. The company, which owns around $ 34 billion in energy and communications assets, produces electricity and natural gas, develops, constructs and operates energy facilities worldwide.    

Mumbai, March 24 
The US Exim Bank today joined hands with IDBI and Sidbi to provide financing to small and medium enterprises and information technology units.

Exim Bank will provide $ 500 million aid in this regard.

A memorandum of understanding to this effect was signed between the institutions on the occasion of President Bill Clinton’s visit to the country.

The MoU was signed by T. M. Nagarajan, executive director, IDBI, Sailendra Narain, managing director, Sidbi and William Daley, US commerce secretary, on behalf of the US Exim bank.

The MoU with Exim Bank envisages identification of appropriate financing opportunities like credit guarantee facilities, co-financing and parallel financing besides exchange of information to provide the maximum financial support to Indian small and medium enterprises.

Apart from these areas, the tie-up is also expected to enhance co-operation between the US and India in the field of IT related activities.

IDBI and SIDBI with their knowledge of the needs of Indian companies is expected to leverage their expertise in credit analysis to channelise Exim Bank funding for financing imports of Indian industry of goods and services from the US.

The signing of the MoU is also expected to serve as a prelude to similar such funding structures for the Indian industry.

Exim Bank is the official US export credit agency, focussing on accelerating exports to developing countries, stimulating small business transactions, promoting the export of environmentally beneficial goods and services and expanding project finance capabilities.

It has an asset base of over $ 18 billion and it has helped to support more than $ 370 billion of US exports worldwide.    

New Delhi, March 24 
The Insurance Regulatory and Development Authority (IRDA) is unlikely to be fully constituted immediately and there are signs the government will settle for a regulatory body with only three to four members.

“There are about four names which have been sent to the appointments committee of the Cabinet (ACC) for approval. The Cabinet will also have to decide whether it will accept all names or make a selection from these. Also, it is unclear whether the members would be full-time or part-time members,” sources in the insurance division of the finance ministry said.

Among the names being bandied about as possible candidates are current IRDA chairman N. Rangachari and present member H. Ansari. Some senior officials of Life Insurance Corporation (LIC) are also expected to be part of the authority.

Rangachary had earlier said the authority would consist of one full-time chairman, five full-time members and four part-time members. In its current form, the IRDA is an interim body with only two members, including the chairman.

Sources said the government was not able to find an actuary that could have been part of the IRDA

“The government had earlier approached the Institute of Actuaries to suggest names, and had also tried to identify a suitable actuary. However, it failed to do so. Now, it has gone ahead and advertised for actuaries,” sources said. They added the government may have to modify a few basic requirements, such as reducing the age limit for actuaries, if the need arises.    

Calcutta, March 24 
The Calcutta Port Trust (CPT) is revising its handling charges and plans to give special concessions on high volume items.

The change in rates has become necessary to arrest the decline in traffic. The rates had earlier been revised in 1996.

The new rates will be approved in the CPT’s board meeting in the last week of April.

Sources said the CPT has given major concessions to large consignments. “The more the volume, the less the charges,” the sources said.

The CPT plans to offer concessions on consignments in excess of 50,000 tonnes, though the sources said this bench-mark would be reduced for select items.

The new rate structure is also expected to give further concessions to jute, cast iron products, drugs, engineering goods and tea.

These products enjoy concessions to the extent of 20 to 25 per cent on the container charges of Rs 6,000 following a “piece-meal” restructuring of rates in September 1999.

“The changes have, in fact, helped us handle larger volumes of consignments against last year’s traffic,” a senior CPT official said.

The Calcutta Dock System handled 1,35,972 teus for the 11 months ending February 1999 compared with 1,20,334 teus in the corresponding period of the previous year.

During this period, the Haldia Dock Complex handled 25,548 teus compared with 24,909 teus in the previous year.

In tonnage terms, the CDS handled 8.98 million tonnes during this period compared with 8.18 mt in the previous year, while Haldia handled 18.68 mt compared with 17.77 mt in the previous year.

The CPT is also considering a reduction in vessel related charges, which is currently much higher than Vizag and Paradeep ports, leading to fewer ships dropping anchor in the city.    

New Delhi, March 24 
Samajwadi party leader Amar Singh has lined up a mega dinner in honour of Kerry Packer, touching off speculation that the Australian media baron will pick up a stake in the Sahara TV channel to be launched on March 28.

Packer, who is scheduled to arrive in Mumbai on March 27, is likely to enter into a tieup with a leading media-software company, and will hold talks with other software firms.

In Delhi, where he touches down on March 28, he is expected to meet senior officials in the ministry of information and broadcasting and the Roys of Sahara India Pariwar. Singh is also understood to be close friend of the Roys.

“Packer is arriving on an invitation from Singh, who has hosted a gala party at Hotel Ashoka in Delhi on March 28. He is good friend of Packer.,” sources close to Singh said. However, industry sources say the baron is likely to attend the launch function of Sahara TV channel, and is likely to buy a stake in it.

Packer, better known to the world as the father of one-day cricket, recently picked up a 10 per cent equity stake in Himachal Futuristic Communication (HFCL) for a whopping Rs 1,039 crore. His company, Consolidated Press Holdings Limited (CPH) of Australia, has also set up two joint venture companies with HFCL to focus on software development and e-commerce.

One of these ventures will devote itself to the development of software products and services while another will set up infrastructure facilities for e-commerce. Both companies will be floated with an investment of Rs 100 crore each.

HFCL will take a 51 per cent stake while CPH will hold 30 per cent; the balance 19 per cent will be given to other strategic investors. Sources in HFCL said Packer’s visit next week is a follow up to that of James D Packer, joint chief executive officer of CPH, and the son of Kerry Packer.

CPH has large investments in media, telecom, e-commerce and entertainment business with a total asset base of about $ 10 billion.

“We have an open mind on entering other areas like entertainment. But, at present, we are concentrating on telecom and infotech. We have, however, held no talks with anyone in India on our entertainment foray,” James D Packer had said after clinching the agreement with HFCL.    


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