FIPB seeks changes in NRI investment rules
Dipping sales may have knocked Indica off its perch
Textile units want cut in excise duty
Budget focus on farm sector
CSE brokers decide to contest polls
Bharti spends Rs 77 crore on network update

New Delhi, Dec. 15: 
The Foreign Investment Promotion Board (FIPB) has sought changes in the rules governing repatriation of investments made by non-resident Indians (NRIs) and overseas corporate bodies (OCBs) as the Cabinet decision on such investments does not square with the provisions laid down by the Foreign Exchange Management Act (Fema).

The root of the anomaly lies in the recent Cabinet decision which permits all NRI/OCB investment made in foreign exchange to be fully repatriable. However, the Schedule-IV route under the Foreign Exchange Management Act (Fema) allows companies to bring in such investment up to 100 per cent on a non-repatriable basis in all cases barring a few sectors.

The anomalous situation was first uncovered by the Secretariat for Industrial Assistance (SIA) when the FIPB received the application of Vitasia Insurance Services which sought transfer of shares from a resident shareholder to a non-resident Indian.

On closer scrutiny, the board discovered that the transfer of shares was being sought under the Cabinet order which allowed all investment made by NRIs/OCBs in foreign exchange to be made repatriable.

However, this ran contrary to the provisions of Schedule-IV of Fema which says that a company is allowed to bring in NRI/OCB investment up to 100 per cent on non-repatriable basis in all activities except for chit fund/nidhi companies, agriculture/plantation activity, real estate business, construction of farm houses and dealing in transfer of development roads.

The board was of the view that due to the clash of rules a situation has arisen where there is always a possibility that NRIs/OCBs may access this route beyond sectoral caps and later convert the shareholding to repatriable basis.

According to FIPB, the only safeguard here was that such a conversion is considered by it on a case-by-case basis which brings in an element of checks and balances.

�Nonetheless, it would be more appropriate to remove even the remotest possibility of misuse by limiting such investment only to non-resident rupee accounts (which are non-repatriable) so that the issue of conversion of non-repatriable shares into repatriable shares does not arise,� the FIPB has suggested to the government.

In fact, the incongruency in rules has been the main reason why several applications, including that of Vitasia has been hanging fire for nearly three months. Every time that the application has come up for consideration, a decision has been deferred by two to three weeks.


New Delhi, Dec. 15: 
This is unofficial: Indica seems to have toppled from its perch. Telco�s small car�the revamped Indica V2�created a storm when it outsold Hyundai�s Santro and Maruti�s Zen in the months of September and October. So, everyone was waiting eagerly for the November figures to see if it had managed an encore.

The Society for Indian Automobile Manufacturers (SIAM) released its November statistics today which showed that Telco�s car sales�it only makes the Indica�had fallen to 5,185 units from 5,327 in October and 5,408 in September.

In contrast, Hyundai�s sales rose to 7,139 units in November from 7,059 units in October and 6,061 in September. These are strictly non-comparable because Hyundai produces three models�Santro, Accent and now the top-of-the-line Sonata. Since the SIAM figures do not report sales by models, it would be difficult to say whether the Indica has been losing ground vis-�-vis the Santro.

But the rising trendline in the case of Hyundai and the falling graph in the case of Indica raises the distinct possibility that Telco�s small car has not been able to pull ahead of the pack.

There are some pointers for making this obervation: Hyundai had sold 6,061 units in September of which 4,953 units were Santros. In two months, its overall car sales are up 17.78 per cent. If we extrapolate using that benchmark figure, then Santro sales would have risen to 5,834 units, clearly ahead of the Indica. Sonata and Accent are higher priced offerings and it is fairly certain that they could not have registered such strong growth figures as to drive up the company�s overall sales by 17 per cent in two months.

Auto buffs will have to wait for the car makers to come out with their individual numbers to see how the battle in the fastest growing segment -- the B segment -- has panned out.

Car makers have been riding through a tough phase with demand dipping. The November figures will lift the gloom-and-doom scenario somewhat: total passenger car sales have risen from 37,856 units in October to 42,740 units in November, a sequential month-on-month increase of 12.9 per cent.Year-on-year sales were however up by a marginal 1.8 per cent rise in November this year as against the 41,986 units sold in November 2000.

In April-November 2001-02, car makers have sold 357,962 units against 373,706 units in the corresponding period of the previous year, a fall of 4.21 per cent.

Maruti Udyog, the country�s largest carmaker, is also starting to claw back. It sales have risen to 23,994 units in November against 19,596 units in the previous month, an increase of 22.4 per cent. However, it still adrift of the 28,396 units it sold in September.


New Delhi, Dec. 15: 
Textile units want the government to reduce excise duty while widening the scope of Cenvat to cover segments that do not come within its present ambit.

The industry claims that the proposed model will lead to an additional revenue generation of Rs 881 crore for the exchequer.

Called an alternate excise model for the textile industry, the recommendations are based on a study done by Crisil Advisory Services.

The study was commissioned by the Indian Cotton Mills� Federation (ICMF).

ICMF chairman Rajaram Jaipuria said the present excise model has a duty structure which has broken links in Cenvat and duty exemptions to various segments in the industry.

In cotton fibre, where the existing excise duty is nil, the proposed excise duty is 2 per cent. For cotton yarn, which has an existing excise duty of 8 per cent, the proposed excise duty is 4 per cent.


Chennai, Dec. 15: 
Union finance minister Yashwant Sinha said today the agriculture sector would be the focus of the next budget.

�Even at the risk of leaking a budgetary secret, I would like to say that agriculture will be the main thrust of my next budget,� he said, addressing an interactive session organised by the Madras Chamber of Commerce and Industry here.

Observing that the country was sitting comfortably on a 60-million tonne heap of foodgrains, the finance minister said India could now even afford to export foodgrains at below poverty line prices, adding that it needs to develop long-term markets.

Regarding tax reforms, Sinha said he would make every effort to render the Indian tax administration more friendly to the tax payer. �One of my unfinished tasks today is to take the fear of the tax authorities out of the tax payer and ensure that he has nothing at all to fear about them.�

The minister refuted the contention that economic reforms were being kept on hold and his government lacked the political will to go ahead with the same.

Emphasising upon the need for patience, he said labour reforms, which have been held up so far, would be taken up soon after consultations with all concerned and will be tabled in Parliament.

Sinha said the objective of the second phase of economic reforms was to �develop for ourselves a model of growth characterised by sustained progress in the current decade,� adding the Centre was committed to taking all the states on board to ensure the second phase of economic reforms turns out a success.


Calcutta, Dec. 15: 
After wavering on whether or not to seek representation on the board of the Calcutta Stock Exchange, brokers have finally decided to go ahead and do so.

The brokers decided to contest the election after the Securities and Exchange Board of India (Sebi) failed to come up with clear guidelines on demutualisation of stock exchanges.

The Sebi board was supposed to meet on December 14 to discuss the matter, but the meeting has now been rescheduled for later this month. Indications are the Sebi board has not been able to make up its mind yet even after racking brains for a number of months.

Already, 17 members of the exchange have filed nominations, 16 of them today.

The members will elect nine of them as directors, of which one will be chosen president. All the nominations will be scrutinised on Tuesday and a list of eligible candidates drawn up the same day. The election will be held at the bourse�s annual general meeting on December 29.

The last elected board of CSE was asked to step down after the payment crisis in March this year. The scam prompted finance minister Yashwant Sinha to declare that brokers would not be allowed any say in the administration of bourses. After the broker-directors stepped down, Sebi appointed a panel headed by former State Bank of India chairman Dipankar Basu to run the bourse.

Though nominations have been filed now, the brokers are apprehensive that the market regulator may debar them from management of the bourse. Even at this stage, if the market regulator issues guidelines barring brokers completely from the administration of the bourses before the election takes place, the brokers will withdraw their candidature. In that event, they said, they might even boycott the AGM.

A question mark now hangs over the fate of CSE�s present management panel, as it is likely to step down if the broker-directors return to power. CSE executive director N. Dasgupta has already announced that he will not continue beyond his term in February-end, while sources said chairman Dipankar Basu has admitted that he was finding it difficult to look after the business of the bourse being based in Mumbai.

With Dasgupta clearly indicating his reluctance to continue after February, the bourse has started looking for a replacement.

But if the brokers return to power, the equations will dramatically change.


Calcutta, Dec. 15: 
Bharti Mobitel, which entered the city cellular ring by acquiring the Modi-owned Spice Telecom, has considerably enhanced its network capacity over the last six months. Since July, when it acquired the Modi stake, Bharti has invested around Rs 77 crore, Deepak Gulati, CEO of Bharti Mobitel said.

Elaborating on how the improved network would help users, Gulati said, �We now have 101 base stations and the number will go up to 125 soon. The high power base stations will translate into wider geographical coverage, superior indoor coverage and improved battery life for cellphones.�


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