SATURDAY JANUARY 29 2012

 

 

 

 

Thesynergyonline Economic Bureau

NEW DELHI,JANUARY 27 :
INDIA has signed a multilateral convention on mutual administrative assistance in tax matters. The Convention was signed by Mr Sanjay Kumar Mishra, Joint Secretary, Foreign Tax & Tax Research Division, Department of Revenue, Ministry of Finance, Government of India in the presence of Deputy Secretary-General of OECD, Mr Rintaro Tamaki. This instrument hitherto available for the members of OECD and Council of Europe was amended in 2010 and open for all countries in June 2011.

The Convention was amended to respond to the 2009 G20 Summit call for developing a broader multilateral approach to improve the effectiveness of exchange of information, co-operation between the countries in the assessment and collection of taxes, with a view to combating tax avoidance and evasion.

Present signatories to the amended Convention are: Argentina, Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Georgia, Germany, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Mexico, Moldova, Netherlands, Norway, Poland, Portugal, Russia, Slovenia, South Africa, Spain, Sweden, Turkey, Ukraine, the United Kingdom, and the United States.

By signing the Convention, India and the other 31 signatories encourage more countries to join, sending a strong signal that countries are acting together to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place.

Many more countries are expected to sign the Convention in future. This provides for a wider network of countries co-operating in exchange of information, assistance in tax collection etc. Out of the 31 signatories, 12 of them have ratified the Convention so far.

Salient features of this Multilateral Convention are

  It is based on international standard of transparency and exchange of information.

This instrument is multilateral and a single legal basis for multi-country co-operation as against the DTAAs/TIEAs which are bilateral. It provides for an extensive network and there will be consistent application of provisions leaving limited scope for deviation.

It provides extensive forms of co-operation among the signatories on all taxes.

  It not only facilitates the exchange of information, but also provides for assistance in the recovery of taxes. This will give a fillip to the efforts of the Government in bringing the Indian money illegally stashed abroad.

  It provides for simultaneous tax examinations and participation in tax examinations in other countries. This provides for examination of tax affairs of the taxpayers simultaneously in their own territory and share the relevant information to each other. This allows tax officials to entering into the territory of the other country to interview individuals and examine records.

  The Convention explicitly provides for automatic exchange of information and spontaneous exchange of information.

  It provides for service of documents in other country.

  The Convention allows exchange of past information in criminal tax matters.

  The information received under the convention can also be used for other purposes besides those related to tax co-operation, for example to counter money laundering with the approval of the supplying state.

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 26 :
COAL India (CIL) has migrated to a new system for pricing its non-coking (NC) coal on the basis of gross calorific value (GCV) from January 01, 2012. Till December 2011, the company used to follow the useful heat value (UHV)- based method to price its NC coal.

ICRA's analysis shows that prices of certain grades of NC coal may rise significantly under the new price regime, while for certain other grades, prices may actually decline

The operating costs of companies in energy intensive industries like primary aluminium are also likely to increase, since many of them have coal-based captive power plants, the fuel cost of which would rise under the new system.

However, Mr Jayanta Roy, senior vice-president and co-head, Corporate Sector Ratings, ICRA stated, “given the coal shortage scenario that has been prevailing in the country in recent years, many non-core players were dependent anyway on costlier coal procured from e-auction and/or imports, and the overall impact of the revised coal price on their cost of operations would be limited to that extent”. The impact on the power sector, which uses primarily the E and F grade coal, is expected to be mixed, depending upon the grade of coal a company was buying earlier and also the colliery it was procuring the coal from.

Mr Roy mentioned, “since CIL has a near monopoly position in the domestic coal market, with a market share of around 80 percent, the new prices would be applicable to almost all NC coal consumers in the country.” Prices of coking coal would not change under the new mechanism."

Additionally, CIL has brought in a uniformity in the pricing of NC coal produced at different mines of different subsidiaries, as against the earlier practice of subsidiary-wise and mine-wise differential prices. Only coal produced from ECL would command a 6 percent higher price over the prescribed notified rates.

For notifying the revised price bands, CIL has continued with its broad classification of consumers; viz. power/fertiliser/defence (core sector) and the rest of the industries (non-core sector).

However, the price difference between the core and non-core sectors has now been revised upwards. Under the UHV based system, D, E and F grade coal for the non-core sector had a price premium of a flat rate of 30 perr cent over the same for the core sector, which now varies between 33 percent to 60 percent under the new GCV- based pricing system.

ICRA notes that the migration to the GCV based system would lead to different price increases for different grades of coal , and therefore the impact on various companies' coal costs would also be different. In the absence of adequate data at this stage on CIL's product mix across the new GCV bands, it is difficult to arrive at the exact impact on various coal consumers.

However, a study of the revised price bands enables one to make a few critical inferences as listed below. For the analysis, ICRA has considered the extent of price increase from the lowest and highest price levels prevailing in each of the earlier grades, and has also calculated the same from the middle level.

Price of erstwhile A, C and D grades of coal are likely to be impacted significantly. Cumulatively, these grades contributed around 19 percent-23 percent of the total NC coal dispatch volumes between 2006-07 and 2009-10 .

Additionally, within each of the grades between A and D, the price would increase the most in the highest GCV band for that particular grade, and would decrease progressively along lower GCV bands within that particular grade.

Prices of the medium grades (C and D) are likely to increase quite steeply. A significant proportion of this coal is used by non-core industries including sponge iron and cement. As per quick calculations, coal costs account for around 25percent of the total operating costs of a sponge iron manufacturer having 100percent coal linkage from CIL (this would however vary, depending upon factors like the distance of the plant from the coal mine).

Similarly, the share of coal costs in the total operating cost of a cement player would be around 30percent (cost of power could be another 15 percent or so from a coal based captive power plant, if the cement plant has any).

Consequently, a sharp increase likely for these two grades would impact the cost structure of sponge iron and cement players significantly, more so since prices are higher for the non-core sectors.

Nevertheless, ICRA notes that given the coal shortage scenario that has been prevailing in the country in recent years, many non-core players were dependent anyway on costlier coal procured from e-auction and/or imports, and the overall impact of the revised coal price on their cost of operations would be limited to that extent.

The power sector is the largest consumer of NC coal, accounting for around 73percent of CIL's volumes in 2010-11

The impact on the power sector, which is the primary consumer of E and F grade coal, is expected to be mixed. The price rise could be quite sharp for the highest GCV bands within the E and F grades.

However, moving towards lower GCV bands within E and F grades, the effect would be mixed across various collieries .

Consumers which were procuring E grade from Western Coalfields Limited (WCL) and F grade from Eastern Coalfields Limited (ECL) at higher prices earlier would now stand to benefit if they get to procure coal from the lower GCV band within the respective grades.

For other consumers, the impact would be adverse. However, many power producers buy higher grade coal for blending with the inferior E and F grades, and the overall impact on their fuel costs would be impacted because of the rise in the prices of coal in the grades A to D.

Captive power plants would not be eligible for being classified under the core sector. Consequently, power costs of companies in energy intensive industries including primary aluminium, cement and steel, many of which have coal based captive power plants, primarily using E and F grade coal, would witness some pressure on their production costs going forward, especially considering the fact that the premium for the non-core sector consumers have been increased under the revised system.

For instance, power cost would typically account for around one third of the total smelting cost of a primary aluminium producer, and an increase in coal costs would exert pressures on its profitability of operations.

Core sector consumers of Mahanadi Coalfields Limited (MCL), South Eastern Coalfields Limited (SECL) and Northern Coalfields Limited procuring C, D and E grade coal would be impacted to a greater extent, since in the previous regime, prices of coal for the above grades charged by these three mining companies were lower than the same charged by the other four subsidiaries of CIL.

The revised pricing mechanism being uniform across coal mining companies, the extent of price increase for these consumers would be relatively higher.

CIL is currently in the process of ascertaining the GCVs of its coal produced from different collieries, and ICRA expects the revised prices to be implemented once this process is concluded.

Despite the possibilities of substantial price hikes for various coal consumers as explained above, ICRA notes that the possibility of grade slippages remains following the completion of the GCV estimation process, in which case the extent of price rise for a particular coal mine would be moderated to an extent.

A clearer picture would only emerge once CIL comes out with the results of the calibration exercise. ICRA would continue to monitor further developments in this regard and evaluate its impact on the profitability of consuming industries.

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 24 :
THE 7th Asia Gas Partnership Summit (AGPS 2012) ) , a two- day prestigious international biennial event will held on March 23 and 24, 2012 at Hotel Taj Palace, New Delhi.

Addressing mediapersons on Monday Mr. B C Tripathi, Chairman and Managing Director, GAIL said that Dr Manmohan Singh, Prime Minister of India, will inaugurate the event.

This is for the first time that Prime Minister of India will be inaugurating the AGPS, he added.

AGPS is organized by FICCI, promoted by GAIL (India) and supported by International Gas Union. It is the biggest Natural Gas Conference of its kind in India, he added..

Over 50 Speakers from 11 countries, including the US, Europe, Russia, China, Korea and Japan have confirmed their participation.

The theme of the 7th AGPS is "Evolving Dynamics of the Asian Gas Market: Challenges of Sourcing, Integration & Sustainability".

Apart from the Prime Minister, other dignitaries to address the event are Mr. S Jaipal Reddy, Union Minister of Petroleum and Natural Gas, India, Ms Jayanthi Natarajan, Minister of State (Independent Charge) for Environment & Forests, India, Mr. R P N Singh, Minister of State, Petroleum and Natural Gas, India, Datuk (Dr.) Abdul Rahim Hashim, president, International Gas Union, Malaysia, Ms. Maria J. A. van der Hoeven, Executive Director, International Energy Agency, France, Energy Charter Secretariat and senior policy makers from the Government of India.

This biennial event of Natural Gas (AGPS 2012) is expected to be the biggest so far and will be attended by Industry leaders of oil and natural gas industry from India and abroad. The two-day conference will have six business sessions and feature some of the best speakers and experts in their areas.

Deliberations will take place on some of the significant issues of the industry including Evolving International Gas Markets and Price Dynamics – Asian Context, Sources, Connectivity and Markets , Gas Transportation & Distribution, New Directions in Gas Handling and Storage, Commercial & Legal Aspects of International LNG, Gas Trading and Sustainability, The Direction of Indian Gas Industry – The Way Ahead.

Two other major features of the event are Master Class on current state of FSRU Technology and potential for future development and CEO's round table featuring the Chief Executives of Indian and International oil and gas companies.

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 23 :
THE government will remove existing ambiguities for strict enforcement of criminal laws to prevent growing incidents of corporate fraud as the financial sector diversifies to keep pace with the rapidly-growing economy, minister for corporate affairs Veerappa Moily said on Monday.

On the other hand, top managements must ensure transparency in decision-makings and ethical conduct across hierarchical levels to act as powerful shield against economic offences, he said while inaugurating a national conference organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Mr Moily said the Companies Bill 2011 awaiting Parliamentary approval provides for tools to handle investigation, enforcement and penalty structure to address situations resulting from corporate fraud. It also provides for establishing of special courts vested with requisite civil and criminal jurisdiction to deal with company matters – including cases involving fraud.

"With pressure on companies to deliver short-term profits plus the growing complexities of organisational processes added to the recessionary climate in many countries, the risk of fraud is much higher today than in previous times. The government has thus set up the Serious Fraud Investigation Office."

Mr Moily said financial frauds in the corporate world are very complex in nature and can be properly investigated only by a multi-disciplinary team of experts. "There are limits to what even gifted amateurs can achieve, especially when they do not have a common platform and different enforcement agencies concerned play a lone hand from their respective turfs. There is need to provide a more concerted approach," he said.

Meanwhile, ASSOCHAM president Dilip Modi said management of fraud is an integral component of effective corporate governance which builds on the requirement for transparent and accountable process consistent with sound business practices and organisation standards of compliance.

"Recent experiences of successive failures and financial collapses indicate dire need to develop and adopt principles of good governance – both for private and public sector companies. As international markets are increasingly shifting to the adoption of global standards, best practices in corporate governance will become even more important,"
he said.

ASSOCHAM secretary general D.S. Rawat said the chamber will set up a national council on corporate governance within two weeks and compile a set of recommendations on the subject for government to ponder upon.

Mr Deepankar Sanwalka, chairman of ASSOCHAM national council on internal audit and corporate fraud, said the incidents of financial frauds by senior management-level employees are likely to increase in future as the stakes go up higher. Leveraging technologies and effective enforcement of laws should override company's growth and profitability.

 

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 18 :
INDIA will need investments worth Rs 30 lakh crore in the next two decades across various segments of hydrocarbon value chain, according to a recent study jointly undertaken by Ernst & Young and apex chamber ASSOCHAM.

These investments will be essential as India is one of the largest energy consumers in the world and the economy is in infrastructure-creation mode, says the study. The per capita energy consumption is very low at present as compared to advanced economies.

The potential of oil and oil equivalent in Indian waters is estimated at 10 billion tonnes – enough to meet all domestic requirements for over a decade. "Hence the need for proactive policy to attract large resources and funds," said ASSOCHAM secretary general D.S. Rawat.

Coal, oil and natural gas are major sources with coal accounting for the highest share of its primary energy mix (52.4 per cent). Oil and natural gas account for 31.7 per cent and 10 per cent respectively of the country's primary energy consumption.

India's per capita energy consumption – 500 kg of oil equivalent (KGOE) – is still significantly lower than the global average of 1,800 KGOE. "The country's efforts to reduce demand-supply gap in oil and gas provide significant opportunities in the upstream segment," said Mr Rawat.

The oil and gas consumption is growing at a compound annual growth rate of 6.5 per cent and equals over 195 million tonnes of oil equivalent (MTOE). Due to global economic recession, energy consumption decreased in many countries as a result of slowed down industrial activities.

The crude oil as percentage of its consumption in India has steadily increased from 79 per cent in 2007-08 to 85 per cent in 2010-11 with annual domestic production stagnating at close to 34 million tonnes.

India's natural gas production jumped dramatically by 45 per cent to about 130 million metric standard cubic metres per day (MMSCMD) when Reliance Industries started operations at KG-D6 field. A total of 25 MMSCMD of liquefied natural gas was imported.

Though India has surplus installed refining capacity of 185 million tonnes per annum, Indian companies are aggressively upgrading and further increasing their capacities to produce Euro IV and Euro V compliant fuels which can be exported to the United States and Europe.

India stands a fairly good chance to emerge as a global refining hub as many refineries in developed countries are likely to shut down over the next few years due to environmental pressures, said Mr Rawat. "These refinery products provide opportunities for engineering, procurement and construction contractors and equipment providers."

India has remarkable potential to discover new oil and gas reserves since a bulk of its sedimentary area is largely unexplored. Industry estimates also suggest 35 to 90 trillion cubic feet of shale gas reserves in Damodar and Cambay basins.

 

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 18 :
THE All India Gems and Jewellery Trade Federation (GJF) has welcomed the new rule notification from the Finance ministry on the imposition of import duty on gold and silver with mixed reactions.

The federation has urged the government to set aside a portion of this collection for the development of the industry.

The All India Gems and Jewellery Trade Federation (GJF) states that at current levels of imports of about 800 tonnes which is valued at current levels of Rs 28 lakh per kg, the customs duty collection will amount to about Rs 4000 crore.

The federation says that a portion of this collection should be set aside for a government-trade partnership in development of the industry in areas set out in the pre-budget recommendations already submitted.

Speaking to mediapersons, the immediate past chairman,GJF, C Vinod Hayagriv, said, "The trade needs valuable support from the government to transition the less organized to a more organized state. GJF and the government   together can make valuable additions to development".

The Federation has also urged the Government to restrict the limit of gold/silver that a passenger brings into the country to 1kg to proactively stop ‘illegal’ imports.

The Federation has also urged a higher securities transaction tax on open trading of commodities gold. This move will help raise revenue for the government and will also help protect the manufacturing sector that brings about employment and business in the trade of gems and jewellery without hampering growth.

Speaking on this, The Chairman Bachhraj Bamalwa said, "We need to stop smuggling of precious metals completely. The government will do well by plugging this route".

Lastly, the federation requested the urgent removal of the excise duty provisions on branded jewellery due to the inappropriateness of the levy. As in India, jewellery is not sold as a brand but rather as low margin products that can ill-afford any further levies at the consumer level.

 

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 15 :
THE Confederation of Indian Industry (CII) has welcomed the notification of the implementation rules for the Civil Liability for Nuclear Damage Act 2011 as a landmark legislation for India.

According to CII, this important notification reiterates the Indian government’s commitment towards developing nuclear power in India, setting the stage for development of nuclear power facilities.
 
For the first time in India, a contemporary liability framework for nuclear damages has been put in place by instituting a 'strict' liability for the operator who has to cough up damages of up to a maximum of Rs 1500 crore,  stated the CII press release.
 
However, while this is clearly a significant move forward, since both the Atomic Energy Act, 1962 and the Public Insurance Act,1991 are silent on the issue of nuclear damages, CII feels that greater clarity is required in some clauses of the Act to make it more effective. 
 
For instance, Section 46 states that nothing in the civil liability law will prevent the operation of other laws in force in the country and makes clear that criminal liability in case of an accident remains, as indeed do tort claims.

However,  the clarification is required to ensure that this provision does not alter the exclusive channeling of any claims for nuclear damage on a strict liability basis only to the operator, who owns the plant, said CII. 
 
Further, the CII statement added that in Section 17, there are issues related to the application of ‘Operator’s right of recourse’.

Currently, the limit to liability is applicable only to 17 (a) which states that Operators have a right to recourse where the right is expressly provided for in a contract.

There is no clarity on whether the limits can also be extended to claims by an Operator under clauses 17 (b) according to which operators will have a right to recourse if the nuclear incident has resulted due to an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services; or 17 (c) which applies in case the nuclear incident has resulted from the act of commission or omission of an individual done with the intent to cause nuclear damage
 
As a result, according to CII, there could still be a degree of overlap on claims arising out of supply of equipment or material with patent or latent defects or substandard services especially since it is open to interpretation that the causes of action under all the three clauses of section 17 are mutually exclusive.

Therefore, it is critical that the Rules or an amendment to the Act expressly set out the legislative intent that the total limit of supplier’s liability under laws and contractual conditions will be as defined under clause 17(a).
 
Several other issues need to be addressed, said CII.

Specific customised insurance solutions for suppliers need to be developed. Currently in India insurance providers do not offer any policy under which suppliers to nuclear power plant can cover their risk.
 
The operator, who is the owner of the plant, plays a crucial role  in selection of the right set of suppliers with sound track record.

Finally, the law should be consistent with the Convention of Supplementary Compensation (CSC) to do business with global players.
 
A balanced legislation will send out the right signals to investors/suppliers and will expedite the progress of the country’s Nuclear Power Program, noted the CII release.

 

THesynergyonline Economic Bureau

NEW DELHI, JANUARY 13 :
THE Associated Chamber of Commerce and Industry of India (ASSOCHAM) has urged the government to retain the Excise Duty and Service Tax at the current rate of 10.3 per cent in its Union Budget for the al year 2012-13.

In its pre-budget memorandum submitted to the Finance Minister, Mr Pranab Mukherjee the chamber has also suggested the government to consider extending service tax net to other items for increased revenue generation.

"The government can consider selective increase in customs duty on import of items other than input materials and capital goods, besides, stake sale in PSUs is another feasible option to generate additional revenue and reduce soaring fiscal deficit," said ASSOCHAM.

"Central sales tax (CST) rate must be cut from 2 per cent to 1 per cent to accelerate implementation of the Goods and Services Tax (GST) which is likely to push the country's economic growth by 1.4 per cent to 1.6 per cent and might add Rs.1.50-lakh crore annually to the government's kitty," the chamber said while stressing upon the need for tax reforms.

ASSOCHAM has also urged the government to restore the CENVAT (Central Value Added Tax) credit of input taxes paid on setting up new manufacturing units, service establishments, on materials and services used in civil construction for installing machinery.

"Restoration of CENVAT credit is imperative to encourage fresh investments as it is also a fundamental principle of GST," said ASSOCHAM.

The chamber has also emphasised that apart from services mentioned in the negative list and which are currently taxed by the state governments under constitution like entertainment, rent and others, all other services must be taxed comprehensively to add to the government's revenues.

The ASSOCHAM has also recommended the government to provide tax sops to sectors with a high employment generation potential like – civil construction, IT, ports, roads, telecom and textiles.

Natural gas must be listed in the list of 'Goods of Special Importance' under Section 14 of the Central Sales Tax Act so that it is uniformly taxed at a lower rate across all states on the lines of commodities like crude oil, coal and steel. More so, as natural gas is a significant input in industries like fertilizer, power and gets transported throughout the country, said the apex chamber.

Apart from this the government should also do away with indirect taxes on inputs and services used in setting up infrastructure projects during investment phase to attract investment.

Surcharge and education cess should be removed as it will generate more surpluses in the hands of companies with consequential impact on investments and growth in view of the global recession.

In case there is a delay in the enactment of the Direct Taxes Code which is to be introduced from April 1, ASSOCHAM has urged the government to maintain the Personal Tax rates as per the proposed DTC.

Exemption limit of reimbursement of medical expenses for employee and his/her family should be enhanced to Rs 50,000 per annum from the present ceiling of Rs 15,000 per annum in view of the rising cost of healthcare in India.

Exemption limits in respect of house rent allowance, transport allowance, kids' education allowance and rent free accomodation should be enhanced considerably as expenses incurred in respect of above have increased significantly due to rising cost of living in light of the high rate of inflation.

The chamber has advocated introducing a weighted deduction of 150 per cent of the expenditure incurred on Corporate Social Responsibility (CSR) activities specifically covering critical areas like education, health, animal husbandry, water management, waste management, women empowerment, poverty eradication, rural development and even companies with a dedicated CSR trust or foundation.

Exemption limit for payment of leave encashment as notified by the Central Board of Direct Taxes (CBDT) in accordance with powers given under section 10 (10AA) of Rs three lakhs (since 1988) should be raised to Rs 10 lakhs with immediate effect.

Discrimination between domestic companies having Indian subsidiaries and those with overseas subsidiaries be removed as it is leading to uncertainty and risk of double taxation on income from overseas investment in the absence of a well defined foreign tax credit system.

A simplified scheme for obtaining PAN in case of expatriate Indians should be introduced.

The overall limit of Rs one lakh under The Finance Act, 2006 must be increased to at least Rs 2.5 lakhs to accommodate for the expanded list, this would also act as a fillip to boost investments especially, as standard deduction has been removed.

The chamber has also stressed upon levying safeguard and anti-dumping duty to protect Indian industry from dumping of goods by other countries due to low demand in European Union and the United States, especially in case of imports from China.

Private sector must be encouraged to build storage infrastructure for agri-produce and imported commodities including petro products by providing fiscal incentive as this will help moderate inflation and spur economic growth. Besides, interest rates should also be moderated since the inflation has started abating.

Thesynergyonline Economic Bureau

NEW DELHI, India , JANUARY 13 :
UNDERWRITERS Laboratories(UL ), a globa player in advancing safety, has developed the first of what will become an annual global study examining the role of perceptions on how and where products are made, sold, bought and consumed. The new study, “Navigating the Product Mindset,” explores the connections and contradictions between perceptions of consumers and manufacturers on issues of safety, innovation, performance and sustainability.

Global perceptions were collected from consumers and manufacturers in China, India, Germany, and the U.S. across industries in high tech, food, building materials, and household chemicals.
         
“UL has worked closely with manufacturers around the globe to help them bring safer products to market faster for more than 117 years,” said Keith Williams, UL’s chief executive. “Today we live in a more interconnected and interdependent world than ever before.  With supply chain complexity growing and global trade increasing at unprecedented rates, understanding and navigating the Product Mindset is essential.”

Key insights from the study include
       Geography and culture play the largest role in shaping perceptions about products.
      Consumers are aware of an increasingly complex, global supply chain and have a growing interest in the traceability of products and product parts.
       Manufacturers in emerging markets rate themselves as being ahead of the curve regarding both product and operational sustainability more than manufacturers in developed markets.
        Few manufacturers appear to make the environment a top-tier issue when compared with safety and performance.
        Product safety and performance are the top two considerations that impact today’s Product Mindset for both consumers and manufacturers.             

Specific findings include:     

     More than 90 percent of manufacturers are confident that they are ahead of the curve in delivering safety, reliability and sustainability. In contrast, 70 percent of consumers feel manufacturers do not conduct thorough testing before launching new products.

    Chinese manufacturers are nearly two times more likely than American manufacturers to value product innovation.  American manufacturers are almost five times more likely than Chinese manufacturers to value speed to market.               
      Consumers are more interested in knowing about the origin of a product’s parts/ingredients than they are with where a product is assembled. This may be why 69 percent of manufacturers agree consumers are becoming more aware and better educated about products in general.               

      Innovation emerges as the most important consideration impacting manufacturers’ ability to compete in the future. However, manufacturers overestimate the significance of innovation to consumers.               

        Fifty-six percent of consumers believe where fresh and processed food is assembled or manufactured will become increasingly important over the next five years and 60 percent of food manufacturers believe the country of origin of fresh dairy products and meat, fish and fruits and vegetables impacts the quality of their products.          
          

          Seventy-five percent of consumers feel manufacturers have not taken adequate steps to ensure that environmentally friendly manufacturing procedures are followed. Only 9 percent of manufacturers stated designing sustainable products is their most important consideration impacting their ability to compete.            

           Fifty percent of manufacturers say they will increase sourcing from other countries. Of that 50 percent, 85 percent will add new countries instead of replacing existing countries from which they already source. Consumers feel product quality is 41 percent higher in developed countries vs. emerging countries.               

 

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 12 :
THE capital markets regulator Securities and Exchange Board of India (SEBI) said on Thursday it will reform the initial public offer (IPO) process and ensure that disclosure norms are made effective as the Indian financial markets undergo radical reforms to become globally
competitive.

"We are looking at every aspect. The basic aim is to curb volatility, particularly on the day of listing," said Mr Rajeev Agarwal, whole-time director of the Securities and Exchange Board of India (SEBI) while addressing an ASSOCHAM conference.

"We will follow strict disclosure norms to protect investors' interests, create enabling environment so that financial firms become global and vigorously enforce corporate governance norms."

He said the industry should make efforts to channelise more savings into capital markets to fund capital requirements of various sectors. Only 4.6 per cent of national savings are invested in capital markets.

India needs investments of $1 trillion to build
infrastructure in the next five years. Mr Agarwal said even pension funds can be invested as new products evolve and regulations are harmonised so that GDP growth of nine per cent can be maintained.

Meanwhile, Mr C.S. Mohapatra, director (secondary markets and UTI) at the finance ministry's Department of Economic Affairs, said the government will remove regulatory overlaps to bring financial stability and take measures to boost corporate bond market.

However, industry leaders must take lead in reducing intermediation costs by introducing new technology and improving human infrastructure. "There is no reason to be pessimistic as India is showing second highest growth rates
amid global economic gloom. There is need for next generation of reforms to increase inflows from foreign institutional investors."

Mr Nanda Kumar, senior vice-president of the National Stock Exchange, said the current global uncertainties pose challenges and opportunities for the Indian financial sector. The industry requires innovation, efficiencies, transparency and safety to bring back investors' confidence.

Mr R.N. Dhoot, president elect of The Associated Chambers of Commerce and Industry of India (ASSOCHAM), said watershed structural reforms have taken place in the banking sector during 20 years of pro-active reforms.

"The time has come for consolidated efforts by all stakeholders for inclusive growth," he said adding financial sector reforms can add significantly to economic growth and also make a significant contribution to the sustainability of this growth.

ASSOCHAM secretary general D.S. Rawat said the financial system's ability to efficiently intermediate domestic and foreign capital into productive investment and to provide financial services to a vast majority of households will influence economic as well as social stability.

Mr Rashesh Shah, chairman of ASSOCHAM National Council for Capital Markets, said Indian yearly savings total 500 billion dollars. The India growth story is in tact, he said, but four trends are worrisome. High inflation, rising interest rates, burgeoning fiscal deficit and the currency under pressure
have led many to conclude that economic reforms are stuck for the moment.

"We need to turn savings into productive investments rather than letting them go in gold and real estate. Foreign investments in the insurance sector and a healthy bond market are needs of the hour."

Others present at the conference were Mr Anil Agarwal, past president of ASSOCHAM, Mr S C Agarwal, co-chairperson of ASSOCHAM National Council for Capital Markets, and Mr Manish Kedia, director and head of debt practices at Resurgent India.

 

Thesynergyonline Economic Bureau

NEW DELHI,JANUARY 11 :
NEARLY 18 percent of rupee depreciation between May and December 2011 has added additional rupee cost of imports to the nation by Rs. 66,000 crore despite decline in the global prices of two major imported products crude oil and thermal coal, according to the ASSOCHAM study on "Rupee Exchange Depreciation: Impact Analysis".

The study analysed four major imported commodities crude oil, thermal coal, fertilizers and vegetable oil. It was observed that the importers had to pay an additional Rs 489.8 per barrel to import the same quantity of crude oil though the dollar price of crude had significantly declined.

While in the case of thermal coal, the importer has to pay an additional Rs. 684.6 per metric tonne to import the same quantity of coal, for fertilizer Rs. 3658.3 per mt. and for vegetable oil imports Rs. 6,941.6 mt.

The benefits of the decline in crude and thermal coal prices could not be passed on to the consumers and contrary to that power and fuel became much costlier due to rupee depreciation. These factors, said the Chamber President, Mr. Dilip Modi, have significantly contributed to fueling the inflation both for the industry and consumers.

The chamber found that the import bill of crude oil increased by Rs 5676.7 crore when exchange rate was varying during the respective month (April – December), the import bill of crude oil decreased by Rs 4405.9 crore when exchange rate was fixed in the respective month.

Import value in terms of international currency has declined in December as compared to April 2011. However, in terms of domestic currency import costs of Crude oil have increased.

A sharp decline in the value of the rupee is bound to affect the power generation capability of power plants that are heavily dependent upon imported coal for electricity generation. Moreover, a fall witnessed in power generation capacity is likely to have an adverse affect on all the three sectors of the economy namely agriculture, industry and services.

Another dimension to the rupee depreciation episode is that not only has the expenditure on imports increased but this coupled with an inflexible tariff structure means that the power companies are going to suffer huge losses.

Import bill for coal, coke and briquettes with the respective exchange rates for the months of April and December 2011 the increase in import bill for coal, coke and briquettes comes out to be Rs 4443.4 crore.

Using April 2011's exchange rate to calculate the import bill for April 2011 and December 2011, the increase in import bill for coal, coke & briquettes would have been Rs. 2928.3 crore.

Due to rupee depreciation the import bills in the above situation differ by Rs 1515.1 crore.

The combined effect of a depreciation rupee and an increase in dollar prices of DAP fertilizer has meant that the importer has to pay an additional Rs 3658.3 per mt to import the same quantity of coal.

The effect of rupee depreciation becomes more evident when we see that had the rupee stayed at May 2011's level then the additional amount the importer would have to pay would have been Rs. 9445 per mt. Therefore due to rupee depreciation the importers' burden has increased by Rs. 2713.3e per mt.

With the respective exchange rates for the months of April and December 2011, the increase in import bill for fertilizer manufactured comes out to be Rs. 13922.1 crore said the chamber chief.

Using April 2011's exchange rate to calculate the imprt bill for April and December 2011, the increase in import bill for fertilizer manufactured would have been Rs. 11568.4 crore. Due to rupee depreciation the import bills in the above two situations differ by Rs. 2353.7 crore.

The global prices of vegetable oil in November 2011 were lower than that in April 2011. Vegetable oil global prices have declined by $ 157.6 per metric tonne. However, due to rupee depreciation the import cost in domestic currency has increased by Rs 6941.6 per metric tonne.

 

 

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 09 :
TODAY India has begun playing a global role unlike ever in the past. Our economy had been relatively stagnant during the initial years after India’s independence. Then from the early 1980s the growth rate picked up. It rose further after the economic reforms of the early 1990s. And since 2005 there has been no looking back. The economy grew for three successive years at rates over 9 per cent. Even during the global recession of 2008-09, India’s GDP grew by nearly 7 per cent , stated Union Finance Minister, Mr Pranab Mukherjee in his keynote address at Pravasi Bhartiya Divas 2012 at Jaipur on Monday  on “Inclusive Growth: Two Decades of Economic Liberalisation.”

The year 2011 has been an eventful one. In terms of the time line in the economic history of the country its passage marks two decades on the path of economic liberalisation. Though we have witnessed ups and downs, this period has transformed our country and catapulted it into the centre stage in the world, he stated .

India is viewed as belonging to the group of the fastest growing nations of the world. We are widely recognized as a major driver of global growth. India is a member of the G20 and, within the G20, it is considered a part of the systemically most important 7, he pointed out..

The movement of the diaspora is no longer unidirectional as it was in the past. What started as a brain drain, has now become a brain gain, not just for India but the world as a whole. Today mobile Indian professionals and entrepreneurs are contributing across the global economy and enhancing its resilience in these troubled times. Many have also returned to the home turf and are engaged in its socio-economic fabric. Still others have set up enterprises or professional relations that span national boundaries, Mr Mukherjee said..

This movement of global talent has had many consequences. First of all, it has brought in many global best practices into the Indian economy. At the same time, it has created networks and linkages which serve as channels for flows of ideas across boundaries. This has given the Indian economy an edge in the seamlessly connected global economic environment , he said.

The global success of the Indian diaspora in the spheres of science, economics, education, business, public life and the arts is a matter of great pride for us all. The ‘pravasi bharatiya’ has contributed significantly to India’s ‘soft power’ and global image in a multidimensional manner. This has no doubt contributed to its attractiveness as an investment destination. The entrepreneurial skills of the Indian business community settled abroad are a matter of envy for other nations. Foreign firms are increasingly aware of the sharp business acumen of the Indian entrepreneur and managers. They have come to respect our business houses and practices, he said.

Much  still remains to be done. We have not yet reaped the full benefits of India’s great diaspora. The most obvious area remains that of investment and entrepreneurship. For instance, in China a large chunk of foreign direct investment has come from overseas Chinese , he said.

 There have been large ticket investments by non-resident Indian entrepreneurs. But  it is far less than the potential and perhaps too concentrated on the formal sector. We  we must pursue an alternative model. One that is more balanced and holistic in a socio-economic sense, Mr Mukherjee said.

For this we must rightly turn to the inspiration behind the Pravasi Bharatiya Divas. The 9th of January, marks the return of Mahatma Gandhi from South Africa to India. The subsequent new vigour he granted our freedom movement is well known. But the Mahatma also brought with him a new outlook and social vision: one that gave great emphasis to the dignity of labour, the importance of our rural sector and social equity.

He was intensely aware of the need for social inclusion and had great faith in the ability of the rural economic system to provide a balanced, equitable and optimal solution to the issue of economic development and social equity. His model of development was based on the harmonious self sustaining village economy which put minimal pressures on scarce resources while maximizing livelihood and well-being. In today’s parlance what he was aiming for was inclusive development coupled with sustainable growth , he added.

India’s economic achievements over the last few years have been commendable. The broad-based growth has brought improved opportunities for livelihood and employment across a wide range of skills. There is also a significant increase in public resources through better tax mobilisation. It has created, perhaps, for the first time in India’s post-independent history, the means to bridge the chronic deficits in social and economic attainments and reducing the disparities across different population groups and between the regions, he said.

But on our social indicators much remains to be done. In his respect there is need to engage in social enterprises in a proactive manner , he stated.

We have tried to evolve a model of development, which is more inclusive and people centric. It has sought to improve the access of the poor and the vulnerable to vital public services by creating entitlements backed by limited legal guarantees. This includes the right to information, the right to work in rural areas, the right to education and the right to food which is in the process of being enacted. There is progress, in all spheres including education, healthcare, financial inclusion and financial literacy, skill development and mainstreaming of hitherto marginalised sections of society, but there is still a long distance to traverse, he said.

It is here that the Pravasi Bharatiya can probably make the biggest contributions. This requires not just financial contributions, but rather dedication of time, ideas and endeavour. From the agenda of the pre-conference seminars I am aware that discussions have been held on ‘Solar Energy- Investment and R&D’ and ‘Social Entrepreneurship-Water’. These are extremely relevant topics for our development. I hope some new ideas will emerge from your deliberations, Mr Mukherjee said.

The Indian inclusive growth model - within the framework of democracy and human rights and freedoms, within a diverse and heterogeneous culture - is being recognized the world over as a viable paradigm. The strong diversity also has to be ‘included’ in the agenda for reforms. And though, as we have seen, it may tend to slow down things a little, as long as the direction is positive and forward looking, we can derive some satisfaction. Every incremental step which comes about with consensus is better than imposing big bang reforms without consensus ,he said.

A strong foundation is being created through a pro-active policy framework in both economic and social sectors. It should help form the springboard for the inclusive involvement of the overseas Indian in India’s development and its destiny. India presents an opportunity for the world as a whole. Our overseas Indian family with its multifaceted talents, excellent capacity for adapting to and ability to operate within different cultures and environments should make a concerted effort to connect with India’s growth and its prosperity in the times to come, he concluded.

 

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 07 :
THE regional meet of Northern Region Chapter of Forum of Women in Public Sector (WIPS) held here recently was inaugurated by Dr U D Choubey, Director General, SCOPE.

Dr Choubey in his inaugural address expressed concern over poor condition of 300 million women residing in rural India.

He urged the Forum to develop a road map to improve the status of these women through educational and awareness programmes.

He said Public Sector Enterprises (PSEs) have earmarked two percent of their net profit for CSR activities and a part of this fund could be utilized for the cause of upliftment of rural women.

"Even if there is 0.1 percent increase in Human Development Index" it will have substantial effect on GDP of the country, he added.

Dr Choubey applauded the contribution of women employees of PSEs for the growth and development of their enterprises. He said to recognize their contribution SCOPE has instituted an "Award for Outstanding Woman Manager in PSEs".

Ms Neeru Abrol, Director (Finance), NFL has bagged the first Woman Award which will be presented by the Prime Minister Dr Manmohan Singh at the SCOPE and MoU Excellence Awards presentation function on January 31 , 2012 at Vigyan Bhawan, New Delhi.

The meet which was attended by a large number of women employees from various PSUs was also addressed by Mr R Jaideva, Director (P), MMTC, Dr Reena Ramachandran, founder president, WIPS, and Ms Suman Lata Sharma, president, Northern Region Chapter, WIPS.

 

Thesynergyonline Economic Bureau

NEW DELHI, JAN 02 :
INDUSTRY body ASSOCHAM today welcomed the government's decision to allow foreign individual investors, pension funds and trusts to directly invest in equities, calling it a bold step to shore up investor confidence and attract dollar inflows.

Foreign investors will now be able to invest directly in Indian capital markets for the first time. "However, authorities must ensure that funds flow from KYC-compliant countries," said ASSOCHAM secretary general D S Rawat.

"It is a positive signal to high net worth individuals (HNIs) who have been routing their investments through mutual funds or FIIs by way of participatory notes," he added.

It should reverse the perception of policy paralysis in governance for the time being,he said.

 

 

Thesynergyonline Economic Bureau

NEW DELHI, DECEMBER 31 :
FALL of rupee against major currencies, new norms of standard-size packaging, increase in raw material costs due to upward spiraling interest rates and inflation together might dent the performance of the fast moving consumer goods (FMCG) sector which ruled the bourses in the current calendar year, apex industry body ASSOCHAM said on Saturday.

According to a sector specific analysis of The Associated Chambers of Commerce and Industry of India (ASSOCHAM) a sharp depreciation in the value of rupee and new packaging norms from July 1 are going to have a drastic effect on the FMCG industry which is likely to increase cost of regular products like biscuits, coffee, tea, toiletries and personal care items by about 10 per cent and more by first quarter of the next financial year.

“Input cost inflation, persistent rise in raw material price, rising fuel costs, fluctuation in the currency, dipping industrial growth, slowing global economy together with an overall moderating consumer sentiment might lead to a slow volume growth of FMCG segment in 2012,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber’s analysis titled FMCG Sector: An Outlook for 2012.

“All of these factors might pinch the FMCG industry which will go for a fresh round of price hikes as we usher in the New Year,” said Mr Rawat. “The sector might take a hit of about 10 to 15 per cent in sales including the semi-urban and rural market as the burden might be shifted to the price-conscious end consumers or else companies will have to opt for down trading.”

“Based on emerging market scenario and overall macro-economic expectations the Reserve Bank of India (RBI) may go in for a reduction in interest rates to boost the sagging economy, improve demand momentum and investment climate,” said Mr Rawat. “With interest rates peaking off we expect RBI to reduce the cash reserve ratio (CRR) and the repo rate nearly by 25 basis points each in the forthcoming monetary policy review in January, 2012 and FMCG will turn out to be the biggest beneficiary of the same.”

 

Thesynergyonline Economic Bureau

NEW DELHI, DECEMBER 30 :
THE Associated Chambers of Commerce and Industry of India (ASSOCHAM) said that the year 2012 might witness high inflationary pressures, even likely to touch 8 per cent level by the next fiscal and continue troubling the common man.

While releasing the ASSOCHAM paper, Mr. D S Rawat, Secretary General, ASSOCHAM said the long term supply side constraints, coupled with higher level of domestic demand pressure and hardening of fuel prices in the external markets will not allow the inflation to soften in the near future.

The ASSOCHAM assessment further stated that the current food inflation has gone down to 0.4 percent and shown the declining trends as well. Recent experiences show that grain prices fall immediately after harvest but start peaking in the post harvest seasons when the market supplies become scarce.  It shows the shortage of proper storage and other infrastructure facilities for farm products. These infrastructure bottlenecks cause the price volatility.

Contrary to food articles, the mineral prices are still rising reflecting their overall supply shortage in the country. As a result, country is increasingly importing minerals from global market at prevailing higher price levels is significantly contributing to overall inflation, added the ASSOCHAM paper.

The chamber believes that high level of inflation in 2012 may continue giving pain to the government on the issues related to food inflation as well as it also put pressure on industry largely due to hyper inflation in manufacturing products.

Mr Rawat further said that the current inflation needs to be seen from two angles: one, there is a shift in income brackets with the growth of the middle class as a result of industrialisation and growth of services raising demand pressure.”  

“And two, the gap between producer prices and consumer prices is widening with retailing at consumer level a highly profitable job as demand pressure increases”, he added..

These inflation figures indicate the role of both domestic and external factors. Prices of fuel and primary products have substantial external and policy influences.

Manufacturing inflation reflects the domestic private sector influenced by the exchange rate and global inflationary conditions.

In the year of 2010-11, higher prices of primary articles especially the rise in prices of food and non food articles, indirectly also affected the production by first pushing up the cost of living, which makes labour to ask for wage hikes and higher wage costs, eventually resulted in soaring cost of production.

As for the fuel inflation, it has also registered 13.4 percent in the first eight months of the current fiscal as against a lower growth in the corresponding period of the previous year. Thus, if we consider manufacturing as the process of transforming primary articles into finished products by working on them with the help of labour and machines that work on fuel, all the three major operating costs of manufacturing sector viz., raw material cost, labour and fuel costs have all increased owing to persistence of higher inflation rates.

According to ASSOCHAM, presently there exists a huge gap between the prices received by the producer and the price paid by the consumer. This gap needs to be filled by creating transport and storage infrastructure to the required extent. Also, the government needs to regulate the functioning of the agriculture markets.

The chamber paper also found that a long chain of intermediator’s benefit from the gap between the prices the farmer gets and the prices that consumer pays.

Besides these, intermediators have no role in the supporting the farmer with required inputs or giving them timely and useful market information.

Mr Rawat further said that if the logistics and storage side is not addressed adequately by the Government at the centre and the states, the food inflation will continue to rise even may touch again to very alarming rate.
 
He also said that the major drawback of the country’s inflation control strategy is that it always considers inflation as a seasonal and temporary problem.

 

 

Thesynergyonline Economic Bureau

NEW DELHI, DECEMBER 28 :
"THE year 2011 is a watershed year in Indo- Japanese relations as we signed the Comprehensive Economic Partnership Agreement (CEPA) during my visit to Japan in February, said Mr Anand Sharma the Union Minister for Commerce, Industry and Textiles in his address to business delegation led by Mr Yoshihiko Noda the Prime Minister of Japan.

"The signing of CEPA has begun a whole new chapter in our economic partnership, unlocking the true potential of trade between our two countries.

The CEPA will further deepen economic engagement in terms of trade in goods, services, and investment; contributing immensely to mutual prosperity", he said.

Japan is an invaluable and strategic partner in the process of India's development. India-Japan has to play major role in the globally changing economic landscape, he added.

Mr Sharma stated that, as a result of coming in to force of CEPA, the bilateral trade is likely to increase substantially and expressed hope that the target of US $ 25 billion by 2014 will be achieved during the specified period.

The bilateral trade between India and Japan during the year 2009-10 was of the volume of US $ 10.36 billion. The bilateral trade during the year 2010-11 reached to US $ 13.823

Informing about the Delhi-Mumbai Industrial Corridor the Commerce Minister said, "The Delhi-Mumbai Industrial Corridor envisages investment of US $ 100 billion and we have now decisively moved from the stage of planning and design to the stage of implementation."

On 24th October 2011, the National Manufacturing Policy was unveiled and seven industrial townships have been identified as the first National Investment and Manufacturing Zones based on models of sustainable development and smart communities, which has been perfected in Japan, he added.

The Japanese Government is committing US $ 4.5 billion for implementation of this project.

Asking for Japanese Government to invest in infrastructure sector, Mr Sharma expressed that, "Over the next couple of decades, we will see massive expansion in Indian infrastructure. In the coming 5 years itself, we have targeted to invest over a trillion dollars in creating capacities of infrastructure which will further catalyze India's economic growth. India has a structured energy dialogue with Japan which seeks to promote a structured cooperation in this sector. India has made rapid strides in the renewable energy sector.

In the field of agro-processing, we aim to double our food processing capabilities in the next 5 years and the establishment of 64 fully equipped agro processing zones and food parks provides an area of immense opportunities.

This is a segment where Japan can be an able partner to develop cross sectoral linkages in the entire value addition chain from agriculture to retail, packaging and logistics, the Minister said.

The Minister observed that, India's pharmaceutical sector is acquiring a global leadership position and Indian generics today constitute nearly a fifth of global supplies.

Our pharmaceutical companies can be of immense value in providing affordable healthcare which is much needed in a country of Japan's demographic profile. India also has a huge pool of trained pharmaceutical scientists, doctors and researchers, which opens up avenues for joint collaborative research for new drug discoveries along with joint IPRs, he said.

Thesynergyonline EConomic Bureau  

NEW DELHI, DECEMBER 28 :
XLRI School of Business and Human Resources, Jamshedpur, is organizing the National Industrial Relations Conference on January 14 and 15, 2012 at the XLRI campus.

The conference is centered on the theme 'Revival of Industrial Relations in India-Myth and Realities' to discuss and draw up a possible road-map for resolving some of the burning issues facing the manufacturing and industrial relations ecosystem in India.

This seminal conference is being organized by the Forum for Industrial Relations at XLRI (FIRE@X) which is partnered by the Indian Industrial relations Association (IIRA) and FES India. The conference comprises panel discussions, speaker sessions and paper presentations by students from the top b-schools of the country.

The panel discussion by industry stalwarts, acclaimed Judges, renowned Academicians and eminent trade union leaders aims to explore the political, legal, social and economic dimensions to the issue.

The Speaker sessions would be addressed by illustrious personalities of the likes of Mr. NS Iyer, GM- HR at Asian Paints Mr Ranendra Goswami, Head HR & Administration at Apollo Health & Lifestyle Ltd, Mr. GD Nadaf, General Secretary, SBI Officer's federation, Mr. JSR Prasad, Director, UNIDOC, Mr. P.Somaraju, Deputy Labour Commissioner among others.

Paper presentations would see students from top b-schools of the country present their perspectives on the issue.

The theme of the conference revival of industrial relations in India underlines the growing importance of industrial relations consequent to government legislations, growing union collectivism amidst growth of manufacturing sector in India. The mounting unrest at various industrial pockets that the country is witnessing in recent years portends ominous trends in Industrial relations.

Moreover, from the Honda unrest in 2005 to Maruti strike in 2011, the country has been mired in troubled waters on the Industrial Relations front and at times it appears that the situation is going from bad to worse.

A few infamous industrial disputes in the last 12 months is indicative of the challenges to Indian manufacturing sector, viz; stalemate at Maruti-suzuki at Manesar, Haryana, dispute at Allied-Nippon in Ghaziabad, strike by employees of Foxconn at Sriperumbudur, Tamil Nadu, a 50-day long strike by a section of workers at the General Motor's Halol plant, dispute at Hyundai factory at Chennai.

The loss at the Maruti plant alone is estimated at over Rs. 630 crore .

With the recent approval of new manufacturing policy(NMP) which pegs the manufacturing sector as a key driver for economic growth in the coming years and which is expected to herald India to be the next global manufacturing behemoth, such widespread labour unrests will result in dampening of interest in the minds of future investors in Indian manufacturing sector.

While various governments trying to push these issues under the carpet by branding them as nothing more than political conspiracies by the opposition parties it is quite obvious that the problem is more complex and structurally deep-rooted.

With years of rapid growth creating skill shortage and thus providing greater bargaining power to labour unions - is it time to give some real teeth to the management to hire and fire ? What supply-side labour policies would ease the pressure? And what kind of alterations need to be made to the much criticized and the so called restrictive, archaic, skewed labour laws so that they be politically more palatable? These are some of the onerous questions that the conference looks to address.

 

Thesynergyonline Economy Bureau

NEW DELHI, DECEMBER 27 :
INDIAN economy will soon revert back to the path of higher growth trajectory, said the Union Finance Minister Mr Pranab Mukherjee.

He said that the present downturn is only temporary. The Finance Minister was addressing the fourth meeting of the Consultative Committee attached to the Ministry of Finance during the current fiscal, here yesterday. The subject matter of the meeting was "Present State of the Indian Economy and the Roadmap for Future".

Mr Mukherjee said that the world economy is going through turbulent times.

He said that due to euro zone crisis, downturn in external demand resulting in slowdown in exports, currency volatility and current account deficit among others have also affected our economy. It was, however, reassuring to note that the pause in the Indian growth story was brief, Shri Mukherjee added.

He said that the food inflation has come down to 1.8 percent and there is moderation in inflation in general.

He said that the savings rate had also gone up. Necessary instructions had been issued to all the Ministries and departments to adhere to their expenditure ceilings.

Various members of the Consultative Committee participated in the discussion. Members said that efforts should be made to stop the migration of agricultural labourers from villages to cities. In order to achieve this, setting-up of agrarian industries in rural areas should be encouraged.

Some members stated that efforts should be made to reduce agriculture's dependence on rain. Enough incentives should be given to produce oil seeds and pulses indigenously, the Members suggested.

They said that credit to agriculture should also be increased and cash subsidy should be given directly to the beneficiaries. Some Members suggested that there was a need to bring FDI to give justice to farmers. The Government of India should arrive at a proper mechanism in close coordination with State Governments.

It was stated that there must be a credible strong path of fiscal consolidation. Members stated that some key sectors like power, civil aviation, health, infrastructure and telecom need priority and higher investment. The Members said that necessary checks should be in place to ensure that funds are not mis-utilized.

Members of Parliament who attended the meeting include Mrs Rajkumari Ratna Singh, Mr S P Y. Reddy, Mr T R Baalu and Shri Vijay Inder Singla all from Lok Sabha and Mr N K Singh, Mr Tariq Anwar and Dr Ashok Sekhar Ganguly from Rajya Sabha. Senior officials of the Ministry of Finance were also present at the meeting.

 

Thesynergyonline Economic Bureau

NEW DELHI, DECEMBER 26 :
WITH India planning to invest over US$ 1 trillion in infrastructure projects in the next five years, Chinese companies are gearing up to cash in on the opportunity.

China Architectural & Industrial Glass Association (CAIGA) and China Building Material Exhibition & Trade Center (CBME), the two Chinese trade organisations in association with Asian Business Exhibitions & Conferences Ltd (ABECL) on Monday announced to hold an international glass technical equipment and building material products exposition on December 7-9, 2012 at Pragati Maidan.

Over 250 Chinese companies will be participating in the exhibition with around equal number of Indian companies. This is the first announcement to strengthen the trade relationship between the two countries.

Economic and Commercial Counselor in the Chinese Embassy, Mr Peng Gang, said at a media conference on Glass Inter Tech 2012, "According to the India's draft 12th Five-Year Plan, India will invest $ 1 trillion in infrastructure development. The firms of both sides can strengthen cooperation and investment in this sector. Chinese enterprises are ready and showing keen interest to cooperate with Indian industry (infrastructure)."

"Growing building material demand in India offers huge potential for Chinese investments to cooperate in housing sector by bringing technology, equipment and construction material. During the past three years, mutual investments have boosted 10 times and Chinese enterprises have completed infrastructure projects in India worth over $ 10 billion," he said.

":The Sino-India bilateral trade, which was $ 63 billion in 2010-11, is increasing significantly. From January to October this year, bilateral trade volume increased by 22 per cent to $ 60.6 billion, maintaining a strong momentum of growth," he addd.

"China keen on getting support from India on tax rebates," he said.

Mr. Zhang Baiheng, Secretary General, CAIGA said, " There is a Chinese old saying, 'a good neighbor is better than a distant brother.' India is our close and friendly neighbour, and is known as a great and gorgeous country. Personally, I am profoundly attracted by the culture and history of India, and I feel very much cheerful to witness the remarkable achievement and development of the economy, technology and culture of India."

"India and China are both great countries with long history & huge population of about 2.5 billion (taken together) which is 2/3 of world's total population. As the two biggest developing countries we are commonly faced with the mission of promoting economy and improving social prosperity," he added.
 
  "With good intentions, CAIGA & CBME has entered into collaboration with ABEC to jointly organize the first trade exhibition in India on glass technology, equipment and building material – Glass Inter Tech 2012," he added..

"We will bring the best Chinese enterprises that have excellent products and high credit. We will also invite the most renowned experts & scholars from China to realize multi-dimensional exchange and communication to take the cooperation & association to a new level. " – he further added

 Sheng Meixin, Director CBME expressed, "As the world's two largest developing countries, China and India not only enjoy traditional friendship between both countries there is also a huge space for cooperation in economic and trade areas. In recent decades, we have seen the rapid development in China, especially in the period since the reform & opening up. We know that construction and building materials industry in India is the second most active industry after Agriculture which is the foundation of India's rapid industrialization & urbanization."

"The friendly exchanges between both countries will help promote the prosperity of India's construction and building materials industry and also boost up the development and progress of the economy and society of both the countries. For this purpose CAIGA and CBME together with ABECL will hold the Glass Inter Tech 2012 exhibition in India, " he said.

"Representing China, we sincerely invite glass and building materials companies, trade organisations from China, India and other countries to actively participate in this exhibition. Let us take this great opportunity to promote our friendship, to enjoy the win-win cooperation, and to achieve common development," he said.

Stressing on the need for a focused and international show for Indian Glass Industry Manish Gandhi, Co-Director, ACETECH said, "Glass industry is growing at a faster pace globally, and India is no exception. With glass finding a major application in construction, automobiles, consumer goods and packaging, the industry is expected to log a 17 percent CAGR in the next decade."

"The glass industry is an integral part of the Indian economy and everyday life, Where Glass is a wonderful building material and finds great applications in architecture, construction, engineering, automotive and other applications other than this it is used in a myriad of consumer products ranging from food and beverage packaging, lighting products for homes, communications & much more," he said.

The glass industry in China commands 50 percent of global market share and has made tremendous advancement in terms of technology. ACETECH is the largest building material & construction show in India, spread across 5 cities and logging the attendance of all prominent builders, architects, developers, consultants, project managers etc.
 
Mr B Prasada Rao, CMD, BHEL, receiving the 'Sivananda Eminent Citizen Award- 2011' of the Sanatana Dharma Charitable Trust from Mr E S L Narasimhan, Governor of Andhra Pradesh.

 

Thesynergyonline Economic Bureau

NEW DELHI, DERCEMBER 26 :
A study by industry body ASSOCHAM covering key macro-economic indicators and financials of 6,485 companies has found dismal performance during second quarter of current fiscal – mainly due to anti-inflationary monetary policy followed by the Reserve Bank of India (RBI) since May last year.

A total of 6,352 companies in private sector and 133 public sector units were analysed on seven parameters – interest payment, net sales, investments, profit after tax, working capital, profit after tax to sales, and interest payment to profit before depreciation, interest and taxes (PBDIT).

There should be a new approach to control inflation – one that encourages production rather than depend on curtailing demand – and therefore increases production of upstream industries and intermediate goods, said The Associated Chambers of Commerce and Industries of India (ASSOCHAM).

It called for fast-track clearances for pending infrastructure projects and allowing foreign direct investments in the pension sector to infuse long-term funds and help revive the economy while curbing inflation.
"At the end of 2011, India is living under the shadow of twin crises," said president Dilip Modi while releasing findings of the ASSOCHAM year-end review. "The global economy is in turmoil and there is a major issue in domestic economy by way of inflation. India's pace of growth has slowed down, the rupee is sliding and industrial production is in negative zone."

The corporate sector has borne the brunt of RBI's anti-inflationary monetary policy. The absence of a push to boost investments and ease supply-side constraints has further aggravated the problems. "The sustainability of India's growth story stands for test."

The ASSOCHAM review said the growth rate of net sales in second quarter of 2011-12 slowed down to 20.41 per cent compared to 27.67 per cent in first quarter. The highest decline was in public sector units – from 35.99 per cent to 21.45 per cent.

The profit after tax figures of PSUs and private companies show 35.24 per cent decline in second quarter compared to 2.82 per cent growth in first quarter. "As the cost of funds continued to remain under pressure, investments at large have taken a backseat. The growth rate in investment figures stood at 9.09 per cent in Q2 as against 15.48 per cent in Q1."

Equity markets too witnessed a downturn as foreign institutional investors pulled out funds from emerging market economies.
The Eurozone debt crisis and slow economic recovery in the United States and Japan also contributed to the 6.9 per cent GDP growth rate in Q2 compared to 7.7 per cent in Q1. Special emphasis needs to be made regarding mining and manufacturing sectors whose performance have remained subdued for a prolonged period of time.

"With rising interest rates, the cost of borrowing has increased, investments have dried up and profit margins have taken a hit," said the ASSOCHAM review. Trade deficit during first half of 2011-12 grew by 3.3 per cent to 73.3 billion dollars.
Depreciating rupee will particularly hit the industrial sector and put pressure on their costs as imports of oil, coal, metals and minerals and intermediate products will get costlier. Decrease in international commodity prices is bound to get offset by falling rupee value.

Thus import based industries should be encouraged to invest in manufacturing hubs, said ASSOCHAM. The government should re-introduce investment incentives through taxation provisions as the cost of borrowings for corporate sector will rise due to depreciating rupee.

If large infrastructure projects are cleared, then a large fiscal support automatically gets introduced into the system without any burden on the Centre's finances. "The government should make investments attractive and invite long-term debt funds in the infrastructure sector."

Production – rather than imports – of resources like coal, steel and iron ore should be encouraged to create new employment opportunities and cut mounting current account deficit. 

 

 Thesynergyonline EConomic Bureau

NEW DELHI, DECEMBER 26 :
ASSOCHAM, Creative Living Foundation of India and Paiman Trust of Pakistan have set up an institutional mechanism called SAARC Women's Initiative for Peace and Prosperity (SWIPP) to form a sustainable coalition of women from India, Pakistan, Bangladesh, Nepal, Sri Lanka, Maldives, Bhutan and Afghanistan. 

The objective of SWIPP is to promote economic, educational and cultural cooperation in the SAARC region. The MoU was signed on Monday by Mr D S Rawat, secretary general of ASSOCHAM, Dr Harbeen Arora, founder and CEO of Creative Living Foundation, and Ms Mossarat Qadeem, executive director of Paiman Trust.

The initiative plans to empower people with education and economic independence to encourage entrepreneurship in south Asia and provide them a networking platform to pull the masses out of poverty, illiteracy, disease and crime, said Mr Rawat.

ASSOCHAM is mounting a 25-member business delegation to visit Islamabad, Karachi, Lahore and Rawalpindi from January 9 to 14, 2012 in a bid to boost annual bilateral trade which currently stands at $2 billion . It is scheduled to meet leaders of political parties, business community, bureaucracy and social organisations.

Dr Arora said formation of women associations and support groups should be encouraged to provide them bandwidth for critical thinking and critical mass. "There is need more than ever before for having more examples of successful entrepreneurship by women and inspiring role models."

Business leaders should unleash entrepreneurial urge and forge ahead with economic partnerships among the neighbouring nations to promote core values of unity and peace, said Ms Qadeem. "Space for women in economic and political spheres is essential for equitable development and peace in south Asia."
Under the South Asia Free Trade Agreement (SAFTA) signed in 2004, all SAARC member countries have to gradually phase out tariffs and other trade barriers on products and services by 2016.

 

Thesynergyonline Economic Bureau

NEW DELHI, DECEMBER 24 :
CHILDREN aged between 10 and 18 are growing sleepless nights, spending an average of 6 to 7 hours a day using some kind of electronic device, especially among metropolitan which can lead to negative outcomes such as social isolation, insomnia, depression, anxiety, obesity and it also affects mental health of an individual.

In Its countrywide survey conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) under the aegis of its Social Development Foundation, in the months of September-November'11 on "Tech toy addictions: A Rising Trend In Metros" has revealed children of modern era are growing sleepless night owls, spend their sleeping time with other things, watching television, playing video games, browsing computer and texting cell phones.

Easy availability of technology with lack of parental supervision is a significant reason for this ever-increasing menace of technology addiction, highlights the survey.
Activities like watching TV and chatting online have greatly cut into teenagers' sleeping time. The teen sleep survey showed that 80 percent of school students are getting less than eight hours of sleep on school days. More than any other group (10-18 years old) of population they are the most vulnerable to such risks.

An aspect which emerged out of this survey is that children of working parents are found to be more technology addictive in the absence of parental supervision, as compared to those whose single parent is engaged in employment. This trend is abundant in metros where normally both the parents are employed, reveals the survey.

The survey was conducted in 10 major cities of Delhi, Kolkata, Chennai, Bangalore, Mumbai, Hyderabad, Pune, Ahemdabad, Lucknow, Jaipur and 2500 tech savvy (an equal number of both male and female) are randomly interviewed by an ASSOCHAM team.

The survey reveals that new technologies, such as cell phones and social networking sites, give teenagers easy access to their friends 24 hours a day. Over half of those interviewed reportedly told that they accessed internet and mobile phones for over 7 hours/day. Significantly, boys reported excessive internet browsing as compared to girls.

According to Dr B K Rao, Chairman ASSOCHAM Health committee said that school-age children and adolescents need at least nine hours of sleep a night. Nearly half sleep less than eight hours on school nights.

He also said addiction to phones is becoming common and youngsters feel under pressure to be interconnected and reachable 24 hours a day.

Dr Rao further said that cell phones are not the only culprits of sleep deprivation, video games and computers contribute to teenagers' inclination to stay up all night. Nighttime media use like video gaming, Internet surfing and TV time with sleep deficits in teens.

The trend of sleep deprivation is leading to many daytime problems for teenagers, including headaches, impaired concentration, weakened immune systems, crankiness, increased use of nicotine or caffeine and hyperactive behavior often misconstrued as attention deficit hyperactivity disorder.

The survey showed that 88 pecent of the students are up late doing homework or studying. Other late-night activities include watching television, surfing the Internet or chatting online.

Around 86 percent of surveyed said they have a phone, music system, computer or television in their bedroom and two-thirds have all three. And one-fourth of teenage admitted that their quality of sleep is affected by leaving on the TV, video games, or computer.

Majority of respondent said that they keep phone at her bedside in case a friend called or text-messaged in the middle of the night. Sometimes, they receive calls or messages as late as 4 a.m.

The survey warns that excessive use of mobile phones makes teenagers more restless and can exacerbate sleep problems and stress.

They also consumed more stimulating drinks, suffered from disrupted sleep or insomnia and are more susceptible to stress and fatigue than young people.
Dr Rao further said that youngsters need to be informed of the negative effects of excessive technology use on their sleep-wake patterns, attention and cognitive problems and the associated serious health risks. It buildup of tension from being constantly connected which creates the stress and disturbed their sleep.

The survey shows teens who sleep less than 8 hours a night exhibit risky health behavior. Over 68 percent of teens admit to insufficient sleep less than 8 hours.
Dr Rao said that can lead to several health problems like loss of appetite, hair fall and poor concentration as short- term effects. While they could also face health hazards like anxiety, depression, hypertension, obesity, anemia etc in long term. Therefore, they need to understand the consequences of sleepless network in order to have a good and more of healthy future.

 

NEW DELHI, DECEMBER 24 :
STAR rated hotels in the metros have reportedly upped the prices in their restaurants, pubs and hiked the room tariffs by nearly 30 to 60 per cent to cash in on the festive mood of party revelers, according to a latest survey of the apex industry body ASSOCHAM.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) interacted with about 100 managing directors, banquet managers, restaurant managers, food and beverage directors and spokesperson of the leading star rated hotels in the metro cities of Ahmedabad, Bangalore, Chandigarh, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune to gauge the mood amid Christmas and New Year excitement amid inflation and slowdown in major economies.

Most of the major hotels' representatives said that they are providing attractive offers, packages for couples which includes food, liquor packages along with an accommodation to make their stay pleasant and comfortable so that they can stay back after the party.

"Star rated hotels in metros have increased their room tariffs by an average of 30 per cent to nearly 60 per cent and are offering gourmet cuisine, elaborate new year eve buffet and a variety of dining and entertainment options inclusive of the room tariff," said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the survey.

Nearly 40 per cent of the respondents said that they are all geared up to host New Year parties and anticipating a rise in footfalls they have upped prices in their high-end pubs and restaurants by over 50 per cent and are charging anywhere between Rs 10,000 to Rs 25,000 per couple for gourmet food accompanied by unlimited premium liquor packages and table reservation.

About 70 per cent of those surveyed said that they have decent bookings for the new year eve parties and in spite of the slowdown in the economy they expect a surge in the number of bookings to rise by at least 20 per cent to nearly 40 per cent.
Almost all the respondents said that they are all set with an array of attractions for guests including distinguished buffet menu, expensive and premium spirits/cocktails, theme parties, performance by DJs, celebrities from film and television industry and music played by live bands.

Besides, many respondents said they have made special arrangements for couples with kids and they have dedicated hotel staff who will take care of kids and are ready with different arrangements like a dedicated kids' zone so that couples can enjoy and ring in the new year without worrying about kids.

Over half of respondents cited the soaring inflation as the key reason they have increased the tariffs but are providing a plethora of special packages so that people are not forced to cut back on parties and can usher in the New Year with élan.

Thesynergyonline Economy Bureau

NEW DELHI, DECEMBER 21 :
INDUSTRY body ASSOCHAM on Wednesday  called for wideranging reforms and clear policies to effectively direct credit flow to the agriculture sector and encourage contract farming for furthering financial inclusion in India.

Agricultural credit can be a means of furthering financial inclusion as it would be linked to economic activity, it said. Of 148 million rural households, 89 million are farm households and 46 million of these are outside the financial services net, according to a study done by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and global consulting firm Ernst & Young.

“However, reforms and clear policies are required to effectively direct credit flow to the agriculture sector. Or else, it will end up burdening banks and the state exchequer,” said the study titled ‘Trillion Dollar Economy – Opportunities and Challenges for Banks.’

A total of 9.1 million new farmers were provided bank credit in FY 2010. Banks – including cooperative banks and regional rural banks – met nearly 113 per cent of the government’s target of Rs 3.25 lakh crore while the recovery-to-demand was over 76 per cent. About 18 per cent of credit goes toward corporate entitites or organised units.

“Corporates can play a vital role in risk management and providing an assured market for agricultural produce which can benefit farmers, banks as well as the rural economy, said the study. “The participation of corporate sector in farming segment will play a crucial role in technology transfer and capital inflows.”

At present, India has the second highest number of financially excluded households in the world. About 40 per cent of the country’s population has bank accounts and only 10 per cent have any kind of life insurance cover while a meager 0.6 per cent has non-life insurance cover.

There are six lakh un-banked villages and only 38 per cent of all bank branches are in rural areas. Although efforts have been made to expand the branch network from 8,700 at the time of nationalisation in 1969 to 87,000 now, only 32,000 branches are present in rural India.

ASSOCHAM said non-banking financial companies which account for 11.67 per cent of advances in the total financial system can also play a major role in furthering financial inclusion. “Public investment in less favoured areas not only offers substantial poverty reduction per unit of spending but also boosts economic returns.”

The agriculture sector accounts for 14 per cent of the country's total GDP with 235.88 million tonnes of food grain production in 2010-11 on the back of all-time high output of pulses and wheat. Some two-thirds of India’s people depend on rural employment for a living.

It employs 52 per cent of the total workforce and – despite a steady decline of its share in the GDP – is still the largest economic sector and plays a significant role in overall socio-economic development.

 

Thesynergyonline Economic Bureau  

NEW DELHI, DECEMBER 20 :
ADDRESSING a conference on India’s Innovation Laboratory : Working Group Dialogue for Promoting Inclusive Growth in Agriculture, jointly organized by the onfederation of Indian Industry (CII) and the USAID in New Delhi on Tuesday , Dr Rajiv Shah, Administrator, USAID said, “ US has had  profound collaboration with India in all sectors, especially in agriculture, which started in 1960s with the establishment of different Agricultural institutes across India, creating the foundation for the Green Revolution.”

“Now the time has come to revive the same to create a partnership for an evergreen revolution in view of existing challenges of changing climate, limited resources and growing demand,” he added.
 
Dr Shah emphasized that new business models are to be developed which require private sector involvement for strategic investments in infrastructure. 

He said this is the beginning of new partnership wherein there is a shift from donor and recipient roles to one of equal partnership and shared responsibilities.
 
Dr Shah announced that USAID in partnership with Confederation of Indian Industry’s Food and Agriculture Centre of Excellence will set up 30 rural business hubs in eastern India that would be exclusively focusing on farmers for disseminating best practices and technologies.

He complimented CII for having been instrumental for bringing private sector closer for such engagements.
 
Mr Hari S Bhartia, past president, CII and co-chairman, Jubilant Bhartia Group, in his address, said that one of the key concerns of Indian agriculture today is making the innovations and technological developments available to the end users.

The experience of agricultural development in  the country has shown that the existing systems of delivery of agricultural inputs and purchase and use of agricultural output have not been efficient in reaching the benefits of better linkages between agriculture and agro- processing industry to the farmers or the agro-industry, he added.
 
Mr Rakesh Bharti Mittal, chairman, CII National Council of Agriculture and vice chairman and managing director, Bharti Enterprises said that  CII firmly believes that a sustained effort at developing an innovative agribusiness sector in the country will eventually lead to the opening up of a completely new frontier of economic development by unleashing an enormous amount of value creation based on India's natural and competitive advantages integrating  agriculture into business- led value chains.
 
Mr Chandrajit Banerjee, Director General, CII said that the slowdown in the agriculture sector was a widespread phenomenon encountered during the last decade which adversely affected the farmers in all the countries, and more so, in agriculture dependent poverty-ridden and poor countries. In this context, the theme chosen for today’s dialogue, `India’s Innovation Laboratory: Working Group Dialogue for Promoting Inclusive Growth in Agriculture' is very relevant and timely.

This dialogue is scheduled at an appropriate time when the whole world is seriously concerned with the challenges posed by demands of the burgeoning population.
                                                                                          
The dialogue was addressed by eminent speakers like Mr T Nandakumar, Former Secretary (Agriculture); Mr P Chengal Reddy, Secretary General, Consortium of Indian Farmers Alliance (CIFA); Mr Ajay Shriram, Chairman, DCM Shriram Consolidated Ltd; Mr Vivek Bharati, Executive Director, Pepsico Holdings India Limited; Dr Gyanendra Shukla, Director, Monsanto Holdings India Ltd; Ms Aruna Bhinge, Head (Food Security), Syngenta India Limited to name a few and the Sessions were focused on Food Security; Production Systems; Post Harvest Technologies and Allied Agro Industry.