Daily Excelsior...Business

New ASSOCHAM
president lauds
vision of CII

NEW DELHI, Dec 23: Rising above the chamber rivalry, ASSOCHAM’s newly-elected President K K Nohria has patted the Confederation of Indian Industry ....more

Indian economic
fundamentals stable
despite challenges

MUMBAI, Dec 23: India’s economic fundamentals remained stable amid severe external disturbances as ...more

Banks may formulate
policy to recover NPAs
of up to Rs 25,000

MUMBAI, Dec 23: Reserve Bank of India has said that public sector banks may formulate a policy for ....more

Delay in enforcing
IPR norms harming
Indian drug companies

NEW DELHI, Dec 23: The delay in enforcing intellectual property rights norms in India is harming.....more

Foreign as well as
domestic funds sell equity

MUMBAI, Dec 23: Foreign Institutional Investors (FIIs) as well as mutual funds remained net sellers in equities in the week ended December 21, at .......more

Gujrat SEZs to have
their own power
generation facility

AHMEDABAD, Dec 23: Gujarat Government has decided to allow all Special Economic Zones (SEZs) in the State to have their own power generation and .........more

Inflation rate touches 121-week low

NEW DELHI, Dec 23: Persistent downturn in prices of primary articles and manufactured products led yet another minuscule .........more

Medical insurance unattractive to Indian
masses: GIC chief

BANGALORE, Dec 23: Medical insurance in its existing form in India is far inadequate and unattractive to the Indian population,.....more

New ASSOCHAM president lauds vision of CII

NEW DELHI, Dec 23: Rising above the chamber rivalry, ASSOCHAM’s newly-elected President K K Nohria has patted the Confederation of Indian Industry (CII) for its vision and leadership which has enabled it to make great strides.

Probably the long-term vision of CII was better than two other apex chambers, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and the Federation of Indian Chambers of Commerce and Industry (FICCI) Mr Nohria told UNI in a chat.

While every chamber was telling the Government what it should do, in all fairness, CII also started saying what industry and business should do. That brought them closer to the Government, and helped develop CII-Government network. Basically, this relationship was developed which enabled the CII to have a bigger say in national affairs, Mr Nohria said.

Mr Nohria, CMD of Crompton and Greaves, chartered out the role the ASSOCHAM will play under his leadership and said he was determined to make a mark. If you can not make, then there is no fun in life. You can make a mark by setting the direction right .

He said CII Secretariat has had the privilege of having a long term Secretary General, Mr Tarun Das, who has been an asset to that organisation and one who has given mature guidance to it over the years.

Mr Nohria, who till recently was heading the western region of the CII, said he will carve out a niche for his chamber which will satisfy his members.

We have no intention of competing with CII or any other chamber. As long as we can satisfy our members, take up issues that concern them and guide them we would have done our task.

He said he was in the process of strengthening the Secreariat of ASSOCHAM to enable it to have positional papers and more research-oriented recommendations.

When asked whether it was the lack of vision on the part of its past presidents which has relegated ASSOCHAM way behind other chambers, Mr Nohria quipped, I don’t think it was lack of foresight of our presidents. That will be a very unfair statement to make. Mr Nohria then traced the history of the apex chambers and said at the time of independence ASSOCHAM was regarded as the voice of the multinationals because of large number of foreign companies being its members.

FICCI on the other hand was favoured more because it was considered the voice of Indian business as most domestic corporates were its members. It was then that ASSOCHAM decided to broaden its membership by enrolling Indian companies as new members.

At that time CII was only a miniscule association representing a small segment of industry, he said.

It is only with effect from January one, 1992, the earlier name of Confederation of Engineering Industry (CEI) was changed to CII. This coincided with the Government opting for liberalisation of the Indian economy when rapid expansion and consolidation of CII began.

The Confederation began its journey in 1895 when five engineering firms, all members of the Bengal Chamber of Commerce and Industry, joined hands to form the Engineering and Iron Trades Association (EITA). This Association was set up with the aim of pressurising the colonial Government to place Government orders for iron and steel and engineering goods with companies based in India. At that time the practice was to place all Government orders with firms based in the United Kingdom.

The change in name from EITA to Indian Engineering Association (IEA) was in keeping with the association’s decision to exclude traders from the membership and concentrate fully promoting the cause of manufacturers.

In 1942, IEA was the only all india association of engineering industry and represented mainly big engineering companies, particularly the British one. This led to a situation where the interests of Indian firms, mainly medium and small scale, were not sufficiently represented, this led to the formation of Engineering Association of India (EAI) in 1942 as an affiliate of the Indian Chamber of Commerce.

In April 1974, the two associations - IEA and EAI - merged to form the Association of Indian Engineering Industry (AIEI).

Foreseeing the upcoming challenges in the future, the leadership at AIEI felt the need for greater consolidation and solidarity that would put the industry on a stronger footing which resulted in the change of the name from AIEI to CEI.

Mr Nohria, an engineer by training and now a professional manager, said greater institutionalisation was needed at ASSOCHAM. Apart from other things, this required improvement in the quality of the product.

When asked whether his members were not keen that ASSOCHAM be the number one chamber, Mr Nohria remarked they want to be successful. As long as they are number one, they could not care less. They want assocham to be a good chamber. My aim would be that my quality should be equal to CII.

Mr Nohria, who is on the board of 15 reputed companies of the country, also spoke highly of his employer, Mr L M Thapar, for giving him full freedom to operate the company he is heading.

He said family ownership was not a problem and what was important was the freedom to manage a company. I have told my employer only if you give me freedom then only can you ask me why I have not performed. I have had no problems .

When told that he could have been lucky in this respect, Mr Nohria replied let me put it this way. It is in the interest of the employers to give freedom to their managers.

Mr Nohria, Past President of Bengal Chambers of Commerce and who is actively associated with the educational institutions and is currently Chairman Board of Governors, Thapar Institute of Engineering and Technology, Patiala, said he was also great believer in good corporate governance.

The CII describes itself as industry association with more than 4,000 companies as direct members and distinct from chamber of commerce which are an umbrella organisation of regional and local chambers. (UNI)

Indian economic fundamentals stable despite challenges

MUMBAI, Dec 23: India’s economic fundamentals remained stable amid severe external disturbances as the year ends on a positive note with high foreign exchange reserves, stable rupee exchange rate, soft interest rates and growing foodgrain stocks.

The Gujarat earthquake and terrorist attack on the Parliament on the domestic front and the September 11 attacks in the USA, increased application of non-tariff barriers by the developed countries and violation of the agreed norms of the World Trade Organisation (WTO) made an impact on Indian as well as other economies.

As a result, most nations, including India, had to scale down the Gross Domestic Products (GDP) growth forecast to bare minimum levels.

India’s export growth, barring software and diamond jewelry, was restricted due to a slowdown in global trade particularly in the USA, Europe and Japan. The Government has drastically cut the current fiscal export target from 12 per cent to mere 3 per cent. As a result, against an expected growth rate of 6-6.50 per cent at the beginning of the year, the country is now likely to settle at 4.90 per cent, the lowest since 1998 when the growth was only 4.80 per cent.

However, foreign exchange reserves touched about 48,000-million dollars mark sending positive signals to the economy.

Even the stocks of foodgrains reached a high of about 60 million tonnes but brought with them the problem of storage.

According to leading economists and analysts, the most discerning factor for the domestic economy during the year was the declining trend in the household savings following the Voluntary Retirement Scheme (VRS) in factories, lowering of deposit rates and falling industrial growth rate due to lack of demand from wholesale as well as retail segments.

Industrial units also undertook ‘downsizing’ through VRS and other prudential measures such as cut in social spending.

Household small savings including post office deposits grew just by 0.71 per cent as against a growth rate of 17.73 per cent in the previous year. Given the slowdown in the economic growth rate some decline in the accretion to small savings was inevitable while the bank deposits continued to be at a higher growth path during the year, say experts.

Expressing concern over the free flow of imported goods into the domestic markets, corporate leaders said there was a need to deepen the reforms in the financial and judicial sectors before opening up national trade to outsiders.

Unless there is a reduction in the cost of production through lower interest rates, technology upgradation and other fiscal incentives, it would be very difficult to withstand the global pressure in a liberalised market economy.

Leading trade bodies like the Indian Merchants Chamber (IMC) said that there was an urgent need for the government to take certain confidence-building measures to attract private sector funding including Foreign Direct Investment (FDI) into the core sector of the economy.

Though traditionally India has had a high rate of domestic savings over the years, much of these savings are not channeled to the productive sector because of lack of transparency and safety in investment practices.

With the capital market in doldrums, primary issues having been noticeably absent and mutual funds having had a bleak year, the Indian economy is now largely dependent on domestic savings for boosting investments.

Reserve Bank Deputy Governor Dr Y V Reddy said poverty and unemployment were the major factors posing threat to the growth of economy and felt that the corporate sector should generate resources to support the Government’s efforts in eliminating these social problems.

Though Union Finance Minister Yashwant Sinha asserted that his Government would enhance spending for completion of projects, mainly in the core sector of the economy, economists said there was a need to contain Government spending to curb the growing fiscal deficit.

Currently, the combined central and state deficit is around 9.2 per cent of the GDP which is close to the level of 9.4 per cent recorded in the crisis year of 1991.

While there are growing expectations of a recovery in economy towards the beginning of the next calender year, exports declined further by 8.5 per cent in the month of September as against over 21 per cent in the previous year.

Corporate leaders also expect the index of industrial production to reach up to around 3.5 per cent at the end of the current fiscal from the current level of 2.3 per cent following expectation of growth in the non-metallic mineral products, transport sector, agriculture and petroleum sectors.

Rural demand is likely to pick-up which would be one of the key factors for the revival of the economy, they said.

Godrej Group Chairman Adi Godrej commented that there is some sign of revival going by the agriculture output though it is not definite.

Mr H F Khorakiwala of Wockhardt Limited said the pharmaceuticals industry is showing some positive results due to growing focus on research work.

Asian Paints Vice Chairman Ashwin Dani said any recovery in the economy would be reflected in the paints industry during the last quarter of the current fiscal year. About 30 per cent higher disbursals of housing loans in the first half would lead to good sales during the second half of the year, he added.

Whatever be the forecast, major players from the capital market felt that as long as the "feel good factor" persists, the market would drive the economic activity to a high plato in the coming months inspite of uncertainties. (UNI)

Banks may formulate policy to recover NPAs
of up to Rs 25,000

MUMBAI, Dec 23: Reserve Bank of India has said that public sector banks may formulate a policy for recovery of dues pertaining to loans outstanding up to Rs 25,000, which have become Non-Performing Assets (NPAs) as on March 31, 1998.

The banks can also devise their own accounting procedure for treatment of the outstanding amount subject to the one-time settlement, RBI said in a release here today.

Outlining the parameters while formulating the policy, the apex bank said it should cover all loan accounts with outstanding balance of up to Rs 25,000 principal amount (excluding any interest element) in all sectors irrespective of the nature of business or purpose.

Any interest which was included in the outstanding amount as on March 1998 or accured on the balance outstanding after the date would be waived, RBI said.

Suit-filed and decreed debts would also be covered and after the settlement was reached, the banks may take appropriate steps for closure of cases in respective courts.

The scheme would not, however, cover cases of fraud, malfeasance and wilful defaults, RBI said adding, the guidelines would be operative up to June 30, 2002.

This follows the November 12 meeting of Union Finance Minister Yashwant Sinha with the Chairman and Managing Directors of PSBs, in which the former had indicated that a suitable scheme should be evolved by the banks for recovery of such dues.

Referring to payment, the apex bank said the amount of settlement arrived should normally be paid in one lump sum. In deserving cases, banks may consider recovering the settlement amount in instalments with down payment of at least 25 per cent to be received at the time of settlement.

RBI said the balance amount should be recovered within one year from the date of settlement.

The decision of the compromise settlement would be vested with the Branch Manager. In case, the loan had been sanctioned by the manager himself, the decision should be taken by the next higher authority, it said.

The banks should follow the guidelines without discrimination, it added.

RBI said the banks should give adequate publicity to all eligible defaulting borrowers to avail of the opportunity of one time settlement scheme of their outstanding dues in terms of the guidelines.

A monthly report on the progress and details of settlement made should be submitted by the concerned authority to the higher one and head office. The compromise settlement reached should be reviewed by the board at monthly intervals, it added. (PTI)

Delay in enforcing IPR norms harming
Indian drug companies

NEW DELHI, Dec 23: The delay in enforcing intellectual property rights norms in India is harming the interest of domestic pharmaceutical companies, according to experts.

Taking part in a special session on ‘IPR issues on drugs and pharmaceuticals’ at the ongoing three-day congress that would conclude here today, speakers were unanimous that policy support, including the IPR compliance stipulated by the WTO, would make the Indian pharmaceutical companies global players just as it happened in the computer software sector.

Mr B K Raizada, senior vice-president of Ranbaxy Laboratories, said shackles such as the IPR non-compliance would come in the way of the Indian companies in benchmarking with global pharma majors to compete in the global markets. Though the Trade Related Intellectual Property System (TRIPS) was firmed up in 1973, the country was dragging on to enacting the revelvant provisions, he pointed out.

He said that India was already a major global player in bulk drug manufacturing and trade and IPR compliance could give the country a foothold in drug formulation manufacturing and trade. This would also reverse the brain drain happening in the pharmaceutical sector, he said.

The apprehension that IPR adherence would push up the domestic drug prices and make it unaffordable to the common man was totally misplaced as 95 per cent of the formulations in the domestic market was off patents, he said and added that even when the IPR protected drugs would come into the Indian market it would be much cheaper and fairly affordable than in the developed countries as the manufacturing cost could be much less.

Dr Nagin Patel, Professor at the Arnold and Marie Schwarts College of Pharmacy, New York, said adoption of IPR would boost up foreign investment in India’s pharmaceutical sector and accelerate the pace of research and development along with facilitation of technology transfer.

"The Government must recognise that patenting is not against the people’s interest, on the contrary it would do good to the people and industry," he said and pointed out that the patents protection in the United States had helped the Indian firm Ranbaxy to secure about 30 drug patents and earn 57 per cent of the company’s revenue from the American market.

Noted trade mark Attorney S Guru Krishan Kumar said that Indian courts have started respecting the patent and trade mark protection in the drug sector. He felt that comprehensive legislative backup to patenting would push up knowledge industry and consumer confidence.

CEO and MD of Ranbaxy Laboratories Ltd. D S Brar said that India should capture the opportunity of new drug discovery research and participation in clinical research. Since India has technical competence and low cost R&D facilities it could provide an excellent opportunity for clinical research and other R&D activities. However, it would require corrections in regulatory provisions and developing networking between universities, Governemnt organisations, research institutes and industries.

Citing the example of the US, he said that universities working on the Government finances could play a pivotal role in development of molecules and industries could convert them into good quality pharma products. He stressed that pharma companies should focus on development of new molecules rather than re-engineering of the already available molecules to exploit the opportunities arising in the post GATT era.

India could utilise the great potential of generic drugs export to the developed countires but development of world class facilities for manufacturing, quality control and regulatory affairs would be essential pre-requisite for it, he added.

The congress discussed ways and means for establishing a niche in the world pharma market for Indian pharma industry and exploit the export potential of 25 million dollars market by 2010. India export at present was of the tune of 2.5 million dollars only.

A focused discussion was held between Chief Executive of US Pharmacoponeia Commission Roger Williams and members of Indian Pharmacoponeia Committee headed by Dr Nityanand and representatives of Indian pharma industry for harmonisation of global specifications for drugs. (UNI)

Gujrat SEZs to have their own power generation facility

AHMEDABAD, Dec 23: Gujarat Government has decided to allow all Special Economic Zones (SEZs) in the State to have their own power generation and distribution facility, Development Commissioner of Kandla Sez Yogendra Garg said.

However, the final decision in this regard is yet to be announced, he said while making a presentation at the Gujarat Chamber of Commerce and Industry (GCCI) last evening.

Kandla Sez would like to have private participation in both power generation and distribution once the final order came out, Mr Garg said adding that this decision would apply to all SEZs in the State. At present Gujarat has three SEZs in Kandla in Kutch, Sachin near Surat and Poshitra near Bhavnagar.

At present, the electricity supply to the industrial units in SEZs is done by Gujarat Electricity Board (GEB). Since GEB has to follow norms of Gujarat Electricity Regulatory Council (GERC), the industry has to buy electricity at very high rates.

"Once we are allowed independent power generation and distribution, we would be out of the purview of GERC," Garg said. This would enable the Kandla Sez to provide electricity to its unit at a lower cost than existing and relative to the power production cost, he said.

This would boost the economic prospects of the SEZs and would be an added attraction for more industrial units to come to SEZ, he added. SEZs are set up as per the exim policy to provide a propitious environment for export production. Industrial units in these zones enjoy regulatory relaxations as well. (UNI)

Inflation rate touches 121-week low

NEW DELHI, Dec 23: Persistent downturn in prices of primary articles and manufactured products led yet another minuscule drop for the third consecutive week in the inflation rate to touch its lowest in 121 weeks at 2.21 per cent on December eight.

The inflation rate was 8.49 per cent during the same period last year and it was 2.27 per cent in the previous week. The recent inflation rate was the lowest since August 21, 1999 when it was 2.20 per cent.

The latest 0.06 per cent decline in the inflation rate mainly on account of slump in the prices of primary articles and manufactured products such as fruits, vegetables, groundnut, cotton seed, castor seed, niger seed, gur and cast iron castings.

Many economic Pundits have predicted that the inflation rate would witness a fall in coming months mainly due to recessionary trends.

After showing uptrends in the last week, the official wholesale price index for all commodities (base:1993-94) slid by 0.1 per cent to 162.0 on December eight from 162.2 in the previous week. It was 158.5 in the same period last year.

The final wholesale price index for all commodities (base:1993-94) and the inflation rate remained unaltered at their provisional levels of 162.6 and 3.04 per cent on October 13, respectively.

The index for primary articles declined by 0.4 per cent to 169.3 from 170 while the index for fuel, power, light and lubricants and manufactured products remained unchanged at their previous week’s levels of 230 and 144.3, respectively.

With fruits and vegetables becoming cheaper by three per cent, ragi and marine fish by two per cent each, jowar, bajra, maize, barley, gram and urad by one per cent each, the index for food articles, under the primary articles group, fell by 0.4 per cent to 179.5 from 180.2. But beef and buffalo meat became costlier by whopping 11 per cent, tea by seven per cent, arhar by four per cent, masur by three per cent, pork by two per cent, condiments and spices by one per cent. (UNI)

Medical insurance unattractive to Indian
masses: GIC chief

BANGALORE, Dec 23: Medical insurance in its existing form in India is far inadequate and unattractive to the Indian population, according to D Sengupta, Chairman of the General Insurance Corporation of India.

Participating in the national seminar on Review and restructuring of the ESI scheme here, he said there was considerable discontent associated with the current schemes, especially in view of the inadequacy of cover, delays in claims settlement and paper work involved.

The pricing depends on the claims experience and there were instances when medical practitioners were found to be recommending undesirable treatment, excessive laboratory tests or even overcharging. This had resulted into adverse claim experience and dampen the spirit of insurers to innovate further.

He said with the insurance sector thrown open to competition, people would hope for new products and better service.

He said under the new environment healthcare could not be left to the private sector. The problems under such circumstances could be in the form of denial of opportunities to those who could not afford to pay and also the lack of physical and financial capability of the private sector to take up the challenge. However, with the demand for healthcare growing there was need for a public and private sector participation in the sector by complimenting their strengths and weaknesses. He, however, said the private sector should play a significant role in meeting the growing healthcare demand.

Mr Sengupta said the existing state owned non life insurance companies and some of the new entrants were preparing to introduce managed healthcare in the country through a new entity called the Third Party Adminsitrator (TPA). Managed healthcare as opposed to the mediclaim services now available could offer a basic minimum product with options for add ons for additional premium.

He said the Insurance Regulatory and Development Authority of India (IRDA) was on the verge of finalising the regulation of TPAs. Insurers were in the process of designing the product with hospitals and clinics having negotiations with them for a tie-up. TPAs were also in the process of creating the necessary infrastructure.

He said a lot of action was expected in the area of health insurance soon and the new insurers were looking at products where the insurance company directly pays the healthcare service providers as against the existing way of reimbursing customers. Some of them were looking for innovative products such as smart cards that could be used in hospitals, dread disease insurance where a patient could be insured for certain major diseases.

The experience of managead healthcare had been successful in many countries as it had a built in check that ensured offering of required quality of service at reasonable price, he added.

He said the current per capita expenditure on healthcare in India was just Rs 831 as against Rs 1640 of China, Rs 12,747 of Brazil, Rs 1.79 lakhs in the United States and Rs 1.22 lakhs in Japan. (UNI)