Wipro eyes 25 m revenue from West Asia

DUBAI, Nov. 18: Banglore-based it services major, Wipro Corporation, is expecting at least 25 million dollars revenue from the West Asia in the next financial year starting April 1, 2003.

Wipro, which set up its regional base in Dubai last year and then expanded into Saudi Arabia and Qatar, has just won a one million dollars project of Dubai drydocks and secured other contracts with Dubai e-government, Dubai Municipality, Riyadh Pharma and Doha Bank.

"A lot of West Asian companies are paying global rates on their it services requirements to various it companies, which are then developed in India at lesser costs," said Wipro chairman Azim Premji during a short visit here yesterday.

He said, "by moving directly into these markets, we will seek to share the lower costs that come with developing these solutions in India with our clients," Gulf News reported.

"The West Asia has a much higher priority in our global operations, and we are putting in top management to develop our interests here. We have the credibility and success in competing with the top five in the global it services market.

"Our West Asia operations will start contributing to the bottomline from the next financial year onwards. I would be disappointed if we did not do 25 million dollars next (financial) year," Mr Premji said.

The regional market for software and maintenance services is estimated at 5 billion dollars and growing at 12 per cent annually.

He said Wipro would reap major dividends from the current trend of getting software development done "remotely". India is one of the key beneficiaries in this global shift happening in the software space.

On the Chinese threat, Mr Premji commented, "anyone who thinks that it will not is being naive. However, China is four to five years behind India in software services, project management capacity and understanding the specific domain requirements of customers." (UNI)

Govt mulls relaxing ECB norms for textile Industry

NEW DELHI, Nov 18: The Government is considering making External Commercial Borrowing (ECB) norms simpler to enable the textile industry tap the international markets for credit.

The textile industry needs Rs 90,000 crore in the next five years to increase capacity and compete in the international markets when the Multi-Fibre Agreement (MFA), which imposes quota for exporting countries, is phased out in 2005, according to the Planning Commission member N K Singh.

"Allowing good units borrow from international markets needs to be looked at as interest rates are low," Secretary in the Ministry of Textiles, S B Mohapatra, said today at a seminar organised by the Associated Chambers of Commerce and Industry (ASSOCHAM).

"There is a need to work out textile asset reconstruction fund and on the basis of relief that it will offer, textile industry players can tap funds in the international market," said Mr Singh, who is also chairman of taskforce on textiles.

The fund, with a corpus of Rs 1500 crore to Rs 2000 crore, can be incorporated in the tenth plan, Mr Singh said.

Both Mr Singh and Mr Mohapatra agreed with the demand of the textile industry to correct fiscal distortions in the sector.

"If Commission’s last year’s suggestions on the industry are fully implemented by the Finance Ministry a lot of these distortions will be taken care of," the Planning Commission member said.

"We will carry on from there and make suggestions for the coming budget to address concerns of textile industry on cenvat throughout the value chain, duties on import of machinery and tax burden on synthetic fibre industry," Mr Singh said.

He and Mr Mohapatra also advocated entering into some sort of an agreement with different trade blocks to expand markets for textile exports from India.

"After MFA phase out, export quota for different countries will go but preferential trading blocks will restrict Indian exports. It is therefore essential for India to arrive at a bilateral understanding with either the entire block or its member countries," Mr Mohapatra said.

"Spain is interested in partnership with Indian textile industry and agreements can also be worked out with Sri Lanka and Bangladesh," the Secretary said.

Mr Mohaparta said textile export target of 15 billion dollars for this fiscal would be easily surpassed.

Mr Singh and Mr Mohaparta also stressed the need for increasing the size and scope of apparel parks. (UNI)

Legalise Hawala operations, feels industry

DUBAI, Nov 18: The system of Hawala should be legalised particularly in India and Pakistan to back up the efforts of the UAE that has recently begun a registration and reporting system for Hawala operators or brokers, experts and industry sources said.

"The UAE’s efforts in streamlining Hawala is a commendable move, but unless the system of Hawala is legalised in other countries, the purpose may not be served," said a senior official in the money exchange business.

"In fact, most of us are waiting to see how the system of Hawala will evolve and how the business will follow after the new regula-tions," he added, Gulf News reported.

"Hawala has to be tackled by all countries to ensure that the system is not abused. Hawala is totally vulnerable to misuse, because there is no paper trail and thus no accountability whatsoever," he said.

"The system is based on trust, but a Hawala operator in the other country could vanish without a trace without delivering. Thus it is very important for hawala to be regulated or licenced in other countries as well," he said.

Just as money exchange houses are required to comply with a minimum capital, a licence to start business and to deal with only licenced banks or exchange houses in other countries, Hawala operators too, must be made to comply with certain regulations to avoid misuse of the system and ensure protection to the sender of money.

Currently, only the UK and Germany have legalised the Hawala system.

"It is time the big players in this business such as Pakistan, India, Afghanistan and some others in the region also take steps to regulate and licence Hawala operators. The UAE has taken the initiative, but for the move to become successful it needs the support of other countries," said an Asian diplomat.

Central banks should make it mandatory for hawaladars to deal with only licenced hawaladars of another country so that there will be a recourse, he added.

At least three sources confirmed that the difference between the Hawala and the official rate is now around 4-5 per cent which is still an incentive to a large number of expatriates here. (UNI)

Maharashtra policy on ITES telecom soon

MUMBAI, Nov 18: In a bid to realise its "digital dream", the Maharashtra Government will soon come out with a ‘citizen-friendly’ policy on IT-Enabled Services (ITES) and telecom, Chief Minister Vilasrao Deshmukh said here today.

Calling for Government-industry participation for its effective implementation, he said the policy would ensure that each and every citizen benefits from information technology.

He was inaugurating the day-long conference on "digital Maharashtra - new horizons and opportunities", organised by the State Government in co-operation with the Confederation of Indian Industry (CII).

He hoped that the conference would evolve some positive suggestions which would enable the government to finalise its draft policy.

"Maharashtra is well-positioned for the digital age as 1.6 lakh trained manpower passes out from the engineering and technical institutes in the state. English has also been made a compulsory language from class one for gearing up the students to take on the competitive world," he said.

The Chief Minister pointed out that his Government was focusing on infrastructure development and hoped that concrete proposals for investment in this sector would be received soon.

The citizen facility centres under the SETU e-governance project, on in 23 districts and 64 talukas, will be extended to the rest of the state by this financial year end. Computerisation of land records under this project have been appreciated by other states who also want to use this software, he added.

Under this mega project, certificates/services were available to the citizens "anytime, anywhere and anyhow". Mr Deshmukh said the new ites policy would encompass concessions to the it-enabled industry, like stamp duty exemption, octroi refund, electricity duty exemption among others.

Later, Principal Secretary (Industries) Vishwas Dhumal, in his presentation, said the draft policy has been prepared in consultation with nasscom, CII which will address existing problems of the industry and equip it to handle future challenges.

In addition to the it policy of 1998, the proposed ites policy recommends that a committee to be set up for deciding the sales tax on equipment for ites at minimum floor rate or lowest slab and calls for simplification of sales tax return procedure. The computerisation of sales tax department is already in progress, he informed.

The major initiatives of e-governance in the draft policy include promotion of private it parks, extending 100 per cent additional FSI to IT/ITES units in private parks and rationalisation of property tax besides others.

There will be self-certification for IT/ITES/telecom units, electronic returns under labour laws and ITES/telecom will be declared as essential services and 90 per cent stamp duty concessions on it mergers/demergers to be extended to telecom.

Mr Dhumal said the Data Protection Privacy Act will be formulated in consultation with industry/legal experts.

Among the other initiatives by the Government are the revamping of access roads to marol/seepz from highway/airport, single window system, improved education system to better manpower quality, especially for ITES.

Mr Deshmukh, who was accompanied by Deputy Chief Minister Chhagan Bhujbal and Industries Minister Patangrao Kadam also had one-to-one meetings with the CEOs of software companies like I-flex solutions, TATA consultancy services, Infosys for over one hour and stressed the need for a continous interaction between the industry and the Government on software development. (UNI)

SC stays HC order against Mauritius based FIIs

NEW DELHI, Nov 18: The Supreme Court today stayed a Delhi High Court judgement quashing a central circular exempting Mauritius-based Foreign Institutional Investors (FIIs) from paying tax on capital gains in India under the double taxation avoidance treaty.

After hearing Attorney General Soli J Sorabjee, a bench comprising Justice Ruma Pal and Justice B N Srikrishna issued notice to the respondents and stayed the May 31 order of the High Court which had quashed the April 13, 2000 notification of Central Board of Direct Taxes (CBDT) terming it as violative of the Income Tax Act.

The bench directed respondents Azadi Bachao Andolan and a former tax official S K Jha, petitioners before the High Court, to file their replies within three weeks and directed listing of the appeal filed by the Centre after eight weeks.

The CBDT notification had put an embargo on probe by the Income Tax officials against fiis which were routing their investments through Mauritius to save tax on capital gains on investments made in Indian share market.

The double taxation avoidance treaty provided for payment of tax in either of the two countires. The fiis were paying a nominal tax in Mauritius and enjoying huge tax exemption in India, the petitioners had alleged before the HC in their PILs.

The High Court had held that since the Government circular declared that certificates of ‘residence’ issued by the competent authorities of Mauritius to be conclusive for the purposes of the double taxation convention between India and Mauritius, it purported to whittle down the powers of the assessing authority and therefore, was bad in law.

Giving an important clarification, the Government in its petition said notwithstanding the circular, "it would nevertheless still be open to the assessing authority to determine whether the asseeee is also a resident of India under the Indian Income Tax Act.

"Hence the said circular does not circumscribe the powers of the assessing officer in any way," it said.

The Government said the High Court failed to appreciate that the circular sought to only clarify that even in case of ‘capital gains’ tax, the certificate of residence issued by competent Mauritian authorities should be accepted and there should be no levy of capital gains tax if the assessee was a resident of Mauritius alone.

"The circular does not purport to obviate an inquiry into whether the assessee is also a resident of India," it said. (PTI)

Sail for Rs 5,000 cr capital expenses during tenth plan

NEW DELHI, Nov 18: Steel Authority of India Limited (SAIL) has planned a capital expenditure of about Rs 5,000 crore for Addition, Modification and Replacement (AMR) schemes, Minister of State for Steel B K Tripathy informed the Lok Sabha during question hour today.

The major projects of the tenth plan mainly includes long rails facilities and billet caster at Bhilai Steel Plant (BSP), finishing mill and bloom caster at Durgapur Steel Plant, continuous casting facilities at Bokaro Steel Plant, upgradation of ERW pipe plant at Rourkela Steel Plant, revamping of cold rolling mills at BLS and RSP and rebuilding of Coke Oven batteries, Mr Tripathy said in a written reply.

NMDC: National Mineral Development Corporation proposes to set up a commercial pig iron plant at Nagarnar in Bastar district of Chhattisgarh at an estimated cost of Rs 298.68 crore.

Sail: Sail has suffered an accumulated loss of Rs 2,461 crore as on March 31, 2002.

Sail is pursuing a rehabilitation proposal for Indian Iron and Steel Company (IISCO) with Industrial Development of India (IDBI) which has commissioned M N Dastur and Company as an independent consultant for assessing the proposal. (UNI)

Telecom industry calls for changes in fiscal policy

NEW DELHI, Nov 18: The telecom industry has urged the Government to bring down tariff on all populated Printed Circuit Boards (PCBs) from the existing 38 per cent including CVD to 20 per cent.

The Telecom Industry and Services Association of India (TISA) has also said that components such as capacitors, resistors, relays, micro processors should be made available to local manufacturers at zero level.

TISA president P K Sandell, said that although import of mobile handsets were exempted from payment of CVD, the excise duty was still applicable on domestically manufactured handsets. This facilitates imports instead of promoting domestic manufacturing. "The above anomaly may be removed by exempting excise duty on domestically manufactured handsets. Also, levy of excise duty on preloaded operating software is adversely increasing the price and affecting customers convenience", mr Sandell said. The TISA chief has also urged that software whether preloaded or packaged should be exempted from excise duties.

In order to survive in post WTO scenario, project costs for setting up new electronic telecommunication and it industries, particularly manufacturing, would require all capital goods and project imports to be available without attracting any custom duties at all. Import of such equipment Mr Sandell pointed out is facing zero custom duties and the only way to promote domestic manufacturing in India and attract investment is to have capital goods made also available at zero import duties to domestic manufacturers."The provision should also cover import of second-hand machineries without any restrictions on value," he said. The TISA president pointed out the financial losses that the telecom industry face due to Finance Ministry formulating policies in contradiction to the laid down regulations. Most of the problems the industry faces concern matters related to indirect taxes like central excise, customs etc which arise because of different interpretations of the same notifications by revenue authorities.

Mr Sandell has called for the institution of a Central Interpretation Cell at all the major centres, with power to take on-the-spot decision rather than having matters referred to various ministries or the higher authorities.

He also urged the Government to have a re-look on the question of charging excise duties on warranty spares which have to be given free- of- cost and therefore cannot be compensated by the customers. "for the survival of domestic telecom, electronic and it industries in the global market all warranty spares may be made non-accessible from the next budget year onwards," he said.

He pointed out the "dangerous implications" of the recommendations made by the Kelkar Committee to do away with tax benefits and incentives allowed for scientific investigations and research activities, currently allowed to the Indian industries. All electronic and telecom manufacturers who will be facing the zero duty regime in the coming years are using technologies which in many cases do not compare to world standards.

There is a need for massive induction of tax and fiscal incentives for promotion of R and D activities particularly innovation of new products. Instead of recommending a series of such crash measures the kelkar committee has recommended attrition in the existing incentive package for R and D activities, Mr Sandell said. (UNI)

High fiscal deficit, low investment may
impede growth : RBI

MUMBAI, Nov 18: The Reserve Bank of India (RBI) Deputy Governor Dr Rakesh Mohan said here today that the continuing high fiscal deficit, interest payment on Government borrowings, low investment and comparatively high interest rate may pose hurdles for the economic growth in the next year.

While delivering a lecture on global economy 2003: recovery or recession?’ jointly organised by HDFC and London Business School (LBS), Dr Rakesh Mohan said the high fiscal deficit is persisting for the last 20 years and was not dwindling the way the global economic reforms demands.

He said that the country needs a high productivity rate which requires huge investment. He wondered how it would be possible to move ahead with a huge fiscal deficit.

Dr Rakesh Mohan said that the profit growth of the companies was higher than the sales growth over the year. He said the sales will also grow only if the productivity rate grows. (UNI)

SEBI recommends mutual fund structure to
real estate investment

MUMBAI, Nov 18: The capital market regulator SEBI has recommended real estate investment structured in the form of mutual fund schemes as a viable option.

This recommendation was made by SEBI’s four-member sub-group on Real Estate Mutual Fund (REMF) headed by K N Atmaramani. The sub-group has suggested modifications in the SEBI Collective Investment Scheme (CIS) Regulations, 1999 to include real estate as an investment objective with certain amendments. In this context, the sub-committee draws its inspiration from the deepak satawalekar committee which suggested the mutual fund structure for introducing real estate investments and has provided detailed rationale and advantages of the mutual fund structure. After the issuing of comprehensive guidelines by SEBI, the mutual fund is now well understood and trusted.

As such, the selling of real estate investments through the mutual fund route would therefore be easier and energies could be directed towards selling the product rather than the structure, according to the sub-committee.

It strongly felt that keeping a maximum limit on subscription would be to the disadvantage of small investors desirous of taking exposures to the real estate sector.

The sub-committee also noted the suggestion by the Satawalekar committee about the restrictions on investments to avoid over-exposure to certain projects.

The sub-committee referred the existing regulations on investment where any investment in one corporate should be restricted upto 10 per cent of the corpus and similarly, any investment in the properties owned and managed by the sponsor should be restricted upto 25 per cent of the corpus.

Association of Mutual Funds in India (AMFI) Chairman A P Kurian said with the set of recommendations by the sub-committee, the real estate mutual funds could be launched in the country once, certain amendments would be made by the SEBI in its regulations.

The real estate mutual funds can be launched immediately by the existing leading MFs and the they can afford the expertise required for the same, he said. (UNI)

SEBI directs JM Morgan to put Grasim
offer for L&T on hold

MUMBAI, Nov 18: Securities and Exchange Board of India has directed JM Morgan Stanley, the Manager to Grasim Industries’ proposed open offer to acquire upto 20 per cent stake of Larsen and Toubro, to not proceed with the offer.

"There have been many investor complaints about the price and the market regulator is also examining the issue of control in light of securities appellate tribunal’s verdict in ACC-Gujarat Ambuja case", SEBI sources said here.

"We have also asked JM Morgan Stanley to make a public announcement on deferring the open offer announced by the Aditya Birla group company last month", they added.

On October 13, Grasim had said the offer at Rs 190 per share was slated to open on December nine and close on January seven and result in a maximum outgo of Rs 945 crore.

JM Morgan Stanley officials were not available for comments.

Aditya Birla Group Spokesperson said "we understand that market regulator has put a temporary stay on the open offer.

Grasim has complied with all regulations and acted in line with the highest standards of governance. Since the matter is sub-judice, it will be inappropriate to comment further", the spokesperson said.

"We have strong conviction in our rights in law", the spokesperson added.

Grasim had said the offer price of Rs 190 per share was higher compared to the average price of Rs 174.93 per share over the last 26 weeks and Rs 170.08 per share over the last two weeks on the national stock exchange, which has the highest trading volumes for L&T. (PTI)

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