CCI identifies 9 sectors for EU-India
economic cooperation

COPENHAGEN, Oct 9: The Confederation of Indian Industry (CII) has identified nine specific sectors for higher bilateral trade and investment flows between India and Europe which include advertising, biotechnology, entertainment, enviromental products and services and education.

Financial and health services, Information Technology, Research and Development and design are other areas specified for enhanced cooperation.

In a paper presented to the third India-EU business summit here, CII was of the view that the traditional business strengths of the EU and India could be augmented and that a large scope existed between the small and medium enterprises of the two sides for greater integration among them.

The small and medium enterprises in Europe are technologically advanced but they face global competition from China and the prospects of a slower growth in the European market.

On the other hand, the Indian small and medium sector is ripe for technological, financial and managerial cooperation with its European counterparts.

"We could look at ties to serve the large and fast growing Indian market or even joint ventures for third country markets," the paper said.

CII president Ashok Soota led the CII team of over 35 CEOs for the business meet. CII has last month opened its fifth office in Europe in Brussels to focus on the EU and the European Commission. (PTI)

Indian film export earns Rs 9 bn in 2001-02

NEW DELHI, Oct 9: Export of Indian films has earned Rs nine billion forex in 2001-2002, and can grow by Rs two billion, if ‘non-traditional’ markets are also tapped, say industry insiders.

The films exported, both as reels and through rights for video cassettes, CDs, DVDs and satellite television transmission has combined to generate this amount, according to film exporters at the film bazaar of 33rd International Film Festival of India here.

"There is increasing demand for our kind of films, mainly Bollywood. But they don’t want violence or sex. They want love stories, family themes, and melodrama," says Nandkumar Bele, secretary, Indian Film Exporters Association.

"There is a lot of potential for `non-traditinal markets’ like China, Japan and South Korea. Tamil actor Rajnikant is a superstar in Japan. It could probably be channelised into opening up a market for Indian films," he says.

Devdas has broken all records in overseas sales, says Rajesh Das of Eros Multimedia, who has the overseas rights for the film, besides multistarrers like Shakti, Pukar, Taal and Company.

The traditional markets are US, UK, Canada, the Gulf, New Zealand, Australia, Mauritius, Thailand, Kenya and Singpore among others, Das said. Other major markets include Sri Lanka, Fiji, Southeast Asia, Egypt. Afghanistan is fond of Indian films, but the economy there is still shattered, so we have to wait and see, says Bele. (PTI)

GoM finalises guidelines for long-term fertiliser policy

NEW DELHI, Oct 9: Designed to cut subsidy in a big way, guidelines for the long-term fertiliser policy based on group pricing was today finalised by the Group of Ministers with the emphasis on energy efficiency and enhanced productivity.

The GoM on urea, headed by Planning Commission Deputy Chairman K C Pant, finalised its recommendations for formulation of the long awaited fertiliser policy which would now be placed before the Cabinet for approval, Fertilisers Minister S S Dhindsa told PTI after the group’s meeting.

The GoM recommendations, mainly based on the report of the Expenditure Reforms Commission (ERC), are sought to be implemented from April, 2003 after the policy is unveiled by the Government, he said. "The emphasis is on energy efficiency and stepped up productivity".

The second phase is proposed to begin from April one, 2004 with an energy efficiency drive, sources said, adding that stage-ii would be operational for a maximum period of two years subject to performance evaluation.

They said variable costs on escalation and de-escalation on group prices would be taken into consideration with effect from April, 2003.

There could be standard deviation of about 20 per cent based on retention prices for two years.

Regarding savings on subsidy, officials were, however, not in a position to specify the likely quantum saying it would be ascertained after detailed calculations involving a wide range of factors.

P Geethakrishnan, had proposed in its September 2000 report a four-phase programme for eventual decontrol of urea over a period of six years.

As per the ERC report, the first stage was to begin during 2001-02 with adaptation of uniform concession for each of five groups including pre-1992 gas-based plants, post-1992 gas-based units, Naptha-based plants and fuel oil/lshs based plants, besides mixed feed units.

Concession rate was to be determined taking weighted average retention prices of plants in each group as on April one, 2000, sources said.

For the second stage (2002-2005), ERC proposed further reduction in concession on Naptha fuel oil/lshs and mixed feed plants based on reduction of energy consumption and lowering of capital related charges (CRC).

In the third stage (2005-06), concession on Naptha and mixed feed plants would be on the basis of assumed switch over to LNG, they said, adding by then a clear picture on availability of LNG would also be ready.

The fourth stage, proposed to begin from April one, 2006, would witness reduction in the number of groups to two when only Naptha based plants would be entitled to concession of Rs 1900 per metric tonne. (PTI)

EU concerned over slow progress in India’s
economic reforms

COPENHAGEN, Oct 9: Voicing concern over the slow progress in India’s economic reforms, the European Union today asked it to reduce the long time lag for approval of projects particularly in the infrastructure sector in a bid to encourage greater flow of foreign investment from Europe.

Emphasising that the vast potential for India-EU cooperation remained untapped, the 15-nation EU sought greater flexibility in labour laws and clearcut rules on foreign ownership.

A theme paper presented at the third India-EU business summit here highlighted the concerns of EU which came in the way of stepping up foreign investment flow and bilateral trade.

The EU is of the view that there was urgent need to address each other’s concerns and help build the potential market that exists in India and Europe, the paper, prepared jointly by the Confederation of Indian Industry (CII), the Confederation of Danish Industries and the Federation of Indian Chambers of Commerce and Industry (FICCI), said.

On WTO-related issues on agriculture, the EU has acknowledged India’s needs and proposed that measures that promote the sustainable vitality of rural areas and the food security concerns of developing countries, as a means of poverty alleviation, be exempted from any future reduction commitments.

The EU would also like to see that other ways be examined in order to provide the necessary flexibility to developing countries to address these concerns.

On the textiles front, the EU recognises that the Indian textile industry enjoys major strengths in the global market and is largely self-sufficient as regards raw material. However, though the acreage is one of the largest in the world, cotton yield is low.

It contended that because of the restrictive import policies pursued by India in the last five decades, technicians had not been exposed to international developments in technology.

Given the cost, Indian machines are very competitive and have the potential to prove as the world’s best should they adopt appropriate modern technology, the EU stressed.

An important concern expressed by both sides was that the EU with over 370 million people and India with a whopping one billion population was not providing a growing market for each other’s goods.

The EU is of the view that India can provide a huge market as there was a large middle class population with a sizeable disposable income at hand.

For India, the unified European market with a common currency is considered a large area of exports.

On it, the paper recommended that the EU should focus on India-centric offshore business models, backed up by long-term investment in world class back-office and IT-enabled service infrastructure in India.

It was suggested that India should be used as the global mode for embedded software and advanced intelligent devices development.

On telecommunications, the need to clarify migration into a new regime in view of implementing convergence was underscored.

The paper underpinned the importance to resolve spectrum allocation and create need based licensing of spectrum bandwidth to facilitate the policy of unlimited new entrants in basic services.

The business meet, attended by over 70 Indian CEOs and about 250 European business leaders, discussed at length joint studies on textiles, financial services, biotechnology and power.

It comes ahead of the third India-EU summit tomorrow for which the Indian delegation will be led by Prime Minister Atal Bihari Vajpayee. (PTI)

Rice-tech international exhibition from Oct 11

VIJAYAWADA, Oct 9: Leading global rice milling machinery manufacturers from countries like Japan, Germany, the US and Korea, will exhibit their innovative products and services at "rice-tech 2002" to be held here from October 11 to 13.

Scores of millers from across the country would take part in the first of its kind exhibition in this commercial city, known as the rice bowl of Andhra Pradesh with a production of 15 million tonne, exhibition organiser S K Baji told reporters here yesterday evening.

Union Minister of State for Consumer Affairs U V Krishnam Raju would inaugurate the expo, State Agriculture Minister V Sobhanadreswara Rao would preside over the function and Union Minister of State for Food Processing N T Shanmugham would be the chief guest, he said.

Experts would enlighten millers, machinery suppliers, global traders, rice marketing consultants, equipment dealers and captains from the rice bran industry about the latest advancements in rice processing at a seminar to be held as part of the exhibition with the active support of the rice millers’ association in Karnataka and Andhra Pradesh, Mr Baji said.

While rice market analysts would explain about the market trends, Government officials would deal with the subsidies and financial packages during the event, being held at a time when the industry is on the threshold of rapid changes under the WTO regime.

Mr Baji, also the editor of fortnightly ‘Rice Mill Reporter’ said special trade meetings would be held to enhance contacts among millers, technical experts and other industry people. (UNI)

South Asia houses 40 pc unschooled in third world

WASHINGTON, Oct 9: South Asia is home to more than one-third of the developing world’s out-of-school population, said a World Bank report, which stressed plugging education gaps between the rich and poor nations for boosting economic growth.

The report titled "Constructing knowledge societies: new challenges for tertiary education" pointed out that one out of every five children (six-years and older) in developing countries is not in school — an estimated 113 million children.

Forty per cent of the out-of-school population resides in Sub-Saharan Africa, about 40 per cent in South Asia, and over 15 per cent in West Asia and North Africa, it said.

Sixty per cent are girls. The education level of most adults in developing countries remains too low to enable them to participate effectively in a global economy. Some 600 million women and 300 million men remain illiterate.

With such extremely low levels of basic skills — the prerequisite for lifelong learning — the priority for these countries remains universal basic education.

Developing countries will have little success boosting economic growth and reducing poverty unless they close a growing knowledge or education divide between themselves and richer countries, it warned.

On average Organisation for Economic Cooperation and Development (OECD) countries spend five per cent of the GDP on public education.

While there is no single estimate of the investment required to provide lifelong learning opportunities in developing countries, it is certain that the associated costs would be far greater in developing countries than in OECD countries.

Sub-Saharan African countries would need to allocate nearly four per cent of the GNP to secondary schooling alone to achieve 60 per cent gross enrollment, the report added.

The report cited many examples of countries, such as Chile, Finland, Mauritius, Vietnam, and Lithuania, saying they have prospered because of their strong commitment to a process of continuous education.

Lifelong learning spurs economic life, reduces poverty, and encourages open and cohesive societies, the World Bank said. A process of continuous education creates a country’s intellectual and economic foundation, and its ability to acquire and use the new hi-tech knowledge and skills increasingly demanded by the global economy, it added.

Expanding on the new report, World Bank president James Wolfensohn said a widening education gap between wealthy and poor countries explained why 4.8 billion people, who live in developing and transition economies, received only 20 per cent of the global GDP.

Mr Wolfensohn said helping these countries join the global knowledge economy was therefore essential to closing the gap between themselves and OECD countries.

The key to bridging the knowledge divide, he said, was a seamless learning system that moved people from primary and secondary school, through university, to updating their skills in the workplace.

"Everyone agrees that the single most important key to development and to poverty alleviation is education. This must start with universal primary education for girls and boys equally, as well as an open and competitive system of secondary and tertiary education.

"Adult education, literacy, and lifelong learning must be combined with the fundamental recognition that education of women and girls is central to the process of development," Wolfensohn said.

The global economy now relies primarily on the use of ideas and technology in devising cheaper and smarter ways of working and doing business, the report said.

Companies can make better-quality products more cheaply while constantly producing new goods and services by using advanced science and technology.

Highly-skilled workers can perform the same jobs with much more flexible arrangements. For example, Korean car producers expect to reduce the cost of procurement by 20 per cent through e-commerce.

The knowledge-based global economy is also rapidly changing the relative economic position of both countries and individuals.

Finland, for instance, has transformed its economy from a natural resource-based economy to a high-tech economy with an increase in the share of computer and telecommunications products in total exports from less than seven per cent in 1990 to 30 per cent in 2000, the report pointed out. Production of goods and services increasingly depends upon effective use of knowledge and information. In turn, labour markets need more, better skilled workers.

As a result, the global knowledge economy increasingly expects people to constantly learn and update their education and skills throughout their lifetimes.

A lifelong learning framework encompasses learning throughout the life cycle (from early childhood to retirement) and in different learning environments, including the formal education system (schools, training institutions, universities), non-formal learning (including on-the-job, household) and informal learning (for example, skills learned through family or community).

The growth of the knowledge economy has not been confined to industrial economies, but has also spread with remarkable speed to developing and transition economies.

Countries that are able to take full advantage of these opportunities will be able to "jump start" their economies and eventually catch up with highly industrialised economies.

Therefore, the development of the knowledge economy can provide opportunities to address social issues including reducing poverty and social exclusion, the report said.

The report said enabling developing and transition countries to integrate well into the knowledge economy requires fundamental shifts in formal education and training systems, where the focus needs to be on teaching people how to learn, and how to use information, as opposed to transmitting facts.

Governments then have a responsibility to take the right policy and institutional steps to create a good quality, efficient lifelong learning system, it added.

It also follows that a national strategy that knits together different sectors of the economy and Government and private agencies is needed in a lifelong learning framework. The overall objective must be to raise people’s motivation to learn, the report said. (UNI)

Recommendations of the tax conference

NEW DELHI, Oct 9: Taxation of farm income with an exemption limit of Rs one lakh, time-bound withdrawal of exemptions and selective use of search and seizures operations are some of the recommendations of the two-day tax conference organised by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in mid-September.

Along with creation of a tax-friendly atmosphere and better tax administration, it suggests that to substantially enlarge the direct tax base in the country amendment should be made in the definition of agricultural income under the I-T Act to bring within its purview at least the cash crops like timber, rubber, cashewnut, coconuts, spices and flowers.

To begin with, the exemption limit income from agriculture could be fixed at a higher figure of Rs one lakh against Rs 50,000 for non-agriculturists.

Further, there is need to expedite allotment of PAN and the coverage of transactions where PAN is mandatorily to be quoted should be enlarged, computerisation relating to the functioning of the I-T Department should be expedited to enable matching of information to detect non-filers of returns. Voice message system on telephones, during the period when returns become due should be extensively used to induce people to file their returns of income and a time-bound programme should be formulated for networking of all Income-Tax offices across the country.

The conference noted that the tax base and revenue earning get eroded because of umpteen exemptions, incentives and concessions in the tax laws.

Therefore, a time-bound programme needs to be drawn for removing provisions relating to these on the basis of some systematic plan, not in an ad hoc manner.

Also, tax laws should not be used for doing the work of other Departments and Ministries. Tasks such as development of regional and backward areas and industrial development should not be the responsibility of the tax department.

A proper mechanism should be evolved to make effective use of survey operations — both internal and external. For this, concerted attention needs to be given in regard to collection of information, its collation, dissemination, storage and retrieval and fast verification, said ASSOCHAM.

Instead of specifying the sources to be tapped every year, it is recommended that the CBDT should draw up a long-term plan indicating the sources from which information should be collected. The information should be procured in a prescribed form on magnetic tapes. It should be effectively used for discovering new assessees.

Further, search and seizure operation should be used in a selective but effective way to find out about new taxpayers and for unearthing evaded incomes and wealth. However, search and survey operations cannot be an end in themselves. These should also create credible deterrence for making tax compliance.

In an era where nearly 97-98 per cent of returns are to be accepted, the picking up of cases for scrutiny should be done through a process which is secret and fair and creates a climate for voluntary compliance for non-filers. Also, to develop faith in the administration, promises made to the taxpayers such as those contained in the Vision 2005 document should be promptly and sincerely fulfilled.

For developing a tax-friendly atmosphere for better compliance, concerted attention should be paid for redressal of taxpayers grievances, promptness in giving refunds with interest where it is due to the taxpayers, better facilities for taxpayers in tax offices, public relations aspect of Tax Department’s working needs thorough reorientation, educating the taxpayers about their rights and obligations under the tax laws, recognition of the role of honest and sincere taxpayers and formulating a system where the expenditure incurred by the taxpayers in assisting the Tax Department in its functioning in regard to role in the matter of TDS is compensated.

Finally, the ASSOCHAM conference emphasised the need for better tax administration for improving compliance and in increasing the tax base.

For this, the tax administration has to be firm but responsive to the taxpayers needs.(UNI)

Govt to review HMT divestment set up committee to better PSUs

NEW DELHI, Oct 9: The decision not to disinvest HMT Ltd will be reviewed within a month and proper valuation will be done before inviting financial bids, Minister for Heavy Industries and Public Enterprises Balasaheb Vikhe Patil said here today.

Some procedural steps were yet to be taken, otherwise there was no problem in the disinvestment of HMT, he told a news conference.

The minister had earlier indicated that disinvestment in the public sector HMT was stalled for the time being. It was not the right time to get good price or return, he said.

A Committee of Chairmen and Managing Directors of PSUs would be set up by monday to hold quarterly reviews of the performance of psus and suggest ways to improve them, co-ordinate the work and suggest ways to improve marketing and production. The committee that would have five or six members would start working within a week, he said.

The announcement was made soon after a meeting of CEOs of various PSUs.

Replying to a volley of questions on the disinvestment of public sector units, the minister said it was up to the Government to decide which psu should be divested and at what time. "It all depends on the judicious decision of the Government," he said.

"There is no fun in keeping loss making units with the Government," according to Mr Patil. Wherever revival is possible it should be done, the minister said.

However, the core industries should remain with the Government, he added. Mr Patil said his ministry would ask for more budgetary allocations for revival of certain PSUs and implementing the VRS. However, he did not give the quantum of the amount, except indicating that this would be done only selectively.

Earlier, addressing the CEOs, the minister said the performance of each PSU would now be closely monitored. He wanted them to demonstrate a winning leadership for availing huge domestic and global opportunities.

Minister of State for Heavy Industries and Public Enterprises Vallabhbhai Kathiria exhorted the PSUs to build on each other’s strengths through meaningful alliances.

Mr B N Jha, Secretary, Ministry of Heavy Industries and Public Enterprises, highlighted the need of PSUs to be comprehensively responsive to changing environment.

He mentioned about setting up separate task forces on exports of capital industry and the automotive industry.

Chairmen and Managing Directors of BHEL, Hindustan Paper Corporation, Bharat Bhari Udyog Ltd and Engineering Projects India Ltd made presentations on various topical issues. (UNI)

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