Indian Cos with major foreign stake can hold 76pc in insurance

NEW DELHI, Nov 10: Companies registered and listed in India even with majority foreign stake would be allowed to pick up 74 per cent equity in insurance venture, chairman of Insurance Regulatory and Development Authority (IRDA) N Rangachary indicated today.

To a specific question whether a company like Hindustan Lever would be eligible as an Indian company to hold more than 26 per cent in insurance ventures, Rangachary told reporters on the sidelines of a FICCI seminar on insurance, it is a company registered and listed in India and would qualify as an Indian corporate.

UK-based Unilever Plc holds 51 per cent stake in Hll while IRDA Bill, which is awaiting parliament approval provides a maximum of 26 per cent foreign holding in insurance ventures.

Earlier speaking at the International Conference on insurance, Rangachary warned companies against attempting to find loopholes in the bill to get around the 26 per cent foreign equity limit.

Law is kept as simple as it could be. But if you try to thwart laws, then the law will take its own actions, he said.

Rangachary also said IRDA would not allow insurance licence holders to sell their licences as in the telecom sector. We would not allow sale of licences. If somebody wants to get out, he will have to surrender the licence to the authority, he said.

Moreover, any transfer of share by an insurance company over one per cent would need permission from IRDA. (PTI)

Plan chalked out for development of bamboo forests

AIZAWL, Nov 10: The Centre has chalked out a five-year plan for the development of 5000 hectres of bamboo forests in Mizoram as part of a national programme to develop bamboo as an alternative to wood to save the dwindling forest cover.

A seperate bamboo development cell under the Union Ministry of Environment and Forests set up recently to explore avenues for scientific management of the national bamboo sources would coordinate the national programme, State Chief Secretary H V Lalhinga told UNI.

The Centre has decided to develop one lakh hectre of bamboo forests annually in the country. It would also give out Rs 500 each to the 50,000 families engaged in growing bamboo in India. Fourteen micro enterprise units would be set up nationwide, each of which would generate employment for about 200 bamboo craftsmen and artisans. The project, would cost Rs 150 crore at the rate of Rs 30 crore annually.

According to the Chief Secretary, the State Department of Environment and Forests has also drawn up plans for the successful implementation of the project. It has been decided that 500 hecters of bamboo forests would be developed in the state and Rs 100 each as financial assistance would be given to the 5000 families involved in bamboo plantation. A micro enterprise unit would also be set up,while people in the rural areas would be encouraged to raise 6,500 hectres of additional bamboo forests under the joint forest management scheme.

The Union Environment and Forests Minister Suresh Prabhu during his visit in July, 1999, to the state had announced the setting up of a Bamboo Research Institute to impart training in scientific management of bamboo forests. The emphasis would, however, be on employment oriented training for the rural poor. The proposed institute would be financed by the United Sations Industrial Development Organisation (UNIDO) for ten years.

The Chief Secretary stressed that the state should utilise the available bamboo resources to the optimum before 2007 AD when the next bamboo flowering is due. During the flowering, rodents destroy several bamboo plantations. (UNI)

Emami Group launches new generation Chyawanprash

CALCUTTA, Nov 10: The Rs 350 crores Emami Group of Companies, India’s leading producer of several ayurveda and herbal products, today formally launched an exclusive new generation chyawanprash using gold, silver and saffron as basic ingredients for the first time.

Announcing the formal launching of the new product called Sona Chandi Chyawanprash in 250 grams,500 grams and one k.G.packs in selected Eastern and North Indian states, Emami Joint Directors R S Goenka and R S Agarwal told a press conference here today that apart from gold, silver and saffron, which were necessary to develop the body’s immune system, the new product contained as many as 52 other important herbs for various purposes.

We have launched the product in West Bengal,Bihar, Orissa,Uttar Pradesh, Punjab, Haryana, Delhi and Himachal Pradesh,after years of in-house research development and detailed clinical tests both in laboratories and on human bodies ,Mr Agarwal said adding that they had so far spent about Rs 5 crore alone in developing the Sona Chandi Chywanprash.

Claiminig that the demand for Indian ayurvedic and herbal products both within and outside the country were growing at the rate of about ten to eleven per cent every year, both the directors said at present the size of the domestic market for such product was to the tune of about Rs 150 crores and to start with they proposed to manage at least 45 per cent of it.

Asked about the export potential of the new chyawanprash, Mr Agarwal said despite a very encouraging response to a worldwide survey from the countries in Europe, USA, Middle East and the far East, their initial sales target was only about Rs 2 crores which might gradually go up to Rs 100 crores in about ten years time.

Initially we would try to capitalise on the huge untapped domestic market before making any serious foray into the global market, Mr Agarwal emphasised and made it clear that they proposed to launch a major media campaign soon to popularise the new product.

About the availability of raw materials in the country following largescale deforestation in different areas,Mr Goenka said keeping in mind the increase in demand for herbs they would soon enter into a technical collaboration with two major foreign players for their proper long term preservation under laboratory condition. ‘We will also set up our own plant bases in different parts of India to meet the increasing demand , Mr Goenka said. (UNI)

Decline in growth rate depressed export growth

NEW DELHI, Nov 10: The huge decline in the rate of growth of exports of iron and steel (19.2 per cent) and electronics goods (10.7 per cent) during April-July 1999 has depressed the export growth of the engineering goods sector. Coupled with weak recovery in chemicals and allied products exports (0.5 per cent), the prospects of reaching the overall export target remain bleak, according to the Association Chambers of Commerce and Industry of India (ASSOCHAM).

A study on "export trends- 1999-2000" carried out by the chamber, however, reveals that exports of gems and jewellery, readymade garments and cotton textiles, fabris and made-ups staged a slow but steady recovery.

The study released by the ASSOCHAM president, K P Singh here today, reveals that merchandise exports fell by 3.8 per cent in 1998-99, if one compares the revised DGCI and S Statistics published in May for 1997-98 and the provisional estimates for 1998-99.

The provisional BoP (Balance of Payments) released by RBI also shows a -3.9 per cent change in export earnings. The revision of trade statistics might raise the 1998-99 figure for exports, although given the improvement in data reportage in recent times the degree of revision may not be large.

The most significant development in the exports during the first quarter of 1999-2000 was the increase in the export of manufactured items- which rose by 9.1 per cent (in US dollar terms), relative to the decline of 3.0 per cent during the full year of 1998-99. Within manufactured goods items such as gems and jewelry, ready made garments and cotton textiles, fabrics and made-ups showed marginal recovery. Chemicals exports registered a marginal increase of 0.5 per cent, compared to the 8.4 per cent change in 1998-99.

In the first quarter chemicals was still in negative territory. Engineering- however, continues to perform poorly, mostly on account of decline in steel and electronic goods, although transport equipment and some other items, exports which had collapsed in 1998-99 is showing strong signs of recovery, the study said. The study said that DGCI and S Imports in 1998-99, rose by only 0.9 per cent. However, bop imports fell significantly by a much as 7.1 per cent. Thus, while the DGCI and S trade deficit rose by 1.7 billion dollars to 13.2 billion dollars. In consequence, notwithstanding the decline in exports, the marginal increase in DGCI and S imports and a sizeable eight per cent decline in net invisibles, the CAD (Current Account Deficit) was restricted to four billion dollars which was lower in absolute terms relative to the 5.5 billion dollars in 1997-98. In relative terms as a proportion of GDP, the CAD fell from 1.3 per cent in 1997-98 to 1.0 per cent in 1998-99.

The ASSOCHAM study noted that the oil import bill that had touched a peak of 10 billion dollars in 1996-97, declined to 8.1 billion dollars in 1997-98 and 6.4 billion dollars in 1998-99. Import of gold and silver which was less than one billion dollars till 1996-97, shot up thereafter to cross three billion dollars in 1997-98 and touch 4.9 billion dollars in 1998-99.

The net impact of these two developments has been that non-pol, non-bullion imports which registered a growth of 21 per cent in 1995-96 has experienced relatively small increases in subsequent years.

In the current year the rise in oil prices combined with higher import quanta have resulted in a massive 54 per cent increase in the oil import bill in the first quarter. Abstracting from this item, the value of non-oil/non-bullion import actually fell by as much as 9.3 per cent. For the four month period April-July 1999 for which data is available, while total imports fell by 3.4 per cent, pol imports increased by 51 per cent.

The decline in non-oil imports has been quite broad-based across commodity groups. A significant feature is the continued decline in capital goods (-26 per cent) in the April-August period of 1999-2000 which has followed upon declines both in 1998-99 and 1997-98. Most intermediate product categories have also shown a decline- in continuation of the trend in 1997-98- with fertilizers proving an important exception.

The fall in gold and silver imports in the first four months is a continuation of the developments following on the increase in customs duties in December 1998. The increase in import of precious stones hopefully is advance notice of continued up-trend in gems and jewelry exports.

The value of non-oil, non-bullion imports can be reasonably linked to indigenous factors such as changes in the level of domestic economic activity. The annualised rate of growth in the value of this category of imports has been declining since 1995-96 when it was as high as 21 per cent . In 1996-97 it was 7.5 per cent, in 1997-98 5.1 per cent and -9.1 in 1998-99 per cent.

This is also true for Q-1 import levels that have fallen to 2.3 per cent in 1998-99 and -12.2 per cent in 199-2000. In the first four months of 1999-2000 the decline in non-oil, non-bullion imports was by 5.6 per cent-a significantly lower decline than in the first quarter.

The chamber study feels that since the decline in non-oil, non-bullion imports is not an outcome of import compression triggered by devaluation or controls, it is a reflection of weak domestic demand (including that derived from export demand) and could be cause for concern-even if the trend does reduce the trade deficit and ultimately the current account deficit.

Fuelled by soaring bullion imports, the DGCI and S trade deficit had touched a record 8.2 billion dollars in 1998-99- an increase of 26 per cent over that in 1997-98. But on BoP basis the trade deficit fell by 17 per cent to 13.25 billion dollars. Thus despite a 0.8 bullion dollars decline in net invisible earnings, the CAD (Current Account Deficit) was contained at four billion dollars-1.5 billion dollars lower than in 1997-98. The structural CAD ratio as a proportion of GDP thus fell to 1 per cent in 1998-99.

The trade deficit for the April-August period was four billion dollars, marginally up from the 3.9 billion dollars registered in the first quarter of 1999-00, but 54 per cent higher than the 2.6 billion dollars for the first five months of 1997-98. In 1997-98 the oil import bill in the April-August period was at about the same level as it is in 199-2000- in the region of three billion dollars.

Oil prices appear to have peaked in the region of 22-23 dollar-per barrel. It is more likely than not, that crude oil would stay at these-or more probably slightly lower- levels at least for the duration of the winter of 1999-00. In consequence, the impact of higher crude and product prices on India’s import bill is likely to be fairly sizeable, with the value of oil-related imports higher by up to five billion dollars in the full year.

Imports of gold and silver have declined in the first four months of 1999-00. It is quite unlikely that imports in a full year will exceed the level of 4.9 billion dollars registered in 1998-99. In July, as we have observed the decline in non-oil, non-bullion imports was smaller than for the first quarter.

Assuming that domestic economic activities will increase in the second half of the year, the ASSOCHAM study noted that there ought to be a reversal in the decline that has been registered in non-oil, non bullion imports in the first four months of the year.

The aggregate impact will thus be a combination of these three factors, namely, a steep rise in the oil import bill by about five billion dollars, import of bullion restricted to under five billion dollars import of goods other than oil and bullion in the second half of the year running a positive balance larger in absolute terms than the decline in the first half. (UNI)

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