PHD House, 4/2 Siri
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PHD CHAMBER OF COMMERCE AND INDUSTRY
Major Economic
Policy Announcements During the Month
FDI Norms for Print Relaxed
17th June, 2005 The Cabinet on Thursday relaxed foreign investment norms in print media by allowing non-resident Indians, persons of Indian origin, overseas corporate bodies and recognized foreign institutional investors (FII) to invest in the sector within the 26% limit for news and current affairs.
Until now, only foreign media companies were allowed to invest in the 26% cap. A direct fall out of this decision would be fresh inflow of investment from the strong community of wealthy NRIs.
The Cabinet had also allowed the publication of facsimile editions of foreign newspapers and periodicals subject to conditions that such editions will not carry advertisements aimed at Indian readers in any form.
The Cabinet, has also allowed newspapers to syndicate as much as 20% of their text (excluding advertisement space) from abroad. The limit was 7.5% earlier. Those who wish to syndicate more than 20% will need to seek approval from the I & B ministry on a case be case basis.
Committee Set up to Study Irani Panel Proposals on
Independent Directors
17th June, 2005 The Finance Ministry has set up a three-member panel to examine the suggestions of the J J Irani Committee on Company Law and specifically on the composition of corporate board of directors.
The three-member committee includes a representative each from the Company Affairs Ministry, the Securities and Exchange Board of India and the Finance Ministry, according to official sources.
Cabinet Okays Economic Agreement with
Singapore
21st June, 2005
The Union Cabinet on Monday gave its nod to the Comprehensive Economic
Cooperation Agreement (CECA) between India and Singapore.
The pact is designed to offer an
integrated package governing trade in goods and services, an agreement on
investment, mutual recognition agreements in services and cooperation
agreements in areas such as education, e-commerce, the media and intellectual
property.
The CECA, scheduled to be signed by the
Prime Ministers of India and Singapore on June 29, during the visit of the
Singapore Prime Minister, Mr Lee Hsien Loong, to India, is all set to take
effect from August 1.
Petrol, Diesel Prices Hiked; LPG Untouched
21st June, 2005
The Government today announced a hike of Rs. 2.50 a litre in the price
of petrol and Rs.2 a litre for diesel.
Petrol and diesel prices were last revised in November, 2004 whereas
international oil prices have continued to remain volatile during this period.
The Government’s decision, however, falls
short of the demand of the oil companies that have been asking for a steep
increase in all four major petroleum products to off set their losses.
23rd June, 2005 The
Orissa government signed a Memorandum of Understanding (MoU) with Posco of
South Korea for a 12 million – tones – per – annum integrated steel plant at
Paradeep in Jagatsingpur district at an estimated investment of $12 million
(Rs. 52,000 crore). The capacity makes
it not only the biggest project in India but one of the largest in the whole
world. The project will be completed in
two phases, each phase comprising two modules of 3-million tones per
annum. The first module is expected to
be completed by June, 2010. Thereafter,
3 million tones of capacity will be added every two years. Thus, the plant will reach its full capacity
of 12 million tonnes by 2016.
Trade Council Notified
27th June, 2005 The government today notified the constitution of an inter-state trade council headed by Commerce and Industry Minister Kamal Nath.
The council, will provide an enabling environment to makes states partners in the country’s international trade. It will be a permanent advisory body, which will meet at least once in six months and make recommendations to the government on issues pertaining to its terms of reference. The council will also be empowered to set up sub-committees.
SEBI Panel Says no to Finger Printing
29th June, 2005 The
SEBI-appointed MAPIN committee has recommended against finger printing of
market participants.
The report of the committee, chaired by Mr
Jagdish Kapoor, former Deputy Governor, Reserve bank of India, suggested a new
software system, called ‘dedupe’, which will issue unique numbers to each
participant without having to use biometric systems.
Investors who have already availed
themselves of their unique identification numbers (UIN, also referred to as
MAPIN) will now have to provide further information to make the existing
database compatible with the proposed one, according to the report.
NDC ‘Endorses’ 10th Plan
Mid-Term Appraisal
29th June, 2005 The
first meeting of the National Development Council (NDC) convened by the United
Progressive Alliance Government gave “a broad endorsement of the Mid-Term
Appraisal of the 10th Five Year Plan as a “roadmap for policy”.
It also set up two sub-committees on
evolving a workable agricultural strategy and relieving the acute debt stress
of States.
The Planning commission Deputy Chairman,
Mr Montek Singh Ahluwalia, said the main focus was achieving “more rapid and
inclusive economic growth”, improving institutional reforms to make money spent
on social sectors effective and addressing infrastructure inadequacies.
‘Outcome Budget’ in July
29th June, 2005 The
Government would bring out an “Outcome Budget” early next month to gauge the
effectiveness of the money spent on various heads under different ministries,
as per the Finance Minister, Mr P Chidambaram.
The Minister said that the ‘Outcome
Budget’ would specify the desired outcomes in quantitative terms with a time
frame. The key to achieving outcomes, he
said, was to ensure efficient service delivery, transparency and
accountability.
Singapore CECA Covers Services Too
30th June, 2005 India
and Singapore today signed a Comprehensive Economic So-operation Agreement that
encompassed trade in goods, services, investments and stronger ties in
education, science and technology, air services and intellectual property.
The agreement, effective from August 1,
2005, was signed by Prime Minister Manmohan Singh and Singapore Prime Minister
Lee Hsien Loong here today.
India has committed to allowing 26 per
cent FDI in life and non-life insurance, 74 per cent in banking (inclusive of
both FDI and FII), 49 per cent in telecom but 74 per cent in four areas, namely
ISP gateway, ISP with out gateway, Infrastructure Provider (IP) – 1 and
IP-2. Value added services in the
telecom sector would be bound at 51 per cent.
Under the CECA three Singapore banks –
Development bank of Singapore Holdings, United Overseas Bank Ltd and Overseas
Chinese Banking Corporation Ltd would be allowed to incorporate one insurance
company, provided none of them individually or collectively hold more than 26
per cent equity. The three banks have
also been allowed to establish 15 branches in four years.
Singapore Banks can Foray into Insurance
30th June, 2005 The
agreement would also open the door for the movement of Indian professionals in
127 services for work in Singapore.
These include accountancy, taxation, engineering, medicine, nursing and
management consultancy services.
2nd July, 2005 Capital
gains arising to a Singapore resident on sale of shares of Indian companies
would not be taxable in India. This is
because India has agreed to extend Mauritius-like ‘capital gains’ tax concession
to Singapore through a protocol.
Consequent to this protocol, capital gains
derived by a Singapore resident would be liable to tax only in Singapore. At present, there is no capital gains tax in
Singapore, so in effect such gains would not be taxed even in Singapore.
RBI Relaxes NPA Norms for Urban Co-op
Banks
5th July, 2005
Urban cooperative banks (UCBs) will be allowed to apply the 180 day
delinquency norm till March 31, 2006 for identification of NPAs in gold loans
and small loans up to Rs 1 lakh, the Reserve Bank of India said in a release.
This move by the RBI is expected to give
some relief to UCBs, which were required to move over to the 90-day delinquency
norm for asset classification from the fiscal ended March, 2004.
Government Opens
up Lignite Blocks for Captive Power Production
7th
July 2005 In a major
policy shift, the Government has decided to allot lignite blocks to private
sector companies for captive power production. Till now, only coal blocks were
allotted to private parties for captive power production. Lignite blocks would
be allotted to private parties along with the provision of allowing several
unrelated companies to form a common user group, which would be allowed to
treat the lignite-based power plants as captive plants. For this, the user
companies will have to jointly take up 26 per cent stake in the company to
which the lignite block is being allotted.
7th
July 2005 The Union Government on Wednesday allowed,
with immediate effect, FDI with cap of 26% in Indian print media and opened the
doors for facsimile editions, revising its earlier guidelines issued by I&B
ministry on Nov 21, 2002. The Government
also issued guidelines for syndication arrangements by the newspapers and
limited it to 20% of the total printed area of the newspapers.
Till, now only 26% FDI was allowed
in print media built the revised guidelines permit investments by FIIs, NRIs
and PIOs within 26 % cap. It said permission only in cases granted where equity
held by the Indian shareholders is at least 51% the paid up equity, excluding
the equity held by public sector banks and public FIs. On facsimile editions of
foreign newspapers, the revised norms stipulates that any foreign company owing
the original foreign newspapers will be permitted to publish it provided it is
incorporated and registered in India and at least three fourth of the directors
on its board and all key executives and editorial staff residents of Indians. For
syndication arrangements the guidelines has hiked from 7.5% to 20% contents in
the newspapers.
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