Import duty on power equipment likely in Budget

The proposal to impose customs duty on import of power equipment with more than 1,000 MW capacity may find its way in the Budget, even as it was withdrawn from the Cabinet on Thursday. The Budget is scheduled to be presented on March 16. While opinions differ on the exact reason for withdrawal of the proposal, official sources said that there were differences over the quantum of duty. While the Power Ministry is believed to have recommended 19 per cent import duty on equipment for large projects, the Commerce Ministry favoured 24 per cent duty.

Source: The Hindu Business Line

Report on DTC Bill to come soon

The Parliamentary standing committee on finance will give its report on the Direct Taxes Code (DTC) Bill soon, paving the way for the House to consider it in the Budget session. This is because members of the panel, including those from the Opposition parties, are now convinced that the anti-avoidance provisions in the Bill need to become law in the context of the government’s drubbing in Vodafone case and the the Citigroup’s stake sale in HDFC Bank which escaped the Indian tax net. In the Vodafone judgement which said the relevant transaction being a genuine FDI deal between two non-residents are not taxable in India, the Supreme Court had also highlighted the need for legislation on general anti-avoidance rule (GAAR).

Source: Financial Express

Bullish Futures Top 1 Million Contracts for First Time in ’12: Commodities

Bullish commodities futures rose above 1 million contracts for the first time in five months as U.S. growth prospects improved and Goldman Sachs Group Inc. predicted further price gains.Hedge funds and money managers boosted combined net-long positions across 18 U.S. futures and options by 7.3 percent to 1.03 million contracts in the week ended Feb. 21, Commodity Futures Trading Commission data show. That’s the highest since Sept. 13. Bullish wagers on gold climbed to a five-month high, and bets on crude oil rose to the most since May.

Source: Bloomberg

Levy higher duties on power equipment imports: Commerce Department

The commerce department has opposed power ministry's attempt to protect existing ultra mega power projects (UMPPs) from the proposed duty hike on imported power equipment. It has said the higher duties should be imposed on all imports from the day the Cabinet approves the proposal. "In the Cabinet note on power equipment imports, the power ministry has proposed a carve out for all approved UMPPs stating that the import duties would not be applicable on orders already placed," a government official said. The commerce department feels this is not warranted, the official said. The power ministry has proposed a 5% basic customs duty on power equipment imports, a 10% countervailing duty and a 4% value added tax in the Cabinet note to shield domestic manufacturers like BHEL, L&T and Bharat Forge against cheap imports from China. The commerce department has a point of dispute with the duties as well. It wants a 15% basic customs duty.

Source: Economic Times

Marine product exports rise 3.48% in Apr 2011-Jan 2012

Exports of marine products from April 2011 to January 2012 have registered a growth of 3.48% in quantity, 25.55% in rupee value and 20.96% in US dollar realisation, compared to the same period last year.The unit value realisation has also improved by 16.89%, according to the latest Marine Products Export Development Authority (MPEDA) statistics. As per the provisional export figures for April 2011-January 2012, the Indian seafood exports have increased by R850 crore from R12,901.47 crore in 2010-11 to R13,753.43 crore.In dollar terms, exports have touched $3 billion during the period. MPEDA released the figures in Chennai on the eve of 18th International Seafood Show 2012 being organised in association with Seafood Exporters’ Association of India (SEAI).

Source: Financial Express

Markets rebound ahead of liquidity injection in Europe

Ahead of the second round of a three-year LTRO (long term refinancing operation) by the European Central Bank (ECB), the Indian equity markets rebounded smartly on Tuesday, retracing some of the losses made in the Monday’s massive plunge.Both the benchmark indices, the 30-share Sensex and the 50-share Nifty, which had lost close to 2.5% on Monday retraced 1.7% on Tuesday as traders braced themselves for another round of liquidity injection in the European markets which could prolong the momentum of foreign fund inflows into the Indian market.The Sensex added 285.37 points to close at 1,7731.1 while the Nifty advanced by 94 points and ended the session at 5,375.5.

Source: Financial Express

ONGC to give Rs 12,400-cr boost to govt finances

The Union government will raise at least Rs 12,400 crore through the sale of five per cent stake in Oil and Natural Gas Corporation (ONGC), giving it a much-needed cushion in the run-up to the Budget. The government would sell 427.77 million shares at a floor price of Rs 290 through the recently introduced auction mechanism, the company said in a notice to the stock exchanges. The auction will be held during trading hours on March 1.Unlike earlier divestments, retail investors will be kept out of this sale. The auction is open only to institutional investors.

Source: Business Standard

Forex reserves down to $311.5 bn as on Sept 30, 2011

The country’s foreign exchange reserves stood at $304.8 billion as at end-March, 2011, and increased to the peak level of $322.0 billion as at end-August, 2011, the Reserve Bank of India (RBI) said on Tuesday.Thereafter, it came down to $311.5 billion at the end of September 2011, the RBI said in a release. The main reasons of decline are, inter alia, the revaluation effect and intervention in the domestic foreign exchange market. As at end-September 2011, out of the total foreign currency assets of $ 275.7 billion, $ 144.4 billion was invested in securities, $ 125.8 billion was deposited with other central banks, BIS and the IMF and $ 5.5 billion was placed with the External Asset Managers.

Source: Financial Express

Market manipulation continues to be the biggest concerns for investors

Market manipulation and price rigging continue to be the biggest concerns for investors, despite harsh actions taken by the capital market against unscrupulous operators for cornering IPOs and trading on insider information. Securities transaction tax (STT) and corporate governance lapses are the other worries, according to a large number of investors who participated in a recent online poll conducted by the BSE Brokers' Forum, an association of stock brokers registered with the BSE. Of the 1,000-odd respondents, nearly 86% feel price manipulation is widely prevalent in the stock market. They feel that present laws are inadequate to prevent growing instances of manipulation and more action should be taken to curb such malpractices.

Source: Economic Times

Bharti Airtel, Vodafone suggests TRAI to deregulate mobile tariffs

Bharti Airtel and Vodafone India have suggested the Telecom Regulatory Authority of India (Trai) deregulate mobile tariffs or continue with its policy to allow telecom operators to fix calling rates, the companies said in separate letters. Airtel, the world's fifth largest and India's largest operator by subscribers, has asked to remove the cap on roaming tariffs. The company which is also a market leader by revenues and subscribers, warned against any kind of regulatory intervention as it may "prove to be catastrophic for the very sustenance of the industry". Vodafone, that follows Airtel in ranking of GSM operators, said tariff regulation would create uncertainty, reduce investment in the sector and lead to higher tariffs in a letter to Trai, seen by ET.

Source: Economic Times

Indian Bank drops plans for standalone life insurance venture

Indian Bank, a public sector lender, has shelved plans to float a separate subsidiary for taking up life insurance business. Instead, the bank will focus on building a multiple-agency relationship system to augment business, its Chairman and Managing Director, Mr T. M. Bhasin, said. It would also go in for white-labelling of products so that Indian Bank's name appears on products being offered by various agency partners, Mr Bhasin said. The move to abandon plans for setting up a separate life insurance venture comes in the wake of the bank's decision to conserve capital and use it more propitiously for its core business.

Source: The Hindu Business Line

Fix dispute in 6 months or face arbitration, Sistema tells India

Russia’s Sistema, which serves 15 million Indians under the MTS mobile brand, became the first international telecom investor on Tuesday to seek justice under a bilateral investment treaty after its licence was marked for cancellation by the Supreme Court. Sistema, the largest diversified public corporation in Russia and CIS, sent the notice to the government about the dispute under the India-Russia bilateral investment treaty (BIT). The BIT binds signatories to provide investments with full protection and security and bars any expropriation of investment. The company said it will also file a review petition in the SC. Sistema, which owns a 56.88% stake in Sistema Shyam TeleServices (SSTL), holds a licence granted by A Raja in January 2008 —among the 122 struck down by the court on February 8. SSTL provides CDMA mobile services in 21 circles.

Source: Financial Express

Govt will divert coal under e-auction to power companies

Amid the power sector facing acute fuel shortage, the coal ministry on Tuesday said that it may divert a portion of the fuel under e-auction quota to power producers, besides resorting to imports to meet the crisis. ‘‘We will divert coal under e-auction quota (to power producers), increase evacuation and import,’’ coal minister Sriprakash Jaiswal said on the sidelines of a function here.Under e-auction, coal is sold at spot market price. Around 10% of the total coal produced by state-owned Coal India Limited (CIL) is sold through e-auction.CIL had offered four million tonne (mt) coal meant for e-auction in October to power companies.The government had then allocated additional quantity of coal to the power sector from the e-auction quota to ease coal shortage that caused frequent disruptions in electricity generation.

Source: Financial Express

Govt ready with 3-pronged plan on cancelled 2G licences

A government group under the chairmanship of Finance Minister Pranab Mukherjee has broadly accepted a Department of Telecommunications (DoT) proposal favouring a three-pronged strategy to deal with the challenges arising out of the Supreme Court order cancelling 122 telecom licences.The accepted proposal envisages the government filing a review petition, a presidential reference with respect to the question of law that has arisen as a result of the order as well as a clarification petition covering operational issues. The drafts of the petitions are now under discussion in the DoT, from where they will be referred to the law ministry.

Source: Business Standard

RBI intervention helps rupee appreciate

After touching a low of Rs 54.23 against the US dollar on December 15, 2011, the rupee has strengthened to Rs 49.07/ dollar (as on February 28). While resurgence in portfolio capital flows (cumulative flows from December 2011 to February 6, 2012 are $11 billion) is one of the reasons, the RBI intervention in the forward exchange market too has helped. The RBI sold dollars in the spot market and bought the same in the forward market, allowing the foreign exchange reserves to remain in tact. This lead to sucking out rupees from the system and increasing dollar supply and, thereby, allowing the rupee to appreciate.

Source: The Hindu Business Line

Sebi amends valuation norms for MFs; raises transparency levels

The Securities and Exchange Board of India (Sebi) on Tuesday tightened valuation norms for money market instruments in a mutual fund scheme. The latest amendments have been made with a view to ensure that the value of the portfolio reflects the market situation to a greater extent.All money market and debt securities, including floating rate securities, with residual maturity of up to or over 60 days will need be valued at the weighted average price at which they are traded on the particular valuation day. Earlier, the valuations norms were applicable only if the residual maturity was up to or over 91 days.Further, as part of its attempts to further enhance transparency, Sebi has directed the asset management companies to disclose all details of debt and money market securities transacted (including inter scheme transfers) in its schemes portfolio on their respective website.

Source: Financial Express

Sebi allows fund managers to manage both domestic, overseas money

Market regulator Sebi has allowed fund managers to manage both domestic and overseas money across all their activities, including mutual funds, offshore and portfolio management service. Last year, the regulator, while allowing asset management companies to share back-end resources, had said they should appoint separate fund managers for each separate fund they manage unless the investment objectives and asset allocations were the same and the portfolio was replicated across all the funds managed by the fund manager. "It has been represented to Sebi that the perfect replication of portfolio between the mutual fund scheme and products under other permissible activities of Asset Management Company (AMC) may not be achieved at all times," the regulator said in a circular on Tuesday.

Source: Economic Times

Direct tax arrears up 10% in H1

Despite a series of measures in the past year to curb the arrears in direct tax collection, a sum of R3.67 lakh crore claimed by the tax department remained unrealised at the end of the first half of this fiscal. The arrears were up 10% over the level at the start of the year. The direct tax arrears consist of mainly amount locked in litigation.However, the growth in arrears has moderated when compared to previous fiscal. At the end of March 2011, the direct tax arrears stood at R3.3 lakh crore, an increase of over 30% over the level a year ago.The arrears are 70% of the direct tax collection target for this fiscal and could prompt the finance minister to take a few more steps in the Budget to curtail it.

Source: Financial Express

Heard on the Street: Sebi crackdown on small IPOs eases worries

Market watchdog Sebi's crackdown on the recent small-size IPOs has come as a relief to exchanges, which are launching their trading platform for small and mid-sized companies. Last year, when such small IPOs were a rage, stock operators and small-time merchant bankers were hoping to move their 'operations' to SME exchanges. They were tempted by the faster approval process for SME listings compared with normal listings, which take over eight months to get Sebi approval. However, after Sebi's recent probe into fraudulent IPOs resulted in many merchant bankers and stock brokers being banned from the market, the operator groups have wrapped up their foray into the SME segment. Exchange officials are relieved as they were worried that the fraud listings would taint the reputation of the already-delayed SME platforms.

Source: Economic Times

SC issues notice to Essar Oil over tax benefit claims

The Supreme Court has issued notice to Essar Oil over its tax benefit claims arising out of the services provided by the company in oil and gas exploration projects in Oman and Qatar. A bench headed by Chief Justice SH Kapadia sought reply from Essar on a petition filed by the income tax department contending that income arising in Oman and Qatar is to be included in the total income of Essar, which is a resident in India for the purpose of tax rate, subject to the credit for taxes paid on the income arising in foreign countries.It said profits from the Oman and Qatar branches have to be included in the total income as the assessee being a resident of India has to be taxed on its entire income in India as per Section 5(1) of the Income Tax Act, 1961.

Source: Financial Express

I-T officials may get strong survey powers to check tax evasion

The finance ministry is looking to empower income-tax officers to go after suspect businesses and the rich to unearth black money and check tax evasion even as the government eases laws and drop low earners from the tax net. The ministry is considering vesting taxmen with powers to conduct surveys beyond their jurisdiction if they think an assessee has stashed away ill-gotten wealth elsewhere. "Surveys are an effective tool to unearth black money...the idea is to make them more effective by removing geographic restrictions," said an income-tax official. The upcoming budget could unveil the proposal after a final go-ahead from Finance Minister Pranab Mukherjee.

Source: Economic Times