Volume 26 – No.09 – December 2010
India Corporate Week 2010 Celebrations The Chamber along with the Ministry of Corporate Affairs celebrated India Corporate Week 2010 in Chennai. This year’s theme was “Sustainable Business”. The Chamber had the privilege and the participation of the Hon’ble Union Minister for Corporate Affairs, Mr Salman Khurshid and Dr T V Somanathan, IAS., Joint Secretary, MCA, New P4 Delhi...
Nani Palkhivala Memorial Lecture & MCCI FFT Programme on
“The Real Significance of Scams”.
In This Issue President’s Message Chamber’s activities – 4 Management Development
Programme on Excise & Service Tax 4 Programme on Secure Cities India II 4 Seminar on Transfer Pricing 4 Seminar on Emerging Trends in Taxation 4 Seminar on Business Innovation & Engineering Excellence 4 Programme on Investor Awareness 4 India Corporate Week 2010 celebrations 4 Nani Palkhivala Memorial Lecture on the Real Significance of Scams
General Committee Spotlight – 4 Climate Change- A Global Environmental Challenge
The Chamber and the Nani Palkhivala Foundation jointly organized the above programme at the Chinmaya Heritage Centre. The speakers were Mr Arun Shourie, Journalist, Author and former Union Minister as well as Mr N Vittal, former P7 Central Vigilance Commissioner....
Climate Change - A Global Environmental Challenge... P9
Policy watch Trade Fairs & Exhibitions Additions to Library Economic Review Others – 4 Highlights of Second Financial Stability Report – RBI
4 Mid Quarter Monetary Policy Review – December 2010 –RBI 4 Gulf Visa Services 4 Representations
PRESIDENT’S MESSAGE hospitals and cultural academies of repute, bear testimony to the social conscience of corporate houses in Tamil Nadu. Of course, the recent gesture by Mr. Azim Premji donating nearly Rs.9000 crores to the cause of education is an outstanding example of individual philanthropy.
Dear friends, At the outset I wish you all a very Happy New Year. During the month of December, we hosted the India Corporate Week celebrations, in which the Hon’ble Minister of Corporate Affairs, Shri Salman Khurshid participated. One of the important points the Chamber raised during this meeting was on Corporate Social Responsibility (CSR). The Chamber strongly expressed the view that “Corporate Social Responsibility” should not become a “Compulsory Social Responsibility” as CSR, by its very nature, is voluntary. Happily, the Minister also seemed to concur on this point. The Chamber’s representation on CSR did not come from the fact that we, the corporate sector, do not believe in Corporate Social Responsibility. In reality, several companies and industrial houses in our part of the world have been practising what is called corporate philanthropy much before the western world came up with the jargon of CSR. Several Educational institutions,
Today, there seems to be a lot of confusion about the term CSR itself – whether this is really different from the corporate philanthropy which we earlier talked about. There are different interpretations or definitions for CSR. Worldwide development of CSR is neither linear nor uniform. November 1, 2010 marked the official launch of ISO 26000 – the social responsibility guidance standard developed by the International Organization for Standardization. The standard provides guidelines applicable to any organization – public or private, small or large, based in developed or developing country. ISO 26000 defines what social responsibility is and outlines the seven main principles of social responsibility: accountability, transparency, ethical behaviour, respect for stakeholder interests, respect for the rule of law, respect for international norms of behaviour and respect for human rights. But in simple terms, it can be defined as the integration of stakeholders, social, environmental and other concerns into the Companies' business operations. On the flip side, many leading economists, including Milton Friedman, perceived CSR as incongruent with the very nature and
purpose of business, and a hindrance to free trade. There is considerable debate as to whether it requires more of the corporation than the obvious: enhancing society by creating and delivering products and services consumers want, providing employment and career opportunities for employees, developing markets for suppliers, and paying taxes to governments and returns to shareholders . Yet another criticism of CSR is that some of the companies which have “shown” that they are socially responsible have subsequently been exposed for unethical practices. In such cases, CSR is felt to be used as a defence to cover these shortcomings. Social responsibility cannot be momentary and inconsistent; it has to be built into the corporate value system. I would go back to my original view that CSR is an important element of business. This is not an “add on” to a business, but an integral part of it. Philanthropy and charity have long been rooted in Indian culture and CSR, which aims to address the triple bottom line- People, Planet and Profit, should therefore be a natural fit with corporate India. Regards,
T T Srinivasaraghavan President
CHAMBER’S ACTIVITIES 2nd December 2010
Management Development Programme on Excise & Service Tax
Under the auspices of the Indirect Taxes Committee of the Chamber, this programme was organized at Hotel Savera.
Mr P R Sudhakar Service Tax – Basic features, registration, payments, input service distributor
Members of the Expert Committee formed the faculty. The following subjects were covered by the speakers:
Mr P R Subramaniyan Service Tax – Issues in construction, works contract service and renting
Mr K K Sekar An overview – Manufacture and classification
Ms Radhika Chandra Sekar Export & Import of services
Mr K Guruswamy Issues in CE valuation
All the faculties made excellent presentations and the delegates interacted with faculty on a number of practical and operational issues.
Mr K Vaitheeswaran Cenvat Credit on inputs, capital goods and input services/as such removal
4th December 2010
Programme on Secure Cities India II – New Age Technologies and Trainings for Combating Terror: Security Watch India, in association with IPPAI launched Secure Cities II initiative – a series of security conferences in nine cities of India. Security Watch India joined hands with MCCI in organising the Chennai leg of the Conference which was held at Connemara Hotel. Mr Maroof Raza, Mentor, Security Watch India welcomed and gave an overview of the programme. Mr Shyam Ratan Mehra, former Secretary-Security, Government of India addressed on understanding and managing the risk of terrorism. The keynote address on the role of Police in preventing, defending and responding to the threat of terror in the 21st century by collaborating with business and community was given by Mr Shakeel Akhtar, Additional Commissioner (Law & Order), Government of Tamilnadu.
He said quick reaction teams drawn from the Tamilnadu Commando Force will reach any spot in the city within 30 minutes in the event of a terror attack. An action plan has been drawn for the whole State and the extended operating procedure adopted in Chennai will be used as a model in other districts also. Soon, rapid response team will be in place in almost every district. Calling for the setting up of public-private bridge organizations that would focus on public safety, similar to the FBI’s Infragard, he said issues such as coastal security and the rising threat of fake currency could not be tackled without greater trust and information sharing. He stressed on the need for trained security guards and said most of the agencies employ guards without checking whether they are competent enough or not. The Conference also stressed on the need for arming the constables and providing proper training to private security guards. It was mentioned that India had a large number of private security guards but most of them lacked training on how to tackle emergency situations like 26/11 attacks. Important topics like training and human capital; role of technology in providing security and protection while combating terror; risk assessment, mitigation and tactical system redesign; challenges of protecting high value and energy infrastructure; cyber
The programme was well attended and certificates of participation were issued to the participants. security and new technologies, etc. were addressed at the meeting.
8th December 2010
Seminar on Transfer Pricing
Under the auspices of Direct Taxes Committee, this programme was organized by the Chamber on the 8th December 2010. Mr.R.N.Dash, Director General of Income Tax- International Taxation, New Delhi inaugurated the seminar. Addressing the gathering, Mr. Dash acknowledged that Transfer Pricing is one of the important concerns both for the Revenue and the tax payers. He stated that the adjustments were carried out by the Transfer Pricing Officers (TPO) across India, in only about 48 per cent of the cases audited by them and the percentage was even lesser in Chennai. However, he noted that the value of the adjustments has significantly increased over the years. He also informed the audience that the Tax Department is working on a
CHAMBER’S ACTIVITIES Handbook for the TPOs to bring more clarity and certainty to the subject. He also stated that the performance of the Dispute Resolution Panel (DRP) over the last year is being reviewed and certain administrative changes are being proposed in this regard. He stated that instructions have been issued to the TPOs across India on seven important issues identified by the Directorate and said that the TPOs should be able to share it with the tax payers, on request. The Seminar was addressed by leading professionals from law and consulting firms namely Mr.Sriram Seshadri, Mr.Sivam Subramanian, Mr.Rishi Harlalka, Mr.N.Madhan and Mr.Rajeshwar Chakka who covered topics such as approach to Transfer Pricing, benchmarking and audit, issues specific in the manufacturing and software sectors apart from discussions on the DRP regime and Mutual Agreement Procedure (MAP) available under the Tax Treaties and the proposed safe harbor rules. Mr N Srinivasan, former President, MCCI in his welcome raised certain issues of concern to the corporate for the consideration of Director General, Income-tax.
10th December 2010
gathering. The forenoon session deliberated on Direct Taxes, particularly on Transfer Pricing, Withholding Tax Issues and the positive & negative features of Direct Taxes Code. Mr. Sriram Seshadri, Director of BMR Associates & Chairman of MCCI’s Expert Committee of Direct Taxes and Mr.Sivam Subramanian of BMR & Associates addressed on Direct Taxes. Mr.K.Vaitheeswaran, Advocate & Tax Consultant & Chairman of MCCI’s Indirect Taxes Committee handled the afternoon session on indirect taxes covering central excise, service tax and an outline of GST. Since the response from companies located in Sriperumbudur, Irungattukottai and Oragadam is encouraging, the Chamber will consider further programmes in Sriperumbudur area.
13th December 2010
Seminar on Business Innovation and Engineering Excellence:
Seminar on Emerging Trends in Taxation:
The MCCI joined hands with Bahwan CyberTek in organizing the above Seminar. Prof Mohanbir Sawhney, Professor from Kellogs and Director of Bahwan CyberTek was the main faculty. Mr Rajeev Ranjan, IAS., Principal Secretary, Industries Department, Government of Tamilnadu was the Chief Guest.
The Chamber has been keen to extend its specialized programmes outside Chennai where the need for programmes such as the above is very high but due to lack of proximity and paucity of time, members have not been able to participate.
In his welcome, Mr T T Srinivasaraghavan, President, MCCI, said that the Chamber is in its 175th year and has chosen the theme “Sustainable Development” in this momentous year. The Chamber has initiated a number of programmes which aim at fulfilling and furthering our State Government’s role of sustainable development.
Therefore, for the first time, the Chamber organized a programme outside Chennai at Sriperumbudur. Mr.B.C.Datta, Member of the General Committee of MCCI and General Manager of Hyundai welcomed the
Optimal utilization of industrial resources, human resources and material resources
will pave the way for inclusive growth. In order to achieve this optimal utilization towards incentivising growth, there has to be conscious effort towards finding new and better ways and new technologies which will take us further down to the path of continuous improvement. Continuous improvement can happen only with new thoughts and new ideas. In the past we tended to believe that innovation happened only in laboratories but today innovation can happen everywhere, every day, in offices and in areas far away from science and technology. India’s strengths have been its engineering skills – this is especially relevant to Chennai, Tamilnadu which has been the home for engineering excellence. We have several examples of innovation in various fields notably in automobile sector he said. He said we are home to some of the most innovative companies and innovative minds which can take India forward. The inaugural address was delivered by Mr Rajeev Ranjan, IAS. He said the theme of the Seminar is very apt as innovation is very relevant to economic growth. Innovation holds the key to productivity and the standard of living. Tamilnadu has not lost its competitive edge and is receiving more enquiries from overseas firms on a regular basis for setting up units. Fresh announcements in this regard will be made soon. He said having cleared projects worth about Rs 50,000 crores in the last four and a half years, the State Government in the next few months would garner additional investment of Rs 10,000 crore. The officials were getting enquiries from firms in the US., France and Japan among others. Tamilnadu in particular and India in general give importance to education. We have a large base of skilled manpower and 450 engineering colleges and the numbers are increasing. While that gives satisfaction, there is skills gap at many levels. He further said that while attrition level of employees in certain industries was high, there was also demand for skilled
CHAMBER’S ACTIVITIES labour. Hence, the State Government had announced a scheme recently to provide skill improvement training for one lakh youth to make them readily employable. 123 million people will be joining the work force in India in the next 10 years he said but the challenge is whether these people are adequately skilled and whether they can improve productivity. Giving an overview of the Seminar, Prof Mohanbir Sawhney said that Tamilnadu is the hot bed for automotive and engineering excellence and emerging markets are becoming hubs for innovation in automobiles
14th December 2010
Programme on Investor Awareness As a prelude to the inauguration of India Corporate Week 2010 celebrations, the Chamber initiated a meeting on Investor Awareness with the support of National Stock Exchange of India Ltd. Chennai, on the 14th December. Mr.K.Pandian, Regional Director, Ministry of Corporate Affairs, Chennai addressed the meeting. He requested the companies to file their annual returns and the balance sheets in time. He elaborated the activities and initiatives taken by MCA for the benefit of corporates. Mr.V.C.Davey, Registrar of Companies, MCA also attended the meeting. Ms.Sunita Anand, Manager, National Stock Exchange of India Ltd., Chennai made a presentation on Investor Awareness.
We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made!" Albert Einstein
and engineering. Innovation spans to people, products, supply chain, etc and it has become extremely global. It is an exciting time for India as talented people are coming back. What China is doing is imitative innovation. So, we have to run faster and faster and be smarter to stay in the same place. Mr S Durgaprasad, Chief Executive Officer of BCT said that BCT is one amongst the 50 fast growing technological companies according to Deloitte Report. They are into logistics space, payment gateway space, etc. and would deepen their presence in India and scale up their operations in the Far Eastern countries.
Prof Mohanbir then made a presentation in which he covered the following : 4 How can engineering companies view innovation in a broad sense 4 Characterising innovation 4 12 dimensions of innovation 4 How can industry put innovation to work in an engineering scenario? 4 How can industry translate technological innovation to customer value? The programme ended with lunch hosted by BCT.
15th December 2010
India Corporate Week 2010 Celebrations The Chamber along with the Ministry of Corporate Affairs celebrated India Corporate Week 2010 in Chennai. This year’s theme was “Sustainable Business”. The Chamber had the privilege and the participation of the Hon’ble Union Minister for Corporate Affairs, Mr Salman Khurshid and Dr T V Somanathan, IAS., Joint Secretary, MCA, New Delhi. Mr T T Srinivasaraghavan, President, welcomed the dignitaries and the participants. The full text of his address appears at the end of this note. Delivering a Special address, Dr T V Somanathan said that MCCI has been a valuable partner of the Ministry especially in organizing this signature event of ICW in Chennai. He said the Chamber has been very pro-active in submitting policy proposals and has been prompt in its submissions. Referring to Sustainable Business which is the theme of this year’s ICW, he said this refers to an approach to business which ensures that business is sustainable in the long run – sustainable socially, financially and environmentally. Many businesses have failed because they never practised proper sustainable strategies. In terms of financial sustainability, Government’s role is to minimize the risk of corporates. On social and environmental aspects he said health and safety conditions in work places, protection and preservation of natural habitats, etc., have come to the fore in a prominent manner. He said the voluntary guidelines on CSR issued by MCA in 2009 received lot of acceptance and many of the developed countries have evinced interest in these guidelines. The inaugural address was delivered by Hon’ble Mr Salman Khurshid. He said ICW event is an important event for all of us namely the stakeholders. MCA was particularly honoured this year when the PM inaugurated the celebrations at Delhi. He referred to the visit of heads of G-5 countries to India and said these are very important indicators to us. Talking about the growing
CHAMBER’S ACTIVITIES might of domestic companies on the global stage, he said India’s corporate sector is poised to become the main engine of growth for the Indian economy. The responsibility it carries is, therefore, enormous. Lobbying is part of the democratic process. Different platforms are available and we should be able to use every platform to reflect our views he said. Independent directors cannot be on the board of 20 or 30 firms as they have to protect the interests of stakeholders in the board room. The number of companies (public, non-public or private) in which they could be independent directors should be limited as they had a larger role to play in the board rooms and as such cannot take their jobs lightly. Referring to the request for deferment of the second phase of convergence of IFRS he said “It will be unfair to the first list of companies; if there are any difficulties, we will resolve them. We don’t want to postpone it just for the sake of postponement. Taxation issue has been taken care of and we are working on capacity building issue. About 90 per cent of the companies will set to gain on the transition”. He further said that Companies Bill 2009 would be introduced in the
forthcoming budgetary session of Parliament. Urging the members to send in their feedback on the new proposals, Mr Khurshid said it was not the intention of the Ministry to make companies adhere to corporate social responsibility target and it was not mandatory. Proposing the vote of thanks, Mr T Shivaraman, Vice-President, thanked the Hon’ble Minister for his thought-provoking address and assured him that the MCCI will be a strong partner of MCA. This was followed by a Technical Session on the key drivers for sustainable business. Mr B Ravi, practising Company Secretary dealt with Legislative reforms and said old and dysfunctional laws should be junked and if this is not possible, at least the old and dysfunctional provisions in the law should be junked; the mismatch between over legislation with under governance should be removed. He said it should be ensured that the laws are introduced keeping in mind the ground reality of Indian economic scenario except where there is a need to have global consideration also in mind. Mr S A Murali Prasad, Director, Sam Consultancy Services Pvt.Ltd., made a presentation on Governance Reforms while Mr K Hari, VicePresident, NSE spoke on Capital Market Reforms.
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India Corporate Week Celebrations Seminar on Sustainable Business Welcome address by Mr T T Srinivasaraghavan, President, MCCI Salutations … It gives me great pleasure to extend a warm welcome to all of you, this morning. We are indeed privileged to have the Hon’ble Minister Shri Salman Khurshid in our midst today to celebrate India Corporate Week 2010, which was inaugurated by the Hon’ble Prime Minister in Delhi, yesterday. This is the second edition of India Corporate Week. These celebrations are an acknowledgement of the significant contribution of corporate India to the economic growth of the nation. In true spirit of partnership, the Ministry is conducting these events jointly with trade and industry bodies, across the country. The Madras Chamber is honoured to be a partner Chamber with the Ministry for the celebrations in Chennai. The Chamber is celebrating its 175th year this year and has chosen Sustainable Development as its theme. It is therefore a happy coincidence that the theme for the India Corporate Week 2010 is Sustainable Business. I believe that this is true reflection of the fact that the corporate sector and the policy makers are on the same wave length, working towards the same goal. Corporate India is bracing itself for a slew of changes. The new Companies Bill, IFRS, GST and the Direct Tax Code are all on the anvil over the coming months. But along side these changes, all of us must rise to the challenge of building sustainable businesses, of achieving sustainable long term development. I can do no better than quote our Hon’ble Prime Minister. Businesses, by their very definition, need to be profitable. But the manner in which they use natural resources and the extent to which they are sensitive to the needs and aspirations of the common man is also critical to their own long-term survival and growth. Sustainability of business, therefore, includes not merely economic sustainability in the narrow sense of the term but social and environmental sustainability as well. Indeed, financial capital needs human, social and ecological capital to be viable in the long term sense of the term. Market activity that concentrates wealth without empowering the poor and the deprived is also unacceptable ethically.
in recruitment. I am happy to inform you, sir, that one of the key initiatives of the Chamber in its 175th year is skill development. The Chamber has a long and enviable tradition of being a responsible and credible voice of trade and industry and has articulated the views of its members in balanced manner. With the kind permission of the Hon’ble Minister, I would like to briefly touch upon some of the proposals in the Companies Bill 2009. Some of the major issues of concern for us are, fixing of the term of independent directors, appointment of auditors and compulsory contributions for CSR. While there can be no two opinions about the need for companies to have a social conscience, philanthropy, in our humble opinion, should be a matter of choice, not compulsion. Many of India’s large companies have already demonstrated their commitment in this area and I am confident that others will follow. I have only touched upon a few issues here. The Chamber has, however, submitted its detailed views and suggestions on the Companies Bill to the Standing Committee for its consideration. Another subject that is engaging the Chamber’s attention is the Convergence of Indian Accounting Standards with IFRS. The Chamber has had several rounds of discussion with its members as also with in-house and external experts. The Chamber fully appreciates the imperatives of aligning Indian Accounting Standards with the international standards. However, given the complexities, as well as the challenges of harmonizing the accounting standards with the Companies Act and the Income-tax Act, this transition is not going to be easy. The first phase of companies is required to move to IFRS, effective April 1, 2011 and they are gearing up for that. Our submission, sir, is that the second and subsequent phases be deferred to synchronise with their adoption by the US and Japan – in 2015. This would allow for all the disclosure and taxation issues to be addressed in the meantime and enable a smooth transition, based on the experience of the first phase adopters and the international experience. Till such time, voluntary adoption may be permitted so that companies who go for cross border borrowings or joint ventures can adopt IFRS if they so choose. I would like to conclude with another quote from our Hon’ble Prime Minister: “Our Corporate culture must be attuned to the universally accepted values of good governance – accountability, transparency, responsibility and responsiveness to stakeholders. Our corporate endeavours have to be consonant with the demands of our eco system and the expectations of Indian democracy.” Sir, I would like to reiterate the Chamber’s commitment to strive for these ideals, in the larger interest of the nation’s development. In fact, our Seminar today will dwell upon these very themes. I once again extend a very warm welcome to the Hon’ble Minister and all of you gathered here for today’s Seminar.
He goes on to add that increasing the employability of our population through effective skill development must be central to corporate strategy and not merely an after thought resulting from difficulties
CHAMBER’S ACTIVITIES 18th December 2010
Nani Palkhivala Memorial Lecture & MCCI FFT Programme on
“The Real Significance of Scams”.
The Chamber and the Nani Palkhivala Foundation jointly organized the above programme at the Chinmaya Heritage Centre. The speakers were Mr Arun Shourie, Journalist, Author and former Union Minister as well as Mr N Vittal, former Central Vigilance Commissioner. Mr Arvind P Datar, Senior Advocate welcomed the speakers and all those present. Talking about scams, Mr Vittal said a good number of politicians are supposed to do jobs in their constituencies. Poor people in our country constitute a majority of the vote bank and our politicians are nurturing the poor. India is a rich country where we have tried to keep the poor as poor. In Indian politics, poor people are very important. For these poor people, these scams do not affect at all. He referred to the great scam in Hong Kong a few years ago and said a corrupt administration turned itself into a good one. If Hong Kong can do it, can India do it? Our entire system is designed for corruption because in no area, we have got accountability. He said those who work always get work and those who do not work, get pay and promotions. Our labour laws are archaic. The Prevention of Corruption Act 1988 is full of loopholes and allowed the “corrupter” to go scot-free. Though confiscation of the ill-gotten wealth had oft been spoken about, no law was enacted. For reforming the system, he stressed the need for strengthening the judiciary, the Election Commission, the Central Vigilance Commission, the CAG and also the media.
He said corruption has to be fought and fought relentlessly so that it will be minimized if not eradicated. Addressing, Mr Arun Shourie said in our day to day life, nothing moves without our giving a bribe. There are examples galore to show that we accept corruption, in some form or the other as normal practice; when we want a licence we pay a “service fee” to get it fast. Speaking about Spectrum scam he said while there is nothing wrong in investigating 2G spectrum allocation from 2001 onwards, this exercise should not be used to delay the ongoing probe into the affairs of the former Union Communications Minister. He claimed that Prime Minister Manmohan Singh was aware of what had been going on in the telecom sector but did nothing for almost two years. It was only to deflect the focus from the Prime Minister that the Niira Radia tapes were leaked, after the release of the Comptroller and Auditor-General’s scathing criticism of the 2G spectrum allocation. The objective of the government was to turn the entire focus on the Minister Mr. A Raja. Disputing Mr Raja’s claim that he was merely following the footsteps of his predecessors in adopting the ”first come first served” policy, in allocation, Mr. Shourie said Mr. Raja did not deal with all pending applications. He ignored the advice of the Prime Minister and the offices of the Finance and Law Ministers and also the Telecom Regulatory Authority of India in this regard. We need to create public pressure to make a change he said. If you think everybody is a crook, then there is no change.
He said the simplest reform would be not to adjourn cases involving public servants. He said "Be an example to others in exposing corruption and educate the younger generation that corruption in any form is bad." Mr T T Srinivasaraghavan, President, MCCI proposing the vote of thanks said the two speakers shared their thoughts with the audience on a subject of great agitation. Mr. Vittal brought out the anatomy of corruption. A ray of hope is that both the gentlemen who understand the problem also feel there is also hope. It is a depressing scenario at present but all of us as individual citizens can bring about a change.
We must realize that achieving social justice in a complex polity such as India requires socio- political and administrative innovations. We have to “reimagine politics and governance” as it is practised in India. We have to address the issues before us – corruption, separatism and inequality - by working to change the circumstances that create them.
- C K Prahalad 7
GENERAL COMMITTEE 17th December 2010
The Committee considered the following:
Safety and Health to be held on 7th and 8th January 2011(Since postponed to 4th and 5th February).
Assocham AGM & Meeting at Delhi – 10th & 11th Membership December 2010 The 90th Annual General Meeting of Assocham and the first meeting of the Managing Committee were held on 10th and 11th December 2010 respectively. Regarding subscription payable by Promoter Chambers, it was informed that the same has been raised from the current Rs. 2.5 lakhs to Rs. 4 lakhs p.a. Assocham has sent a list of 70 national committees which are being reconstituted. Those desirous of serving on these Committees could inform the Chamber and the Chamber would send a consolidated list to Assocham. A reference was made to the latest communication from Assocham regarding an Ombudsman and requesting the President of the MCCI to represent the Southern Region.
To decide on the 175th year Commemorative Stamp The Committee finalized the design for the commemorative stamp. The Chamber will take steps to write to the Postal Department at Delhi to proceed further. The President reported on the various programmes organized by the Chamber during December 2010. He specially referred to the India Corporate Week 2010 celebrations organized on 15th December which was addressed by Mr Salman Khurshid, Hon’ble Minister for Corporate Affairs, Government of India as well as Dr T V Somanathan, IAS., Joint Secretary in the Ministry of Corporate Affairs. The Committee was also informed of the Nani Palkhivala Memorial Lecture on “The Real Significance of Scams” scheduled for 18th December and the proposed training programme on Occupational
companies in and around Chennai, to get their feedback. The Secretary General said that she would present a detailed business plan at the next meeting of the Committee.
The Committee admitted the following companies to membership of the Chamber: Diksaat Transworld Ltd. AGP International Services PKF Sridhar & Santhanam Daimler India Commercial Vehicles Pvt.Ltd. VA Tech Wabag Ltd. Orient Green Power Company Ltd.
Senate of the Annamalai University
MAA Kuthari Projects Pvt.Ltd.
Arrears of Subscription 2010-11 The committee noted the list of companies in arrears numbering 17 and decided to send a final letter and if there was still no response, to formally remove them from the rolls of the Chamber at the next meeting of the committee.
175th Year Celebrations Committee meeting The Chairman of the 175th year celebrations committee was apprised of the Chamber’s interest in developing a Skill Development Centre on the land purchased by the Chamber near Sriperumbudur. It is the desire of the Chamber that it should do something as part of the 175th year which will have long term impact for our members and for the constituency that we serve. He was very supportive of this idea but advised the President to speak to a cross section of industries to determine their interest and the level of support they would provide. Accordingly, it is proposed to have discussions with some of the leading
MCCI is pleased to inform members that Mrs K. Saraswathi, Secretary General of the Chamber has been elected as a Senator of the Annamalai University for a period of 3 years from December 2010.
We are what our thoughts have made us; so take care about what you think. Words are secondary. Thoughts live; they travel far. - Swami Vivekananda
- A Global Environmental Challenge Dr A Janagan
Chairman, Expert Committee on Energy MCCI When was the last time you ever saw sparrow’s chirping in your garden…When was the last time you came to know from NGC that there are only 27 glaciers left in the Montana’s Glacier National Park, versus 150 in 1910…If you are an environmentalist when was the last time you took note of the Coral reef which are highly sensitive to small changes in water temperature, suffered the worst bleaching, or die-off in response to stress—ever recorded in the history… Finally when was the last time you have ever experienced such a cold winter in Chennai which always saw the hot, hotter and the hottest seasons - all these attribute to climate change and Global warming. Climate change is universally recognized as a significant global environmental challenge. But, what is this climate change all about and who has caused it. If you happen to read all the statistical reports about global warming most of them would have concluded that humans have caused most of the current planetary warming.
by 80% by 2050. What does it mean to us that we cannot continuously use energy source from fossil fuels which are the main source of CO2 emission or improve the Energy Efficiency to conserve energy (either in the form of coal, Hydrocarbon type) . The financial, food, fuel and climate crises are individually serious issues. But, in combination, their impact could be catastrophic for the global economy. Perhaps, we stand at across roads. Even as we move into a global economic downturn, there are growing calls for an accelerated transformation towards low carbon and resource productive economies. This means, we need to invest in R&D those stimulate, nurture and progress new low carbon ideas. A new system is needed that fosters sustainable, low carbon and resource productive innovation = short, long, medium and long term. The stern review saw more than $ 5 billion of venture capital invested in Clean Tech worldwide since January 2007 (Source : Ernst & Young).
But what next? Well that is a big question now. Humans are now pacing fast to find all ways to erase the past mistakes and bring hope to this world to make it a better place to live in. As for the foremost things, the best way to start off is nothing but Green House Gas emission effect, or CO2 emission level .
This leads all of us to understand Energy saved is energy produced and Energy saved is equal to helping CO2 emission reduction and thus helping the society to save from climate change.
The United Nations Climate Change Conference in Copenhagen, in December 2009, highlighted the major challenges and opportunities associated with climate change as we move post 2012 Carbon dioxide (CO2) reduction targets.
Ever increasing fuel price and stringent government emission legislations are accelerating the demands for fuel efficient vehicle manufacturing from the automobile manufacturers.
In October 2008, UK raised the bar by announcing a target of cutting CO2 emission
Already in US and Europe, two legislations on fuel economy have come into force – (1) CARB (California Air Resource Board)
(2) EVR (Enhanced Vapor Recovery) German 3l/100 Km, 2l/100 Km, sustainable environment per Kyoto Proto and reduce green house gas emissions -This means light weight in design is critical in achieving such performance improvements. There is no exception whether the transport system is powered by depleting fossil fuels, emerging fuel cells and hydrogen or renewable biofuels. It has been established that 10% reduction in vehicle weight results in 7% fuel economy. For every 75 litres top off about 150 Kg carbon dioxide is eventually released into atmosphere. Around the world, motor vehicles account for approximately one-third of oil consumption and about 14% of global CO2 emissions is from burning fossil fuels. Reducing from transportation in developing nations is a major environmental challenge, according to the World Bank, which also notes that emissions from vehicles in these nations will quadruple by 2030 without introduction of lighter weight and more energy efficient vehicles using cleaner fuels. The impact of this which amounts to additional pollution being added to the World’s biosphere by ground vehicles is simply unacceptable.
Fuel Cells for the Future At a time when energy resources are fast depleting, Fuel Cells raise new hopes, as research in the futuristic technology gathers momentum. Simply said Fuel cells convert the chemical energy of fuels directly into electricity. It could come in handy for power generation, transportation using hydrogen as fuel, and
SPOT LIGHT in powering electronic instruments like Laptops and Mobile phones replacing the lithium batteries. Fuel cell technology is yet to translate into commercial reality.
Save Fuel 4 Don’t keep engine running at traffic signals 4 Maintain steady speed 4 Do not shift gears needlessly Fuel cell technology has the potential. 4 Use only microprocessor- controller air In June 2010, a hydrogen powered car conditioners. was driven around for 250 miles during Save Power demonstration. A fuel powered motor 4 Defrost your refrigerators regularly cycle completed 320 miles before refueling. 4 Use motion sensor lighting in passages Auto major like Honda, Toyota and others and garages are all working on Cars powered by fuel 4 Use reverse osmosis technology to cells. A hydrogen powered car could be ten conserve water times costlier than a car with an internal Save Water combustion engine. 4 Harvest rain water for watering gardens 4 Repair dripping Faucets New fuel cell systems, for instance, based 4 Don’t let the water run while rinsing on alkaline conducting membranes are an utensils important area in reducing the total cost of fuel cells and developing new markets besides 4 Work with non-profit organizations towards Natural Resources Management new catalyst and support systems to improve Manage Natural Resources the performance. 4 Create green spaces 4 Keep your surrounding environment clean Climate change is affecting the cultivation 4 Use natural compost for your gardens of tea, with rising temperature reducing 4 Use waste sand or Fly ash or Sand yields and altering the distinctive flavor is dust to make bricks for boundary walls researchers view. We are experiencing a sea and building. change in the climate variation now a days Recycle and Reuse across the planet and agriculture cannot be 4 Recycle aluminum foil an exception . 4 Reuse old bottles and tin cans 4 Use old compact discs to make Well but don’t you think when we refer Christmas tree decorations – door Humans we too are part of it and every little hangers coasters action of ours has contributed to this threat. 4 Transform waste land into a naturalists Now is it not our responsibility to give back delight our little gestures to save our world. Biodiversity connect with nature Droplets of water makes an ocean; well I 4 Do not use products that destroy the guess our small actions are going to be miles balance of nature of hope to our future generations. What 4 Do not take anything except was once considered a good habit has now photographs when you visit forests become a necessary action to give that extra and parks mile in saving our world. 4 Do not leave behind any trash when you visit forests, parks and lakes As a responsible citizen what we can do to 4 Use eco-friendly packaging for lower help in reducing global warming and help green house emissions towards climatic changes? Reduce Waste 4 Use cloth instead of paper towels and Corporate Responsibility napkins 4 Every Company or enterprises must have 4 Make double sided photo copies Climate Change Policy 4 Print on both sides of a paper 4 Cut down executive travel by using Tele- 4 Plant trees as much as possible to address presence which replicates the experience climate change and maintain ecological of a face to face meeting. balance
Rejuvenate Nature 4 Protect the forest cover 4 Do not build on forest land 4 Plant more trees Support Green Buildings 4 Install double glazed windows 4 Use roof insulation to reduce heat ingress 4 Maximize green cover on ground, roofs and terraces 4 Develop green batteries which are manufactured with safe chemicals and minimum water loss. They last longer and recyclable Support Green Technologies 4 Encourage business and community leaders to use green technology 4 Make energy efficiency the most important attribute in all purchase decisions 4 Spread energy conservation among the people irrespective of any level across the society Spread Awareness 4 Increase your own awareness about climate change 4 Inform others about climate change through emails, chats, street play, etc. 4 Speak up against wastage of energy and water Conclusion Everyone in the planet of about 6 billion people will have to work hard to preserve the planet and give back to our children in a better condition that we had borrowed. In midst of issues like socio-economic, political and environmental changes and depleting resources, we are worried that environment will affect the basic quality of our life. Therefore, we have a responsibility to create a sustainable world when mankind can live in peace and in harmony. The journey is continuous in taking constructive steps to tackle climate change and reduce Green House Gas (GHG) emission effect. We have a window of seven years to stabilise CO2 at today’s levels if we are to limit our global mean temperature increase to around 2.4 0 C. Any one who says what is the point, why take action- if we start today we can make a difference in the next two to three decades.
- R.K Pachauri 10
Importance of Carbon Accounting in the Board Room-
Integrated approach to raise bottom-line Mr. Anmol Singh Jaggi
Director, Gensol Consultants Private Limited
In the midst of all the political and business oratory about climate change there is a growing evidence that world's largest companies have already geared themselves for a low carbon economy. Big corporations are visibly taking active steps to mitigate its future risk and are moving towards a carbon constrained economy. All this can be witnessed with the demand for carbon consultants, tools and software programs that help companies monitor greenhouse gas (GHG) emissions and enhance their energy efficiency, increasing dramatically over the past year. Carbon management has moved up the corporate agenda and many companies now understand the need to handle their emissions. Today, the practice is considered as a strategic priority and has taken a position in the board room as a part of significant financial discussions. It is being propelled to the forefront of businesses across multiple sectors through a number of market drivers, including energy costs, the growing cost of carbon, brand reputation, energy supply risks, employee expectations, investor requests and competitive positioning. With companies anticipating the impact of these drivers to grow over the next five to ten years, Carbon management is increasingly being added to their long term priority checklists. Green accounting has become an integral part of businesses today and Gensol through its expertise in providing efficient solutions has been constantly working towards bridging the gap between a company's green efforts and its balance sheets. With firms understanding the importance of attaching the financial value to environmentally responsible initiatives undertaken by their organisation, energy
consultants have started playing an integral role in developing a sustainable economy.
cut in their monthly electricity bill, but also experience a growing revenue stream.
Today more and more organisations are being challenged and selected not only on the basis of the products and services they provide but also on how they produce and deliver those products and services in an environment friendly manner. Many sustainable business processes, such as the Green Supply Chain, have been in the works for decades; however, the movement has really taken off in 2010. Sustainable businesses have started to experience bigger and better returns as they attract the contemporary customer base pursuing green products and services and also have embedded energy efficient practices in their business model.
In an attempt to meet the global standards of the carbon compliant industry and the ever growing demand of sustainable products and services, one of the leading Textile manufacturers of India very recently acquired an ISO 14046 certificate. Gensol successfully concluded the GHG assessment of this Textile major, thus facilitating the certification which further aids their survival in the international arena.
A heightened focus on energy, climate, toxics and other environmental issues have led to some of the largest consumer brands to enter the green marketplace. In the last few months, major corporate giants such as Wal-Mart and Tesco have announced new initiatives that coerce suppliers to go an extra mile to measure and manage their environment impacts. The steps were taken either due to the compliance faced in their parent company or as a voluntary initiative in order to contribute towards the environment as in the case of an Indian oil major ONGC. In the current scenario when major giants have already entrenched low carbon objectives in their business strategy, small and medium industries are also stepping up with strategies to enhance their energy efficiency, resulting in a raised bottom line. With the implementation of energy efficient business practices, they not only experience a
Meanwhile, in order to reduce GHG emissions from imports, both US and the EU have proposed an additional tax on carbonemitting products from advanced developing countries such as India and China. The EU has now initiated the process of identifying product groups which supposedly are more polluting like metals, chemicals and certain textiles. The proposal once implemented will definitely have adverse effects on the export industry of both the nations if they fail to provide low carbon products and services. Further, various schemes being introduced globally such as UK CRC Energy Efficiency Scheme which is a new regulatory incentive to improve energy efficiency in large public and private sector organisations, makes it mandatory to improve energy efficiency and reduce the amount of Carbon dioxide (CO2) emitted to the UK. This scheme has further put an indirect compulsion on Indian companies doing business with UK firms under compliance to enhance their energy efficiency. Many companies today are facing a tough time deciding how and where to start on the road to carbon management and fail to
SPOT LIGHT recognise the plethora of opportunities to seize competitive advantage and cost-benefits. With most of the companies becoming energy compliant, role of consultancies in this sector is becoming increasingly important. In such scenario, a 360 degree energy solutions provider like Gensol comes to the fore with a comprehensive approach for industries as well as corporations to assess their environmental performance, environmental risks in the supply chain, behavioral and technical strategies, policy and energy price scenario to mitigate their organizational risks associated with GHG and position themselves to compete in a carbon constrained industry. Carbon accounting for such businesses not only reflects a new social contract between business and the stakeholders to whom they are accountable, but also reflects a business mission that recognizes the fact that certain things are beyond accounting.
The issue of climate change is one that we ignore at our own peril. There may still be disputes about exactly how much we're contributing to the warming of the earth's atmosphere and how much is naturally occurring, but what we can be scientifically certain of is that our continued use of fossil fuels is pushing us to a point of no return. And unless we free ourselves from a dependence on these fossil fuels and chart a new course on energy in this country, we are condemning future generations to global catastrophe. -Barack Obama
Trade Fairs & Exhibitions National Delhi 24-27th February 2011
Delhi Spring Life-N-Style Exhibition 2011 organized by ITPO
Chennai 16-18th March 2011
Water Today's Water Expo, Chennai Trade Centre International
Malaysia 1-5th March 2011
17th Malaysian International Furniture Fair 2011
Singapore 23-26 March 2011
WeldTech 2011 – The 8th Asian International Welding, Surface Treatment & Joining Technology Exhibition
23-26 March 2011
i Automation 2011 – The International Intelligent Automation Exhibition
23-26th March 2011
MTA 2011 – The Precision Engineering Industry Event
2-12 April 2011
40th Tripoli International Trade Fair (ITPO is organizing national participation of India in this Trade Fair)
21-24 June 2011
CommunicAsia 2011 Enterprise IT2011
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POLICY WATCH 4 India is deepening the economic ties with Singapore 4 Government to bear a third of oil subsidy 4 Service tax levy on rail freight deferred to April 1
Government to bear a third of oil subsidy
The government will shoulder a third of the oil subsidy burden despite concerns over its implication on the fiscal situation, a 4 FTAs with Malaysia, Japan, commitment that could allow the country's EU in 1st half of 2011 largest fuel retailer Indian Oil Corporation 4 Centre is willing to consider phased to go ahead with its share of sale plan. The approach to GST roll-out government had paid Rs 260 billion in Dual rate structure as a transitory 2009-10 to make up for more than half of measure is being considered the revenue losses of state-run retailers. It has already committed Rs 130 billion to oil 4 Planning Commission seeks inputs from companies that lost Rs 313 billion this year. NGOs, Social Groups for 12th At current price levels, Indian Oil, Hindustan Five Year Plan Petroleum and Bharat Petroleum are projected to lose Rs 683 billion and the oil ministry expects at least half of the amount to be borne by the finance ministry. Last month the finance ministry had indicated that it India is deepening the seek Parliament's approval for the Rs economic ties with Singapore would 130 billion already sanctioned towards oil subsidies in the Budget session. Global oil prices have risen as freezing weather in the INDIA is to deepen its economic ties with northern hemisphere has increased energy Singapore as part of its 'Look East policy', demand for heating. The spurt has resulted with bilateral trade expected to touch SGD in the difference between domestic retail and 30 billion this year. Bilateral trade between international benchmark prices widening. the two countries dipped last year to SGD 22 billion due to the global recession but was SGD 28 billion in 2008, having surged from SGD 12 billion in 2005 following Service tax levy on rail freight the implementation of the Comprehensive deferred to April 1 Economic Cooperation Agreement. India's Commerce and Industry Ministry would be leading a high level ministerial and CEOs delegation to Singapore for "The India The Centre has for the third time this fiscal Show". Some 80 Indian corporations will deferred the implementation of service tax be exhibiting at the show which would levy on transport of goods by rail. This levy also have a symposium aimed at further will now come into effect from April 1. The nurturing the good relationship between earlier proposed date was January 1. Also, India and Singapore. The Indian businesses the service tax exemption on certain goods participating in the show would be seeking carried by Railways such as pulses, food to establish partnership and strategic grains, petroleum products, organic and links with Singapore's small and medium chemical manure and motor vehicles will now enterprises as well as major corporations in come into effect from April 1, along with the infrastructure sector simultaneously with 70% abatement. The latest deferment comes water-technology and urban development at a time when the Government is keen to expertise. ensure that its actions do not fuel inflationary expectations. It would also come as a relief for the domestic cement and steel industries who 4 India, Russia sign 30 pacts
would have otherwise been required to fork out higher freight rates for movement of coal, cement and steel by rail.
India, Russia sign 30 pacts INDIA and Russia have signed 30 pacts in several key areas such as civil nuclear cooperation and defence, including development of Fifth Generation Fighter Aircraft (FGFA) to augment country's military capabilities. Besides deciding to enhance cooperation in crucial spheres of military, energy sector, science and technology, space research and pharmaceuticals, the two sides agreed to step up efforts to achieve the target of bilateral trade of $20 billion by 2015. Apart from 11 pacts, which were signed after the talks, 19 agreements, including those between private companies of both the countries were signed on the margins of the summit. The key pacts include Preliminary Design Contract for FGFA envisaging joint design and development by Hindustan Aeronautics and Russia's Sukhoi Design Bureau and Rosoboron export.
Free Trade Agreements (FTA) with Malaysia, Japan, EU in 1st half of 2011 INDIA will open its trade in goods and services with Malaysia, Japan and its largest trading bloc European Union (EU) in the first half of 2011. There will be signing of agreements (comprehensive market and investment promotion) with Japan, Malaysia and EU. India has already signed a framework agreement for the Comprehensive Economic Cooperation Agreement (CECA) with Malaysia and concluded negotiations for a similar pact with Japan. India has already entered into comprehensive market opening pacts with Singapore, South Korea and 10-nation Association of Southeast Asian Nations (ASEAN).
POLICY WATCH Centre is willing to consider phased approach to GST roll-out Dual rate structure as a transitory measure is being considered In its effort to end the deadlock over implementation of the Goods and Services Tax (GST), the Centre offered a phased approach to roll-out the unified indirect tax regime with a view to evolving a consensus with the States.
Highlights - Second Financial Stability Report
4 Household and corporate balance sheets are healthy. The Reserve Bank of India presented its assessment of the health of Indiaâ€™s financial sector in the second Financial Stability Report (FSR).
Mr Pranab Mukherjee, the Finance Minister also expressed the Centreâ€™s willingness to accept a dual rate structure as a transitory measure to eventually lead to a model GST regime.
The ideal structure would be to adopt a single rate, which is common for goods and services. However, a consensus was a must for implementation of GST.
4 A prolonged low interest rate regime in advanced countries, the two-track global recovery and divergent course of monetary policy actions have created push and pull factors for large capital inflows into EMEs;
Planning Commission seeks inputs from NGOs, social groups for 12th Plan:
of portfolio flows which are prone to sudden stops and reversals. However, at present, stressed liquidity conditions warrant caution and a watchful management in the coming months;
4 Global recovery continues to be uneven and uncertain while downside risks remain significant;
Financial Markets 4 Efficacy of the LAF corridor needs to be improved; 4 Need for a well-developed term structure in money markets; 4 Deeper and more liquid bond markets desirable; 4 Increased integration of domestic financial markets has led to volatilities in forex markets rising in alignment with international levels; 4 Growing offshore Rupee markets constrains the policy actions for maintaining orderly conditions in the domestic markets;
4 Global imbalances continue to persist and the progress towards rebalancing remains too slow;
4 Concentration of market activities in a few participants makes the market prone to bouts of illiquidity.
This is the first time that it is asking civil society to identify the challenges and areas that require special focus:
4 Significant amounts of sovereign debt, especially in European countries, are maturing in the next few years and any renewed turbulence could severely impair the fragile global recovery.
The Planning Commission is involving leading non-governmental organizations and civic society, seeking their inputs, suggestions and experiences, for preparing its approach paper for the 12th Five Year Plan (2012-17) which will be the base document for the Plan itself.
Domestic Outlook and Assessment
Though NGOs had been giving their suggestions for the previous Five Year Plans, this is the first time the Planning Commission has sought the engagement of civil society asking it to identify the challenges and areas that require special focus so that the Plan document was more holistic in nature and could help in yielding desired results.
4 In India, growth has rebounded strongly but inflationary pressures persist, driven both by domestic demand and increasing global commodity prices. Inflation, particularly food inflation, in India continues to rule at elevated levels reflecting in part the structural demandsupply mismatches resulting from, inter alia, rising incomes and changing consumption patterns; 4 External sector ratios for India have deteriorated, fiscal conditions are still under pressure and inflationary pressures remain elevated; 4 A potentially worrying feature of capital flows to India has been the dominance
4 Financial sector remained resilient but vigilance on asset quality and liquidity is needed; 4 Provision coverage ratio met in aggregate, some laggards; 4 Infrastructure loans could heighten ALM risks though there are mitigants; 4 Off balance sheet (OBS) exposures of foreign banks warrants monitoring; 4 A robust co-operative banking sector is critical for financial inclusion. Regulatory Environment 4 The proposed capital rules pose some challenges but the banking system is not likely to be unduly stretched; 4 Leverage and liquidity norms not binding constraints but pose some challenges;
POLICY WATCH 4 Implementing international norms calibrated to local conditions will require concerted efforts;
Mid-Quarter Monetary Policy Review: December 2010
4 The supervisory structure for financial conglomerates (FC) will have to draw on international policy developments; 4 NBFCs vis-a-vis banks – a few avenues for regulatory arbitrage remain;
4 Entity regulation could leave regulatory gaps which need to be addressed;
retain the repo rate at 6.25 per cent and the reverse repo rate at 5.25 per cent under the Reserve Bank’s liquidity adjustment facility (LAF);
retain the cash reserve ratio (CRR) at 6.0 per cent of net demand and time liabilities (NDTL) of scheduled banks.
4 Microfinance institutions (MFIs) – recent concerns warrant closer examination; 4 Network connectivity important for ascertaining systemic vulnerabilities;
It has been decided to:
of quantitative easing in the US. However, recent data show some signs of improvement, especially in respect of real GDP and consumer confidence, even though the unemployment rate has increased. Although economic recovery has been progressing in Europe, financial stability concerns have resurfaced as the sovereign debt problem spread further. Major emerging market economies (EMEs) continue to experience robust growth. Significantly, despite the slow recovery and slack capacity in advanced economies, international commodity prices such as oil, food, industrial inputs and metals have risen noticeably in recent weeks. Reflecting the strength of demand and higher commodity prices, inflation has started creeping up in most EMEs.
4 Strengthening the institutional mechanism for financial stability.
It has been decided to:
4 Financial Market Infrastructure remained robust;
4 Systemic risk bearing capacity of Central Counter-Parties has become critical; 4 Deposit insurance system in India robust but some critical issues remain. Stress Testing 4 Stress testing on the credit, market and liquidity risks indicates a reasonable degree of resilience of the banking sector in India. The banking sector also displays resilience in response to stressed domestic macroeconomic variables; 4 The impact of strong headwinds arising from any sharp deterioration in the global economic situation needs to be monitored; 4 Some deterioration in the capital position of banks is evidenced only in case of a very sharp increase from the current NPA levels; 4 Rising Interest rates and liquidity constraints under stringent stress scenarios faced by some banks warrant monitoring.
first, reduce the statutory liquidity ratio (SLR) of scheduled commercial banks (SCBs) from 25 per cent of their NDTL to 24 per cent with effect from December 18, 2010; second, conduct open market operation (OMO) auctions for purchase of government securities for an aggregate amount of Rs. 48,000 crore in the next one month, the schedule for which is being issued separately.
The above two measures are expected to inject liquidity on an enduring basis of the order of Rs. 48,000 crore. Given the permanent reduction in the SLR by one per cent of NDTL, the additional liquidity support under the LAF announced by the Reserve Bank on November 29, 2010 will now be available up to the extent of 1.0 per cent (instead of 2.0 per cent) of the NDTL of SCBs from December 18, 2010 to January 28, 2011.
Global Economy There have been significant global and domestic macroeconomic developments since the announcement of the Second Quarter Review of Monetary Policy on November 2, 2010. A slow recovery and persistent unemployment motivated another round
GDP growth of 8.9 per cent in Q2 of 2010-11 suggests that domestic momentum remains strong. Agricultural growth has recovered on the back of a good monsoon. After flagging during August-September, the index of industrial production (IIP) grew by over 10 per cent in October 2010. Various indicators of industrial activity, including the Purchasing Managers’ Index (PMI) also suggest a strong underlying momentum. Lead indicators of services sector activity have continued to increase at a robust pace. These developments reinforce the Reserve Bank’s projection of 8.5 per cent for real GDP growth for 2010-11 which will be reviewed in the Third Quarter Review scheduled on January 25, 2011. Inflation After remaining in double digits for five successive months, year-on-year headline WPI inflation declined to 8.8 per cent in August 2010 and further to 7.5 per cent in November 2010. Consumer price (CPI) inflation for industrial workers and rural/ agricultural labourers softened to single digit rates from August 2010, after remaining in double-digits for over a year. The overall reduction in inflation reflects moderation of food price inflation following a favourable
POLICY WATCH monsoon. Food price inflation moderated from an average of 15.7 per cent in Q1 of 2010-11 to 12.3 per cent in Q2, to 10.0 per cent in October 2010 and further to 6.1 per cent in November 2010. Amongst food items, the moderation in inflation for cereals and pulses has been larger than that in inflation of protein related food items such as egg, fish, meat and milk reflecting the structural nature of food inflation. In addition, inflation for non-food primary articles such as raw cotton, raw rubber and minerals rose sharply. Reversing the declining trend in the last six months, non-food manufactured products inflation edged up to 5.4 per cent in November 2010. Though inflation has moderated, inflationary pressures persist both from domestic demand and higher global commodity prices. The pace of decline in food price inflation has been slower than expected due largely to structural factors. There is a risk that rising international commodity prices will spill over into domestic inflation. Going forward, rising domestic input costs for the manufacturing sector combined with aggregate demand pressures could weigh on domestic inflation. The risk to the Reserve Bankâ€™s projection of 5.5 per cent inflation by March 2011 is on the upside. Liquidity While the overall liquidity in the system has remained in deficit consistent with the policy stance, the extent of tightness has been beyond the comfort level of the ReX-MozillaStatus: 0009een mainly due to persistence of large government cash balances which have averaged ` 84,000 crore since the Second Quarter Review of November, mirroring in the average net LAF repo amount of ` 1,01,000 crore. In addition, the liquidity deficit has been accentuated by structural factors such as significantly above-trend currency expansion and relatively sluggish growth in bank deposits even as the credit growth accelerated in 2010-11. While the liquidity deficit improved transmission of monetary policy signals with several banks raising deposit and lending interest rates, excessive deficits induce unpredictability in both availability and cost of funds, making it difficult for the banking system to sustain credit delivery.
In view of the persistent liquidity pressures in November 2010, the Reserve Bank implemented some measures such as additional liquidity support to SCBs under the LAF up to 2.0 per cent of their NDTL, continuation of second LAF, and OMO purchase of government securities. While these measures have helped stabilise overnight interest rates, the extent of deficit could constrain banksâ€™ ability to expand their balance sheets commensurate with the productive needs of the economy. The additional liquidity measures initiated by the Reserve Bank respond to these concerns. As the economy expands, it needs primary liquidity, which will have to be provided in a manner consistent with the monetary policy stance. Such provision of liquidity should not be construed as a change in the monetary policy stance since inflation continues to remain a major concern. The measures taken in this review need to be appreciated in that context. Summing Up To sum up, the underlying growth momentum of the Indian economy remains strong. Even as inflation has moderated, it remains significantly above the comfort level of the Reserve Bank. Moreover, risks to inflation remain on the upside, both from domestic demand and higher global commodity prices. There is, therefore, a need for continued vigilance on the inflation front against the build-up of demand side pressures. A major challenge for the Reserve Bank in the recent period has been liquidity management. It is the Reserve Bankâ€™s endeavour to alleviate the liquidity pressure in a manner consistent with the monetary policy stance of containing inflation and anchoring inflationary expectations.
inter-bank market closer to the operative policy rate of the Reserve Bank.
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"Progress is impossible without change and those who cannot change their minds cannot change anything."
- George Bernard Shaw
Expected Outcomes The policy actions in this Review are expected to: 4 release sizable primary liquidity into the system; 4 bring down the liquidity deficit in the system close to the comfort zone of the Reserve Bank; and 4 stabilise interest rates in the overnight
Capital as such is not evil; it is its wrong use that is evil. Capital in some form or other will always be needed. - Mahatma Gandhi 16
ADDITIONS TO LIBRARY Annual Reports: Beardsell Ltd. 2009-10 Bangalore Chamber of Industry & Commerce 2009-10 ITC Ltd – Sustainability Report – 2010 VA Tech Wabag Ltd – 2009-10 Leitner Shriram Manufacturing Ltd – 2009-10 India Asean- Sri Lanka Chamber of Commerce & Industry 2009-10 Integrated Rural Community Development Society – 2008-09 Directories: Arab World Trade 2010 – Rifacemento International Others:
Knowledge Community on Children in India:
Quality of Education in Primary Schools under Tea Garden Management, Assam
Life-Skills Education for Adolescents (with a focus on HIV/AIDS Prevention): Insights into Process and Progress in Andhra Pradesh
Improving Elementary education in Maharashtra: The work of the State Education Quality Cell
Fostering Synergy between Health and ICDS for Advancing Child Survival and Development in Gujarat
The Role of The Anganwadi Worker in Polio Eradication in Bihar: From Awareness Generation to Service Delivery
Planning and Monitoring Units in Orissa: A Comparative analysis
Revitalising the Parent Teacher Association for Better Service Delivery in Education in Uttar Pradesh
Janani Suraksha Yojana: Problems and Prospects in East Singhbhum, Jharkhand Child Reporters as Agents of Change: A case study of the Child Reporter Initiative in Hoshangabad, Madhya Pradesh Effect of Supportive Supervision on ASHAs’ Performance under IMNCI in Rajasthan
India Energy Year Book 2010-11 – India Energy Forum
Training for Capacity Development: UnderstandingThe Master Trainers Alliance in Maharashtra
Export Manual – Exporting to EU – An Introduction
The Reading Enhancement Programme: A Capacity Development Tool to Enhance the
The MCCI extends a warm welcome to its following new members:
Diksaat Transworld Ltd., Chennai Business: Broadcasting AGP International Services Business: Overseas Manpower Recruitment agency PKF Sridhar & Santhanam, Chennai Chartered Accountants Daimler India Commercial Vehicles Pvt.Ltd. Business: Manufacturing of commercial vehicles
VA Tech Wabag Ltd. Business: Turnkey Execution of Water & Waste Water Treatment Plants Orient Green Power Company Ltd. Business: Power Generation through Renewable Energy sources MAA Kuthari Projects Pvt.Ltd. Business; Engineering, construction, project management and procurement
Total Sanitation Now: The Role of the Programme Management Unit In Ending the Practice of Open Defecation in Rural Jharkhand Promoting “Sport for Development”: An International Inspiration Initiative in Medak District, Andhra Pradesh
Mr A Sivasailam MCCI deeply mourns the sad demise of Mr A Sivasailam, Chairman, Amalgamations Group, on 12th January 2011. An industrial legend, he was the President of the Chamber during the years 1979 and 1980 and led the Chamber so admirably. In his death we have lost a man of deep faith, great vision and a benefactor of the underprivileged. The Chamber, on behalf of all its members, conveys its heartfelt condolences to the bereaved family and the entire Amalgamations Group.
(for the week ended January 2, 2011)
ECONOMY Food price inflation shoots up to 14.4 per cent The wholesale price-based inflation rate in the country shot up to 14.4 per cent during the week ended 18 December 2010 against 12.13 per cent during the previous week. The index for major group â€˜Primary Articlesâ€™ rose by 1.0 per cent from the previous week level. The index for 'food articles' rose 1.1 per cent from the previous week due to higher prices of poultry chicken, condiments and spices, fruits and vegetables. The index for the 'non-food articles' group rose 0.8 per cent. The index for the `Fuel and Power' group rose 0.8 per cent. Inflation rate for the 'fuel and power' group stood at 11.63 during the week ended 18 December 2010 against 10.74 per cent during the previous week.
Core sector grows at 21-month low of 2.3 per cent The Index of Six core industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) in November 2010 registered a growth of 2.3 per cent compared to 5.9 per cent registered in November 2009. During April-November 2010-11, six core industries registered a growth of 5.0 per cent as against 4.5 per cent during the corresponding period of the previous year. The six core industries crude oil, petroleum refining, coal, electricity, cement and finished steel have a combined weight of 26.7 per cent in the index of industrial production and are considered as advance indicators of industrial activity. These sectors had grown an upward revised 8.6 per cent in October helping industrial growth bounce back to 10.4 per cent for the month from 4.4 per cent in September. The sluggish growth was largely because of a contraction in refinery and cement output in November. The cement production
contracted 11.6 per cent in the month, while steel production was up only 4.4 per cent suggesting lack of spark in the construction sector. The sluggish coal production growth should be a worry considering that this is the primary fuel for firing the ambitious power capacity expansion. Coal production rose only 0.7 per cent in November from a year ago in line with the 0.6 per cent increase in the first eight months of the current fiscal. The slow increase in output has forced companies to look to import coal for their needs. India could import nearly 100 million tonnes of coal despite having some of the largest coal reserves in the world.
telecommunication, metallurgical industries, power, computer hardware and software and construction. At USD 25.88 billion, foreign direct investment into the country in 2009-10 was 5 per cent lower than the USD 27.33 billion FDI seen in the previous fiscal.
'Two-speed' global recovery likely to continue in 2011: Maharashtra, NCR corner 50 IMF per cent of FDI in first half of International Monetary Fund has said that the world economy is likely to see a "two2010-11 speed" recovery in 2011 with emerging Maharashtra and the national capital region accounted for over 50 per cent of foreign direct investment inflows into the country during the first half of 2010-11, says the latest Industry Ministry data. Maharashtra attracted the maximum foreign direct investment (FDI) of about USD 2.67 billion during April - September, 2010, accounting for 34 per cent of the total FDI in the country during the period. National capital region (NCR), including parts of Uttar Pradesh and Haryana, received USD 1.96 billion of FDI during the period. NCR accounted for 20 per cent of the total FDI in the country. During the period, India attracted USD 11 billion of FDI, the data said. According to experts, the good infrastructure of States like Maharashtra and Delhi made them more attractive FDI destinations than States with poor roads and power facilities. Karnataka was the third-most preferred FDI destination in the country, attracting USD 1.04 billion during the period, followed by Andhra Pradesh (USD 491 million), Madhya Pradesh (USD 398 million) and Tamil Nadu (USD 331 million). Less developed States such as Rajasthan received USD 13 million of FDI during the period while Orissa and Uttar Pradesh attracted USD 11 million and USD 80 million, respectively. The sectors that attracted the maximum FDI include services,
markets witnessing stronger growth than advanced economies.
Some emerging nations like India and China, however, are also facing the challenges of huge capital inflows and overheating. The global economy, which grew nearly five per cent this year, is being driven by good expansion in emerging countries while many advanced nations continue to grapple with sluggish economic activities. Weak growth in advanced economies is barely enough to bring down unemployment and emerging markets face the challenges of success, including how to avoid overheating and handle strong capital inflows. For instance, India has alone seen Foreign Institutional Investors investing more than USD 40 billion this year.
INTERNATIONAL China's manufacturing sector PMI drops to 53.9 pc in December The Purchasing Managers Index (PMI) of China's manufacturing sector dropped to 53.9 per cent in December, down 1.3
ECONOMIC REVIEW percentage points from November. The figure marked the 22nd straight month in which the index was above the boom-and-bust line of 50 per cent. Before dropping in December, the index had been rising for four consecutive months, according to the China Federation of Logistics and Purchasing. The drop was seen as a delayed response to declining commodity prices in November, as the November PMI did not reflect that trend. PMI comprises of a package of indices to measure performance of the country's manufacturing sector.
FORTHCOMING PROGRAMMES 17th January 2011 Seminar on Protecting the Patents, Designs and Brands in European Union at The British Deputy High Commission 22nd January 2011 Food for Thought Programme - Corporate Social Responsibility Hotel GRT Grand 29th January 2011 Management Development Programme on Tamilnadu VAT in Hotel Savera 4th-5th February 2011 Management Development Programme on Occupational Safety & Health in Hotel Savera
A reading above 50 per cent indicates economic expansion, while that below 50 per cent indicates contraction.
Please contact the Chamber secretariat for registration for the above programmes.
Godrej Safe for sale The Chamber has a very strong, heavy and sturdy Godrej safe which is for sale. Interested parties may contact the Chamber secretariat at Tel: 24349452/24349871/24349720.
Where India will be by end of decade?
The India of 2020 will be a country transformed, with cities becoming virtual nation States. Bihar & Haryana will be the fastest movers in terms of GDP Rank States 2020 1 Maharashtra 2 Uttar Pradesh 3 Andhra Pradesh 4 West Bengal 5 Bihar 6 Haryana 7 Tamilnadu 8 Gujarat 9 Karnataka 10 Rajasthan 11 Kerala 12 Delhi 13 Punjab 14 Madhya Pradesh 15 Orissa Courtesy: India Today
GDP (in Rs.cr) 2019-20 24,68,580 17,06,944 16,02,563 14,27,021 12,57,762 9,87,694 9,82,427 9,59,228 8,99,568 7,68,908 7,38,484 6,71,352 6,64,960 6,63,833 4,22,791
GDP (in Rs.cr) 2008-09 6,92,749 4,12,151 3,77,346 3,53,967 1,42,508 1,82,588 3,39,212 3,37,217 2,70,697 2,01,675 1,89,841 1,65,948 1,65,804 1,71,547 1,33,601
Rank 2009 1 2 3 4 14 10 5 6 7 8 9 12 13 11 15
The following communication was sent to the Chairman, Chennai Port Trust on the sudden imposition of surcharge by BTL on export-import trade at Chennai Port: 17th December 2010 Mr Atulya Mishra, IAS., Chairman Chennai Port Trust Rajaji Salai Chennai 600 001. Dear Sir Re: Imposition of surcharge by Bengal Tiger Line on exim trade at Chennai using Chennai Port We enclose herewith a trade announcement made by Bengal Tiger Line. The Chamber is quite surprised and shocked at this move where unjustifiable surcharge is being sought to be imposed on the trade for inefficiencies that are not attributable to the trade. We also wish to draw your attention that the trade has gone out of its way and borne a huge cost to facilitate easing of the congestion faced during this month and it is a sad commentary that such efforts of the trade are being rewarded by imposition of penal charges over a period extending upto 3 months. This is also a very sad reflection on the activities of the Chennai Port. The Chamber requests your immediate intervention to have this unjust levy waived immediately in the interests of trade. Thanking you,
Yours faithfully Sd/……… T T Srinivasaraghavan President (Copy forwarded to the Ministry of Commerce & Industry and Ministry of Shipping)
Concern over dip in container trade volume CENS Economic Bureau – 23rd December 2010 CHENNAI: The Consultative Committee of City Chamber of Commerce, which met in the city on Wednesday, voiced its concern over the 25 per cent dip in the volume of container trade at the Chennai Port for a number of reasons, the main ones being bad roads and closure of several entry gates leading to the harbour area by the port authorities for the past few days. The Committee also took a decision to meet either the Chief Minister of Tamil Nadu M
Karunanidhi or Deputy Chief Minister M K Stalin in acouple of days and apprise them of the precarious situation the export and import trade had started experiencing due to the callous attitude of the port authorities as also those in the Shipping Ministry. Syed Munir Ahmed, Chairman, Consultative Committee of City Chamber of Commerce, and President, National Chamber of Commerce, said that the trade would be forced to move out of Chennai Port and patronise the ports in Tuticorin and Kochi if the current situation was not eased immediately with the proper intervention of the Union and State governments and more particularly the port authorities at the Chennai Port.
“Now the traders are made to pay demurrage and other charges for no fault of theirs though the port authorities are to be blamed squarely for the container traffic problem, all because of the closure of several entry gates to the harbour and the bad roads leading to the port,’’ he added. “There is a wait of 25 days to clear the containers at the Chennai Port and this has badly affected the export and import trade,’’ he noted. (MCCI is a member of the Consultative Committee of City Chambers of Commerce in Chennai .)
For further details please contact the Chamber secretariat at 24349452/24349871/24349720.
MCCI Conference Room which has been refurbished now is available for hire. It has a seating capacity of 26 and is fully equipped with facilities such as LCD projector/screen, writing board etc. Ideal for small workshops & roundtable discussions, inhouse meetings, and client meetings.
Nani Palkhivala Memorial Lecture & MCCI FFT Programme on
“The Real Significance of Scams”.
India Corporate Week 2010 Celebrations
Management Development Programme on Excise & Service Tax
Seminar on Transfer Pricing
Seminar on Emerging Trends in Taxation
Programme on Investor Awareness
Seminar on Business Innovation & Engineering Excellence