Vol. 26 Nos. 8 & 9 – November & December 2012
rs e b em m r h t u i o w l l a led w g l i n f i Wishew year and ne a n hopes gs! new eginnin b
Mr S Kabilan, IAS (Retd.,) Former Chairman, TNERC delivering the Inaugural Address. Seated l to r : K.Saraswathi, R.Raghuttama Rao, Anil Razdan, T.Shivaraman, K.V.Rangaswami, P.S.Bami and B.Bhambhani.
IN THIS ISSUE X President’s Message X Chamber’s Activities
Seminar on Changing Cities: Building Opportunities Visit to Krishnapatnam Port Meeting with Mr Henry Richard, ROC Conference on Tamil Nadu Power Dynamics & Future Perspectives FFT on Competition Law – Levelling the Play Ground?
MCCI & MMA Video Discussion on “Office Safety - It’s a Jungle in There” X General Committee X Expert Committees X SPOT LIGHT - COMPETITION LAW X Policy Watch X Salient Features of the Companies Bill
X Representations X RBI’s Circular on Exim Bank's Line of
Credit of USD 250 million to the Government of Nepal X Tamil Nadu Holidays 2013 X Commercial Holidays 2013 X Charter Party Holidays 2013 X Trade Fairs & Exhibitions X Additions to Library X Economic Review
TN Power Crisis – Groping in the Dark Dear Members, The State of Tamil Nadu is currently facing one of the worst power crises in the last few decades. The peak deficit was 2250 MW in 2011-12 and is probably well over 3000 MW now. It appears that the situation will get worse before it can get better. While we are focusing on growing the manufacturing sector, it is a fact that we are not in a posi on to provide power which is a cri cal factor for development. For those of us who live in Chennai, the situa on may not look that grave as we can cope with 2 hour power cuts in our homes. Large industries opera ng on HT power with dedicated feeders are also able to cope (albeit at a cost) buying power from private producers at premium prices. The real challenge is being felt by small and medium industry, especially those who are in the Tier 2 and Tier 3 ci es. Opera ng an industry with 12-14 hour power cut, for all prac cal purposes, is impossible. Running on DG sets is technically feasible but, except for a few, not financially viable. While the public and media attention is on the suﬀerings of individuals facing 12-14 hour power cut, the real economic impact is due to the eﬀect on industry. We are already seeing anecdotal evidence of companies closing down opera ons or shi ing produc on and opera ons to other (more powerful!) States. We need to realize that once produc on and jobs move out, they are not going to come back.
The implications for Tamil Nadu are huge. For instance, a single day of protest shutdown by the industrial units in Coimbatore on 10th February has reportedly cost the industry about Rs 400 crore, out of which 20 per cent were taxes that were to go to the Centre and the State. The cascading effect is on employment, investment, produc vity, quality of life and more so on business and personal morale. The reasons for this situa on are many. We have added over 4000 MW of demand from 2006-07 to 2011-12 and added less than 2000 MW of supply in that period. Additional capacities that should have come on line have also been delayed. While there is substan al capacity in the pipeline, this will only partly plug the hole. We will, in the interim, add over 1000 MW of demand every year. While we are no doubt the undisputed leader in Renewable Energy in India with over 40% of the country’s wind power, this can only be a supplement to our energy mix and not a base load solu on. The solar policy recently announced by the State Government is ambi ous and welcome as it has the poten al to add some capacity in the short term. However, solar with a PLF of the order of 20% can only be a part of the solu on but not the en re solu on. The solu ons will have to come from a range of areas. The major points that come to mind include:
• Focus on removing bottlenecks in commissioning of plants under construc on • Developing a pipeline of projects to deliver an average of 2000 MW of new base load capacity every year The Chamber recently organized a Conference on TN Power Dynamics & Future Perspec ves where we had a case study of Gujarat power sector presented by the Principal Secretary, Energy & Petrochemicals Department, Gujarat. The presenta on detailed the progress of Gujarat from a power deficit to a power surplus State.This could be a model for Tamilnadu given the poli cal will and long term planning. The fact of the ma er is there is an urgent need to tackle this situation and the Government has to take this as the top most priority in their agenda. Let us hope to see some light at the end of the tunnel and pray that the New Year would be brighter.
Wishing every one of you and your family a Joyous and Prosperous New Year!
T. Shivaraman President
• Pass the financial restructuring package for the TN Transco and TANGEDCO so that they are credit worthy again and can a ract private sector power producers. • Fast track approval for new thermal plants both in the Government and the private sector
CHAMBER’S ACTIVITIES 7th November 2012
MCCI & MMA Video Discussion on “Even Eagles Need a Push” The video discussion highlighted that Push can be the greatest gift one can ever give. It is the power to prepare for the future. The video described the quali es of confident empowered people namely - have self appreciation, be obsessed to your spontaneous thoughts and act accordingly; concentrate on your strengths and work on your weaknesses; visualise what you want to be; and be commi ed to whatever you undertake. The trainer was Mr Prem Kamble.
9th November 2012
Seminar on Changing Ci es – Building Opportuni es On 9th November this year, the Chamber completed one year of SCF. To mark this anniversary the Chamber organized a full day seminar on Changing ci es – Building Opportuni es . The seminar focused on the opportuni es that arise because of ci es like Chennai, expanding in terms of area as well as popula on and also the challenges that require to be faced and tackled. Mr K Phanindra Reddy, IAS., Secretary, Housing & Urban Development Department, Government of Tamilnadu delivered the inaugural address while Mr Mike Nithavrianakis, Bri sh Deputy High Commissioner, Chennai, delivered a Special Address. Welcoming the gathering, Mr T Shivaraman, President, MCCI said during the 175th year of the Chamber the Chamber decided to relook at what it was doing and what would be the new focus for the Chamber. It was decided that sustainability and sustainable development would be the core theme of the Chamber and we should bring like minded people to develop a business case for sustainable development and create action plans. He said if business is not sustainable, then business itself will die. As business organiza ons, it is our responsibility to
debate this and encourage our business community to move towards sustainable development. He said currently the Chamber is pursuing (a) CSR Survey of members and (b) mapping sustainable prac ces of companies in and around Chennai to share the knowledge. He thanked the British Deputy High Commission, Chennai for being with the Chamber from the beginning and for their support. Delivering a Special Address, Mr Mike Nithavrianakis said that sustainability and low carbon development are very important for UK and to address these challenges, they are taking domestic ac on and seeking global partnership. Climate change is a formidable challenge and low carbon development is equally a big opportunity. UK is taking mul ple steps to address emissions and can share experiences with partners. He said UK is a global hub for cost eﬀec ve, innova ve low carbon solu ons. It is the 6th largest market in low carbon and environmental goods and services. Internationally, UK is proud to be the first country to have commi ed to the Global Climate Fund, channelling money into international climate finance and supporting developing countries with technology transfer to make the transi on to a low carbon economy. He also referred to Prosperity Fund – a small fund for suppor ng projects that can enable big changes to address climate change. He said UK is suppor ng solar research na onally and would be keen to engage with Tamilnadu even more so now with the State’s new Solar Policy in place. Delivering the inaugural address, Mr K Phanindra Reddy,IAS., Secretary, Housing and Urban Development Department, said private sector and non-government organiza ons have a key role in carrying forward urban planning and sustainable ini a ves outlined by the policy makers. Ci es change with me due to economic opportuni es, entrepreneurial spirit and long term policy.
He said one challenge is continuity – people with dynamism occupy important posi ons but leave work incomplete due to impera ves of government systems. It takes me for persons in key posi ons to learn the job. It is important that eﬀorts to improve are not just initiated but sustained. What is needed are systems to ensure that experience and lessons are shared to ensure a well managed city. Ins tu ons and the corporate sector that par cipate in development can contribute in this process. He further said forums like the City Connect are working with public agencies in urban planning and transport. He urged that the Chamber’s Sustainable Chennai Forum should iden fy projects for implementation. They should be solid models and projects in the field to showcase sustainable practices before scaling them up to city level. Proposing the vote of thanks, Mr Vijay Bhalaki of Athena Infonomics said that failures in urban transport, public health, housing, water management – all these oﬀer enormous business opportuni es for entrepreneurs. He thanked British Deputy High Commission and the other partnering organisa ons for their support in organizing this Seminar. This was followed by the following Technical Sessions: S e s s i o n I : To p i c : E c o n o m y & Employment Dr R Srinivasan, Associate Professor, Department of Econometrics, University of Madras chaired this session and the speakers were –Mr A Aravamudhan, Chief Opera ng Oﬃcer-HR, Lucas TVS Ltd. , and Mr. Shanker Gopalkrishnan, President, Madras Consultancy Group. Dr Srinivasan said don’t consider Chennai as a stand alone economy or a labour market. Increasing popula on will create lot of problems in terms of economic administra on. He felt that major chunk of the expenditure of Local Bodies should be towards water, sewerage and sanita on which is not being
CHAMBER’S ACTIVITIES done by the Corpora on of Chennai. Local bodies have become the extended arm of the Government and there is nothing that they can conceive on their own. Mr Aravamudhan referred to the nonavailability of skilled labour and called for labour reforms. He said employers want flexibility and labour wants security. He urged the employers, employees and Government to take initiatives in skill development. He said while some companies with vision, start their own polytechnics, some others go to ins tu ons and develop their own syllabus. Mr Shanker Gopalkrishnan said industry is the villain so far as sustainability of industry is concerned. If you want your farm produce to reach the remote corners, you need to package it well. In India nearly 30% of the produce gets wasted. In Philippines 95% is processed and therefore you get enormous economic benefit. In the last 70 years industry has not felt the need for re-cycling he said. He referred to the Chennai port and how it con nues to be congested; the poor condi on of roads and said master planning needs to be looked at. The city lacks open spaces for children to play. He cited the example of Colaba in Mumbai where reclaimed land has been handed over to a local associa on of that area for development. It has since been developed as a beau ful park. This can be replicated in Chennai as well. Session 2: Topic: Emerging Opportuni es in Social Infrastructure (Education/ Health/Aﬀordable Housing) The session was chaired by Dr Maria Saleth, Director, MIDS. The speakers were Mr M K Padmanabhan, Advisor, Educa on, Research & Innova on, MARG Group, Mr M Murali, Managing Director, Shriram Proper es Pvt.Ltd., and Dr M Mathews, Director-Hospital, VHS., Chennai. Addressing Dr Maria Saleth said, development and urbanisa on both go together. In the next 20 years, in India we will have about 87 ci es with a million plus popula on and 2/3rd of urban popula on will be living in these 87 ci es.
He referred to the dearth of public transport, shortage of dwelling units specially for middle and low income groups, pollu on and conges on in roads. Major challenges will be in the educa on and health sector. He said 8% of the GDP should be spent on health sector and 8-9% on educa on sector. He said for improving the urban infrastructure, Government alone cannot do this job. There is a need for public private participation and the need for private sector investment in a huge way. Mr M K Padmanabhan said people are looking for quality educa on from primary to the higher level. Therefore they move to the urban ci es. We need to address this problem in a concerted way. He referred to the callous a tude of the State in not paying a en on to this problem. He said ITIs do not produce a good fitter or a machinist as half of the machinery in the ITIs does not func on. There is dearth of good teachers. He felt Government should come forward and open schools in rural areas and see that they a ract rural children. Mr M Murali felt that education was most important and if this is not provided to the people, it becomes a law and order situa on. The biggest employment opportunities are in agriculture and housing. What are we doing for agriculture and food shortage he asked. First create employment he said and if the people do not have work, they will become social criminals. He said an employee’s output is more if he has a own dwelling. Having a house is not only addressing a social need but also it brings sa sfac on in the family. We need to create more social housing and townships. He felt there should be a clear policy for rural housing and urban housing. Government alone cannot provide housing to the masses. Encourage the private sector by giving suitable incen ves he said. Dr M Mathews felt we are privileged to be in Chennai for certain reasons – we have the best of hospitals, the best of doctors etc. Are we churning out doctors who are going to treat people with humane
touch? Medicare is going to become very expensive in the days to come he felt. There is urban-rural divide as far as medical health is concerned. We have a number of General Prac oners and a number of poly clinics. Are they available all the me and are they in convenient places he asked. What are the opportuni es? He advised the audience to take medical insurance. There are health clinics and wellness clinics to prevent diseases. Today’s diseases are man made diseases he said. Wellness clinics concept has to catch on. Almost all diseases can be prevented. Educate children from the primary level about modifying the lifestyle he advised. Session 3: Topic: Opportuni es in U li es Management (Waste Management/ Power/Water/Transport) Prof. D S Hanumantha Rao, Former Member, Tamilnadu Energy Regulatory Commission chaired this session. The speakers were – Mr Shyam Ramachandran, CityConnect, Mr Anand Madhavan, Deputy General Manager, ICRA Management Consul ng Services Ltd., Dr.R Hema, Associate Professor, Madras School of Economics, and Mr S Mani, Chairman, Industrial Waste Management Associa on. Dr Hanumantha Rao referred to the book authored by Dr Parthiban titled Urban Public Transport – A study on performance of Metropolitan Transport Corpora on in Chennai city which was released by him on the occasion. The book deals with the issues of public transport, the transport policies of the State and Central Government etc. The book also reveals most of the problems faced by the commuters in Chennai. It also suggests some recommendations to the policy makers. He congratulated Dr Parthiban on bringing out such a publica on. Addressing next, Mr Shyam Ramachandran of City Connect referred to the parking problems in the city. How can a city be decongested? Provide them some tools and technologies. Provide them parking information he said. They intend to provide information through mobile, smart card system etc. which will help to a certain extent to solve the parking
CHAMBER’S ACTIVITIES problems. It is a network he said and if we are part of the network, then you will always park right. In the next 15 years, India will have 450 million cars – more than the popula on of US and UK put together. Where are the roads he asked? Mr Anand Madhavan made a presenta on on how u li es can be best made use of. He said in the last 15 years urbanisa on has happened without focusing on other parameters. Organisa ons and U li es that manage our cities have become weaker. To ensure and make our ci es compe ve, we need to ensure that our city u li es become capable of sustaining and in this process there is scope for PPPs and the community to contribute. He said not a single Indian city has 24 x 7 water supply . Solid waste management is bad in every State. In 2007-08 Tamilnadu was power surplus. The tariff was not increased for the last 10 years. In terms of financial sustainability he said we need to ensure that there are no freebies. We should pay for the services and demand services. Addressing next, Dr R Hema said, we are going through one of the worst power crisis today. It is me to move to many of the renewable energy op ons. Government policies have been ad hoc or piecemeal . There has to be an Act or Policy direc ve with certain incen ves for the capacity to come from private sector. It is ironical that during this par cular year, the amount of investment in wind genera on in the State has come down because the State Electricity Board has not made the payment. She said if you want the U li es to be sustainable, we need to create the right kind of economic incentive for them to func on and oﬀer their services in a sustainable manner. A possible model ins tu onal arrangement could be the answer. But how we can make these u li es stronger and capable of delivering adequate services in a sustainable manner to the people?
She suggested the franchising model like in Maharashtra. There are certain conditions in order to help the State u li es to revamp their systems and make them more viable. Priva sa on has not yet happened . Revamping and re-incentivising the system should come from the distribu on end. If you revamp distribu on, you have to revise tariﬀ, cut down ineﬃciencies and bring in more accountability. She said TNEB has not made any investments in genera on. Mr Mani addressed on the challenges that we face specifically in respect of waste management. It is a challenge as never before he said. Nature had a principle that nothing is a waste. Sustainability is all about emulating this principle in everything that we do. He said green plants take in carbon dioxide in the presence of sunlight and let out oxygen. We have nkered and tampered with this ecological cycle of nature. He said we consume much more than we really need. Mr Jitesh Barahmkshatriya made a presentation on Usage of Spatial Planning Tools to promote low carbon city development in India. He said what is happening in India is that we have agriculture economy 500 metres away from industrial economy and digital economy. Industry and agriculture has to co-exist with each other. He said the aim and objec ves of Atkins which company he represents is to reduce the carbon intensity of urbaniza on through integration of master planning carbon tools in the spa al planning system. When ci es expand in India, we push our agriculture out he said and kill our ecology. He described some of the measures to reduce carbon. Currently Atkins has undertaken a project in Madurai. The programme concluded with vibrant interac on by the par cipants.
1st December 2012
Visit to Krishnapatnam Port The General Commi ee of the Chamber at its mee ng held in November decided that a visit should be arranged to Krishnapatnam Port to see the func oning of the Port and the facili es oﬀered there for export-import opera ons. Accordingly a 15 member team from the Chamber visited the Port on 1st December. The team was given a very warm welcome a er which the oﬃcials of the Port made a presenta on. Brief details are:It is a part of CVR and Navayuga Group of companies. Strategically located in Nellore district of Andhra Pradesh, 180 Kms north of Chennai. The mother port was constructed in 18 months – the fastest commissioned port in the world. The port has been built keeping in mind the need for future expansion. As regards connectivity, there is a dedicated 4-lane road from port to National Highway-5 which will be upgraded to 6-lane road. There is also a dedicated railway line from port to the na onal grid. It has vast protected water front of 12.5 Kms to develop 42 berths. It is emerging as a major hub for coal handling in India. In the first year (200809) since its incep on, the port handled 8.2 million tonnes (mt) of cargo, of which iron ore traﬃc was 7.7 mt and coal about 1 mt. In the second year, the port handled 16.1 mt (of which iron ore was 10.5 mt and coal 2 mt). This fiscal, the port will handle 15-16 mt of coal, about 1 mt of edible oil and some fer lizer. The port is currently undertaking the second phase of expansion to have a total of 12 berths. In the third phase, the port will construct a few more berths and by the end of the fourth phase, the port will have a total of 42 berths. Advantages Strategic e up with main line operators;
CHAMBER’S ACTIVITIES CFS to be developed within the Port area; Customs facility; it has func onal custom EDI 1.5 connec vity. The Port has been conscious about CSR. It has a Security Training School and a Driver Training Academy within the premises; organizes health camps for its employees; 500 houses were built and handed over to the fishermen; it oﬀers free educa on for all the children of the employees: It is an all weather port opera ng on all 365 days having 12 mul purpose berths; it has single window clearance so that delays are avoided. It has 26 weigh bridges and 6 loco engines. The port has been handling iron ore, quartz, granite, barites, maize, rice, wheat etc.. Their mo o – H E A T – Honesty, Eﬃciency, Accountability and Transparency. The port has received many awards the recent one being Lloyd’s List Global Award 2011 as the best Port Operator. The CEO of the port Mr Anil Yendluri, the person with a vision who was instrumental in construc ng the port, also addressed the Chamber delegates and answered the queries of the members. Apart from extending excellent hospitality, all the delegates were given an opportunity to plant a sapling which was appreciated by every one. Contact details: Mr Anil Yendluri, CEO Krishnapatnam Port Email: anil.yendluri@krishnapatnamport. com Mr Suresh Anand Vice-President marke ng Email: sureshanand@krishnapatnamport. com
5th December 2012
Mee ng with Mr Henry Richard, ROC, Chennai Under the auspices of the Expert Commi ee on Company Law, this mee ng was organized at the Oﬃce of Deloi e. Ms Bhavani Balasubramanian, Chairperson
of the Company Law Commi ee welcomed Mr Henry Richard and those present. Mr.Henry Richard, addressing on “Regulatory perspectives on Financial Statements” gave an overall view of how the Company Law Department was func oning up to the stage of 2000 and now. He explained how the return filing procedures have gone through three important phases. In the First Phase, there was physical filing of returns. There was a huge volume of papers and documents which had to be filed and maintained. He said this was the dreadful period as there was huge unproduc ve work and ineﬃciency in maintaining and retrieving records. In the second phase, which started some me in April 2006, things changed to a great extent. Online filing was introduced and MCA invested nearly Rs 600 -700 crores to revamp the procedures. Professional companies like TCS was engaged to develop and maintain the so ware. Going into the next level, phase three was introduced when the XBRL statements were to be in place. This not only made filing easy but also facilitated lot of instant analysis regarding statements filed by the companies. There were about 18 automatic alerts built into the system like advance audit remarks, reten on of maximum cash balance, etc. Mr Richard then pointed out that they will be moving into fourth phase now and Infosys will be engaged to assist at this stage. He sought comments from members on the diﬃcul es they faced in filing returns so that these could be eliminated in the current phase to the extent possible. He said that they have completely switched over to e-filing and even in developed countries like the UK, such a total transformation had not been achieved. The discussion then followed when members brought to his notice a few issues they faced like: -
Correc ng mistakes in the STP form once filed
Need for training for XBRL hos ng
Mr Richard suggested that Chambers like MCCI can ini ate such training. He was requested for extension to file XBRL till 31st December. As suggested by him, a representa on was sent to the Ministry of Corporate Aﬀairs, New Delhi. Members also wanted to know more about l8 alerts as many of them were not aware of the same. The Chamber has decided to organise an extensive workshop on these alerts. It was informed by him that a Help Desk is available for immediate filing. Members of the Chamber were informed of this facility. Mr P Viswanathan, Co-Chairman of the Commi ee, proposed the vote of thanks. The mee ng was a ended by about 30 representa ves of member companies.
15th December 2012
Conference on Tamil Nadu Power Dynamics & Future Perspec ves The single most challenge facing Tamilnadu now is the deficit in power sector which is so cri cal for industrial development especially when the State Government aims to make the State Numero Uno in the country. The availability or non-availability of adequate power has cascading eﬀect on the economic growth of the State and has far reaching eﬀects on the socio-economic development. The State’s strength on wind energy, the addi ons to the capacity of nuclear power, the recent solar policy announced by the State Government, etc., are some of the posi ve factors in the State’s energy scenario. However, lot needs to be done to tide over the current situation and take the State on a growth path. The Government also aims at bringing around Rs. 450,000 crores of investment into the power sector, with ac ve private sector par cipa on. It was therefore thought fit to organize this Conference to bring together the Central/
CHAMBER’S ACTIVITIES State Government, policy makers, industry players, etc. India Energy Forum, New Delhi, associated with MCCI in organizing this Conference. L&T Construc on was the Industry Partner and Principal Sponsor for this Conference. The programme was also supported by a number of players in the sector – The India Cements Ltd., Neyveli Lignite Corpora on, State Bank of India and Ojus Power. The Conference was divided into four parts. Inaugural Session: At the inaugural session, Mr T Shivaraman, welcoming the gathering said that the MCCI has been agitating about the shortage of power throughout its history. In the ‘80s prac cally at every mee ng, the Chamber has been pushing for more power and a er 30 years, we are talking about the same subject again. He said the purpose of this Conference is not to complain about the shortage of power but to see what best we can do to overcome the situa on. It is necessary that we create a document which will allow us to lobby with Central and State Government. Mr P S Bami, President, India Energy Forum and former CMD, NTPC said IEF deals with all facets of energy. No country can make progress unless there is suﬃcient energy. Coal is the main source for genera on of power he said. He also referred to T&D losses and how these could be minimized. If we want to be a reasonably advanced country, we need to invest in power sector. Structural change has not taken place in our country and the purpose of reforms have not been carried over. The presentation made by Mr R Raghuttama Rao, Managing Director, iMaCS on Tamilnadu Energy Scenario was packed with data. For the State to regain its leadership, there is no other way for it but to get the power sector in order at the earliest. He said there has been very li le addi on of genera on capacity over the years. The tariﬀs have not been increased for the last six years. The T&D losses have been 18 to 20%. The power deficit in Tamilnadu has built up over the years and gave suggestions as to how
the Government along with TNEB and TANGEDCO can get out of this. Mr K V Rangaswami, Adviser to Chairman, L&T, urged that we should reduce dependency on coal. There is 30,000 MW of installed power capacity in our country which is not u lized fully because of lack of coal supply. He said nuclear power though costly is a clean fuel. When Kudankulam is commissioned we hope to have some relief. He said nuclear waste management needs to be properly planned and implemented. The keynote address was delivered by Mr Anil Razdan, Former Secretary (Power), Government of India. For more than five years, Tamilnadu has done li le to mitigate its energy crisis and the new projects in the pipeline for the next five years would hardly suﬃce to bridge the widening deficit gap he said. The State power utility’s performance on varied parameters raised serious concerns about the future. As against a country wide power deficit of 9,573 MUs in November 2012, Tamilnadu alone accounted for 3,235 MUs or 34%. Against a national deficit of 7.7%, Tamilnadu’s deficit was 28% or four mes the na onal average. Though some States are worse oﬀ than Tamilnadu, Mr Razdan cau oned against any such comparison because Tamilnadu’s needs are diﬀerent and it had maintained a fairly good track record in the past. Given the financial constraints of the power u lity and Centre’s reluctance to fund new projects, Mr Razdan said the alterna ve was to invite private players to set up projects. Investment climate is poor in Tamilnadu because private power generators including wind mills have not been paid money for more than a year. He said only 92 MW was added in the State by private players in the 11th Five Year period. Future is equally bleak for the State he noted. As against a capacity addi on of 90,000 MW planned for the 12th Plan period in the country, Tamilnadu’s share
will be just 4,891 MW or 5.4%. Delivering the inaugural address, Mr S Kabilan, IAS (Retd), Former Chairman, TNERC, blamed the delay in tariﬀ revision for the moun ng power deficit. Delayed revision le TNEB with no money to invest in new projects and pushed it into a debt trap he noted. Mr B Bhambhani, Convenor (Power), India Energy Forum, proposed the vote of thanks. The First Technical Session focused on Power Generation – Capabilities & Challenges. This was chaired by Mr J Mahil Selvan, Director-Power, NLC. Mr N Suresh Kumar, Vice-President & Head-Thermal Power Plant Construc on, L&T Power, and Mr T Sankaralingam, Managing Director of BGR Energy were the speakers. One of the highlights of the Conference was the Special Address – presenting the Gujarat Power Model by Mr D J Pandian, IAS., Principal Secretary, Energy & Petrochemicals Department, Govt. of Gujarat. Making a presenta on he said poli cal will and administra ve skill helped make Gujarat a power-surplus State. Mr Pandian said Gujarat government did not invest much in the generation project. But they went for public-private partnership to set up power plants taking advantage of the Electricity Act and facilita ng the coal and gas linkages for the projects. They were able to procure power from private companies at a cost of Rs.2.85 per unit as against their own genera on cost of Rs.3.05 a unit. The State also invested on developing transmission network. The second Technical Session dealt with Development of Renewable Energy sources/Green Energy & Green Buildings wherein the best practices followed by SEBs par cularly in distribu on and renewable energy generation were discussed. The speakers were Dr S Gomathi Nayagam, Execu ve Director of C-WET, Mr Pashupathy Gopalan, Vice-President and Managing Director, South Asia and
CHAMBER’S ACTIVITIES Sub-Saharan Africa Opera ons, MEMC, Sun Edison, and Mr C N Srinivasan, Partner of C R Narayana Rao LLP. The session was chaired by Mr V Subramaniam, former Secretary, MNRE, Government of India. The third Technical Session was on Emerging Trends in Nuclear Power, chaired by Mr K Balu, former Director, Nuclear Recycle Group, BARC. This session was addressed by Mr T J Ko eeswaran, Sta on Director, Madras Atomic Power Sta on, Kalpakkam, Mr P Puthiyavinayagam, Associate Director – Core Design Group, IGCAR and Prof. M Subramanian, Southern Zone Convenor of India Energy Forum. The vote of thanks was proposed by Mr Amarjit Singh, Secretary General of India Energy Forum.
21st December 2012
FFT on “Compe on Act – Levelling the Play Ground? The topic for the Chamber’s monthly FFT programme for December was “Competition Law– Levelling the Play Ground?”. The success of market economy depends on fair and healthy compe on and fair compe on is considered advantageous to the ul mate consumers as it brings down prices , enhances quality and choices etc. The Compe on Act, 2002 was passed by the Parliament in the year 2002, to which the President accorded assent in January, 2003. The Act is stated to aim to promote free and fair market prac ces and prevent abuse of dominance by any or more players . It was subsequently amended by the Compe on (Amendment) Act, 2007. A Compe on Commission was also established, vested with certain powers to monitor unfair prac ces between players and to encourage compe on. In recent mes there have been some specific cases where CCI has been coming out with their observa ons and judgements regarding the methods and practices followed by businesses while dealing with compe on. This has necessitated to have a be er understanding about the responsibili es and limits of businesses
and what fair competition means, how compe on policy works in other countries, the power and jurisdic on of CCI vis-a vis other regulatory bodies and judiciary, what are the ongoing issues with regard to the Compe on law, etc. It is with this background and to deliberate more deeply on the subject, this programme was organized at The Rain Tree Hotel, 636, Anna Salai, Nandanam, Chennai 600 035. The following were the speakers: -
Mr A V Ganesan, IAS., (Retd.), Former Commerce Secretary, Govt. of India
Mr Samir R Gandhi, Partner, AZB Partners, New Delhi
Mr R Prasad, Member, Compe Commission of India, New Delhi
We l c o m i n g t h e gat h e r i n g , M r T Shivaraman, President, said Compe on law is a revolving area and we need to learn a lot. India is a most compe ve place to do business. Compe on law and compe on regula on is not something for rich countries alone. It is much more important for growing country or a middle income country like India. The role of the Government in controlling and ensuring that compe on is allowed or encouraged is undeniable. It is equally necessary for the Government to control compe on to ensure that the process is transparent and the roadblocks laid by the compe on law or the regulators do not delay this process. In this connec on, we in India have the Compe on Commission through which we are able to get decisions fairly quickly. Addressing next, Mr R Prasad, Member, CCI said as far as markets are concerned, monopolies were there, there was cartellisa on. He said this is a civil oﬀence in India and in the next l0 years, it is likely to become criminal oﬀence. Giving the history of compe on law, he said this was first started in Canada in 1889, followed by USA in 1896 and in Europe in 1957. At present 120 countries are having this law. He said in India the law was framed in 1969 (MRTP Act). If one’s assets exceeded Rs.20 crores, it became a monopolist and required a licence. In 1996, at the WTO conference in Singapore, it was decided that most of the countries should have
compe on law. In India, this Act was enacted in 2002. Mr Prasad said freedom of trade should be protected. You have to give a choice to the customer. An -compe ve prac ces have to be stopped. He said when there is compe on from abroad, you are bound to innovate. The Compe on Act is against abuse of dominance and monopoly needs to be stopped. He said 97% of the cases referred to it are cleared immediately. In the last one year, not a single case has gone for detailed inves ga on. In normal cases, each case gets cleared within 30 days. Mr Prasad felt that the competition policy is more important than the fiscal policy, monetary policy, etc. In India, every State should have a Compe on Act; compe on has to cover all aspects of our life and the Compe on law has to grow. Cabotage law now under Compe Commission lens
Speaking on the sidelines of FFT, Mr Prasad said we need to change our policy on Cabotage Law. Cabotage laws are governed by Sec on 407 and 408 of the Merchant Shipping Act 1958, which state that no ship other than an Indian ship or a ship chartered by a ci zen of India shall engage in the coastal trade of India except under a licence granted by the Director General of Shipping. Five to six decades ago India’s rail network was 55,000 km while China at that me had 20,000 km. Today India’s rail network has improved marginally to 60,000 kms while that of China’s network has more than tripled to 90,000 km. With 7500 kms of coastal line, coastal shipping accounts for hardly seven per cent of local cargo movement compared with 15 per cent in the US or 40 percent plus in the EU. Mr Samir Gandhi, Partner, AZB & Partners, made a presentation containing an overview of Competition Law in India. He said in the history of India, postliberalisa on, the compe on regulator has attracted the most attention by industry. He said the MRTP Act was
CHAMBER’S ACTIVITIES repealed and the Competition Act was enforced in 2009. The Compe on Act is based on ”eﬀects” doctrine. He described the three pillars on which Compe on Act rests namely First pillar looks at agreements; what is the eﬀect of these agreements in the market. The second pillar relates to abuse of dominance – in the Compe on Act what is important is that whether you are the only player and whether you are the dominant player. If you are dominant, are you abusing the dominance? The third pillar – why CCI should look at M&As? CCI will not look at every Mergers and Acquisitions. It looks at only a certain percentage and whether there is any distor on in the market. He said the biggest area of exposure what CCI has done as far as cartel is concerned is about Industry Associa ons. He advised to see that there is no room for cartelisa on. A great degree of cau on has to be exercised as to what is discussed at the mee ngs of the Industry Associa ons; what kind of informa on can be exchanged; whether you are doing legi mate ac vity or not. Speaking next, Mr A V Ganesan said while the CCI deals with domes c jurisdic on, there is an interna onal dimension to compe on. He said GATT was formed on 1st January 1948. The world trade has grown since then 30 mes. Just because mul lateral system was introduced, GATT was introduced. WTO law is completely under pinned by compe on. He said first you treat the na ons equally – do not discriminate. Second, equality between imported goods and manufactured goods. India is suﬀering from cartellisa on in cement. If you import, this can be broken up. He said do not dis nguish between foreign investment and domes c investment. WTO aims at bringing compe on in interna onal trade. It aims at equal treatment for goods, services etc. He felt that numerous agreements with various countries will not promote trade. Whatever you do, look at both the dimensions he advised. International dimension is as important as domes c dimension. There was a vibrant Q&A session. The programme was attended by about 70 persons.
26th December 2012
30th January 2013
Video Discussion on “Oﬃce Safety: It’s a Jungle in There”
Workshop on Doing Business in the US
Every year, about 6 million people get hurt at work and more than 4,00,000 are fraught with hidden and tricky dangers in their oﬃces. The video discussion was therefore to see how to cope with the risks so that the workers can be prepared for emergencies. The key points were :Preven ng injuries at work sta ons; controlling dangers of fire, electricity and hazardous material; and formula ng emergency plans. Ms Janani, Corporate Trainer and Consultant, was the facilitator. The discussion revealed that there is not suﬃcient awareness in our country about the risks involved at the work place. Take a quick break and do a few simple exercises she said. Keep the workplace around you clean; work in well lit areas –see that the cables, rugs are in their place and are not an hindrance to you; do not use boxes or chairs to reach up; make your work sta ons as comfortable as possible; always make a “to-do” list; take breaks; change your posi on; this will increase blood circula on. She also advised to leave work worries at work. Precau ons to be taken Do not put cigare e buds in oﬃce trash; exit points to be clean; train the staﬀ to use the fire ex nguishers; do not use faulty electrical equipment and see that your hands are not wet. Emergency ac on plan It is important for the employers to realize the hazards the employees face. Training should be given on first aid; Emergency telephone numbers should be prominently displayed. The takeaways were:- Organize regular trainings to your employees - from top to bo om - Put your systems in place - Training should be mandatory; - Do not act but react to the situa on - Positive thinking does not guarantee success but negative thinking guarantees failure - Change your workstations for your comfort - When you have support systems, rely on them. Take the help of others. She concluded saying that we need to bring in change in our thinking pa ern.
MCCI, jointly with Business in America Conferences (BIA Conferences), is organising a one day workshop on “Doing Business in the US” on 30th January at Hotel Le Royal Meridian commencing at 9.30 am. For doing business in the US, Indian en es and investors must have a complete understanding of the current business and investment opportunities, US policies, procedures and legal requirements. The conference aims to throw light on these aspects in greater detail and will be of interest to any new or exis ng company that wants to do or expand their businesses in US. The Key topics to be covered will be: • Incorporation, Banking and Sales Strategies •
Global Mobility and Staﬃng Challenges
• Successfully preparing & Filing B-1,H-1B,L-1 and Green Cards • How to avoid mistakes and receive more immigra on approvals • Employment and immigration compliance • Tax planning, IP, Import Controls and Trade Regula on • H ow to a nswe r quest i ons at the Consulate • Dealing with Employees: Overview of US Laws and Prac ces • Q&A, Mock Session and Hands on Prac cal training from the Experts Experts who bring with them years of experience, will provide an overview of the legal and regulatory environment related to doing business in the US and explain how to formulate eﬀec ve business, immigra on and tax strategies .US immigra on a orneys will also highlight the procedures for successful B-1, H-1B, L-1 and Green Card applica ons. More details of the workshop are available on: www.biaconferences.com. MCCI can also be contacted @ 24349871/24349720 email: email@example.com The Directory of Members 2011 is also available for sale. Rs 500/- per copy plus courier charges. Contact MCCI for a copy.
GENERAL COMMITTEE 10th November 2012 The Commi ee held its monthly mee ng on 10th November. Before proceeding with the Agenda items, Mr J Krishnan expressed concern about the agita on by way of forming human chain on the ques on of handling of coal by Chennai Port Trust and how the users of port would be aﬀected. He also expressed that the Chennai Port Trust has assured that it would implement the pollu on control measures suggested by Supreme Court within two months to be able to resume its profitable coal handling opera ons. As regards the visit to Krishnapatnam Port, the Commi ee decided on 1st December taking into account the convenience of majority of members. Mr Krishnan suggested that the Logis cs Commi ee members could also be invited.
The Committee also felt that the core commi ee for Skill Development Centre should be reconstituted. Dr Nirmala Prasad expressed her inclina on to be a part of the core commi ee. Regarding Training Course on Exim Procedures, a communica on was sent to members and it was felt that the course can be started even if there were 15 confirmed candidates. The Committee was informed about the efforts to have joint certification programme in affiliation with Madras University. Members sought the help of Dr Nirmala Prasad, who is a syndicate member of Madras University in this regard. The President then reported on the mee ngs as follows:-
It was decided that the Chamber can define the scope and can take up the study focussing primarily on Tamil Nadu. Later a wider discussion on this subject through a seminar can be ini ated with appropriate thought leaders. As regards Skill Development Centre, the Secretary General apprised the Commi ee that Mr Jayaraman, former CEO of Everonn has been engaged as consultant to assist in the Skill Development Project. She informed that trainings are going on in the rented premises and there is response for spoken English and Tally package. The Commi ee felt that we should expedite pu ng up at least a minimum facility in our land.
Regarding cons tu on of a core commi ee for Skill Development Centre, the following names were proposed: 1. President 2. Vice-President 3. Immediate Past President 4. Dr R Mahadevan
Mee ng with Mr.Simon Devlin, MD, Full Circle Management Solutions, UK- 18th October.
5. Dr Nirmala Prasad
FFT on Allocation Vs Auctioning of Economic Resources – 27th October.
7. Mr.A.Aravamudhan COO–HR, Lucas TVS Ltd.
MCCI-MMA Video discussion on “Even Eagles need a Push” – 7th November.
Training Course on Exim Procedures
Seminar on Changing Ci es: Building Opportuni es – 9th November.
As regards the study on ease of doing business, the Commi ee noted that the Chamber has approached IGC Interna onal Growth Centre for any basic details they might have on the subject. The Commi ee also compared ease of doing business in other States like Jharkhand where one can start a business in seven days.
Lot of deliberations followed on the subject. Members felt that doing business is becoming next to impossible. The Chamber should find out what the real issues are and also the ways to improve the situa on. It was felt that the proposed study might throw up some objective informa on which can then be escalated to the concerned authori es. Members felt that the study alone might not be of great help unless we strongly lobby for required changes .
8th December 2012 The Commi ee met on 8th December and discussed the following: Vision document 2023 – Crea on of a mega Port: It was noted that Madras Consultancy Group has been requested to give a proposal for undertaking the study. The terms of reference have since been finalised. On ease of doing business in Tamilnadu, it was informed that discussions have been held with Centre for Public Policy & Research (CPPR) and their broad proposal is awaited.
6. Mr K S Pasupathi, Chairman, Expert Commi ee on HRD
Mr J Krishnan and Ms K Saraswathi met Dr S Gurusamy of Madras University with regard to organising a training course on Exim Procedures for the Final Year Arts and Science students of the University as also regarding issue of diplomas/ cer ficates jointly with the University. A proposal has been submi ed to him. He has agreed to discuss with the appropriate authori es and get back to us. M C C I P r e - B u d g e t M e m o ra n d u m 2013 - 14: The Commi ee was informed that the Expert Committees on Indirect Taxes and VAT have finalised the points for Pre- Budget Memorandum. With regard to Direct Taxes, a meeting has been scheduled on 13th December and the issues rela ng to Direct taxes will also be finalised.
GENERAL COMMITTEE While on this, a member referred to the Fiat case favouring the Revenue. He said since this will have serious financial implications on the industry, a joint representa on should be made to the Government at the earliest. The President reported on the following programmes: Visit to Krishnapatnam Port – 1st December 2012: Members of the General Commi ee and the Logis cs Commi ee, comprising of 12 members and three from the Secretariat visited the Krishnapatnam port on 1st December 2012. The team was accorded a warm welcome a er which the oﬃcials of the Port made an excellent presentation about the facili es oﬀered at the Krishnapatnam port. A er lunch, Mr.Anil Yendluri, CEO interacted with the delegates and also highlighted the services being oﬀered by the Port. The port is strategically located in Nellore district of Andhra Pradesh, 180 Kms north of Chennai. It is just 4 years old. The mother port was constructed in 18 months – the fastest commissioned port in the world. The port has been built keeping in mind the need for future expansion. As regards connectivity, there is a dedicated 4-lane road from port to Na onal Highway-5 which will be upgraded to 6-lane road. There is also a dedicated railway line from port to the na onal grid. It has vast protected water front of 12.5 Kms to develop 42 berths. It is emerging as a major hub for coal handling in India. It is an all weather port opera ng on all 365 days having 12 mul purpose berths; it has single window clearance so that delays are avoided. The port authori es said they can handle any type of cargo, and they were in a posi on to customise export-import cargo opera ons according to the need of the customer.
Since they had a land bank, they were willing to give land to any one who is willing to set any industry, the only condi on being that they should use the port for their exim opera ons. Vice- President, Mr S G Prabhakharan elaborated further about the visit and lauded the planning and execution in creating such vast facilities at Krishnapatnam Port, aiming to be at par with world class ports like Ro erdam. Mr Krishnan said there have been enquiries from Chennai and Ka upalli ports. They also wanted the Chamber delega ons to visit their ports.
Dynamics and Future perspectives – 15th December along with India Energy Forum, New Delhi: b) Visit of Omanian Delegation – December 2012: c) MCCI-MMA video Discussion – 26th December: d) FFT on Competition Law – 21st December 2012: e) Visit of Business Delega on from China – December 2012: f) Interac on mee ng with Dr.Amitendu Palit – 5th January 2013 along with Athene Infonomics:
Mr Krishnan also suggested that the Chamber should try for representa on on the Krishnapatnam Port.
g) Awareness meeting on Energy Conservation Building Code (ECBC) – January 2013:
Mee ng with Mr. Henry Richard, ROC, Chennai – 5th December 2012:
Commercial Holidays – 2013:
Mr P Viswanathan, Co-Chairman of the Expert Committee on Company Law briefed the members about the mee ng with Mr Henry Richard, ROC. Mr.Henry Richard addressing on “Regulatory perspectives on Financial Statements’ gave an overall view of how the Company Law Department was func oning up to the stage of 2000 and now. He said that they have completely switched over to e-filing and even in developed countries like the UK such a total transforma on had not been achieved. He was requested for extension to file XBRL till 31st December. As suggested by him, a representa on was sent to the Ministry of Corporate Aﬀairs, New Delhi. It was informed by him that a Help Desk is available for immediate filing. Members of the Chamber were informed of this facility. It was also men oned at the mee ng that there were 18 alerts and the Company Law Commi ee would organise a further programme to deliberate on this. The forthcoming programmes were: a) Conference on Tamilnadu Power
The List of Commercial Holidays for observance by member companies of the Chamber for the year 2013 were finalized. The list is published elsewhere in this Bulle n. IT ma ers: There was a discussion on the Income Tax no ces received by the Chamber and the case posi on and other connected issues. The Auditors joined the discussion. It was suggested that the Chamber may wait for Advance tax payment ll March 2013 and also try meeting the Chief Commissioner of Income tax to apprise him of the service status of the Chamber.
Always welcome the problems Because problems give you dual advice First, you know how to solve it Second, you know how to avoid it in future
EXPERT COMMITTEES 29th November 2012
suggest any modifica ons /up-grada on if required.
Combined mee ng of the Expert Commi ees on Indirect Taxes & VAT Both the Committees met to discuss and finalise the issues for pre-budget memorandum to be submitted by the Chamber. While most of the issues were finalised, members were also asked to send to the Chamber if there were any addi onal points for inclusion. The prebudget memorandum has since been forwarded to the Government.
He also informed that he had discussions with two companies namely, Sify and M Tech one who have agreed for a joint programme with MCCI. The programme with Sify would be on upgrading SMEs to be organised in the 3rd week of January 2013 while the programme with M Tech one would be on Security perspec ve. It was also suggested by the members that the Chamber could take “Impact on Social media” as a discussion topic for one of its programmes. The Committee also suggested the following concerned with MCCI website and also on general issues:
7th December 2012
Expert Commi ee on IT/ ITES The Committee met under the Chairmanship of Mr Clynton Almeida. He referred to the IT sector which has been growing beyond limits with new technologies. He suggested that if there were any issues which required discussion by the Commi ee, they could share their thoughts through e-mails or mee ngs could be convened if required. He requested the members to visit the Chamber’s website regularly and
• Online payment of membership renewal • E-learning modules • Crea on of online forum • Reviews on current policies and prac ces • Sharing of expert opinion • Promo ons and revenue genera on • Network with other members for Business development and promo on
• Increasing IT awareness and benefits of IT enabled organisa ons through newsletters, technology vendor interac ons, technology fairs, etc. • Green IT (reducing carbon footprint & energy conserva on) • Webinars • E-waste management programme in associa on with Govt. of Tamilnadu
13th December 2012
Expert Commi ee on Direct Taxes The meeting of the Committee was called to hold pre-budget discussions and iden fy issues for inclusion in the PreBudget memorandum to be submi ed to the Government. The Committee finalised the points and these have since been sent to the Government. There was also a presenta on on Recent Judgements on Direct Taxes by Ms Vandana Vyas, Office of Mr K Vaitheeswaran, Advocate & Tax Consultant.
Awareness Mee ng on Energy Conserva on Building Code (ECBC) 9.30 a.m. - 5.00 p.m. - Hotel GRT Grand Conven on Centre, T. Nagar, Chennai 600 017.
Mee ng with Business Delega on from San Antonio, U.S. led by Hon'ble Mr Julian Castro, Mayor, City of San Antonio 12 noon to 4 p.m. - Hotel Raintree Anna Salai, Nandanam, Chennai 600 035.
Programme on Doing Business in the US 9.30 a.m. to 5.00 p.m. - Hoel Le Royal Meridien, Chennai.
Visit of Delega on from Port of Antwerp.
Compe ve Neutrality: A minimum condi on for eﬀec ve mixed markets By Pradeep S Mehta*
Since reforms began in the 1990s the government deregulated sectors which were hitherto the exclusive preserve of the public sector such as, airlines, telephones, insurance, banking etc. However, in most cases, the government did not privatise any of the State enterprises but made them face compe on from the private sector. Such a policy then required healthy compe on between private sector and public sector firms by providing a level playing field. Alas, in many cases the government adopts positive discrimina on for State enterprises thus viola ng a compe on policy principle of compe ve neutrality. In order that our economy can func on well without any distortions, the government has to be neutral. The proposed National Compe on Policy calls for such a policy response. As the Organization for Economic Coopera on and Development (OECD) defines it, compe ve neutrality is a principle in market compe on which implies that no business entity is advantaged (or disadvantaged) solely because of its ownership. This is a significant element of a country’s competition policy and countries such as Australia, UK, USA and others have consistently advocated for the importance of this principle. The dra Na onal Compe on Policy in India which lays down certain principles upon
which competition policy be hinged includes compe ve neutrality as one. Unfortunately, despite li le debate on its significance in any market setting, evidences of its violation continue. For example, while railway container operations allowed private players to operate, dice is always loaded against them vis-a-vis the State owned CONCOR. Another example is about the lack of ins tu onal separa on of the policymaker, from the regulator and the market player in the case of Bharat Sanchar Nigam Ltd (BSNL), TRAI and DOT. This has the poten al for distor ng the compe ve neutrality principle by providing a case for conflict of interest. A few such conflict of interests have caused failure in imposing compe on measures in interconnec on and infrastructure access in mobile telephony or the preferen al treatment granted to Air India with respect to the alloca on of traﬃc rights and access to government funding vide laws, regula ons, and prac ces is an example. On the other hand, Air India has also suffered from lack of competitive neutrality in the past. For many years public sector airlines, which included then Indian Airlines, have been trying in vain to procure aircra to expand their fleet. As a result, a lot of unused bilateral traﬃc rights have been allocated to those private airlines that have been allowed to operate
lucrative domestic and international services. Instead of giving Air India the permission to buy aircra , the Ministry allowed Jet Airways to open interna onal services that operated only on commercial routes already serviced by Air India. In the case of Bharat Sanchar Nigam Ltd (BSNL), the reverse compe on neutrality adversely aﬀected BSNL in payment of licence and spectrum fee being a State player and not being able to appeal against adverse orders of regulatory bodies. Another similar instance of what I call reverse compe ve neutrality was seen in the case of the closure of the three vaccine manufacturing PSU units on questionable grounds followed by sole reliance on private players by the Government which has now been revoked a er much hullabaloo. The principle that the playing field should be levelled between State-owned enterprises and private firms, is also true in the reverse. It is not only about poten al disadvantages faced by the private sector when they compete against State-owned enterprises which is how it is commonly understood but the reverse as well. In an article in Business Standard(http:// www.business-standard.com/india/news/ pradeep-s-mehta-compe ve-neutralityin-public policy/446529/),I have argued how all these happened, and no prizes for guessing that rent seeking behaviour
SPOT LIGHT of poli cians and malleable babus allowed all this to happen. Despite being an essen al ingredient for a successful compe on regime, India is seeing several instances of the distor on of this principle across its various sectors. In the recent past there have been many such cases. In December, 2013, the Associa on of Power Producers complained about the discriminatory treatment against Coal India Limited’s (CIL) draft fuel supply agreement (FSA) which they allege favours State run companies. The draft grants the op on of arbitra on regarding FSAs only to government companies among other one-sided clauses. Similar concerns arose in the energy sector where the private fuel retailers shut outlets alleging a non-level playing field and a price differential of Rs 3-8 a litre on petrol and Rs 15-20 a litre on diesel, compared to rates of PSUs. Government has not ensured a level playing field since the me it has invited investment by private players and it has gone back on the withdrawal of the administra ve pricing mechanism. Another problem pertains to the grant of subsidies being provided on oil
products. Aside from the harmful eﬀects of these subsidies on compe on and the environment, these are only available to PSUs and not to private players.
Over the past decade there has been a
Similarly, the capital market regulator, Securi es and Exchange Board of India (SEBI), recently announced its plans to amend its investment policy and now parks its surplus funds in fixed deposits of State owned banks only, even if the returns oﬀered by them are lower than that of private banks by up to 10 basis points (0.1 percent).According to the decision taken, SEBI would prefer to deposit its surplus funds with the public sector banks even if the rate of interest oﬀered by them is less than the returns oﬀered by the private sector banks. The recommendations came from the Commi ee of Execu ve Directors of SEBI which intends to scrap the current pro-compe ve policy that involves competitive bidding between both public as well as private sector banks. The argument oﬀered in favour of the amendment adds insult to injury by saying that this is being done “to ensure safety of funds”. A similar direc ve was also once issued by the Reserve Bank of India to PSUs that they should park their funds only in State-owned banks.
may be several reasons for having a mixed
rise in the number of mixed markets and with it, an increasing need to have a level playing field for market players. There market economy that acknowledges the significant roles played by both the private and the public sectors. However, where competitive differences do not reflect underlying diﬀerences in costs or objec ves such as where regula ons or taxes apply diﬀerently to private, public sectors then there may be a risk that the market will not operate perfectly due to resources being used ineﬃciently. The application of competitive neutrality and any devia on from these principles therefore should always be subject to the condi on that the benefits outweigh the associated costs. For this to happen soon, the Government needs to adopt the National Competition Policy and implement the same. (Secretary General, CUTS International. Natasha Nayak and Swati Thapar of CUTS contributed to this ar cle. A shorter version of this ar cle: ‘India’s uneven playing fields’ has appeared in Business Standard of 14th December, 2012.)
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Seminar on Changing Cities â€“ Building Opportunities Inaugural Session:
T Shivaraman welcoming K Phanindra Reddy, IAS., with a bouquet of flowers. Looking on is Mike Nithavrianakis
Mike Nithavrianakis delivering the Special Address.
K Phanindra Reddy, IAS., delivering the Inaugural Address
T Shivaraman in conversation with K Phanindra Reddy.
T Shivaraman presenting a memento to Mike Nithavrianakis
Technical Session I â€“ Economy & Employment:
Seated L to R: Shanker Gopalkrishnan, Dr R Srinivasan and A Aravamudhan
Technical Session II – Emerging Opportunities in Social Infrastructure (Education/Health/Affordable Housing)
Seated L to R: M.Murali, Dr.Maria Saleth, M K Padmanabhan and Dr M Mathews
Technical Session III – Opportunities in Utilities Management (Waste Management / Power / Water / Transport) and Case Study Presentation.
K.Saraswathi welcoming the Speakers. Seated (L to R) – Anand Madhavan, Dr R Hema, D.S.Hanumantha Rao, S.Mani and Shyam Ramachandran
D S Hanumantha Rao releasing the book titled “ A study on performance of Metropolitan Transport Corporation in Chennai City” authored by Dr S Parthiban (extreme left). K.Saraswathi receiving the first copy.
Jitesh Brahmkshatriya, W.S.Atkins (India) presenting the Case Study on Low Carbon Urban Planning.
A view of the audience
Conference on Tamilnadu Power Dynamics and Future Perspectives Inaugural Session:
T Shivaraman, President, MCCI welcoming the Speakers and the participants. Seated (L to R) : K Saraswathi, R Raghuttama Rao, Anil Razdan, S.Kabilan, K V Rangaswami, P S Bami and B Bhambhani.
T.Shivaraman welcoming Anil Razdan, Former Secretary (Power), Govt. of India with a bouquet of flowers.
K.V.Rangaswami, Advisor to Chairman, Larsen & Toubro Ltd, delivering the Special Address.
T Shivaraman presenting a memento to S Kabilan, IAS (Retd.), Former Chairman, TNERC .
Technical Session I Power Generation â€“ Capabilities & Challenges
B Bhambhani, Convenor (Power), India Energy Forum welcoming the Speakers. Seated (L to R) N Suresh Kumar, J Mahil Selvan and T Sankaralingam
D J Pandian, IAS, Principal Secretary, Energy & Petrochemicals Dept, Govt.of Gujarat interacting with the participants. Seated at left is P Krishnakumar.
Technical Session â€“ II : Development of Renewable Energy Sources / Green Energy & Green Buildings
Session Speakers seated (L to R) : Dr S Gomathi Nayagam, V Subramaniam, Pasupathy Gopalan and C N Srinivasan.
Technical Session III : Emerging Trends in Nuclear Power
K.Balu, Former Director, Nuclear Recycle Group, A view of the audience BARC welcoming the session speakers. Seated (L to R) : T.J.Kotteeswaran, M Subramanian, P.Puthiyavinayagam and Amarjit Singh.
A view of the audience
FFT on Competition Law – Levelling the Play Ground ?
K.Saraswathi welcoming the Speakers and the participants. Seated (L to R ) : A.V.Ganesan, IAS (Retd.), Former Commerce Secretary, Govt. of India, R Prasad, Member, CCI, T.Shivaraman, President, MCCI & Samir R Gandhi, Partner, AZB & Partners.
A V Ganesan at the mike
Samir R Gandhi making a presentation
A view of the audience
Visit to Krishnapatnam Port
A view of MCCI team during the discussion
Anil Yendluri, CEO, Krishnapatnam Port interacting with the team members.
MCCI-MMA Video discussion on “ Even Eagles Need a Push”
Prem Kamble, Trainer, with the participants.
Srinivasan K Swamy, Former President, MCCI, planting a sapling
Meeting with Registrar of Companies, Tamil Nadu
Henry Richard, ROC addressing. Seated (L) Bhavani Balasubramanian and (R) P Viswanathan
Compe on Policy Decentralised II: More on State level Compe on Acts in India By Madhav Dar *
Compe on policy itself is now a fairly standard feature of a free market economy to redress some of the problems of free markets Among the most laudable policy ini a ves of our legislature in the past decade, the se ng up of the Compe on Commission of India and various sectoral regulators (TRAI, SEBI, PNGRYB, IRDA and AERA etc) must certainly rank among the foremost. The ra onale for these bodies is completely in tandem with modern thought on the way free market economies func on and is an important step towards the evolu on of a free market economy and the move away from public sector dominance. There are several questions regarding the design of our sectoral regulatory ins tu ons – whether they have the best possible structure, whether we have too many or too few bodies of this nature, and whether these bodies are appropriate for the par cular sector. These ques ons need to be encouraged, especially by the academia. The performance of various regulatory bodies, which is quite variable across sectors, raises the separate issue of the accountability of regulatory bodies and whether parliamentary and judicial oversight mechanisms are working suﬃciently well. In keeping with the above trend, in a previous piece in the Diplomatist in April, we had briefly described the poten al beneficial aspects par cularly of competition policy, and suggested that it might be desirable to enact State Competition Acts to supplement the newly set up Compe on Commission of India (CCI). We had sensi sed readers to the possibili es of having compe on authori es at the level of individual States
in India as well. To recapitulate briefly, such bodies could aid the enforcement eﬀorts of the CCI, be an instrument of compe on advocacy, play a vital role in developing a compe on culture, aid in capacity building, increase and spread material prosperity and strengthen the federal structure of the country. State level compe on authori es should be viewed as en rely complementary to the Central CCI. Compe on policy itself is now a fairly standard feature of a free market economy to redress some of the problems of free markets. The an compe ve prac ces that the compe on law is designed to prevent include horizontal prac ces like price fixing and market alloca on, and ver cal prac ces like refusal to deal, resale price maintenance etc, abuses of market power (dominance) and an compe ve mergers, all of which inhibit the func oning of a free market economy. Such prac ces take place throughout the country. The aim of this companion piece is to give a broad view, along with some concrete illustra ons, of the benefits of compe on policy in general and at the level of the individual States, since these ideas are not suﬃciently well known in India. Role of the State A fundamental idea underlying competition, competition culture and competition/antitrust policy is to give a free rein to the natural energies of people and to employ those energies in useful direc ons. Thus, the natural urge
to material advancement leads people to strive for wealth; in doing so, they put in a substan al amount of labour towards the crea on of factories, products and the employment of people, innova on and even tending of the environment, given suitable incen ves. It thus becomes unnecessary for the State to preoccupy itself with the produc on of goods and services, which is a diﬃcult, painful and laborious task and becomes even more so when it has to be done for others unselfishly. This is primarily because it is beset, quite naturally, with incen ve problems which, in part, lead to the kind of mass scale corrup on we are seeing today. Instead, a State which is overworked with a hundred func ons that have no correla on to policing and oversight, but instead involve detailed production, is bound to get stuck in a morass of detail, detrac ng it from its main func ons. The role of the State in economic ac vity in a free market economy can be limited to legal and policing func ons and the provision of safety nets for those who need them, but this needs to be done gradually, especially in a country as big as India. The func ons of the State thus become much more that of the umpire, the setter of rules, standards and law enforcement appropriate to the society they serve, the enforcer of laws, the creator of regulatory and oversight bodies and the preven on of crime. Indeed, in a society where ci zens are used to being constantly looked after by the State, forget how to feed and
*Madhav Dhar is a New Delhi based freelance anƟtrust economist.(ArƟcle Courtesy: DiplomaƟst Plus)
SPOT LIGHT organise themselves by the use of their natural abilities as was witnessed in the former USSR in the wake of the collapse of Communism. The promo on of competition in the long run should lead to a much more honest, open and transparent society. In a country like India where there is s ll abject poverty, the most urgent task is the growth of output and income for the poor, their inclusion in na onal life by gainful employment. For this purpose, there is an urgent need to employ natural energies of people in their own self interest (telcos and handset manufacturers have connected millions of people and made India the fastest growing mobile market in the world) rather than for an over burdened State to make large plans without any realis c hope of a aining them. Compe on policy at the State level should make a direct diﬀerence to the growth rates of GDP of the States. The Need for State level Legisla on To be sure, there is a real ques on as to the need for addi onal legisla on and machinery at the State level when a central body, the CCI, is already present. As we have repeatedly stated, the principal reason for State level commissions is to supplement the enforcement eﬀorts of the CCI. The task at hand is simply too large for a single body to handle, that too at the central level. There are other reasons - a monopoly supplier of government services might behave in ways that resemble that of a monopolist supplier of a service in a private market, essen ally too li le output at too high a price with a lot of deadweight loss to society! Fostering inter agency competition might yield superior outputs in terms of enforcement. Moreover, such competition, between compe on agencies, is certainly going to be useful in the monitoring/supervision/ oversight mechanism of the commissions by Parliament. The diversification of enforcement agencies is desirable under conditions of limited information and uncertainty, as is the case prevalent in India. Mul ple agencies also provide a
safety net in the event that a single agency fails to discharge its responsibilities through inep tude, a lack of vigour or corrup on. The more vital a government func on is, as is the case with compe on policy, the stronger the case for its discharge by diverse sources. The above reasons also point to the need for a careful considera on of the form for such acts and agencies so that they yield the above benefits. I n t a n g i b l e G a i n s o f A n t i - Tr u s t Legisla on The enactment of antitrust legislation at the State level should be seen as part of third genera on reforms of economic policy whose focus is to achieve higher growth rates exclusively through a wider diﬀusion of the gains from growth, greater geographical spread of the benefits of liberalisa on to regional and local levels, a greater thrust on the spread of the benefits of a free market to the masses and the encouragement of small business, all of which can be achieved in part by a well enforced compe on policy. Among these reforms are the encouragement of entrepreneurship through the removal of barriers to entry and financial provisions for SMEs, and greater inclusion through the spread of educa on and the crea on of physical infrastructure. This is not, therefore, to be seen just as a ma er of increasing budgets for social sectors, but posi vely using State Compe on Acts as an instrument for the wider diﬀusion of the market economy and concomitant gains. The idea is that a greater spread of compe on policy and culture is necessary to bring about a wider diﬀusion of the gains from economic growth which, in turn, because of higher propensi es to spend among the middle and lower classes, will lead to higher growth rates by boos ng aggregate demand. This is achieved by pu ng greater downward pressure on prices through the enforcement of a strict compe on regime, which would help in curtailing inflation. For this reason, a certain amount of advocacy of the
benefits of compe on policy is required. It should be seen as a concrete but small first step in implementing the much touted inclusiveness agenda. An Illustration: Haryana Competition Act To get a concrete idea of the working of a State Compe on Act, let us take a par cular State, say Haryana, and imagine for a moment that the Haryana Compe on Act 2012 has been passed with sec ons three and four almost iden cal with the provisions of the Compe on Act 2002. Sec ons covering issues of geographical origin and procedures, penal es, private enforcement and others have been resolved and set up without any merger control. Mergers may be le to central jurisdiction and amendments can be taken up at a later date. Further, imagine that a Chairman and four members of the Compe on Commission of Haryana have been appointed, the oﬃce is opera onal and the required coordination with consumer and other courts has been established. We will consider the following sectors – healthcare, autos and auto parts, IT, transport services, real estate services, govt. contrac ng and food distribu on. In healthcare, there are e ups in hospitals between doctors and diagnos cians as also doctors and post prescrip on medical care. A doctor orders some diagnosis. You can get this in the hospital or outside. The doctor may not accept reports from anywhere. The lack of quality control and proper regula on impels doctors to get diagnostics from a known source and are o en ver cally integrated. However, the doctor may be receiving a kickback for sending patients or for prescribing par cular drugs, which is in viola on of medical ethics and should receive the a en on of the Medical Council of India (MCI). Alternately, it may also be an an compe ve prac ce called e-in sales, in viola on of 3(4)(a). This needs to be determined under a rule of reason.
SPOT LIGHT In the sale of autos, the maintenance contract is frequently tied to the sale of the car with exclusivity clauses that prevent anyone from touching the engine on the threat of losing the warranty. In part, this may be due to the sophis ca on of newer generation engines which prevents a mechanic without the desired equipment and skills from trea ng it. But there may be an element of tying which needs to be determined. It can have the effect of foreclosing a potentially very large and lucrative after sales service market to several potential entrants, which also makes the ed good market uncompetitive. Again, this must be determined by a rule of reason. More importantly, in the development of vendors of parts, designs are made in a way to prevent reverse engineering. A part which is to be used in a car can be produced locally, but often car manufacturers do not give this design to local parts suppliers thus preventing the entry of local producers into the manufacture of these parts. This allows the price of the part to be well above cost, prevents the growth of local production and kills a very large source of employment. As a result, the replacement market has two very dis nct but interrelated segments, namely the OEM’s and local replacement. There are issues of ver cal diﬀeren a on here related to quality and may jus fy the making of exclusive supply arrangements. Such issues need to be inves gated further under a rule of reason by trained industrial economists and cost accountants because the analysis of both these disciplines is quite demanding. If patent issues are present, they will add another dimension of complexity to the analysis. Compe on issues in public procurement are probably the most easily visible. All purchases made by the Haryana govt., departmental undertakings of the State, State public sector units, development authori es in the State, urban bodies,
district level bodies, in-state infrastructure projects where items are purchased, should be checked for collusive prac ces (Sec on III oﬀences), which have a direct impact on purchase price and, thereby, on the state exchequer and ci zens of the State. Bid rigging is specifically proscribed. Moreover, as the general public becomes familiar with an trust, they can report such viola ons which should make the job of the Compe on Commission of Haryana easier. This is relevant for all government purchases from computers and sta onary to vehicles. Collusive practices in mandis can be checked by the CCH; these have been documented for some of the mandis in Haryana, in particular in Sonepat. The whole food distribu on trade requires a lot of compe on scru ny since it is rife with an compe ve prac ces, including in the transport of food items. I n t h e I T s e c to r, o n c e s o f t wa re manufacturers establish themselves, as in accoun ng and banking so ware, there may be issues of tying and too frequent updates, which a consumer does not want but is forced to pay for and consume. Then there may be issues of deliberate incompa bility with other manufacturers and opera ng systems precisely to prevent compe on. In real estate services, there is a strong possibility of collusion between brokers and builders in se ng property prices and rentals for both commercial and residen al real estate. A standard competition problem that can arise in real estate is the maintenance and provision of building services when an apartment that is sold is ed to the same company or an associated one. In fact, speciality companies now exist to provide such services and this market needs to be encouraged rather than excluded by an compe ve tying. In addi on, there are other problems in the real estate sector associated with adherence to claimed standards, false
adver sing and withholding of deposits which perhaps need to be dealt with by consumer courts, and possibly a regulator for the sector. In the transport sector, there is the possibility of collusion between operators in fixing freight rates for all kinds of freight movement. In addi on to restric ons on entry through issuance of licences and permits, in connivance with the State governments, this sector provides fer le ground for se ng rates in various ways, which, in the long run, is exceedingly profitable for operators. So, for instance, for the transport of marble by truck from Rajasthan to Delhi, rates at one level have to be maintained by active collusion, namely threats to individuals trying to deviate from such agreements coupled with inducements. Similarly, for vegetables, food products and many other items, there are separate agreements. All such collusive ac vity requires regular vigilance from State an trust authori es who are generally much be er informed than their central counterparts. How far the adop on of State Compe on Acts will actually go towards greater diﬀusion of the gains from growth will depend on the vigour of enforcement, appointment of suitable people in these bodies, achievement of suitable capacity building, the enthusiasm of the individual State governments and its adop on to the needs of the industrial structure of the par cular State. One cannot expect that the enactment of such legisla on will automa cally lead to desired outcome, especially because one cannot be sure of enforcement efforts. On a different note, at a more theoretical level, it is ques onable whether compe on policy can redress all the kinds of economic problems created by unbridled capitalism. Nevertheless, one is almost surely be er oﬀ with free markets and compe on policy than with free markets and no compe on policy!
POLICY WATCH India ASEAN finalise FTA in services and investments
the amendments proposed by the Le par es were rejected by the House.
India and ASEAN finalised the much awaited Free Trade Agreement in services and investments. This move is likely to boost trade to $100 billion by 2015.
The Bill along with the proposed legisla ons on pension and insurance, was one of the five key reform measures on the government’s agenda during the current session of Parliament. The government dropped the controversial changes in the Bill in deference to the wishes of the Opposi on. However, it had accepted all major recommenda ons of the Standing Commi ee on Finance.
A er opera onalising FTA in goods last year, both sides were engaged in widening the base of the pact by including services and investments. At present, trade between India and ASEAN stands at $ 80 billion. ASEAN and six partners – Australia, China, India, Japan, South Korea and New Zealand – will start first round talks on the RCEP next year which are expected to form the world’s economic bloc in 2015. Cheap loans for stressed out sectors on anvil Commerce Minister Anand Sharma recently held discussions with the Finance Minister P.Chidambaram and said the government was actively considering extending cheap loans to stressed-out sectors other than SMEs to provide them a cushion against global economic slowdown. He also indicated that an announcement would soon be made regarding sops for the export sector which were now reeling under the impact of global slowdown. Lok Sabha clears Banking Bill sans controversial clause The Banking Amendment Bill recently got the approval of the Lok Sabha a er the Government dropped the controversial provisions rela ng to allowing banks to trade in futures and keeping the sector outside the purview of Competition Commission. The Bill which seeks to strengthen banking regula ons, was passed by voice vote a er
Cabinet Committee clears new Urea Investment Policy:Policy aims to incen vize fer lizer companies to set up new plants: The Cabinet committee on Economic Affairs recently approved an Urea Investment Policy, which is likely to incen vize fer lizer companies to set up new plants and expand exis ng capacity. India imports over 30 percent of its urea requirement and the policy aims at reducing that. But it is unlikely to have any impact on exis ng prices. The policy which aims to attract fresh investment of about Rs. 35,000 crore to increase domes c produc on by eight million tonnes, has been cleared as the previous policy failed to a ract the much needed funds. RBI to relax norms for entry of foreign banks The Reserve Bank of India is expected to relax norms soon allowing opening of more foreign banks, Commerce Secretary S R Rao said recently. RBI will soon announce a progressive policy for permitting opening of more foreign banks. He said that with far more regional integration of economies and commerce, the market forces themselves will demand that each of the central banks
of sovereign na ons take similar calls. The me is propi ous and it is going to happen sooner than later he added. At present, expansion of foreign banks in India is on a reciprocal basis. India and Pakistan are nego a ng issues with regard to opening of bank branches in each other’s territory to facilitate trade and commerce. As per WTO agreement, India allows opening of 12 branches of foreign banks in a year. Last year, the RBI in a discussion paper suggested that foreign banks should be incen vized to operate in India as wholly-owned subsidiaries, as against the present system of having presence through branch network. Ministries seek “declared good” status for ATF In a bid to bring down the cost of air operations, Civil Aviation and Petroleum Ministries would make a joint representa on to the Finance Ministry to no fy jet fuel as a ‘declared good’ enabling levying of a flat 4 percent tax on it. At present, sales tax on avia on turbine fuel (ATF) ranges from 4 to 35 percent varying from State to State. The cost of jet fuel accounts for about 40 percent of the opera ng cost of Indian carriers, most of which are facing financial trouble. India to promote investments in Bangladesh In a bid to deepen the rela onship and promote economic engagement, India would promote massive investments into Bangladesh for creating jobs and economic opportunities for the local popula on and make the country a major hub for exports into India and other parts of the world. India slashed its sensi ve list under the South Asian Free Trade Area (SAFTA) for less developed countries and granted duty
POLICY WATCH free access to Bangladesh. Bangladesh had been demanding for a long me for increased market access for its products to India. IRDA to unveil norms for new products Insurance Regulatory & Development Authority (IRDA) would come out with guidelines for new insurance products. Guidelines in this regard were being finalized. For instance, a life insurance product would have guaranteed death benefit while a pension product must provide s pulated annuity. The guidelines would become regula ons shortly. FII limit in G-Secs, corp bonds hiked Seeking to narrow the current account deficit, the Finance Ministry increased the FII limits in government securi es and corporate bonds by $5 billion each, taking the total investment limit in domes c debt to $75 billion. As far as FII debt limit is concerned, two new categories have been created. One $5 billion in government securi es without any stipulated residual which will be open to pension fund, central banks, and sovereign wealth funds. Other 45 billion will be open for corporate bond and Gilt. So, the overall limit goes up from $ 65 billion to $ 75 billion Finance Ministry sources said. The overall limit of domes c debt is distributed through a host of categories across government, corporate and infrastructure debt. India wants Colombo to cut levy on automobile import - Du es were recently increased by almost 100 percent Clearly unhappy over the decision of the Sri Lankan Government to impose fresh import duty on automobile exports from India, the Government indicated that it would explore the option through diploma c channels to prevail upon Sri
Lanka to bring down the import tariff as such a move could hit Indian vehicle exports to the Island nation. India is mulling over various op ons to deal with the situa on. The move by Sri Lanka is likely to hurt exports from India and has put the automobile industry in a quandary as Sri Lanka is very important market for the Indian automobile companies. Recently the island nation increased import du es on vehicles by almost 100 percent which has adversely impacted exports from India. NBFCs may need prior RBI nod for ownership change Non-Banking Finance Companies (NBFCs) would need RBI’s prior approval before making changes in their ownership control, a dra guideline of the Central Bank said recently. The dra guidelines based on the Usha Thorat Commi ee report, also seek to make mandatory for all deposits taking NBFCs to obtain credit ra ng. Appointment of CEOs of NBFCs with asset size of Rs. 1,000 crore and above would require the RBI approval. In the interest of good governance and the sensi vi es associated with NBFCs, such companies whether listed or not, will need to comply with Clause 49 of SEBI’s lis ng agreement on corporate governance including induction of independent directors. The draft norms indicate that existing unrated NBFCs will be given one year to get rated. Therea er they would not be allowed to accept any fresh deposits or renew exis ng deposits ll they get themselves rated. Regarding non-performing assets, the RBI has proposed that asset classification
and provisioning norms should be made similar to that of banks for all registered NBFCs irrespec ve of the size. Reserve Bank ghtens norms for issue of debit cards The Reserve Bank of India has s pulated that debit cards would be issued to customers having savings bank and current accounts but not to cash credit or loan account holders. Banks may issue only online debit cards, including co-branded debit cards where there is an immediate debit to the customers’ account and where straight through processing is involved, RBI said. Banks are henceforth not permi ed to issue offline debit cards. Banks which are now issuing oﬄine debit cards may conduct a review of their oﬄine debit card opera ons and discon nue opera ons of such cards within a period of six months from the date of the circular RBI said in a no fica on to all banks. RBI extends deadline for new cheque standard The Reserve Bank of India extended the deadline given to migrate to new look cheques (CTS 2010 Standard cheques) with more security and standardised features, to March 31, 2013. Earlier it had set a December 31, deadline. However, the RBI said the residual nonCTS 2010 Standard cheques that are presented in the clearing systems beyond this extended period would con nue to be accepted for the clearing but would be cleared at less frequent intervals. Adherence to CTS 2010 Standards has inherent advantages as the security features in cheque forms help the presen ng banks to iden fy the genuineness of the drawee banks’ instruments while handling them in the image-based scenario.
POLICY WATCH Centre cuts import tariﬀ value of gold The Centre slashed the import tariﬀ value of gold marginally to $550 per 10 grams amid weak global prices of the precious metal. The tariﬀ value of silver has, however, been hiked marginally to $ 1,062 a kg. The tariﬀ value of the base price on which the customs duty is determined is to prevent under-invoicing. The Government decided to bring down the import tariﬀ value of precious metals as global prices have weakened. Second review of India-Singapore CECA to conclude shortly Singapore Prime Minister Lee Hsien Loong said the second review of the Comprehensive Economic Cooperation Agreement (CECA) between India and Singapore is likely to be concluded soon and would further liberalise bilateral trader and give a fillip for deeper economic engagement. Mr Lee, who was in India for the ASEANIndia Commemora ve Summit said that the second review had taken a long me and expressed the hope that it would be concluded very soon. “We are willing to go forward and give a new shape to the partnership if India is willing to further liberalise the trade pact. We are looking for opening up of the banking sector, which it seems has been done. Also, we are looking at reforms in the labour sector and also very bullish about coopera on in the avia on sector. India needs to look at the sub-continent and liberalise its avia on policies further” he said. On the issue of connec vity with India and ASEAN, Mr Lee said ASEAN was working on it. We are talking about connec vity in a very broad sense. We are talking about physical connec vity like rail and air links. We are also talking about coopera on
in telecommunica on and energy, a gas network, an electricity grid and links out of ASEAN na ons and regional partners, including India, he said.
Unveiling these incentives, Commerce & Industry Minister Anand Sharma said “With these measures, we should be able to give a push to our exports in the last quarter of this financial year. The
Asset reconstruc on companies FDI cap raised - The prohibi on on investment by FII in ARCs will be removed The foreign investment ceiling in asset reconstruction companies (ARCs) has been increased to 74 per cent from 49 per cent, a move aimed at bringing more foreign exper se in the segment. The decision was taken a er consulta on with the stakeholders and the sector regulators. However, foreign investment in ARCs will need to comply with the FDI policy including the one related to sectoral caps. Further, the foreign investment limit of 74 per cent in ARCs will be a combined limit of FDI and FII. With this change in the policy, the prohibi on on investment by FIIs in ARCs will be removed. 2% interest subsidy for exports extended for one more year
objec ve is to stabilize the situa on and try and move from the nega ve territory to posi ve.” He also expressed the hope that with the help of these steps, exporters would be able to ship more and help the country reduce the widening trade gap, which touched @175.5 billion between JanuaryNovember. National Policy on Electronics (NPE) 2012: Unlike the IT and telecom sector, wherein India has already been recognised as a global player, the performance of our electronic hardware manufacturing has lagged on account of specific challenges. To focus on Electronics System Design & Manufacturing in the country, a separate policy for the sector i.e. the National Electronic Policy 2012 was approved for implementa on by the Cabinet on 25th October 2012.
Faced with a widening trade deficit, the Central Government announced a slew of incentives to reverse the decline in exports, which will fall short of the $360 billion target set for the current fiscal. The 2 per cent interest subsidy scheme, which was to end on March 2013, has been extended for one more year. In addition to this, more sectors have been covered under the scheme, with engineering exporters being the major beneficiaries. Merchandise shipments to the US, European Union and the Asian markets will qualify for addi onal sops. Exporters are facing a demand slow-down in these markets.
The NPE provides for comprehensive set of policy ini a ves to revive the Electronics System Design and Manufacturing sector in the country which include broadly: - Electronics Manufacturing Clusters (EMC) scheme - Modified Special Incen ve Package Scheme - Se ng up Semiconductor wa er fabrica on units - Preference to domes cally manufactured electronic goods (Preferen al Market Access) - Scheme for Mandatory registra on of iden fied electronic products for meeting specified safety standards - Human Resource Development ini aves in ESDM
REPRESENTATIONS 6th December 2012 Mr.Avinash K.Srivatsava Addl. Secretary Ministry of Corporate Aﬀairs Government of India New Delhi. Dear Sir Filing of XBRL – 15th December 2012 – request for extension of date: As you may be aware, the Madras Chamber of Commerce & Industry (MCCI) is one of the premier industrial bodies serving the trade and industry in the Southern Region. We are into our 177th year of service and almost all the major companies opera ng in Chennai and its suburbs including MNCs are our members. The Chamber works closely with State and Central Government on policies and issues aﬀec ng the trade and industry. The Madras Chamber has always been a proac ve Chamber working as a bridge between the business community and the policy makers. The Chamber has many Expert Commi ees dealing in various subjects, one of them being the Expert Commi ee on Company Law/ Corporate Ma ers, comprising of Company Secretaries, CAs, Cost Accountants, Financial heads etc. who deal with the ma ers concerned with Companies Act and other related issues. At a mee ng of the Commi ee held yesterday, the members felt that due to constant power cuts in Tamilnadu, in some areas for almost 8-10 hours everyday, corporates are finding it diﬃcult to file XBRL through online. Since the me of the power cut is not being announced in advance, systems are down most of the me. Our members therefore felt that the Chamber should request you to consider extending the me limit for filing ll 31st December 2012. This will greatly help the corporates to file the XBRL on me and confirm compliance . We shall be grateful if you could kindly consider our request posi vely and extend the date ll 31st December. Looking forward to hearing from you. Yours faithfully Sd/-……. K.Saraswathi Secretary General (The Government have since extended the date up to 15th January 2013.)
First Mega Interna onal Japan-India SME Conference in Chennai 18th and 19th February 2013 – Hotel Savera, Chennai The Indo-Japan Chamber of Commerce & Industry will be organising the above Conference at Chennai. The aim of the Conference is to bring together SMEs of Japan and India and to provide a pla orm to facilitate frui ul economic coopera on between Japanese and Indian businessmen. This will be followed by a Golf Tournament on 20th February 2012 in Chennai. Registra on Fee:
For the SME Conference on 18th and 19th Feb. 2013 - Rs. 5,000/For the Golf Tournament - Rs.3,000/- (Op onal)
For further details please get in touch with: Indo Japan Chamber of Commerce & Industry 21, K.B. Dasan Road, Teynampet, Chennai - 600 018. Tel.: 24352810 / 24354779 / E-mail: email@example.com
REPRESENTATIONS 27th November 2012 Mr Sunil Paliwal, IAS Secretary to Government Commercial Taxes Dept Government of Tamilnadu Fort St.George, Chennai 600009. Dear Sir Tamilnadu Value Added Tax Act 2006 – Diesel Genera ng Sets – Plea for reducing the rate of tax from 14.5% to 5% Gree ngs from MCCI. MCCI does not need any introduc on to you as you had addressed one of our programmes namely Discussion Mee ng on Tamilnadu VAT Act on 28th February 2012. We wish to submit that the manufacturers and dealers of diesel genera ng sets in Tamilnadu are severely handicapped by the levy of 14.5% VAT in the State. This high rate of tax in Tamilnadu vis-à-vis the lower rates of tax in our neighbouring States of Karnataka and Puducherry has severely aﬀected the sales of diesel genera ng sets in Tamilnadu. Moreover, the Government of Tamil Nadu is oﬀering subsidies to MSME’s for purchase of generators and with a higher tax rate, the purpose of the subsidies is defeated. The Government of Tamilnadu had earlier issued a GO Ms No. 36 dated 1.4.2008 reducing the rate of tax from 12.5% to 4% and presently it is 5% for generator sets. Generator Sets cover Genera ng sets also. As you are aware, genera ng sets are used for producing electricity. For standby power requirements of customers, genera ng sets are used and generally these equipments are called as generators. In view of the severe power shortage in Tamilnadu, more so in mofussil areas, these genera ng sets are cri cally required by customers. The Hindu of 26th November states “Inverters out, generators in” – with power cuts exceeding 16 hours, residents are unable to recharge ba eries. This all the more jus fies the need for using generator sets for which the tax has to be reasonable. The same point has also been reiterated by the Indian Generators Manufacturers’ Associa on which has been published in The Hindu today under the cap on “Taxing mes for alterna ve power genera ng sets”. The high incidence of tax will only ensure flight of trade and industry from Tamilnadu to our neighbouring States causing considerable loss of tax revenue to the State exchequer. If the rate of tax is pegged at 5% in Tamilnadu, it will certainly boost the sales of diesel generators in the State and ensure substan al addi onal tax revenue to the State exchequer. The lower rate of tax will also a ract manufacturers from other States to set up their shops in Tamilnadu which in turn will help s mulate the State’s economic and industrial growth besides providing addi onal employment opportuni es in our State. Considering the above, the Chamber earnestly requests the Government of Tamilnadu to urgently look into the ma er and issue a clarifica on /no fica on which will greatly enable all the small and medium scale industries to run their businesses peacefully in the State of Tamilnadu. We trust the Government of Tamilnadu will heed to the request of the industry for such a clarifica on immediately. Thanking you Yours faithfully Sd/…….. K.Saraswathi Secretary General Copy to:. The Commissioner of Commercial Taxes Government of Tamilnadu Ezhilagam, Chepauk Chennai 600005. (The Government has since considered our request and has reduced the tax to 5%. )
Salient Features of the Companies Bill 2011 The Companies Bill, 2011, which was passed by the Lok Sabha recently, on its enactment will allow the country to have a modern legisla on for growth and regula on of corporate sector in India. The exis ng statute for regula on of companies in the country, viz. the Companies Act, 1956 had been under considera on for quite long for comprehensive revision in view of the changing economic and commercial environment nationally as well as internationally. In view of various reformatory and contemporary provisions proposed in the Companies Bill, 2011, together with omission of exis ng unwanted and obsolete compliance requirements, the companies in the country will be able to comply with the requirements of the proposed Companies Act in a better and more effective manner. The salient features of the Companies Bill 2011 are as follows: 1. (Amendment in Clause 135): In the Section on Corporate Social Responsibility (Section135), which is being introduced as a statutory provision for the first me, the words ‘make every endeavour to’ have been omi ed from its Sub-clause (5). So, the first para of Sub-clause (5) of Clause 135 now reads as follows: “The Board of every company referred to in sub-sec on (1), shall ensure that the company spends in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy.” Such clause is also amended to provide that the company shall give preference to local areas where it operates, for spending amount earmarked for Corporate Social Responsibility (CSR) activities. The approach to ‘implement or cite reasons for non implementa on’ retained. 2. (Amendment in Clause 36): To help in curbing a major source of corporate
delinquency, Clause 36 (c) amended, to also include punishment for falsely inducing a person to enter into any agreement with bank or financial ins tu on, with a view to obtaining credit facili es. 3. (Amendment in Clause 143): Provisions relating to audit of Government Companies by Comptroller and Auditor General of India (C&AG) modified to enable C&AG to perform such audit more eﬀec vely. 4. (Amendment in Clause 186): Clause 186 amended to provide that the rate of interest on inter corporate loans will be the prevailing rate of interest on dated Government Securi es. 5. (Amendment in Clause 144): Provisions rela ng to restric ons on non audit services modified to provide that such restric ons shall not apply to associate companies and further to provide for transi onal period for complying with such provisions. 6. (Amendment in Clause 203): Provisions relating to separation of office of Chairman and Managing Director (MD) modified to allow, in certain cases, a class of companies having multiple business and separate divisional MDs to appoint same person as chairman as well as MD. 7. (Amendments in Clause 147 and 245): Provisions rela ng to extent of criminal liability of auditors - par cularly in case of partners of an audit firm - reviewed to bring clarity. Further, to ensure that the liability in respect of damages paid by auditor, as per the order of the Court, (in case of conviction under Clause 147) is promptly used for payment to aﬀected par es including tax authori es, Central Government has been empowered to specify any statutory body/authority for such purpose. 8. (Amendment in Clause 141): The limit in respect of maximum number of companies in which a person may
be appointed as auditor has been proposed as twenty companies. 9. ( A m e n d m e n t i n C l a u s e 1 3 9 ) : Appointment of auditors for five years shall be subject to ra fica on by members at every Annual General Mee ng. 10. (Amendment in Clause 139): Provisions relating to voluntary rotation of auditing partner (in case of an audit firm) modified to provide that members may rotate the partner ‘at such interval as may be resolved by members’ instead of ‘every year’ proposed in the clause earlier. 11. (Amendment in Clause 2): ‘Whole- me director’ has been included in the defini on of the term ‘key managerial personnel’. 12. (Amendment in Clause 42): The term ‘private placement’ has been defined to bring clarity. 13. (Amendment in Clause 61): Approval of the Tribunal shall be required for consolidation and division of share capital only if the vo ng percentage of shareholders changes consequent on such consolida on. 14. ( A m e n d m e n t i n C l a u s e 1 5 2 ) : Clarification included in the Bill to provide that ‘Independent Directors’ shall be excluded for the purpose of compu ng ‘one third of re ring Directors’. This would bring harmonisa on between provisions of Clause 149(12) and rota onal norms provided in Clause 152. 15. (Amendment in Clause 470): Provisions in respect of removal of difficulty modified to provide that the power to remove diﬃcul es may be exercised by the Central Government up to ‘five years’ (a er enactment of the legislation) instead of earlier up to ‘three years’. This is considered necessary to avoid serious hardship and disloca on since many provisions of the Bill involve transition from pre-existing arrangements to new systems.
RESERVE BANK OF INDIA Foreign Exchange Department, Central Oﬃce Mumbai - 400 001 RBI/2012-13/142 July 24, 2012 A.P. (DIR Series) Circular No.9 To All Category - I Authorised Dealer Banks Exim Bank’s Line of Credit of USD 250 million to the Government of Nepal Export-Import Bank of India (Exim Bank) has concluded an Agreement dated October 21, 2011 with the Government of Nepal, making available to the la er, a Line of Credit (LOC) of USD 250 million (USD two hundred fi y million) for financing eligible machinery, equipments, goods and services including consultancy services for the purpose of infrastructure projects such as highways, airports, bridges, irriga on, roads, railways and hydropower projects in Nepal. The machinery, equipment, goods and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services (other than consultancy services) may be procured by the seller for the purpose of Eligible Contract from outside India; provided however that, at the request of borrower and with the approval of Government of India, Exim Bank may consider reduc on in the Indian content. 2. The Credit Agreement under the LOC is eﬀec ve from June 29, 2012 and the date of execu on of Agreement is October 21, 2011. Under the LOC, the last date for opening of Le ers of Credit and Disbursement will be 48 months from the scheduled comple on date(s) of contract(s) in the case of project exports and 72 months (October 20, 2017) from the execu on date of the Credit Agreement in the case of supply contracts. 3. Shipments under the LOC will have to be declared on GR / SDF Forms as per instruc ons issued by the Reserve Bank from me to me. 4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or u lize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remi ance a er realiza on of full payment of contract value subject to compliance with the prevailing instruc ons for payment of agency commission. 5. AD Category-I banks may bring the contents of this circular to the no ce of their exporter cons tuents and advise them to obtain full details of the Line of Credit from the Exim Bank’s oﬃce at Centre One, Floor 21, World Trade Centre Complex, Cuﬀe Parade, Mumbai 400 005 or log on to www.eximbankindia.in. 6. The Direc ons contained in this circular have been issued under sec ons 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Rashmi Fauzdar) Chief General Manager
Hannover Messe 2013 Hannover Messe 2013, the world’s most important technology event will be held from 8th to 12th April 2013 at Hannover, Germany. It will feature 11 leading interna onal trade shows. Orbitz oﬀers independent travel plans and Group Travel packages for exhibitors and visitors for Hannover Messe 2013. They include premium airline, 3 star hotels located within city limits, apartment stays, Fair ground transfers with group, etc. For more info please contact Mr Sandeep Panwar email: firstname.lastname@example.org Tel: 022-24102801-03/6728 2400.
Government of Tamil Nadu - List of Holidays – 2013 Sl. No
New Year’s Day
*Annual closing of Accounts for Commercial Banks & Co-opera ve Banks
Telugu New Year’s Day
Tamil New Year’s Day and Dr. B.R.Ambedkar’s Birthday
*Half yearly closing of Accounts for Commercial Banks & Co-opera ve Banks
* Applicable only to Commercial Banks and Co-opera ve Banks in Tamil Nadu.
Commercial Holidays 2013 1st January
Charter Party Holidays 2013
New Year’s Day
Tamil New Year’s Day & Dr B R Ambedkar”s Birthday
Tamil New Year’s Day
Wednesday May Day
Wednesday Gandhi Jayanthi
2nd November Saturday
Have the courage to follow your heart and intuition they somehow already know what you truly want to become. - Steve Jobs
Addi ons to Library Annual Reports:
Trade Fairs & Exhibi ons
Bimetal Bearings Ltd. 2011-12 Chemplast Sanmar Ltd. 2012
Sri Lanka 8-10 February 2013
Sri Lanka Footwear & Leather Fair
Singapore 18-21 June 2013 18-21 June 2013 27-29 Nov.2013
Broadcast Asia 2013 Communic Asia 2013 AnaLabAsia2013
8-11 April 2014
FHA 2014 (Food and Hospitality Trade event)
Germany 19-21 March 2013
The Cochin Chamber of Commerce &Industry – 2009-10 & 2010-11 FICCI 2011-12 Others: A Journey of Excellence & Enterprise – SICCI Centenary Commemora ve Volume
16-21 Sept. 2013
European Coa ngs show 2013 (Adhesives, Sealants, etc) Bauma 2013 – Construc on machinery Interzun – Furniture & Interior Construc on Hannover Messe – Industrial Automation & Subcontrac ng EMO Hannover – Machine Tools
China 24-27 May 2013 18-21 June 2013 2-4 July 2013
China Glass Beijing Essen Welding & Cu ng Aluminium China
15-23 April 2013 13-16 May 2013 9-12 April 2013
Bangladesh (Dhaka) 9-11 May 2013 India (Mumbai) 17-20 April 2014
Madras Stock Exchange Ltd. – 75 Glorious Years – Pla num Jubilee Souvenir UN Habitat: Urban Patterns for a Green Economy – Optimising Infrastructure Urban Pa erns for a Green Economy – Working with Nature Urban Pa erns for a Green Economy – Leveraging Density Urban Patterns for a Green Economy – Clustering for compe veness
5th Meditex Interna onal Expo (Healthcare, Medical, Surgical and Hospital Equipments).
Ci es & Climate Change Ini a ves – Tool Series: a) Developing Local Climate Change Plans – A guide for ci es in developing countries
9th Die & Mould India Interna onal Exhibi on.
Chennai 28 Feb-2 March 2013 10th Everything About Water Expo 2013 Interna onal Exhibi on and Conference on Water and Waste Water Management
b) Making Carbon Markets work for your city – A guide for ci es in Developing Countries Urban Public Transport – A study on performance of Metropolitan Transport Corpora on in Chennai city – Dr. S. Parthiban.
New Members The Chamber extends a warm welcome to the following new members: Build Cra Interior Pvt.Ltd. Business: Interior Contrac ng
GMV Projects & Systems Business: Design, Manufacture & Supply of Steel, Cement, Power plant machinery etc.
Ayan Tech Solu ons Pvt.Ltd.
Integrated Foods & Consumer Products (India) Pvt.Ltd. Business: International procurement, outsourcing and Back Oﬃce
Business: IT, ERP service provider
Kentz Engineering (India) Pvt.Ltd.
Business: Prin ng, Retail Branding and Display materials
Proalign Consul ng Pvt. Ltd. Business : Management Consultancy Asia Society for Social Improvement and Sustainable Transforma on and Charitable Trust (ASSIST)
CSS Corp Pvt.Ltd., Chennai Business: So ware Development Tes ng and Support
Anand, Samy & Dhruva Business: Advocates
Knowledge Capital Investment Group Business: Educa on, Consul ng and Training, entrepreneurship development.
ECONOMIC ECON NOMIC REVIEW REVIEW CONTENTS 1.
Macroeconomy 1.1 India’s Balance of Payments, Q2 2012-13 1.2 Central Government Fiscal situa on 1.3 Consumer Price Index for industrial workers 1.4 India’s Interna onal Investment Posi on (IIP) Corporate Sector 2.1 Performance of Eight Core Industries 2.2 Sectoral Deployment of Bank credit
India’s Balance of Payments, Q2 2012-13: •
India’s current account deficit (CAD) widened in Q2 of 2012-13 on account of a larger trade deficit.
On a BoP basis, merchandise exports recorded a decline of 12.2 per cent (year-on-year) during Q2 of 2012-13 as against an increase of 45.3 per cent during corresponding quarter of 2011-12.
Similarly, on a BoP basis, imports also registered a decline of 4.8 per cent (yearon-year) during the quarter as against an increase of 38.1 per cent during same quarter last year.
Steeper decline in the exports than that in imports led to the widening of trade deficit to US$ 48.3 billion during Q2 from 44.5 billion during the corresponding quarter previous year. During Q2, net services receipts recorded a rise of 11.4 per cent (year-on-year), led by software, construction, information services, business services. Net receipts under secondary income (private transfers) recorded a moderate increase of 2.9 per cent during the quarter and were partly oﬀset by the net ou low under primary income (investment income). Notwithstanding a reasonable increase in net services receipts, net invisibles earnings could finance only a lower propor on of trade deficit as net ‘primary and secondary’ income flows were relatively smaller. Consequently, the CAD worsened to US$ 22.3 billion in Q2 of 2012-13 as compared to US$ 16.4 billion in the preceding quarter and US$ 18.9 in Q2 of 2011-12. As a propor on of GDP, CAD during Q2 of 2012-13 worked out to 5.4 per cent as compared with 4.2 in Q2 of the previous year.
Government’s revenue collec on stood at just Rs. 4.45 lakh crore which is 47.6 per cent of the Budget es mate of Rs. 9.35 lakh crore, while tax collec ons stood at Rs. 3.69 lakh crore, 47.9 per cent of the Budget es mate.
Consumer Price Index for industrial workers: Despite the surge in net inflows under the financial account (excluding changes in reserves) during Q2 of 2012-13 led by foreign direct investment (FDI) and por olio investment, there was a marginal drawdown of reserves by US $ 0.2 billion during the quarter, mainly due to the higher level of current account deficit.
In H1 (April-September) of 2012-13, CAD was higher at US$ 38.7 billion as compared to US$ 36.3 billion in the same period of the previous year. As a propor on of GDP, CAD rose sharply to 4.6 per cent in H1 of 2012-13 from 4.0 per cent in H1 of the previous year reflec ng slowdown in GDP and a significant deprecia on in rupee.
Net inflows under the financial account were lower during April-September 2012 over the corresponding period of previous year mainly due to decline in FDI, external commercial borrowings (ECBs) and banking capital.
Non-Plan expenditure in April-October stood at Rs. 6.24 lakh crore, 64.4 per cent of the Budget target of Rs. 9.69 lakh crore for the en re financial year. In the year-ago period, it stood at 66.1 per cent of the Budget Es mate.
Modera on in capital inflows coupled with con nued elevated level of CAD led to only a marginal accre on of US$ 0.4 billion in the foreign exchange reserves during AprilSeptember 2012.
Central Government Fiscal situa on Centre’s fiscal deficit stood at Rs. 4.1 lakh crore which is 80.4 per cent of the fiscal deficit target during the first eight months of the current financial year. In the corresponding period of 2011- 12, the fiscal deficit stood at 85.6 per cent of the Budget Es mate. Es mate of the first half of 2012-13 fiscal deficit as percent of GDP accounted for 8.3 per cent of GDP at current price. For the April-November 2012 revenue deficit stood at Rs. 3.19 lakh crore that is 91.2 per cent of the Budget Es mate, against 91.3 per cent in the corresponding period last year. Plan expenditure stood at Rs. 2.43 lakh crore which is 46.7 per cent of the budgeted Rs. 5.21 lakh crore. In the year-ago same period, Plan expenditure stood at 50.1 per cent of the Budget Es mate.
The All-India CPI-IW for November, 2012 rose by 1 point and pegged at 218 (two hundred and eighteen). On 1-month percentage change, it increased by 0.46 per cent between October and November compared with 0.51 per cent between the same two months a year ago. The largest upward contribu on to the change in current index came from food items which increased by 0.86 per cent, contribu ng 1.01 percentage points to the total change. At item level, largest upward pressure came from Rice, Wheat A a, Goat Meat, Milk, Onion, Potato, Tea (readymade), Snack Sal sh, etc. The other items like Cooking Gas, Medicine (Allopathic), Bus Fare, Auto Rickshaw Fare, Flower/Flower Garlands, Tailoring Charges, etc. also put upward pressure in total change. The largest downward contribution to the change in current index came from Pulses and Products with a decline of 0.38 per cent, contribu ng (-) 0.03 percentage points to the total change. However, at item level, vegetable & fruit items like Cauliflower, Radish, Palak, Brinjal and Orange put downward pressure on the index. The year-on-year inflation measured by monthly CPI-IW stood at 9.55 per cent for November, 2012 as compared to 9.60 per cent for the previous month and 9.34 per cent during the corresponding month of the previous year. Similarly, the Food inflation stood at 10.85 per cent against 9.91 per cent of the previous month and 7.61 per cent during the corresponding month of the previous year. At centre level, Mysore recorded the largest increase of 7 points followed by Vijayawada (6 points) and Guntur, Tiruchirapalli, Coimbatore and Bengluru (5 points each). Among others, 4 points rise was registered in 7 centres, 3 points in 10 centres, 2 points in 6 centres and 1 point in 20 centres. Nagpur centre reported a decline of 2 points and other 9 centres registered a fall of 1 point each. Rest of the 19 centres’ indices remained sta onary. The indices of 41 centres are above All-India Index and other 36 centres’ indices are below na onal average. Puducherry’s index remained at par with all-India index.
ECONOMIC REVIEW India’s Interna onal Investment Posi on (IIP): •
Net claims of non-residents on India (as reflected by the Net IIP, i.e. Interna onal financial assets abroad less Interna onal financial liabili es) increased by US$ 47.7 billion over the previous quarter to US$ 271.5 billion as at end-September 2012, mainly on account of US$ 55.6 billion increase in liabili es. The changes in IIP also reflect the valua on changes emana ng from exchange rate movements. The Indian residents’ financial assets abroad stood at US$ 441.7 billion as at end-September 2012 recording an increase of US$ 8.0 billion over previous quarter. Reserve assets, which remained the major component of international financial assets, raised by US$ 5.1 billion to US$ 294.8 billion at end-September 2012. Direct investment abroad moved up by US$ 1.4 billion during the quarter to US$ 115.8 billion as at end-September 2012. The International financial liabilities increased by US$ 55.6 billion over the previous quarter to US$ 713.2 billion as at end-September 2012. Direct and por olio investments in India increased by US$ 24.4 billion and US$ 17.1 billion, respectively. Among other investments liabili es, currency and deposits (mainly NRI deposits), trade credit, and loan (mainly ECB) increased by US$ 6.1 billion, US$ 4.1 billion and US$ 3.7 billion, respec vely. Equity liabili es in US$ term has gone up by US$ 39.0 billion (US$ 23.8 billion in Direct investment and US$ 15.2 billion in Por olio investment). Due to rupee apprecia on during end-June 2012 to end-September 2012 equity liabili es in US$ term revised upwards by US$ 21.0 billion (US$ 13.4 billion in Direct investment and US$ 7.6 billion in Por olio investment). The ra o of India’s interna onal financial assets to interna onal financial liabili es decreased to 61.9 per cent in September 2012 (66.0 per cent in June 2012).
industries was 3.5 % as against their growth at 4.8% during the corresponding period in 2011-12. •
The Eight core industries combined index was 144.9 in November 2012 with a growth rate of 1.8% compared to their 7.8% growth in November 2011. During April-November 201213, the cumula ve growth rate of the Core
Crude Oil produc on registered a growth of 0.8% in November 2012 compared to its (-) 5.7% growth in November 2011. Cumulatively, Crude Oil production recorded a nega ve growth of (-) 0.5% during April-November 2012-13 compared to its growth at 2.9% during the same period of 2011-12.
The growth rate of Natural Gas produc on was nega ve both in November, 2012 at (-) 15.2% and in November 2011 at (-) 10.1%. Cumula vely also, Natural Gas produc on registered a nega ve growth of (-) 13.1% during April-November 2012-13 and (-) 8.5% during the same period of 2011-12.
Petroleum refinery produc on had a growth of 6.6% in November 2012 compared to its growth at 11.2% in November 2011. In cumula ve terms, Petroleum refinery produc on registered a growth of 7.2% during April-November 2012-13 compared to its 4.4% growth during the same period of 2011-12.
Fer lizer produc on registered a growth of 5.0% in November 2012 against its nega ve growth at (-) 6.7% in November 2011. Cumula vely, Fer lizer produc on registered a nega ve growth of (-) 3.3% during April-November 2012-13 compared to (-) 0.7% growth during the same period of 2011-12.
Steel production had a growth rate of 6.0% in November 2012 against its 10.5% growth in November 2011. Cumula vely, Steel produc on registered 3.4% growth during April-November 2012-13 compared to its 8.9% growth during the same period of 2011-12.
2. Corporate Sector Performance of Eight Core Industries:
Coal produc on registered a growth of (-) 4.4% in November 2012 compared to its growth at 4.9% in November 2011. In cumulative terms, Coal production recorded a growth of 6.7% during AprilNovember 2012-13 compared to its negative growth at (-) 4.0% during the same period of 2011-12.
Cement produc on registered a nega ve growth at (-) 0.2% in November 2012 against its 17.0% growth in November 2011. The cumula ve growth of Cement Produc on was 6.7% during April-November 2012-13 compared to its 4.8% growth during the same Crude Oil.
Electricity genera on had a 2.3% growth in November 2012 compared to its 14.4% growth in November 2011. The cumula ve growth of Electricity genera on was 4.6% during April-November 2012-13 compared to its 9.4% growth during the same period of 2011-12.
Sectoral deployment of Bank credit: Sectoral deployment of credit collected on a monthly basis from select 47 scheduled commercial banks accoun ng for about 95 per cent of the total non-food credit deployed by all scheduled commercial banks for the month of November 2012. Highlights of the sectoral bank credit are given below: •
On a year-on-year (y-o-y) basis, non-food bank credit increased by 17.6 per cent in November 2012 as compared with the increase of 16.8 per cent in November 2011.These data for November 2012 are not strictly comparable to the ongoing trend as the year ending November 30, 2012 has 27 fortnights while the year ending November 18,2011 has 26 fortnights.
Credit to agriculture increased by 24.4 per cent in November 2012, up from 7.3 per cent in November 2011.
Credit to industry increased by 17.7 per cent in November 2012 as compared with the increase of 20.9 per cent in November 2011. Deceleration in credit growth to industry was observed in all the major sub-sectors, barring mining and quarrying, food processing, wood and wood products, paper and paper products, petroleum, coal products and nuclear fuels, chemical and chemical products, cement and cement products, and all engineering.
Credit to the services sector increased by 15.3 per cent in November 2012 as compared with the increase of 17.2 per cent in November 2011.
Credit to NBFCs increased by 30.3 per cent in November 2012 as compared with the increase of 39.2 per cent in November 2011.
Personal loans increased by 16.3 per cent in November 2012 as compared with the increase of 13.3 per cent in November 2011.
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InTouch MCCI NOV-DEC 2012