Vol. 26 Nos. 6 & 7 - September & October 2012
IN THI S
President’s Message Chamber’s Activities Felicitation to the President of India MCCI-MMA Video Discussion on “Motivation - Igniting Exceptional Performance” FFT on Interest Rates and Economic Growth
Chamber Day MCCI-MMA Video Discussion on Personal Goal Setting – Journey to Success Talk on “Re-engaging Europe-Is the Opportunity Real” by Mr Simon Devlin, UK FFT on Allocation V/s Auctioning of Economic Resources
General Committee Expert Committees SPOT LIGHT - GREEN BUILDINGS Policy Watch Additions to Library Economic Review
Dear Members, The Indian political scene seems to be getting more heated with accusations of corruption flying thick and fast. While this is definitely not a healthy situation, one feels that we may be focusing on the wrong problem. The October 27 Issue of the ‘Economist’ had an article that covers one of the causes of corruption. A study by Transparency International revealed a very clear correlation between corruption and the ease of doing business. Countries where business regulations were simple have the lowest levels of corruption. India seems to be going in the opposite direction by increasing the difficulty of doing business in all sectors. The attitude of the Government appears to be to introduce new regulations as a knee-jerk reaction to violations or bypassing of earlier regulations without repealing or modifying the original regulations. The result is that the legal system in India has become somewhat like the culture of the country where we have absorbed layers of influences from other civilizations. We can trace influence from sources as diverse as pre-Roman Christianity to modern day western values overlaid upon a few thousand years of Hindu civilization.
While this is a great strength for the culture as a whole, replicating this in the legal system has led to a monumental maze of regulations. A study some years ago had identified hundreds of laws in India that serve no current purpose and need to be repealed. However, there appears to be absolutely no will or inclination on the part of the Government or the bureaucracy to simplify these regulations. This inevitably increases the rent seeking power of the regulators and the machinery that implements these regulations. The current outcry over corruption has unfortunately been directed at perceived large scale corruption. There is no attempt to look at the source of the power that allows for corruption which is the discretionary power of the Government to interpret and implement the regulations that give extraordinary power to every Government employee. The net result of this is that India is ranked 132nd in the list of countries in terms of ease of doing business, below such countries like Nigeria, Swaziland, Zambia, etc. Even Pakistan is 20 places ahead of us.
has made a very clear statement that she wants to reduce the burden of regulations on Brazilian business. We believe that this is the time for a reasoned debate on the fundamental regulatory environment with a view to simplify the procedures. It is unfortunate that the country seems to be moving in the opposite direction as distrust of business seems to be the primary rallying cry of the anti-corruption brigade. I think, as a Chamber, we should work to ensure that the right sense prevails. Wishing all the Members “A Very Happy
Diwali”. With best wishes
T. Shivaraman President
One can take some cold comfort from Brazil which is ranked only two places above us. However, the President of Brazil
CHAMBER’S ACTIVITIES 8th September 2012
Felicitation to the President of India, Shri Pranab Mukherjee: The Chamber organized a meeting on 8th September at Hotel Hyatt Regency to felicitate the newly elected President of India, Shri Pranab Mukherjee. It was indeed a matter of pride and privilege for all of us and an unique honour for the Chamber as MCCI was the first Chamber he addressed after assumption of office as President. It was also the first time in the history of the Chamber that we had the rare privilege of President of India participating in our function. This was, no doubt, a momentous occasion for all of us. His Excellency, the Governor of Tamilnadu, Dr K Rosaiah also participated in the meeting. Mr T Shivaraman, President, MCCI welcomed the gathering. His address is given below for the benefit of the readers. Salutations …… It is indeed a great and momentous day in the annals of the Madras Chamber that we are here today to felicitate the President of India, Shri Pranab Mukherjee, and to listen to his message to the business and industry leaders of this region. Sir, we are extremely privileged and honoured to have you with us today and I, not only on behalf of the Madras Chamber and its members, but also on behalf of the entire business community of this region, extend a very warm and respectful welcome to Your Excellency. You Sir have handled multiple Ministerial roles with great success. As a Foreign Minister, you were instrumental in the Civil Nuclear Accord that opened up the opportunity for a major expansion
in nuclear power. Your achievements as Finance Minister are so many that we would be here for many hours if I were rash enough to attempt to list them. Your status as a statesman capable of reaching beyond party lines is unparalleled. With your experience as a teacher, a journalist, a writer, a senior and most respected Minister and, most importantly, as one of the foremost statesmen of contemporary India, it is but fitting that you have assumed the highest office as President of India. We are happy to offer our felicitations to you, Your Excellency, on this achievement. We know that you will add lustre to this great office and will be a more than worthy successor to such greats as Dr Rajendra Prasad, Dr S Radhakrishnan and Dr. Zakir Hussain. We are extremely happy that one of your earliest visits since taking office has been to Chennai and we are indeed extremely fortunate to have you among us on this visit. We can say that both the functions you have participated today are organisations with a long history – one, the High Court with 150 years in the field of Jurisprudence and the other, our Chamber with 176 years of service to industry and commerce. We also welcome His Excellency, Dr K Rosaiah, Governor of Tamil Nadu, who is now part of Chamber’s history as he was our Chief Guest during our 175th year concluding ceremony last year. The Madras Chamber is 176 years young. I say this because while we have a long history, we still try to stay relevant to the current needs of industry and commerce. We were founded at a time when the very shape of business was utterly different from what it is today. The Chamber has been an integral part of the growth of industry and commerce in Southern India, more particularly in the State of Tamil Nadu and has been a catalyst in the early
infrastructure development of the region - be it roads, railways, post and telegraph and more importantly the ports, which we are still passionate about. The Chamber forges ahead in its 176th year and is taking new initiatives like setting up our Skill Development Centre focused on developing skilled manpower for our members and a Sustainable Chennai Forum to promote a business case for sustainability while still continuing to play the traditional role of a responsible voice of trade and industry. Today, MCCI member industries are major contributors to the development of both the State as well as the nation as a whole. The State of Tamilnadu of course is a leader in various industries including Automotive, Energy, IT, Healthcare, textiles, leather etc. As one of the most urbanized States in India and a State with a high Human Development Index, we are in a way pioneers and torchbearers for the progress of India. Our companies are competitive both within India and in the international market place. We are also the home to a number of multinationals like Ford, Hyundai, Nokia, Nissan, Daimler etc. Your kind acceptance of our invitation and your gracious presence and address today is sure to give us additional motivation to move forward. We consider ourselves fortunate to be a part of this memorable occasion and I am sure that the bicentennial volume of our Chamber’s history will have much to talk about on this event. I, on behalf of the Madras Chamber, our sister Chambers in the City and the State, and the entire business community of Chennai and Tamilnadu, welcome our President, His Excellency Shri Pranab Mukerjee and the Governor. I also extend a very warm welcome to every one of you present here.
CHAMBER’S ACTIVITIES Address by the President of India, Shri Pranab Mukherjee Governor of Tamil Nadu, H.E. Dr K Rosaiah, Shri T Shivaraman, President, Madras Chamber of Commerce & Industry, Smt. K Saraswathi, Secretary General, Shri T T Srinivasaraghavan, Immediate past President, MCCI distinguished Members of the Madras Chamber of Commerce and Industry, Ladies and Gentlemen: Good evening to all of you. At the very beginning I would like to express my regret that my programme has been delayed because I was held up in the earlier function. So you had to wait. I am sorry for that. I am happy to be here this evening and to meet the Members of this historic Chamber of the industry and business leadership in Tamil Nadu. You are in your 176th year of commendable service in promoting the interests of Commerce and Industry in Tamil Nadu. I congratulate you on your contribution to the progress of this prosperous and forward looking State. You have reason to be proud of your achievement. It is you and your fellow entrepreneurs that can take credit for the industrialization of our country, the building of its infrastructure, establishment of strong trade and business partnerships all over the world. You have sustained these with your strong business acumen, far sighted understanding and your forward looking approach in respective areas of investment and productive work. It is the entrepreneurial spirit of our nation’s business and industrial community that has achieved the high growth rate today which has earned India enviable status of an emerging economy. It is the momentum created by you and your counterparts that has seen India through the global economic meltdown. It is the relentless initiative and innovation
of the leaders and industry, trade and commerce, our farmers, our workers, our managers that will keep the fundamentals of our economy strong and that is the need of the hour. I would only emphasise that we should always keep uppermost in our mind the goal that our nation’s growth should be as inclusive as possible to encompass all sections of the society and to ensure that each and every one, even in the lowest stratum, to reap the benefits of the fruits of development. Among you there are any number of far sighted and hard working investors and innovators. You have proven yourselves that you have the expertise and the talent. I look to you to take up the opportunities in today’s globalised world to creatively sustain the enduring values and business ethics – one of your biggest strengths to live up to the good name that you have earned in the world. Nothing can be more dangerous than negative sentiments in our mind. I am sure that you will continue to radiate confidence and drive the development process with courage in a spirit of adventure and confidence. In course of time, there may be difficulties. The difficulties may sometime appear to be insurmountable. But always we shall have to keep in mind that every problem can be resolved through determination, through appropriate innovative and technological application of mind and if we proceed with that spirit, it would be possible for us to overcome the problems. Currently, no doubt we are passing through difficult time. Our GDP growth has slowed down. The rate of inflation is reasonably high, environment for fresh investment does not appear to be very bright, the current account deficit is likely to widen and fiscal deficit is also an area of concern. All these problems are there, but it is we ourselves who will have to solve these problems to resolve this crisis. Merely lamenting and
spreading negative sentiments would not help us to overcome the problems. We shall have to keep in mind that the entire world environment today is not very encouraging. No country today can live in isolation. International events have its impact on the domestic economy. Policy formulations at the domestic level cannot resolve all crises. But if we keep those long term objectives in view, then it will be possible for us to achieve the desired level of growth on a sustainable basis. There is no dearth of self styled Cassandras. Always they make forecast for doom. But how does it help? Because we have confidence in ourselves, our entrepreneurs, our farmers, our workers managers, our technologically competent work force. If we look at the history of the growth scenario of this country from a longer perspective and longer period of time, we will find there is nothing to be disappointed. Occasionally we have problems and there had been ups and downs. But we have been able to overcome those difficulties through our own efforts. As I mentioned, the fundamentals of our economy are strong - i.e the rate of domestic savings. Yes it may not be as high as 36% which we achieved in 200708 but still it is reasonably high running around 32 to 34%. It is true in the recent years particularly during the period between 2008-09, when the first major international economic crisis began and thereafter in 2011 till today the euro zone crisis which had the lasting impact on the world economic growth scenario, and in that context, if you look at, the first impact of 2008-09 reduced our growth from around 9% to 6.7%. But shortly with the efforts of our own entrepreneurs, our own workers, our own farmers, we were able to top the table and in two consecutive years 2009-10 and 2010-11, we achieved the growth at 8.4%. Again in 2011-12, our GDP growth has shrunk to 6.5%. This
CHAMBER’S ACTIVITIES year, the first quarter growth is 5.5%. No doubt it is disappointing, but if you look around the world not many countries are better than us. International Monetary Fund is revising and re-revising the growth projections of all the developed countries. Resolution of euro zone crisis is not in the horizon of visibility. These are facts to be kept in view while making assessment and I would suggest that let us give up pessimism and rededicate ourselves, try to take advantages which are available to us. Huge domestic market and domestic demand driven growth strategy could be appropriate at this juncture–it may not be so high but it cannot be too low either. Yours is one of the oldest Chambers as I mentioned to you, I would expect that in your deliberations and your future course of action you will not only instill confidence amongst yourselves, but you will spread it around the country, around your partners. In the past also you had to face this problem. But we have overcome it through the collective efforts keeping confidence in ourselves and I am quite sure you will be able to overcome the present crisis which is confronting us. We need not be self styled cassandras and prophets of doom. Thank you ladies and gentlemen for giving me the opportunity to share some of my perceptions here. I n h i s Vo t e o f T h a n k s , M r T T Srinivasaraghavan, immediate past President said an institution with a history of 176 years would have pretty much done it all and seen it all. It is almost true in respect of MCCI. Its pages are replete with red letter entries from history. However, one page had not been filled and that was the President of India had never honoured this Chamber with his august presence; today, that golden page has been inserted in our history books. He thanked Shri Pranab Mukherjee for honouring us and for his sage words
which were an inspiration not only to those gathered at the meeting but to the business community at large.
Provide rewards and recognition
Communicate and be “visible” to your employees
He also thanked His Excellency the Governor of Tamilnadu for his presence. The programme ended with the National Anthem.
In conclusion he said “Motivate to perform: Perform to be motivated”.
13th September 2012
MCCI & MMA Video discussion on “Motivation: Igniting Exceptional Performance” This month the joint video discussion programme was handled by Mr.S.Pirama Nayagam, HRD Consultant and Chief Education Officer of Deeksha Learning Services. The video discussion focused on the various aspects of performance and motivation. He explained “Performance” as a strategic and integrated approach to achieve success. He said it is an outcome of works, tasks, activities, behaviours and results thereupon which is generally appreciated through rewards and recognition. Speaking about recruitment, he said an organization should avoid appointing persons who are fraudulent, dishonest, cruel, without enthusiasm, incompetent and cowardly. The success of an organization depends on work performance; work performance depends on the quality of employees and the quality of employees depends upon motivational elements.
The discussion was well attended and well appreciated.
22nd September 2012
FFT on Interest Rates & Economic Growth Inflation and decelerating growth have been two of the main challenges facing the Indian economy now. RBI, the apex Bank, has tried using interest rate as an instrument to tame inflation and there were frequent hikes in interest rates in the recent past. While it had some impact on the inflation, there were views that this has had negative impact on the growth and had slowed down the momentum. Indian Inc has been seeking an interest rate cut. To understand the relation between the interest rate changes and the economic growth and to deliberate more deeply on the subject, the Chamber organized a Food for Thought Programme on Interest Rates and Economic growth. The Chamber had the following speakers to address the programme: Mr T B Kapali, Economic Consultant
Mr G Ramachandran, Financial Analyst
Mr V Suri, Vice-President and Head of Corporate and Strategic Planning, Murugappa Group.
Key learnings from the video were:-
Mr M R Venkatesh,
Managers should spark excitement, fuel momentum and sustain a passion
Reward and build morale and trust
Solicit suggestions and feedback
Mr T Shivaraman, President of the Chamber, welcoming the gathering said that the Chamber has been having this FFT programme almost every month and the response has been good. This is a forum
CHAMBER’S ACTIVITIES where we discuss in some detail, the views on general and contemporary subjects of interest. The speakers would normally have divergent views - so it becomes very interactive, leading to a lively debate. Today we talk about interest rates and the economic growth, the subject is pretty high on the agenda for all of us. The RBI has taken interest rates to a higher level to curb inflation. However, he said inflation is not in the control of monetary policy or the interest rates alone. One thing is certain that the Indian growth story has slowed down and we can debate as to why this has happened – is it primarily because of interest rates? No doubt interest rates do have its share. He said the FFT programme is to make people think, to get new insights and new ideas on what is happening in the world so that we can better understand the environment in which businesses operate now. The speakers then addressed the meeting. Brief excerpts of their addresses are given below: Mr T B Kapali Addressing Mr Kapali said the corporate sector is barking at the right tree but they are asking for the wrong fruit! meaning they are asking for low interest rates. But what they should ideally ask for is interest rates should be set according to some conceptual framework, which will ensure that there is general price stability in the system. The key reason why there has been a big slow down on investments in the past 2-3 years is that the relative prices of some inputs, products and services, were increasing right through. We did not have generalised aggregate price level pressures in the economy of this magnitude from 1999 to 2005-06. It is the relative price pressures that have morphed into very stubborn aggregate price level pressures.
As long as the price level pressures were relative, corporate investment was good. The corporate profitability performance during 1999 to 2007-08 was excellent. The relative price pressures were evident at that time. The corporates went ahead with the investments with confidence and expectations that there will be generalized input cost pressures which they could pass on and they had excellent profit growth. Investments too were very strong during that period. Now the economic history tells us that a strong period of relative price pressures invariably transformed into aggregate price level pressures. This is what has happened in India. The input costs are going up and corporates have found that whatever projections they have made on real returns on investment of projects, they are all coming under tremendous pressure because of the aggregate price level increases This results in the forecast of real returns not being realized automatically. There is a fall in the level of confidence. This is acute in India. In this scenario what is the role of interest rate he asked? The most important contribution or rather the only contribution the Central Bank can make is to ensure that relative price pressures do not get transformed into aggregate price level pressures. In this respect, he felt that the RBI has signally failed. He said “don’t ask for just low interest rates. Unless you relate it to the level of prices, interest rates as such do not have any meaning.” Mr G Ramachandran Mr Ramachandran made a presentation on Interest Rates and Economic Growth. He said inflation and decelerating growth have been two of the main challenges facing the Indian economy now. The RBI has tried using interest rate as an instrument to tame inflation. There were frequent hikes of the same in the recent past.
He said interest rates are a function of economic growth; yet we see interest rates as instruments that determine growth. We love the India growth story but belied expectations produce “the India wrath story”. He explained the five factors that affect interest rates as : -
Interest rates are a function of growth
Interest rates are a function of the fiscal situation
Interest rates are a function of inflation
Interest rates are a function of credit risk; and
Interest rates are a function of the term
He further said growing economies have high interest rates; fiscal deficit leads to high interest rates; inflation necessitates high interest rates; borrowers, including sovereigns, with poor credit quality face high interest rates and longer the term of borrowing, the higher the interest rate. Economies in decline and in recession have low interest rates and low interest rates trigger growth. The Central Bank can hold interest rates low in order to trigger growth and/or to sustain growth. He said why interest rates are high in India? Because our economy is growing though many do not think we are growing. The fat fiscal deficit, the recent reforms pertinent to diesel and liquefied petroleum gas, could make a small difference. We are not starved for capital he said. Our savings rate is high and we have high ambitions. But our trust is low; low voltage drives our actions. He said we want the RBI to solve our many problems. We can’t blame the RBI if it pays a lot more attention to inflation than to growth; the RBI is not going to cut interest rates in a hurry. And there is
CHAMBER’S ACTIVITIES no certainty that the economy would grow when the RBI cuts interest rates. Mr V Suri
to supply side bottlenecks and imported commodities cannot be addressed by monetary tightening alone he pointed out.
Mr. Suri made a presentation on the relationship between inflation, interest rate and growth and also made a comparison of India and China. He also highlighted the impact of high interest rate regime on industry and the expectations from the Government.
What are the solutions? Economic revival is possible by addressing: -
Bloated expenditure & low productive capital spending
He made a reference to the Repo Rate, the GDP growth and the WPI change year on year basis. He said China brought down inflation significantly keeping the interest rates intact whereas in India, there is a drastic fall in growth because of high interest rate but inflation still
supply side issues; and fiscal deficit
Cut discretionary spending and be asset light
Reduce borrowing and restructure to reduce interest
He added that high interest rates are a big concern to the growth and profitability of the corporate as well as makes business environment uncertain. RBI’s move of high interest rates did not serve the purpose. GDP is falling and inflation is back. Speaking about the effect of high rates on business, he said consumption rate has come down and demand is less; high finance cost coupled with inflation is affecting the middle line; projects get delayed/downsized and volatile exchange rates have made even cheaper external borrowings unviable. The repaying capacity of borrowers is deteriorating. The SME sector is in doldrums as limited fund raising options for SMEs is leading to slow down in flow of funds to the sector. The business sentiment is subdued as business confidence index comes down; commercial credit growth is on the decline. In effect, the high interest regime has affected the business sentiments negatively with (a) subdued top line growth (b) bloated middle line and (c) stressed bottom lines. High inflation due
The following were his suggestions for the Business, in the current circumstances: -
Cash is king: Trade profits to cash
Retain core personnel/profitable customers
Innovate and automate
Take strategic investment positions for creating a future
Have patience and work to create new opportunities.
Mr M R Venkatesh Mr Venkatesh briefly remarked on the issue of hike in prices of diesel, petrol, the subsidies given by the Government, etc. They indeed provided food for thought. With an interesting Q&A session, the programme concluded.
29th September 2012
CHAMBER DAY The Founders’ Day of the Chamber which is called “Chamber Day” was celebrated on 29th September with a meeting at the Sheraton Park Hotel & Towers, Chennai. The Chief Guest was Mr Ajay Shankar, IAS (Retd.) Member-Secretary, National Manufacturing Competitiveness Council,
New Delhi. Mr Vish Viswanathan, Managing Director, Visteon India, delivered a special address. Mr R Raghuttama Rao, Managing Director, ICRA Management Consulting Services Ltd., made a presentation on TN Economy and Vision 2023. Mr T Shivaraman, President, MCCI, in his welcome address, outlined the various activities of the Chamber. He said power crisis is high on the agenda. The Ports in Tamilnadu is something that we need to focus on. He said the Chamber’s focus is also on manufacturing. Though it cannot be denied that IT Sector has put India on the global map, it is imperative that we strengthen the manufacturing sector too to achieve long term sustainability. He further said Government policy is key to development of industry and our long term vision has to be along with the Government’s policy. His address was followed by a presentation by Mr R Raghuttama Rao on TN Economy and Vision 2023. He said any vision if it is articulated can work wonders. Tamilnadu is one of the leading States in many dimensions. The Vision 2023 document is very ambitious. It is not just a document but it is a Political Statement he remarked. He observed that the key economic indicators of the State have vastly improved during 2012. He felt that Service sector is clearly the leader; however, manufacturing is the engine for growth. The State’s fiscal deficit is in line with the recommendations of the 38th Finance Commission. Tamilndu’s Vision 2023 is to become India’s most prosperous and progressive State with least poverty and where the people enjoy all the basic services of a modern society and live in harmonious engagement with the environment and the rest of the world. The vision is a guide that seeks to channel the ambitions of a modern democratic State towards a desirable and aspirational future and is a
CHAMBER’S ACTIVITIES challenge for the stakeholders, including the Government, political leaders, civil servants, industry, institutions, etc. He described the following strategies to achieve Vision 2023 namely:
Increasing the share of manufacturing in the State’s economy
Making Tamilnadu the Knowledge capital and innovation hub of India
Making SMEs vibrant in the State
Specialisation in service offerings like back office operations, healthcare, tourism, etc.
Thrust on skill Development
Improving agricultural productivity
Transforming ten cities into world class cities
Thrust on social welfare programmes
Signature projects like developing world class centres of excellence in at least 10 areas that act as nuclei of innovation
Encourage PPPs in infrastructure project creation, etc.
Delivering a Special Address, Mr Vish Viswanathan said there is a feeling in India like the developed countries that we can just develop on services and not emphasise on manufacturing. Manufacturing in India contributes only 15% to GDP as compared to Thailand (36%), Korea (31%), China (30%) and Germany (21%). Stressing the importance of manufacturing he said, Manufacturing is a major engine for economic development, employment generation and reduction of poverty. He gave various reasons as to why manufacturing has not taken off in a big scale in India. The factors affecting were scale, value addition, branding, inadequate funding, land cost and issues over acquisition, lack of adequate natural resources, etc. He called for stepping up of funds for national and development initiative and
enhance industry-institute interaction. India has comparative advantages over China with regard to frugally engineered p ro d u c t s , g re e n m a n u fa c t u r i n g , development of large trading houses, manufacturing for business requirements, sector-specific opportunities and access to natural resources overseas. He also called for changes in Tax laws –abolition of MAT on SEZs, speed up GST implementation, clarification on tax benefit for R&D etc. The Chief Guest, Mr. Ajay Shankar made a presentation on Strategic Vision for Manufacturing as Engine for Inclusive and Sustainable Growth. He said the main objectives of a development strategy are poverty reduction, inclusive growth and manufacturing success. India’s comparative advantage lies in services and manufacturing where the growth rate in services is much higher than in manufacturing. He said manufacturing is key to employment generation and sustainable growth. The share of agriculture in GDP has been going down. He said manufacturing must grow more for employment generation. Readily available developed land at affordable price and work space with adequate infrastructure was essential for manufacturing. He also referred to the shortage of employable supply at all levels. The wage inflation is not commensurate with large young population. There was also distortion in supply – for example enrolment in engineering was higher than in Polytechnics and ITIs. He called for vocational education and skill development to be mainstreamed in education. He further said harmonious industrial work culture was essential – good partnership between management and labour, labour market flexibility with strong social safety net and the political will for change, were required. He urged to move from gold and real estate to manufacturing.
According to him, the major challenges being faced in the development process are the need for social and political consensus for manufacturing, partnership of stakeholders, etc. There was a very vibrant interaction. The meeting was well attended by the members. The Chamber also had the privilege of many of the past Presidents attending the programme. Proposing the vote of thanks, Mr S G Prabhakharan, Vice-President said it has been a data packed day. In India, we do not value data analysis or the trend analysis. He said Mr Ajay Shankar’s presentation gave an insight into development strategy, the exchange rate, the real estate bubble, the global challenges and opportunities, etc. The presentation of Mr Vish Vishwanathan was phenomenal - it was on a global scale and where India stands vis-à-vis other countries, etc. The data presented by Mr Raghuttama Rao about Tamilnadu and its vision to become No.1 State in India was indeed electrifying. He thanked the past presidents of the Chamber and lauded their services in the past because of which the Chamber is standing tall today. The meeting concluded with lunch.
11th October 2012
MCCI-MMA Video Discussion on Personal Goal Setting – Journey to Success The trainer for the monthly video discussion held in the MCCI Conference Room was Mr G Abhishek, an Entrepreneur and Founder of PDF Consultants. A video presentation was shown after which he explained how important it is to set goals in life, have positive thinking and accept risks and visualise what we want to achieve. One should act as if everything that we want to achieve in life is possible.
CHAMBER’S ACTIVITIES He said, if you have not reached the goal, try new things. Journey is as important as the destination. He stressed that it is important to set small goals. Why are we not setting goals he asked? The reasons are many – some of them being - we think it will be a failure, we do not make efforts, external factors affect us and sometimes we are too ambitious. Decide what you want to be he said. We need support to achieve our goals. Once you achieve your goal, you become complacent. Review and reset your goal, always have positive thinking, accept risks, respond to others’ needs and keep striving he advised. The programme was attended by about 30 participants.
12th& 13th October 2012
All India Workshop on Indirect Tax Laws This is a flagship annual event of the Chamber and was organized on 12th and 13th October at Hotel GRT Grand. At the inaugural session, Hon’ble Justice Mr. M Jaichandren was the Chief Guest. Welcoming the gathering Mr T Shivaraman, President, MCCI, said thanks to the policy makers who are making the taxation principles and procedures dynamic by changing them every year and this necessitates that this workshop is conducted every year to update the members on the changed procedures and compliance methods. Had there been no changes in our taxation system, the workshop would have become redundant now. He said the basic focus of the Chamber is to make things clear for industry to function and also lobby with Government
on what best they can do. We have to remember that economic development depends on businesses doing well. If you do not have economic development, you do not have employment, you do not have rising standard of living, etc. In the bedrock of development, the economy should grow through an effective and efficient functioning of the industry. It is therefore essential that industry plays its part to pay for the common good that we enjoy. We have always been asking the industry to do their part – follow the laws, environment regulations, CSR, etc. The Government machinery, the Legislature, the courts, all of them have much work to do to bring people out of poverty he said. The principles of taxation have always remained as equity, certainty, convenience and economy. He said even today these canons of taxation hold good but the only question is how much of these are actually met by our present systems. He said there is a long way to go; we, as industry, need to lobby for a hassle free, unambiguous and transparent system which would create an enabling environment for both the tax payer and the regulator to progress together. Mr K Vaitheeswaran, Chairman of the Expert Committee on Indirect Taxes of the Chamber presenting an outline of the workshop said it is a challenging task to structure the programme as the Chennai audience is very knowledgeable. He thanked the members of the committee for spending considerable amount of time in suggesting topics for the workshop. He outlined the broad topics of the workshop and the speakers who will be handling them. He requested the participants to be
interactive and put forth questions as much as possible. At the end of two day deliberations, whatever issues arise can be put forth to the Government he said. The inaugural address was delivered by Justice M Jaichandren, Judge,High Court of Madras. Referring to the structure of the programme he said it has intricate issues in tax laws to be deliberated upon. The courts are for the common man he said and the lawyers have been asked to help to give just conclusions. There is anxiety amongst the legal fraternity to do justice. Whether you are a judge or an industrialist, you should be just, noble, a good citizen and serve the society at large. Tax laws are very complex he said. Even if it is made simple, Chartered Accountants and Lawyers some time make it complicated. One should read not only in between the lines but also behind the lines he stated. Referring to CST & VAT, he said there are a number of constitutional issues. One of the challenges which the industry is facing is the non-availability of credit on CST purchases. He said CSR is the in-thing. There are so many opportunities and more focus is required with regard to food security, HIV aids, education etc. CSR is becoming an increasingly important activity to businesses nationally and internationally. As globalization accelerates and large corporations serve as global providers, these corporations have progressively recognized the benefits of providing CSR programs in their various locations. Corruption is the hot topic he said. If we can’t eliminate it, at least we can reduce it. He said please indirectly don’t aid corruption.
CHAMBER’S ACTIVITIES At the Technical Sessions, the following subjects were covered:
Service Tax – Point of Taxation and valuation
Mr Joseph Prabakar Advocate & Tax Consultant
Service tax – Reverse charge mechanism Ms Aparna Nandakumar Compliance/Procedure/Cenvat Credit Advocate & Tax Consultant Works Contract –Service Tax implications For Real Estate and Infrastructure/Transition
Mr K Vaitheeswaran Advocate & Tax Consultant
Special Economic Zones-Supply of Goods and Services – Issues
Ms Bhargavi Natesan General Manager –Finance, Cognizant Technology Solutions
Works Contract –SubcontractIssues in VAT And Service Tax
Mr. P.Purushotham Advocate
Service Tax –Classification – Bundled Services- Issues & Illustrations
Ms Jayashree Parthasarathy Director, BMR Associates Bangalore
CST – Stock transfer – Intransit Sale
Mr N Venkataraman Sr. Advocate, Supreme court
Service Tax Vs VAT –Critical Analysis
Mr B Sriram Executive Director – Tax Regulatory Services PWC
Place of provision of Service RulesCritical Analysis
Mr Shailesh P Seth Advocate, Mumbai
Service Tax-Issues in the Negative List Customs – New Regulations and Old Import practices
Mr Shailesh P Seth Mr J Krishnan, Partner, S Natesa Iyer & Co.
Service Tax – Mega Exemption Notification-Scope and Issues
Mr N. Viswanathan Advocate, Chennai
Service Tax-Issues with reference to Employer and employee
Mr K K Sekar DGM-Indirect Taxes Ashok Leyland Ltd.
Proposing the vote of thanks, Mr K K Sekar said the very presence of the Hon’ble Justice in spite of being a working day, is a reflection on the importance of the workshop. His address was electrifying as well as entertaining. On the taxation side he said, members of MCCI are known for their compliance. Our policy is whatever is due to the Government, it is to be paid.
Mr R Periasami, IRS., Commissioner of Service Tax, Chennai was the Chief Guest at the Valedictory session. At the Valedictory session, the President in his address remarked that as a Chamber we are conducting these programmes for two reasons – one is to disseminate knowledge from our distinguished speakers to the business community and the employees of our member companies and second, equally important is to get feedback from
our members and practitioners so that the issues could be consolidated and necessary representation submitted to the Government. He expressed his appreciation to Mr K Vaitheeswaran and his team for conducting this workshop all these years and hoped to keep this as a flagship event of the Chamber in the future as well. Thereafter Mr Vaitheeswaran summed up the proceedings. Mr Periasami, congratulating the MCCI on organising such a workshop spread over two days, said the Department is supposed to train the people. He expressed happiness that representatives of major companies in Chennai were present at the workshop. He said do not be afraid to come to the Service Tax Commissionerate. It is the most transformed and IT savvy Department in the Government. He said more than 80,000 assessees are in Chennai out of which only 10,000 have taken a service tax registration number.. He called upon the delegates to visit the Service Tax website. If members had any issues in service tax, they could simply walk in to the Service Tax Commissionerate and resolve the same he said. Proposing the vote of thanks Mr KK Sekar said the Chamber was inspired by Mr Periasami’s gracious presence. He said members of MCCI will ensure 100 per cent compliance. The programme was attended by about 80 participants.
18th October 2012
Talk on “Re-engaging Europe – Is the Opportunity Real”? The world is now economically interlinked and has become a global village. What happens in one country impacts every
CHAMBER’S ACTIVITIES other in the globe. The recent global slowdown and the EU crisis has had its adverse impact on India too. The business confidence everywhere is down. And the Indian economy appears to be at a rather critical moment. However every challenge also brings along some new opportunities. EU being one of the important trading partners for India, the question now is whether to re-engage Europe in our businesses. Before doing so, a prudent approach towards new business in Europe is essential. One should understand as to whether selling into Europe in 2012 – is it an opportunity or a risk? What are the growing sectors and what lies in store? What is the right way to engage? What should be the appropriate strategies? To get the right answers to all these questions, the Chamber organized an Interaction meeting with Mr Simon Devlin, Managing Director of Full Circle Management Solutions UK, in the Conference Room of the Chamber. Mr Simon Devlin is an expert in Management development, training and consultancy and his company Full Circle, which is one of the UK’s fastest growing management consultancy firms, offers several solutions including helping overseas companies penetrate into Europe. Thanking the Madras Chamber for the opportunity given to meet its members, Mr. Simon Devlin gave a brief overview about EU which was set up in 1952 by a Treaty of Rome by 6 founding States. The main reasons for the birth of United States of Europe was to reduce the risk of a 3rd world war and to develop closer political linkages in the face of growing threats from USSR. The three corner stones of EU are – free movement of goods/services, of people
and of money. Today the EU consists of 27 member States and the introduction of Euro in 1999 was a massive step forward in the move towards the establishment of a truly single market. He said EU remains a relatively virgin territory for Indian companies and the key products exported from India to the EU were machinery and transport equipment, chemicals and raw materials –granite. EU based exporters are beginning to place greater focus on India as a priority target export market. The key reasons for this were: -
English is widely spoken in India;
massively improved air routes between India and the EU
Press coverage across EU about scale of economic growth in India; and
the ongoing economic uncertainty in EU.
He gave the following five common reasons for failure in the field of export development – -
Selection of the wrong export market
Poor selling skills
Wrong pricing strategy
Lack of perseverence/ongoing commitment to exporting effort
He said one should have adequate finance, the right people/skills to do business; sufficient time/commitment and spare production capacity. Under the EU working time directive, staff cannot be forced to work more than 48 hours a week. EU customs duties are applicable on most products imported from elsewhere- these duties do not apply in relation to intra-EU trading due to free movement of goods. To conclude he said, the EU economy has suffered over the last 4 years but still remains an economic power house
globally. One has to be clear about the time, the cost and effort required to gain a foothold in the EU market. The choice of priority export markets in EU is critical and should be based on thorough market research. He said “be prepared for the fundamental differences in the way that business is done”’. This was followed by an interaction during which Mr Simon clarified the queries of the participants.
27th October 2012
FFT on Allocation V/s Auctioning of Economic Resources There have been widespread discussions on the use of economic and natural resources for commercial and economic activities, especially in the context of the recent developments in allocating the resources like coal, spectrum, etc. The recent Supreme Court judgment also set in motion serious discussions on this subject. The questions now raised are –what is the best system to put the resources to optimum use, how this should be done, what are the powers and responsibilities of the regulator and the users, etc. To discuss these issues in greater detail, the Chamber organized this programme on the 27th October at Hotel Raintree Anna Salai. Mr S G Prabhakharan, Vice-President of the Chamber in his welcome said the purpose of this FFT programme is not to give a judgment, or get a judgment on any issue. The whole idea is to elicit views from the audience. As a Chamber we need to understand our perspectives and what the majority view points are, so that it can be put across to the right people. He said today’s topic Allocation v/s Auctioning of Economic Resources has
CHAMBER’S ACTIVITIES been hotly debated by the media because it concerns the economic and natural resources of our country. We need to have economic development. Is it economic development v/s sustainable development? he asked. The per capita income of our country is very low compared to many other countries and therefore economic development has to take place. In the bargain, how do we use these resources? We have a good measure of controversies in 2G, Coalgate etc. If the resources are auctioned, will it give a good revenue to the government he asked. If it is allotted or allocated, what is the effect of these and that is what we are going to debate today he said. The speakers were Mr N R Krishnan, IAS (Retd)., former Secretary, Ministry of Environment and Forests, Government of India and Mr N Venkataraman, Senior Advocate, Supreme Court. Mr Krishnan referred to the Five Year Plans of the country immediately after independence. He said the 3rd Plan laid emphasis on industrialization. Various policies were adopted by the Government. In 1956 the Industries (Regulation & Development) Act was enacted which stated that if anyone is engaged in any activity listed in the schedule, they should get a licence from the Government. Important sectors like steel, power,etc. were with the Government. In 1973-74 the government brought out further enactments to step up investments in certain sectors like coal. Coal mines were nationalised. Power generation remained with the State Electricity Boards. 1991 saw the economic liberalization of the country when a large number of industries which were under licence were taken out. There was a big wave of reforms – but this also led to many problems. We
were grappled with the question as to how to manage with this transition. There were not many public interest litigations then, except a few on the environment side.
In the 2G judgment, the Supreme Court has said that auction is the only method. One has to understand the spirit of the judgment he said.
Now, there is awareness among the people. The Government’s actions are very closely scrutinized and monitored.
According to the judgment, if you are going to sell resources, you are going to collect money; this means revenue mobilisation and this means auctioning is the preferred way. It can’t be at a discounted price because it is nation’s property, he said.
When telecom revolution came, we wanted private players and in 1993-94 there was a scam. He said in the 2G judgment given on 2nd February 2012, the court did not break any new ground but only stated what was there earlier. He referred to Article 14 and the Presidential reference to the Supreme Court on 12.4.2012 wherein 8 questions were posed for advisory opinion. Referring to Article 39 (b) he said the State is the legal owner of the natural resources as a trustee of the people and hence must discharge its duties in the spirit of trusteeship. In conclusion he said this judgment has some far reaching implications and the end results are more important. Addressing next, Mr N Venkataraman, Senior Advocate, Supreme Court explained the basic fundamentals of the 2G judgment, given by two great judges of the Supreme Court. He said Government is the owner of natural resources and when it decides to distribute – it has one concern that it should be for the common good. The purpose of distribution is to achieve common good. The common good grew into two broad principles namely (a) State v/s people and (b) State v/s private players to whom the natural resources are allocated. It should ensure equitable access of natural resources and give adequate compensation to the people who are affected by it. 2G became a policy judgment on natural resources. The 2G judgment states thus : “A fair and impartial publicised auction is perhaps the best method of discharging the burden”.
What is important of the outcome of this judgment is that Government has conceded before the bench; it has said it will ensure that it is implemented in letter and spirit. Giving his opinion Mr M R Venkatesh said it has come to the conclusion that auction is the only route and as an analyst, he feels that this is the only way forward. He said we are in exciting times and the impact of the 2G judgment will be felt not in simple terms. There are several layers and layers coming out of this judgment he said. He felt there is lack of credibility in public life and we are trying to impose ethics through courts. He concluded saying ‘discretion is the soul of democracy’. There was a very interesting Q&A session during which the speakers interacted with the participants.
ALL INDIA WORKSHOP ON INDIRECT TAX LAWS A few copies of the background papers prepared for the above wo r ks h o p o rga n i ze d by t h e Chamber on 12th & 13th October containing papers/presentations of the speakers are available for sale. Price : Rs. 200/- Please Contact: Jessie Edwards, Deputy Secretary for your requirements. Email: jessie.edwards@ madraschamber .in
GENERAL COMMITTEE 15th September 2012
and others participated.
The Committee deliberated on the following:-
From the feedback received, it was noted that the focus has to be more on course material and training programmes. It was noted that sourcing candidates is a problem and school drop outs should be targeted. It was also suggested that we as a Chamber, should aggregate the demand from the members about the requirement of what kind of candidates they want.
Vision 2023 and Study to assess the social and economic health of Tamilnadu – Status paper on TN economy The President apprised the Committee that Vision 2023 envisages creation of 5 major ports in Tamil Nadu. However, it is the Chamber’s strong view that it is better to have one world class port which would be in a position to compete with new upcoming ports in Colombo and Singapore and which should be a multiple port, handling vessels, container cargo and hazardous chemicals, bulk materials etc. It was felt as a Chamber, we need to push this idea forward and try to add it in the Government Agenda and the location could also be suggested. The President also informed the Committee that a full day Seminar has been proposed to discuss more on this, inviting international experts and also policy makers from both Centre and the State. However before that it was suggested that a broad prefeasibility report on this idea needs to be prepared and then when once the basic facts are clear, we could take this forward. While on this, Mr Krishnan apprised the Committee about the recent developments and discussions regarding Chennai port and said that there are now positive indications that the 1.8 km connectivity would become operational in the next 6 to 7 months after 11 years effort. B ra i n s t o r m i n g S e s s i o n o n S k i l l Development Centre Exhaustive deliberations were held at the brainstorming session on 22nd August in which Mr Jayaraman (former CEO of Everonn), Mr Haribabu from Rane Training Centre, Mr B C Giridharan, Consultant (formerly with Department of Labour & Employment) and also Mr Sairam of IMaCS
The Secretary General informed the Committee that trainings are going on at the rented premises recently taken. However, the infrastructure available is inadequate and hence students are not impressed. It is very strongly felt that we should try to develop at least a minimum facility in our own place and try to expand the activities gradually. Members were of the unanimous opinion that though the project has lot of challenges, we should continue to explore new ways and models to make this successful. New Membership Eight new companies were admitted as members – their names appear elsewhere in this Bulletin. It was informed that V V Titanium Pigments Pvt. Ltd. Tuticorin have acquired Kilburn Chemicals and hence the membership of Kilburn Chemicals will stand in the name of the new company. Dr S Gurusamy thanked the President for co-opting him to the Committee. He emphasised the need for having co l l a b o rati o n b etween acad emi c institutions and industry to bridge the gap between what is needed by the students and what is offered to the students by the academic institutions. Speaking on behalf of the Commerce Department, he requested the industry body to be part of curriculum designing – and to suggest what kind of contents,
syllabi etc. to be taught. He also said that the University has to send students to companies for internships for 45 days and most of the companies are not willing to accommodate their students. He requested the help of the Committee in this regard. The Committee pointed out that earlier the Madras Chamber was represented on the Senate of the Madras University and it would be good to have representation on the Senate again. Dr Gurusamy offered to speak to the Vice-Chancellor in this regard. He also requested the Committee that in order to benefit the students and faculty, the Chamber can hold Workshops/ Seminars in the premises of the Madras University.
15th October 2012 TN Vision 2023 Discussions took place about the need for a world class mega port. It was felt that first the Chamber should prepare a concept paper, meet the senior officials of the Government to get their inputs and parallely work with iMaCS to see that this recommendation of the Chamber is included in their agenda for the consideration of the Government. The Committee desired to visit the Krishnapatnam port to see the working of the Port and the facilities available there. Regarding the other issue of taking up a study, it was felt that the immediate study that can be thought of is to understand the cost of doing business in Tamilnadu. A lot of deliberations took place in this regard about the various transaction and hidden costs that hamper the business growth. Tamilnadu has always been taking Gujarat as an example or bench mark. It was felt that we should look at Singapore or US
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Global Summit – Role of Industry Chambers
Susmita Shekhar, Secretary General, PHD Chamber, D S Rawat, Secretary General, Assocham, Sergio Sgambato, Secretary General, Indo-Italian Chamber of Commerce, Salman Khurshid, Hon’ble Minister for Law & Justice, Govt. of India, Sandeep Somany, President, PHD Chamber, Arup Roy Chowdhury, Chairman, NTPC, K Saraswathi, Secretary General, MCCI and Suman Jyoti Khaitan, Senior Vice-President, PHD Chamber
US Commercial Service - Award The United States Department of Commerce for the first time has instituted Awards for certain categories. A Certificate of Appreciation for achievement in Trade was presented to the Madras Chamber of Commerce & Industry in recognition of its services to expanding U.S. – India Trade and Services.
l to r: Judy Reinke, Minister Counsellor for Commercial Affairs, Jennifer McIntyre, US Consul General, K.Saraswathi, Secretary General, MCCI and James Golsen, Commercial Consul and Principal Commercial Officer for South India
GENERAL COMMITTEE and compare the cost of doing business there. Discussion on Latest announcements on Policy issues by the Union Government The Committee was informed that the Expert Committee on Company Law has been discussing the Companies Bill and is awaiting for the notification. On FDI it was noted that Tamilnadu State is not agreeing to allow FDI in retail. FDI in Insurance sector was generally welcomed. MCCI Training Course on EXIM Procedures – from October 2012: Last year, the Chamber with the assistance
of Logistics Committee, organised a course on Exim Procedures for the 2nd Year MBA students of MOP Vaishnav College for Women. It is now proposed to offer this course to the member companies as well, on week ends. The proposal is to hold classes in the Conference Room of the Chamber. Seminar on “Changing Cities and Emerging Opportunities” in the context of World Habitat Day theme – 9 th November 2012 On the occasion of World Habitat Day last year, a Sustainable Chennai Forum (SCF) was launched at the Chamber. Since then the Forum has organised a number of
programmes of relevance. This year, SCF will organise a Seminar on the WHD theme “Changing Cities and Building Opportunities” along with Athena Infonomics on the 9th November, marking the first anniversary of SCF. Monthly Bulletin The Committee decided that the Bulletin may be published once in two months in view of the escalation in printing cost. It was also noted that advertisement support was not adequately forthcoming from members. Later, the Chamber can think of publishing only e-bulletin.
Addis Chamber International Trade Fair, February 21 – 27, 2013, Addis Ababa (Ethiopia) The India Trade Promotion Organisation (ITPO) is organizing India’s national level participation in the 17th Addis Chamber International Trade Fair(ACITF) to be held from February 21 to 27, 2013 at Addis Ababa Exhibition Centre, Addis Ababa, Ethiopia. The forthcoming Addis Chamber International Trade Fair is a B-2-B event expected to attract a large number of participants and visitors from many countries including Europe, Far-East, Middle-East,Africa and North America. India Pavilion will be spread over in an area of 300 sq.mtrs. approximately. The display profile of India pavilion will include a variety of products/services ranging from Engineering,Chemicals,Synthetic fiber/Plastics, Electronics, Drugs & Pharmaceuticals, Paper Products, Glassware, Automobile, jewellery, textiles, processed food, handicrafts, SSI and other consumer goods. The participation charges are Rs.6,000/- per sq.mtr. under shell scheme. For further details, please get in touch with: Mr V Narayanan, Manager, ITPO, Chennai Tel: 28554655/28587297 Email:firstname.lastname@example.org
Representations Audit Certificate in Form WW – VAT audit- Extension of time The CTRE Department vide Notification No. GS Ms 119 dated 30th Aug 2012 had inserted Rule 16A to the TN VAT Rules 2007 prescribing that “Every registered dealer liable to get his accounts audited as per sub-sec (9l) of Sec. 63A shall furnish the audit report in Form WW within seven months from the end of the year in duplicate”. In view of several representations from our member bodies stating that they find it difficult to get the certificate issued by the Chartered/Cost Accountants in Form WW due to voluminous data to be pursued by them, and hence meeting the deadline of 31st Oct 2012 may not be possible in respect of the financial year 2011-12, a representation was sent to Secretary, CTRE, requesting to extend the time limit for filing the VAT Audit Report for the financial year 2011-12 till 31st December 2012.
EXPERT COMMITTEES 1st September 2012
Expert Committee on Legal Affairs At the first meeting of this Committee held on 1st September, the Committee decided that it would clarify queries of members and make representations to the Government on any enactment which affects the industry. As regards the Arbitration and Conciliation Act, there was a discussion about the Supreme Court judgment in the case (Civil . Appeal No.5440/2002 - Booz Allen and Hamilton Inc . vs. SBI Home Finance Limited and Others ) in which the Supreme Court has held that any issues relating to enforcement of mortgage should be tried by the Court and not by the Arbitral Tribunal. Therefore any dispute claims or differences in relation to mortgage shall be tried only by Courts and not by the Arbitral Tribunal even though suitable clause is provided in the mortgage deed or contracts. It was decided to get the suggestions from the members in this regard and to make a representation to the Law Ministry to amend the Act with retrospective effect. Mr B K Srinivasan agreed to help with regard to arbitration issues. There was also a discussion about the problems in land acquisition and how it affects the corporates. Members were informed of the example of Sri City wherein they provide educational facilities, skill development, employment to the local youth, etc. Regarding work plan, the Committee decided to organize a Seminar on Intellectual Property Rights shortly.
1st September 2012
Expert Committee on Economic Affairs The Committee which met on 1st September finalized the terms of
reference. Considering the work plan for the year, it felt that this Committee along with Financial Sector Committee could jointly interact on common subjects like fiscal policy, budgetary policies, exchange rates, inflation, Foreign exchange etc. It noted the current debate on the lowering of the interest rates between the RBI and the Ministry of Finance which was very much impacting the industry. The Secretary General informed that the Chamber would be happy to take this debate as a FFT programme and planned it for 22nd September. Deliberating on the role of SMEs, and the number of problems faced by them, the Committee decided to plan a suitable programme on Managing Risks for SMEs as early as possible. The Committee also suggested inviting MPs for a discussion to the Chamber to enable the Chamber to highlight the important issues affecting the industry. Participation of MPs would be relevant and they could project their views at the Parliament at the appropriate time. A Seminar on Reforms in Agricultural Policy to be planned in December/January. The other programmes like pre- budget and post- budget discussions and workshops would be conducted by the Chamber as usual.
5th September 2012
Expert Committee on Direct Taxes The Committee met on 5th September and decided on the work plan for the year. It would hold meetings once in two months. The Committee suggested that an expert can be invited to make a presentation on a specific subject in the evenings for an hour. Some joint programmes with other Chambers were also suggested. As regards transfer pricing, the Committee suggested
that we should invite the official from Government for a half a day seminar to know more about the procedures and processes which the Government has in mind. There was a discussion on the Draft report on GAAR provisions. It was felt that there seems to be a definite move to defer GARR for a longer period. However, some issues still required deliberation and members were requested to send their suggestions so that they can be compiled to make a representation.
6th September 2012
Expert Committee on Industrial Development/ Infrastructure: The Chairman apprised the members about the meeting he had with the newly elected President and Vice President of the Chamber on 11th August. He said, the Vice President of the Chamber had requested the Expert committee members to bring one or two new members to the Chamber so that membership base would improve and enable the Chamber to do lot of activities. The Committee felt that instead of taking a number of initiatives during the year, it could focus on one or two main areas/ issues and try to complete the task during the year. The Chairman suggested that two sub-committees could be formed out of 16 members, and each sub-committee could contribute their views, so that the Committee could make suggestions to the Government or arrive at an action plan for future purposes. Following initiatives were suggested for consideration by each sub-committee. Sub-committee I; 1. I n c r e a s i n g t h e s h a r e o f manufacturing in the Stateâ€™s economy 2. Making SMEs vibrant
EXPERT COMMITTEES Sub-committee II: 3. Transforming ten cities into world class cities that become the nodes of growth across the State 4. Signature projects 5. Encourage PPP in infrastructure project creation and /or service provision
14th September 2012
the Commerce Secretary at the earliest or alternatively, select members of the Committee could meet him at his office in Delhi to highlight the issues. The Committee decided on the following programmes for the year: -
a suitable conference on the port sector inviting international speakers as their presentations and technology would help the Chamber’s study.
a programme on basic elements of shipping and import & export procedures at Sriperumbudur in October or November.
Inviting Commerce Secretary to address the members would be the top priority.
Meetings/ workshops as and when desired.
Expert Committee on Logistics Mr. J.Krishnan, Chairman, briefly informed the members of the Committee’s major activities last year namely release of a Port Study by Hon’ble Minister for Shipping, Mr G K Vasan at a Seminar on Ports and a meeting with the US Port Mission. The focus this year would be on Port Development and related issues. The exim trade in Chennai is faced with several problems such as accessibility to the port, labour strike, connectivity by road and rail, delay in loading/unloading of goods, etc.
Members were informed that last year a certificate course on EXIM procedures was conducted for the 2nd year MBA students of MOP Vaishnav College for Women. The same pattern would be continued for the students of other colleges.
The Committee decided to form a core team to study the feasibility of setting up a mega port and take this forward. Capt.Suresh Amirapu felt that this idea might be successful but all the existing port guidelines, their administration procedures/policies need to be modified and reassessed before setting up the mega port.
It was suggested by the Secretariat that this course could be planned for the representatives of member companies as well since there were many enquiries for such training programmes. This would be organised during week ends and could be held in the Chamber’s conference room. The Committee endorsed this view.
The Committee noted that a number of infrastructure projects were on the anvil in Tamilnadu. However, there was no agency to monitor these projects and hence a nodal working group to monitor these projects should be insisted upon.
Further, the transaction costs were very high and the Chamber had already sent representations in this regard to the Commerce Secretary. The Commerce Ministry’s clearance was required in certain areas of the shipping trade. The Committee therefore felt that the Chamber should organise a meeting with
The Committee noted that all formalities with regard to the operation of Kattupalli Port have been completed and the port is ready for operation. However, the port management had not started its administrative functions and the Committee felt that a suitable letter be sent to the senior official of L& T, requesting him to take forward the Kattupalli port operations. (The CBEC has since issued a notification with regard to commencement of operations of Kattupalli Port) .
Authorised Economic Operators The CBEC had started Authorised Economic Operator (AEO) Programme in August 2011 on a pilot basis which is applicable to all economic operators such as importers, exporters, logistic service providers, custom house agents, warehouse owners etc. Under this programme, approved economic operators are given preferential treatment in terms of faster clearance and less physical inspections along with other benefits subject to their conforming to prescribed security standards and compliance with tax laws. The Committee felt that this programme would be very useful for all those in the EXIM business and Members could make use of this facility.
28th September 2012
Expert Committee on Environment, Pollution Prevention & Control The Secretary General briefed the Committee about the Sustainable Chennai Forum (SCF) launched last year and the initiative of SCF to promote a business case for sustainable development. She also informed the Committee about the activities held last year and requested the Committee to work closely with SCF. While considering the work plan for the year, it was suggested that on solid waste management, a representative from Witteveen Bos from Netherlands may be invited to address. Preparation of Tamil Nadu Environmental Policy 2012 The Committee was informed that the Government had convened a meeting to discuss the above and requested members to send their suggestions at the earliest. The Secretary, SISMA who was present at the meeting expressed concern about the various problems faced by the sugar industries.
GENERAL COMMITTEE The Committee also expressed concern about the difficulties in obtaining consent from TNPCB as also renewing the same. The Committee suggested that these points also could be added in the suggestions for Environmental Policy. Mr M Ramakrishnan expressed concern about the global warming and the invisible damages that are being caused and suggested that awareness should be created among the youngsters. It was decided to organize a Seminar on the various policies relating to Environment by inviting the Director-Training of TNPCB.
15th October 2012
Expert Committee on Financial Sector The Committee discussed at length about the funding to SMEs, interest rates for SMEs, the rating of SMEs by the Rating Agencies, etc. After considerable discussion, it decided to organise a Seminar during January 2013 with suitable faculty. The Committee considered the Terms of Reference and approved the same. On the Work plan for the year, it decided to organize: -
A Seminar on FEMA –Emerging issues and recent developments
A programe with bankers on SME’s development and their needs
Seminar on Indian Insurance industry – The way forward
Programme on Credit Rating focusing for SMEs
Meeting with Governor/Deputy Governor of RBI; and
Meeting with Officials of IRDA
Discussion on New Mutual Fund Guidelines
It also decided to prepare a concept paper, identify one or two issues and give specific recommendations to the Government.
17th October 2012
Expert Committee on HRD/ CSR The Chairman expressed concern about the lack of skilled manpower and the wide gap between the requirement and the availability which needs to be addressed. While on the one side, people below the poverty line are not able to earn, on the other hand the corporates are not able to locate employees according to their requirement and therefore there was need to create awareness amongst the people, more particularly the corporate, to develop the skills. The Committee was also of the view that the educational system needs urgent attention to reduce the dearth of manpower which hampers the growth of the country.
The Secretary General apprised the Committee about the Logistics Course for 30 hours duration conducted last year for the MOP Vaishnav College Students which was very well received. 59 students had participated. Exams were conducted and certificates were issued. As part of the course, they were taken to visit the Chennai Port, Airport, etc. The Committee was also informed that a Job Fair was planned with Jaya TV which was not successful. She was of the view that it should be revisited. The ideal time would be January-February. The Committee would organize a programme on Factories Act in November 2012 and a Seminar on CSR in January 2013.
The Committee desired to create an awareness about the following: -
Corporates – to know about what is industry and its obligation to the society
Educational pattern which has no connection whatsoever with the industry requirements.
Regarding the Skill Development Centre, the Secretary General agreed to make a presentation about the objectives of the Centre and also the progress made so far at the next meeting. The Secretary General apprised the Committee that a CSR survey has been sent to members. She requested the members to send it back to the Chamber duly filled in. This will help us to organise a Seminar on CSR. Bringing out a directory about the CSR activities of the members of MCCI was also suggested. She also informed that the Chamber conducted a programme on Factories Act twice which was very well attended, and said we can also think of organizing an updation programme for SMEs on the Factories Act.
Global Summit – Role of Industry Chambers The PHD Chamber of Commerce & Industry, New Delhi, organized this programme at New Delhi on 4 th September 2012. Ms K Saraswathi, Secretary General, MCCI, made a presentation at the Valedictory Session on “Building the Bridge: The Leaders’ Vision” which was chaired by Mr Salman Khurshid, then Hon’ble Minister for Law and Justice. She also took this opportunity to present to the audience , who were from different Chambers in India and abroad, the new initiatives like the Skill Development, Sustainable Chennai Forum etc taken up by MCCI and how these activities have the potential to serve the members. The presentation was well appreciated by the delegates.
By: Ms. Sivaranjani, RenEnTeks
Green Buildings in India 1. Concept: Buildings capable of using resources like energy, water and materials with increased efficiency , while reducing the impact on human health and environment, using better siting, design, construction, operation, maintenance and waste management practices is called a Green Building. In India, buildings are said to be responsible for 40 per cent of the energy use, 30 per cent of the raw material use, 20 per cent of water use, and 20 per cent of land use in cities. At the same time, they cause 40 per cent of the carbon emissions, 30 per cent of solid waste generation, and 20 per cent of water effluents.
Council and the USGBC. The first Platinum rated green building in India was CIISohrabji Godrej Green Business Centre in Hyderabad in 2003. With a modest start of 20,000 square feet of green built-up area in the country in the year 2003, till June 2012 more than 1,725 registered Green Buildings Projects with a built-up area of over 1.20 Billion sq. ft are registered with the Indian Green Building Council (IGBC), out of which 267 Green Building projects are certified and fully functional in India.
The concept of green building projects is attributed to various building sectors all across India such as â€“ residential complexes, exhibition centers, hospitals, educational institutions, laboratories, IT parks, airports, government buildings and corporate offices. 3. Green Building Certifications The green building movement has led to the emergence of various green certification systems.
With India witnessing tremendous and rapid growth in the infrastructure and construction sector encouraging use of energy efficient technologies with adaptation of practices used in native architecture, and use of locally available materials and resources is necessary. 2. Growth of Green Buildings The green building movement in India started with the establishment of the Indian Green Building Council (IGBC) in 2001, which was an initiative of the Confederation of Indian Industry (CII) along with the World Green Building
*Source : IGBC: Green Building Movement in India-Seminar on Application of Glass in Green Buildings June 2012
SPOT LIGHT electricity, thereby reducing pollution and emissions of Greenhouse Gas.
The predominant ones are: United Kingdom
BREEAM -Building Research Establishment Environmental Assessment Method
Leadership in Energy and Environmental Design, developed by the US Green Building Council (USGBC)The Green Globe Rating System Energy Star (United States Environment Protection Agency)
Green StarAustralia Greenhouse Building Rating (AGBR)
CASBEE- Comprehensive Assessment System for Building Environmental Efficiency, developed by Japan Sustainable Building Consortium
Water Efficiency: Green buildings use 20–30% less water compared with similar conventional buildings. This reduces the operational water expenses and the pressure on urban infrastructure. Moreover above 70 % of the waste water is treated and reused for landscaping and flushing. This reduces the load on the area’s sewage system.
BCA Green Mark
b. Waste Reduction:
Indian Green Building Council GRIHA
Green buildings stress on implementation of waste reduction strategies. Construction wastes and demolition debris generated during construction are reused and sent to recycling units. The use of recycled content in construction materials reduces construction waste by approximately 50% compared with that of similar conventional buildings. Segregation of waste & converting organic waste to energy or manure in site is also an added advantage decreasing the waste load to the landfill.
The green rating systems followed in India are: a. IGBC & LEED India- managed by the Indian Green Building Council (IGBC) The Indian Green Building Council, an initiative of the Confederation of Indian Industry (CII) has its own set of ratings for Green homes, Green townships, Green SEZs, Green Factory Buildings and green landscapes. LEED-India was adapted by the IGBC to focus on indigenizing the LEED rating to suit the Indian context and is currently responsible for certifying LEED-New Construction and LEED-Core and Shell buildings in India. b. GRIHA -Green Rating for Integrated Habitat Assessment developed by TERI (The Energy and Research Institute). GRIHA has derived inputs from the codes and guidelines developed by the Bureau of Energy Efficiency, the Ministry of Non-Conventional Energy Sources, MoEF (Ministry of Environment and Forests), Government of India, and the Bureau of Indian Standards. The rating system aims to achieve efficient resource utilization, enhanced resource efficiency, and better quality of life in the buildings. The guidelines are revised every 3 years to account for latest developments during the time frame. c. BEE (Bureau of Energy Efficiency Certification) Certification Energy Conservation Building Code (ECBC) launched by BEE is set for energy efficiency
standards for design and construction with any building of minimum conditioned area of 1000 square meters and a connected demand of power of 500 KW or 600 KVA. The energy performance index of the code is set from 90 kW·h/sqm/year to 200 kW·h/sqm/year where any buildings that fall under the index can be termed as “ECBC Compliant Building”. 4. Features Green buildings address the following features 5. Key Drivers for Green Buildings a. Operational Savings Energy Efficiency: Energy saved is energy generated. Green Buildings are 25%-30% more energy efficient and on an average have 2% of their energy from Renewable energy sources. Energy efficient buildings reduce the demand for fossil fuel generated
c. Increase In Productivity & Health Benefits Green buildings provide better air quality, natural daylight and pleasant indoor environment. Using less toxic interiors, lowemitting adhesives, paints, illuminating space with natural light; thermal comfort due to local control over air conditioning and better ventilation improves the quality of life of the occupants which translates into better productivity and healthy atmosphere.
SPOT LIGHT d. Increased Brand Image Green buildings enhance the brand image for commercial occupants and builders. They are also indicative of the organization’s commitment to the wellbeing of its people, the environment and their surrounding commitments. It stands for commitment to good management practices and Corporate Social Responsibility. 6. Costs & Benefits of Green Buildings in India There is no difference in the use and appearance of green buildings as compared to the conventional ones. The major differences are in the better indoor environment quality and operational savings. The green buildings have direct economical advantages in terms of the operational savings and indirect
benefits due to increased brand image and productivity and health of its occupants.
b. Uncertainties in the Real Estate market:
The cost premium of green buildings in India range from 6-18% which results in a perception that it is difficult to get positive returns on this extra investment in short term. However over a period of time with increased awareness, technical knowhow and availability of resources the cost premium gap can be bridged.
Any uncertainties in the real estate market will bear direct implications on the ability of the developer to invest premium costs in green buildings.
7. Challenges & Constraints a. Lack of knowledge and incorrect perception : It is perceived that Green Buildings cost more and have long gestation period. The concept of green buildings is slowly evolving and would take time for developers and builders to adopt green practices
Name of the Project
Location Built-up Area(sq.ft) Achieved
Rating in Cost (%)
CII-Sorabji Godrej GBC
ITC Green Centre
Gurgaon 170,000 Platinum
Gurgaon 175,000 Platinum
Spectral Services Consultants Office
Hyderabad 78,000 Chennai
Source : CII
Requirement of sourcing locally produced building materials might discourage developers to engage in green building projects. Monopoly of certain green building material distributors by hiking prices may deter developers further. d. Benefits to the occupant and not the developer Many developers feel that the occupants enjoy the operational savings and cannot command an equivalent premium sale price. e. Monitoring & Evaluation
The table below indicates the payback period of Green buildings in India
c. Sourcing of Green building materials
Increase Payback Period (years)
Currently there is no monitoring and evaluation mechanism for the operational green building’s performance for which it was designed in India. The idea of a building being sustainable should be across its entire life cycle. 8. Key Green Building Project in Chennai With 42 IGBC certified buildings, Chennai leads in Indian green buildings space, resulting in 21% of the total green building space in India.
A few of Chennai’s green building projects
Anna Centenary Library Building
LEED for New Construction (NC)
Tamilnadu Legislative Assembly
LEED for New Construction (NC)
Grundfos Pumps India Pvt Ltd
IGBC Green Factory Building rating system
Olympia Technology Park
LEED for Core & Shell (CS)
Express Avenue Mall
LEED for Core & Shell (CS)
Shell Business Center- phase 1
LEED for Commercial Interiors(CI)
TCS Techno Park-Phase II
LEED for New Construction (NC)
Scaling-up of Green Building Construction through Energy Conservation Building Code (ECBC) Implementation
Rising energy demand in India, along with the predominance of coal in the energy mix, makes energy efficiency increasingly critical. Many reports have emphasized the need for efficient use of energy resources to achieve sustainable development and green building construction. Acknowledging the vast potential for energy savings, the Indian government in 2001 enacted the Energy Conservation Act (EC Act). The Act provides for the legal framework, institutional arrangements, and regulatory mechanisms at the Central and State levels to promote energy efficiency in India. The Bureau of Energy Efficiency (BEE) is the statutory body under the Ministry of Power, Government of India that facilitates and coordinates energy efficiency initiatives at the central level. The buildings sector is one of major consumers of energy, accounting for about 33% of India’s total electricity consumption—of which the residential and commercial sectors account for 25% and 8%, respectively. It is estimated that 70% of the building stock in India that will exist in the year 2030 is yet to be built. Improving energy efficiency in buildings is a priority for the Government of India and the State governments; focusing on this sector will not only help the government’s climate change mitigation efforts but also will aid in reducing the widening gap between supply and demand of energy. To promote energy efficiency technologies and measures in new buildings under
the EC Act, BEE developed the Energy Conservation Building Code (ECBC). The Code sets minimum energy performance standards for the design and construction of new commercial and public buildings. The code defines norms and standards for the energy performance of buildings and their components—including the building envelope, space and water heating, ventilation and air-conditioning systems, interior and exterior lighting systems, and electrical power systems and motors—based on the climate zone in which they are located.
commercial building sector the electricity consumption in this sector has experienced an average growth of 13.5% over last four years because of sharp rise in economic growth rate, substantial increase in living standards and other aspects of human development.
The ECBC is currently voluntary, but the Ministry of Urban Development and the Bureau of Energy Efficiency (BEE) are working with state governments and urban local bodies (ULBs) to raise awareness of the code and promote its implementation at the city and municipal level. It has been estimated that ECBCcompliant buildings can use 40-60% less energy than conventional buildings in India. The implementation of the ECBC can therefore promote sustainable development by reducing energy use, cutting costs, improving services, and reducing environmental impacts – and can help struggling cities meet their growing energy demand. Effective ECBC compliance in towns and cities is critical to achieve these benefits, as well as to the overall success of the code.
Government estimates indicated that in conventional Indian Building, annual energy consumption is 25 units per sqft, with 34% energy accounted for fan, 28% for lighting, 13% for refrigerator, 10% for evaporative cooling and rest goes to other equipments and heat losses. However, this does not include the energy-mix on supply side due to various other forms of energy utilized such as petrol, diesel, LPG gas, fuel wood etc., burned in each household, data is not available at this stage. There is considerable scope of reducing energy consumption with the existing technology to up to 12kwh/ sqft/ annum and a saving of about 40% of energy consumption or reduction in building’s carbon footprint.
Construction industry growth rate is sustained at 8-10%. To complement the increased energy consumption in
According to BEE, the average National Benchmarking for commercial buildings in India is relatively above 180 kWh/m2/ year. The ECBC complaint buildings could help to achieve the benchmark up to 110 kWh/m2/ year thus saving the energy in buildings operations.
The ECBC specifically applied to commercial and multi-family residential buildings with connected loads over 100 kW or contract demand of 120 kVA. The ECBC applies to both new constructions, renovated as
building has to meet or exceed the specific levels (meeting minimum values, and other energy-related design features) intended for individual element of the building systems. Under the prescriptive standards approach, the builder/developer has the option of “trade-offs” for envelope features, which allow for lower thermal efficiency in one of the envelope element for better efficiency with another envelope element to achieve the overall efficiency required by the code.
Source: MoUD, 2009 well as large-scale commercial building retrofits in which the final air-conditioned space of the building is greater than 1,000 m2. ECBC code provisions apply to:
Building Envelope (walls, roofs, windows, day lighting and skylights)
Heating, Ventilation & Air Conditioning (HVAC)
Lighting (Indoor and Outdoor)
Service Water Heating and Pumping (Solar Water Heating)
Electrical Systems (motors, t r a n s f o r m e r s , p o w e r f a c t o r, monitoring)
The Government of Tamil Nadu has included implementation of ECBC in the State as one of the priorities for the year 2012-13. The State is leading with LEED certified buildings and also has many BEE certified star rated energy efficient offices which reflects the supportive business environment needed for the ECBC implementation at the city level. The implementation of the ECBC can therefore promote sustainable development by reducing energy use, cutting costs, improving services, and reducing environmental impacts—and can help struggling States/cities meet their growing energy demand. The Tamil Nadu State Designated Agency (Tamil Nadu Electrical Inspectorate) is actively participating in building sector energy efficiency program, which includes ECBC implementation for new construction
and a building retrofits program for existing government buildings. Tamil Nadu State's efforts so far....
The Tamil Nadu government has included implementation of ECBC in the State as one of the priorities for the year 2012-13 and has proposed to form a “State Energy Conservation Mission”
The State budget for 2012-13 has allocated to develop capacity for ECBC implementation with technical assistance from ASE
To demonstrate the concept of “Energy Efficient Building” recently the government has announced that the new Collectorate complex at Cuddalore, Tiruppur and Thanjavur will be designed as a model “Energy Efficient Building”.
Tamil Nadu government issued a Government Order on establishment o f Te c h n i ca l a n d E m p o we re d committee for implementation of Energy Conservation Building code in Tamil Nadu
Building components and systems have two alternative options to comply with ECBC code requirements. The suggested two main approaches to comply with ECBC; one is “Prescriptive method” and other is “Whole Building Performance method”. Both approaches guide the building owners and designers to implement energy efficiency in buildings.
In whole building performance method Compliance, designers have to perform computer modelling of whole building performance to demonstrate the building will use less energy than a standard design for the same type of building in the same climate zone. In either the prescriptive or performance methods, the building must first meet mandatory measures as well. The Proposed Building is simply compared against the Standard Building to determine the actual energy saving from ECBC compliant buildings. The standard building often represents the existing level of energy consumption allowed for particular building under a scenario where all the prescriptive requirements of ECBC have been adopted. The proposed building is ECBC compliant under a scenario where computer analytical process modelling is performed for total energy consumption before the building is constructed. The Alliance to Save Energy (ASE), a nonprofit organization, with the support of Shakti Foundation and Department of Energy (DOE), USA actively engaged in supporting the TN State Government Energy Department, in providing technical support and tools to help implement ECBC as per local climatic conditions of the State. Pradeep Kumar Director- Alliance to Save Energy, India Email: email@example.com Phone: 080-22112072/73 www.ase.org
In first approach, prescriptive method,
POLICY WATCH Debt-focussed mutual funds can invest in Housing finance firms SEBI allowed debt-oriented mutual fund schemes to invest in housing finance companies. Additional exposure to the financial services sector (over and above the existing 30 percent)not exceeding 10 percent of the net assets of the scheme in debt-oriented mutual fund schemes will be allowed by way of increase in exposure to HFCs only SEBI said in a press release recently. However, the total investment in HFCs cannot exceed 30 percent of the net assets of the scheme. Hike in Insurance FDI The FM said he would convince the Opposition parties to back the Government proposal on 49 percent foreign direct investment in the insurance sector. Most insurance companies promoted by public sector banks are in need of massive capital infusion. When the banks themselves are facing funds crunch for their own capitalisation, how can you expect them to pump in funds? he asked. The FM stressed that the insurance sector needed huge money and if the FDI limit was kept at 26 percent, no additional funds would flow in. According to him, raising the FDI to 49 percent would bring in foreign funds, which would benefit the domestic Indian insurance industry. A more contemporary Companies Bill The Union Cabinet approved amendments to the Companies Bill 2011 which not only aim to serve the interests of the
stakeholders better but also mention changes relating to spending on corporate social responsibility. The revised Bill which is expected to be placed in the winter session of the Parliament has limited the number of companies an auditor can serve to 20. It has also brought in more clarity on criminal liability of auditors. Appointment of auditors for 5 years shall be subject to ratification by members at every annual general meeting. Cabinet Nod for changes in Competition Act The Government expanded the ambit of the Competition Commission of India with an amendment to the Competition Act, following which all sectors would fall under the purview of the fair trade regulator. Approving a proposal by the Ministry of Corporate Affairs in this regard, the Union Cabinet decided to amend the Competition Act 2002, with a view to fine tuning the regulations to bring it on a par with the prevailing scenario and in light of the experiences grained over the past years. Under the proposed amendments, no sector would be exempted from the purview of the CCI. Thumbs up to foreign investment in pension funds The Union Cabinet approved the amendments to the Pension Fund Regulatory and Development Authority
Bill 2011 opening up the pension sector to foreign investment. Though the Cabinet has not specified the foreign direct investment cap in the pension sector, it is understood that it would be at par with the limit set for insurance companies which has now been raised to 49 per cent. Retrospective tax issues could be resolved before Budget :FM In what may provide further boost to investor sentiments at home and abroad, the Central Government maintained that there was no reason why addressing issues pertaining to retrospective amendment of Income tax laws should wait till the budget session in February next year. The Parthasarathi Shome Committee was asked to recommend measures to deal with retrospective amendment of income tax laws and suggest ways of treating taxation cases which involve indirect transfer of Indian assets, of the likes of the Vodafone-Hutchison deal in 2007. RBI open to raising cap on global e-commerce deals The RBI is open to looking at increasing the limit on international e-commerce transactions now set at $ 3,000, a top official said. The limit was set in consultation with PayPal, a major player among the international payment gateways and added that as many as 99 per cent of the e-commerce transactions fell under the limit of $ 3,000.
Business proposal from Embassy of Belgrade, Serbia
Business Opportunity in Moselle, France
Assocham has been informed by the Embassy of Belgrade, Serbia regarding a business proposal that they would like to open their market for companies from India and establish long-term business relationship. Domestic producers from Serbia are going to formulate pesticide products based on active ingredients manufactured in India.
The Chamber has received an enquiry from Franceâ€™s Moselle Economic Development Agency about a reputed company â€“ TIOUV â€“ which has financial difficulties right now and is looking for a company for industrial/financial partnership or even acquisition.
In this regard Consulting Agency DRAGON is engaged by domestic producers from Serbia in seeking for a suitable business partner, who is: 1. Manufacturer of active ingredients 2. Can provide appropriate Registration dossier which include 5 GLP batch reports / at least non-GLP 3. Have a competitive price on market / have registered product in EU Companies dealing in this segment are requested to submit their contact information to Vicky.firstname.lastname@example.org.
This is a business opportunity. Any member company wishing to develop on the European market and interested in this business opportunity could approach the Chamber. For more details about the company, please visit our website www: madraschamber.in
ECONOMIC REVIEW CONTENTS 1.
1.1 Second Quarter Review of Monetary Policy 2012-13 1.2 Central Government Fiscal situation for H1 2012-13 2. Corporate Sector 2.1 Performance of Eight Core Industries. 2.2 Sectoral Deployment of Bank credit
1. Macroeconomy 1.1
Second Q uarter Review of Monetary Policy 2012-13
Monetary Policy Review undertaken by RBI resulted in the following :-
Cut the cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.5 per cent to 4.25 per cent of their net demand and time liabilities (NDTL) effective from November 3, 2012.
The reduction in the CRR, will inject around Rs. 17500 crore of primary liquidity into the banking system.
There is no change in policy interest rate. Accordingly, the repo rate under the liquidity adjustment facility remains at 8.0 per cent.
Consequently, the reverse repo rate under the liquidity adjustment facility (LAF), determined with a spread of 100 basis points below the repo rate, will continue at 7.0 per cent, and the marginal standing facility (MSF) rate, determined with a spread of 100 bps above the repo rate, at 9.0 per cent.
Liquidity: Systemic liquidity deficit has been high because of several factors: the wedge between deposit and credit growth, the build-up of Government’s cash balances from mid-September and the drainage of liquidity on account of festival-related step-up in currency demand. This high systemic deficit will
have adverse implications for the flow of credit to productive sectors and for the overall growth of the economy going forward. As regards the growthinflation balance, headline WPI inflation moderated from its peak of 10.9 per cent in April 2010 to an average rate of 7.5 per cent over the period January-August 2012. During this time, growth has slowed and is currently below trend. This slowdown is due to a host of factors, including monetary tightening. Since April 2012, the Reserve Bank’s monetary policy stance has sought to balance the growth-inflation dynamic through calibrated easing. The transmission of these policy impulses through the economy is still underway. In conjunction with the fiscal and other measures recently announced by the Government, the Reserve Bank’s monetary policy stance said to work towards arresting the loss of growth momentum over the next few months. Inflation faired up again in September, reflecting the partial pass-through of adjustment of diesel and electricity prices, and elevated inflation in non-food manufactured products. It is, therefore, critical that even as the monetary policy stance shifts further towards addressing growth risks, the objective of containing inflation and anchoring inflation expectations is not de-emphasised. Indian Economy Macroeconomic situation: Growth decelerated over four successive quarters, from 9.2 per cent year-on-year in the
fourth quarter of 2010-11 to 5.3 per cent in the fourth quarter of 2011-12. In the first quarter of this year, growth was marginally higher at 5.5 per cent. This slight improvement in GDP growth in the first quarter was mainly driven by growth in construction, and supported by better than expected growth in agriculture. On the demand side, the growth of gross fixed capital formation decelerated, while the slowdown in growth of private consumption expenditure continued. The external demand conditions and crude oil prices also remained unfavorable, adversely impacting net exports. Over the last quarter, global risks have increased and domestic risks have become accentuated owing to halted investment demand, moderation in consumption spending and continuing erosion in export competitiveness accompanied by weakening business and consumer confidence. The industrial outlook remains uncertain. Notwithstanding the improvement in rainfall in the months of August and September, the first advance estimates of the 2012 kharif production are about 10 per cent lower than last year’s production. On the basis of the above considerations, the baseline projection of GDP growth for 2012-13 is revised downwards from 6.5 per cent to 5.8 per cent. Inflation Headline WPI inflation remained sticky, at above 7.5 per cent on a y-o-y basis, through the first half of the current year. Furthermore, in September there was a pick-up in the momentum of headline inflation owing to the increase in fuel prices and elevated price levels of nonfood manufactured products. This is, in part, attributable to some suppressed inflation in the form of earlier underpricing being corrected. However, even after adjusting for this, the momentum
ECONOMIC REVIEW remains firm. Fuel group inflation registered a significant rise in September, reflecting the sharp increase in prices of electricity effected from June, the partial impact of the increase in prices of diesel in mid-September and significant increase in non-administered fuel prices on account of rising global crude prices. Non-food manufactured products inflation was persistent at 5.6 per cent through JulySeptember. This upside pressure was a result of firm prices of metal products and other inputs and intermediates, especially goods with high import content due to a depreciating rupee. Consumer price inflation remained elevated, reflecting the build-up of food price pressures. CPI inflation excluding food and fuel groups ebbed slightly during June-September, from double digits earlier.
1.2 Central Government Fiscal situation for H1 2012-13
75.1 per cent of Budget estimates in 201213 against 72.2 percent in H1 2011-12.
Fiscal deficit in half year is 65.6 percent of the Budget estimate for 2012-13 as compared to 68.0 percent in H1 2011-12
2. Corporate Sector
The government revenue collection and non-Plan expenditure have declined as compared to same period of last year. Revenue collection is 37.5 percent of budget estimates 2012-13 against 38.5 percent in 2011-12. Government Non-plan expenditure is 50.7 percent of budget estimates during H1 2012-13 against 51.6 percent during H1 2011-12. This year, the government has pegged its market borrowings at Rs. 337669.32 crore which accounts 67 percent budget estimates during first half of the year. This is 9 percent lower as compared to last year same period. The revenue deficit stood at Rs 263284 crore in H1 2012-13 which is
Additions to Library Directories Members Directory – Sindhi Chamber of Commerce Macao Business Directory – Macao Trade & Investment Promotion Institute
During April-September 2012-13, the cumulative growth rate of the Core industries was 3.2 % as against their growth at 5.0% during the corresponding period in 2011-12. 2.2 Sectoral Deployment of Bank credit Sectoral deployment of credit collected on a monthly basis from select 47 scheduled commercial banks accounting for about 95 per cent of the total non-food credit deployed by all scheduled commercial banks for the month of September 2012. Source : Assocham
New Members The Chamber extends a warm welcome to the following new members:
Ending corruption? How to clean up India? – N Vittal, former CVC
Assocham for urgent reforms in Farm Credit – Assocham
2 . 1 Pe r f o r m a n c e o f E i g h t C o r e Industries.
A J Trust Educational Consultancy Agaram Infotech Private Limited Aqua Designs India Private Ltd. Ashok Leyland Nissan Vehicles Ltd. Balsara Engineering Products Pvt. Ltd. Contemporary News Pvt. Ltd. IL & FS Education & Technology Services Ltd. Lakshmi Machine Works Ltd., Coimbatore Dharsan Dredging & Construction Treyaa Newtech Ltd. State Trading Corporation of India Ltd.
Growing Heat of NPAs on Banking Sector - Assocham Arbitration rules of the Institute of Chartered Accountants of India and ICAI Code of Ethics for Arbitrators and ICAI Panel of Arbitrators - ICAI Franchise Opportunities – Official guide to franchising 2012Franchising Association of India Knowledge Paper on Transformation and Emergence of Tourism in Karnataka with a focus on investment in tourism infrastructure FICCI
Name Change Kilburn Chemicals Ltd. To V V Titanium Pigments Pvt.Ltd.