Andhranews

New Delhi, Aug. 9: There is no question of allowing foreign direct investment (FDI) in retail if it adversely affects the small retailers in the country, Mr Kamal Nath, minister of commerce and industry, said at a meeting with a 12-member delegation of the Confederation of All India Traders (CAIT). A powerful association of small traders, CAIT has been opposing FDI in retail all along. Last month in the national meeting of its office bearers, a resolution was passed opposing FDI in retail.

Knowing their opposition, Mr Nath tried to pacify these traders saying that as of now, there was no policy for FDI in retail. The government had ensured suitable safeguards against any adverse impact on small traders by allowing FDI only in retail of “single brand” products, the minister said, adding that “the main concern was not foreign vs domestic, but big vs the small.”

The issue was not just about buying and selling but also about access to technology, backward linkages etc especially in sectors like food processing so as to reduce wastage of fruits and vegetables and ensure better returns to the farmers for their produce, he explained. “I have not yet found the right model (for retail),” he added.

But the members of CAIT are not impressed with Mr Nath’s assurances. “Mr Nath only gave us a stereotype answer, which we don’t accept,” Mr Praveen Khandelwal, general secretary CAIT, told this correspondent. Traders are questioning the need of FDI in retail. “The general notion is that FDI is only required in the technology sector, so what are the circumstances that are forcing the government to allow FDI in retail?” asked Mr Khandelwal, adding that the “government needs to answer this question.”

Traders are preparing a white paper questioning FDI in retail. “We would present the paper to the minister and if he answers those questions, it is fine, otherwise we will launch a nationwide agitation,” threatened Mr Khandelwal.

Earlier, the delegation had presented a paper on core domestic trade issues to Mr Kamal Nath, which calls for abrogation or amendment of outdated laws and regulations; simplification and rationalisation of the tax structure including merger of all commercial taxes on domestic trade into a single tax and abolition of the central sales tax; better banking facilities for traders; formation of a ministry of internal trade at both the Central and state levels and protection to domestic trade from foreign direct investment.

Washington, Aug. 9: The Federal Reserve on Tuesday suspended its two-year campaign of raising interest rates, a long-awaited policy shift based on the hope that a modest economic slowdown will subdue inflation without much pain.

After 17 consecutive increases at each meeting since June 2004, the Central Bank voted to hold its benchmark interest rate steady at 5.25 per cent. Policymakers suggested that they wanted more time to see where the economy was headed before deciding whether further increases might be necessary.

In a statement accompanying its decision, the Fed acknowledged that inflation had accelerated. But it predicted that slowing economic growth, led by the retreat of the housing market, would lead to smaller consumer price increases before long.

“Readings on core inflation have been elevated in recent months,” the Fed’s policy-making committee said. “However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.” The Central Bank left itself ample room to resume its rate increases if inflation proves more stubborn than expected.

Hyderabad, Aug. 9: The Indian government should allow an increase in foreign direct investment in the insurance sector to 49 per cent, from the current ceiling of 26 per cent, to attract more foreign capital into the nascent sector, a top official of Aviva plc, the fifth-largest insurance firm in the world, said on Wednesday.

Speaking exclusively to this newspaper, Mr Philip Scott, group executive director, Life International of Aviva Plc, said, “We hope the Indian government raises the FDI limit in the insurance sector to make India more attractive for insurance companies. India is a growing market, but the ceiling of 26 per cent is hampering more investment in the country,” Mr Scott said.

Aviva Plc has a 26 per cent stake in Aviva Life in India, with the Dabur group holding the majority 74 per cent stake. Under the Insurance Regulatory and Development Authority guidelines, foreign insurance companies can hold only 26 per cent stake in private In-dian insurance companies.

The issue of increasing the FDI limit has been pending for more than two years, with finance minister P. Chidambaram stating in his Budget speech of 2006-07 that the government planned to increase the limit. The IRDA Act needs to be amended for this to happen, but with the government depending on the support of the Left parties, it is yet unclear when the amendment will be introduced.

Mr Scott said India offered “greater opportunities” for growth than China, and that Aviva was committed to growing the Indian business. Aviva’s total sales in the Asia-Pacific
region, including India, grew by 80 per cent to $386 million sterling in the first half of calendar year 2006, he said.

According to Vivek Khanna, director (marketing) Aviva Life, the company was now the sixth-largest private insurer in India. Asked about the the impact of the recent IRDA norm requiring insurers to get proof about their customers’ address for policies above Rs one lakh as a measure to check money laundering, Mr Khanna said that Aviva welcomed the directive.

“We would however like the IRDA to clarify on how to obtain addresses from customers in rural areas, because in most cases people there don’t have the required documents.”
He said Aviva Life, which currently has bancassurance tie-ups with 22 banks, was scouting for more bancassurance tie-ups. “Bancassurance is our strongest sales channel,” he said.

Mr Scott said Aviva Plc’s worldwide operating profits in the first six months of 2006 had grown by 27 per cent under the European Embedded Value systems to £1,699 million from £1,318 million on-year. Under the International Financial Rep-orting Standards, which came into force last year, the operating profit rose by 45 per cent to 31,376 million in the first half of 2006 from £943 million on-year

I left India in January 1994 and have been an NRI since then. I bought a flat in 1997 in Mumbai, in joint ownership with my wife, from the funds earned outside India and the money was remitted through the bank. I have let out the flat and earning Rs 2,40,000/- per annum as rent, which I presume can be repatriated. Will this amount be taxable along with my other interest income in India, if the amount is retained in India and not repatriated. Or will it be tax-free if repatriated outside India ?

N.S. MURTHY
via email

You shall be liable to pay tax on the rental income and the interest income in India, irrespective of the fact that the amount is repatriated or not. A non-resident is liable to pay tax on all incomes accruing or arising in India or deemed to accrue or arise in India. You shall however be eligible to claim the admissible deductions as per the provisions of the Income-Tax Act.

I am a student of Chartered Accountancy PE II course with a merit background in my CA PE I. I require your clarification with regard to the educational loan available to the students from various nationalised banks:

* Whether any educational loan can be obtained from banks to pursue my professional education? I have no source of income other than the stipend paid by my principal?
n Whether the loan so taken can be utilised for the purchase of vehicle?

K. KARTIC, Hyderabad

Deduction in respect of interest on loan taken for higher education is governed by the provision of Section 80E. “Higher Education” means full-time studies for graduate or postgraduate course in engineering, medicine, management or postgraduate course in applied sciences or pure sciences including mathematics and statistics.

Deduction under Section 80E will not be available for instance, for courses in humanities, social sciences, commerce, accountancy or law [Vide Circular No 684]. Hence, you will not be eligible for any deduction under Section 80 E of the Income-Tax Act, 1961. As far as vehicle loan is concerned, you may approach banks that offer these loans.

Kamal Rathi represents Rathi & Malani, a Hyderabad-based chartered accountancy firm. The views expressed here are those of the author. They do not reflect the views of this newspaper. Readers can send their personal income-tax queries to Mr Rathi at tax@decca-nmail.com, or write him at Tax Matters, C/o Deccan Chronicle, 36, Sarojini Devi Road, Secunderabad-500003, AP

One of my favourite American magazines is Foreign Policy, published bimonthly by the Carnegie Endowment for International Peace. It costs quite a bit of change to get it airmailed from Washington DC, but the money is, I believe, well spent (friends question the need to subscribe to such magazines at all, but they usually calm down when I point out that I could have used that money to subscribe to the National Review, or, worse, The Weekly Standard!).

Anyway, one of the things that FP is known for is, its lists. FP had a recent one on seven “failed States”. The lists are obviously subjective. Before we proceed, did you ever wonder that while Google has emerged as the most popular, there are millions upon millions of people who don’t know Google from Adam because they don’t speak English? How do people with no knowledge of English access the Internet and find what they are looking for? With homegrown Internet se-arch engines, of course.

The current issue of FP has a list of such search engines designed for local users. In the list is Raftaar (which means “speed” in Urdu), a search engine aimed at the millions of Hindi speakers in India and around the world. Raftaar is in its Beta version, and works only with Microsoft Internet Explorer 5.0 or higher, and not on Mozilla Firefox.

“A poll last year found that 44 per cent of Indians want to find content online in Hindi. But India’s national language does not have a unified font structure for display on the Internet, making searches especially difficult. Raftaar is attempting to fill that void by developing an easy-to-use Hindi alphabet feature on its homepage, allowing surfers to type in searches. Since its launch in January, traffic has been inconsistent, but as more Hindi speakers log on, its popularity could explode,” says FP.

The downside for Raftaar? “India is home to 16 official languages and hundreds of different dialects, meaning that capitalising on the country’s many Internet users is going to be difficult. Sites capable of handling a variety of Indian languages simultaneously are already on the rise and could be the model for future Indian Internet development. Because Raftaar’s searches are Hindi-only, it could be left behind,” the magazine says.

The other region-specific search engines, listed by FP, includes Baidu in Chinese, Quaero, based in the EU and promising, when it launches, searches in French and German; the yet-to-be-launched Sawafi in Arabic; Yandex in Russia; and Web Wombat in Australia, which searches 20 million web pages from Australia and New Zealand. You can trust the Aussies to do their own thing, mate.

Hyderabad, Aug. 9: After acquiring its closest rival SSA Global for $1.4 billion, Infor, an ERP firm, has set its eyes on expanding its focus in the Asia-Pacific region which currently contributes only 9 per cent by way of revenues.

The SSA Global buy also provides Infor an entry into the “promising” Indian market where the potential for ERP and supply chain design work is high, according to senior Infor and SSA Global officials.

“The Americas and EMEA (Africa) markets contribute 50 per cent and 41 per cent to our revenues but within a year we should touch double digit revenue figures from the Asia-Pacific region where the growth is being driven by China, India and South Korea,” Mr John Flavin, senior vice-president and general manager at Infor said during his visit to the Hyderabad centre of SSA Global.

On India as an operational unit, Mr Flavin said, “The crucial integration of SSA Global with Infor is over and now we have stepped up hiring in Hyderabad where we have 600 professionals.” Mr Flavin, however, ruled out the option of expanding Infor operations to other cities.

Some of the new markets that Infor will be working in will be aerospace and defence, where Infor officials maintain that the company will bring in more than $100 million in revenue each year. Moreover, Infor’s automotive segment, where SSA Global’s expertise is bound to help, is expected to bring in more than $120 million each year in revenues.

The four-year-old Infor has grown from a $750 million company into a $2.1 billion IT behemoth having primarily taken the buyout route. At last count Infor has acquired 20 companies, the latest being SSA Global.

Islamabad, Aug. 9: Pakistan has put off adding some 150 items for import from India, following the new wave of tension between the two countries. Last week, Pakistan and India expelled two senior diplomats declaring them persona non grata.

The process of expanding the “Indian importable items” list has been suspended lately amid growing tension between the two neighbouring countries, official sources said. The ministry of industry and production, the sources said, had forwarded a list of 150 items for inclusion in the list of importable items from India but the government has delayed action on the plan. Most of items in the list are either machinery or industrial raw materials, not being manufactured in Pakistan.

Mumbai, Aug. 9: The upbeat sentiment in the Asian markets over the halt in the rising interest rates by the US Federal Reserve had its impact on the Indian stock markets with both the Sensex and the Nifty hitting their highest points since May 18.

The Sensex closed 130.20 points up at 11,145.18, after hitting a high of 11,185.95 and the Nifty closed 42.20 points up at 3,254, after seeing an intra-day high of 3267.20. The Asian markets saw the Nikkei up 191.93 points and the Hang Seng 298.38 points.

The highlight of Wednesday’s trading was the turnover on both the exchanges at Rs 31,565.78 crores. The F&O sector accounted for Rs 22,387.41 crores. On the National Stock Exchange, there were 682 stocks that ended in the green and 207 in the red.

Mumbai, Aug. 9: ONGC, L&T and Reliance Industries Ltd (RIL) continued to be affected by the heavy rains and flooding at Hazira for the second day, while RIL’s IPCL plant at Baroda was partially shut due to non-availability of gas from ONGC.

A high-level ONGC team headed by director (technology and field services) Mr U.N. Bose reviewed the situation at the plant and said it would be restarted after the waters recede. Detailing the work going on at the site, the company said operational teams of ONGC are all geared up to begin restoration and start-up production.

An INMARSAT Terminal has been installed for communication and portable generators have been sent and are being installed. The Hazira Gas Processing Plant receives around 40.5 million metric standard cubic meters per day of gas from ONGC’s offshore Bassein field.

It processes this to produce 1650 metric tonnes (MT) of LPG, 3350 MT of aromatic naphtha, 417 MT of superior kerosene oil (SKO) and 48 MT of high speed diesel (HSD). The company said that the management is seized of the issue and massive efforts are being made to restore normalcy in the shortest possible time.

Meanwhile, a Reliance spokesperson said that their plant has been partially shut as some units are still working. In the case of L&T, sources said there has been no damage to the plant or property at Hazira, but the company had to shut down the plant as the access road was flooded.

New Delhi, Aug. 9: There is some good news and there is some bad news for Indian urbanites — Mumbai and Delhi are among the world’s least expensive cities. They, however, do not have enough in their kitty to splurge as the wages of people living in the two cities are among the lowest in the world. The gross earnings in Indian cities are less than 10 per cent of the wages in top-ranked cities.

According to a study conducted by Swiss banking major and the world’s largest wealth manager UBS, Mumbai has emerged as the second least expensive city while Delhi is a tad expensive as the fourth least expensive. At the same time, Delhi has been ranked at the lowest position in the earnings chart with gross hourly average wage of $6.1 as against Copenhagen’s $118.2.

Gross wages in Mumbai and Delhi and Asian countries like Jakarta and Manila amount to less than 10 per cent of the wages in the top-ranked cities. While gross hourly wages average $16-17 in Europe and North America, they drop to an average of $5 per hour before taxes and social security contributions in Asia.

The net hourly pay in Delhi stands at $1.2 and $1.4 in Mumbai as against $19.5 in Zurich and more than $15 in London and New York. The average gross hourly pay of Delhiites is $1.4 while that of people in Mumbai is $1.6 dollars as against more than $25 in Zurich, Oslo, Geneva and Copenhagen.

Asians seem to be partially compensating for low purchasing power through longer working hours as they work the longest hours in the world, which is almost 50 days more per year than West Europeans. People in Delhi work 2,121 hours and are entitled to 15 days paid vacations per year.

In Mumbai, people work 2,205 hours and take holidays for 17 days a year as against a global average of 1,844 working hours and 20-day vacations. Seoul tops the list with 2,317 hours per year. UBS said that in countries benefiting from the outsourcing trend, there might be more employment opportunities, but there is little evidence of rising wages. “A constant influx of job-seekers into the big cities, coupled with often rudimentary labour laws, are keeping wage growth low,” it added.

UBS said in its Price and Earnings 2006 report, published on Wednesday, that a Delhiite needs to work nearly one hour (59 minutes) to buy a large McDonald burger, which is higher than the global average of 35 minutes of work. In contrast, in cities like Los Angeles, New York, Chicago and Miami, a maximum of 13 minutes are needed for a mouthful of Big Mac while the time jumps to as high as one and a half hours in Nairobi.

Among the 71 cities covered in the study globally, Oslo, London, Copenhagen, Zurich and Tokyo are the five most expensive cities while excluding the cost of housing. The living costs are the highest in London and New York if rents are included. Mumbai has been ranked at the 70th position on the living cost chart, excluding the rent, up one position from its 71st position in the 2005 ranking. New Delhi is placed at the 68th position in the latest list.

After including the housing costs, Mumbai and Delhi move a bit higher on the chart, but still remain among the world’s least expensive cities. The rankings were given on the basis of the cost of a shopping basket of 95 goods and 27 services, which costs $38.5 in Mumbai and $42.8 in Delhi in contrast to as high as $121.5 in Oslo and more than $100 in London, Copenhagen, Zurich, Tokyo, Geneva and New York.