Sample Content: Economy & Energy "Economy Watch"

Ericsson gets $1.3 b contract from Bharti

• Bharti Airtel awarded a $1.3-billion network expansion contract to Ericsson that would help the mobile operator to deliver enhanced voice quality and faster data access to its subscribers. Ericsson will expand and upgrade Airtel’s network in 15 of India’s 22 telecom circles to put in place a converged network and expanded coverage in rural India.
• As part of this contract, Ericsson will supply its industry-leading portfolio of energy efficient 2G/2.5G radio base stations, circuit and packet core, microwave transmission and Intelligent Network. In addition, Ericsson will ensure that Bharti Airtel’s core and transport network is 3G-ready in order to reduce time to market and enable the fast rollout of 3G services at a later date.

India Infra to invest in Karaikal Port

• Karaikal Port Private Ltd (KPPL), a wholly-owned subsidiary of Marg, an infrastructure and real estate development company, has finalised its fund raising plans for its second phase of expansion.
• It is a deep-water port at Karaikal district of Puducherry. It is to be developed over three phases with the final phase getting operational by 2016. Phase-I of the development, which is now operational comprises two berths. Phase-II now under implementation involves a capital expenditure of Rs. 1,500 crore and will become operational by September 2011.
• India Infrastructure Fund (IIF), which is managed by IDFC Project Equity Company Limited, will be investing Rs. 150 crore into the equity capital of KPPL towards Phase-II expansion. (Locate In Atlas)

L&T partners Rolls-Royce for LWR

• Larsen & Toubro Limited (L&T) and Rolls-Royce, the global power systems company, have signed a memorandum of understanding (MoU) for cooperation to effectively address the projected need for light water reactors (LWR) in India and internationally. LWR technology is in use in over 60 per cent of civil nuclear power plants operating worldwide.
• The two companies have agreed to collaborate on areas including nuclear instrumentation and controls, engineered products and systems, reactor components, engineering services, in-service reactor support and waste management.

Textile industries park to be opened soon

• A comprehensive textile industries park being developed under the Textile Centre Infrastructure Development Scheme (TCIDS) of the Union government by Kerala Industrial Infrastructure Development Corporation (Kinfra) is ready for opening at Taliparamba.

BoB life insurance venture to break- even by 2015

• State-owned Bank of Baroda (BoB) said that its insurance venture IndiaFirst Life Insurance that became operational four months ago would break-even by 2015.
• IndiaFirst Life Insurance, the 23rd player in the life insurance space, is a three-way joint venture between Bank of Baroda, Andhra Bank and their British partner Legal & General

Dhanlaxmi Bank launches credit cards

• Dhanlaxmi Bank, one of the fast growing private sector banks in India, has announced its foray into retail assets business with the launch of its credit cards business by introducing Dhanlaxmi Bank Platinum and Gold Credit Cards. Targeted at its premium customers, both categories of cards offer a host of innovative features and benefits.
• Dhanlaxmi Bank, for the first time in India is introducing a ‘pay by transaction’ billing mode for credit cards. Under the programme, instead of a monthly billing cycle, the interest-free credit period is considered for individual transactions from the day of purchase. The customer thus enjoys a 45-day interest-free credit period on each purchase and does not need to time the purchase based on the billing cycle. This feature also gives the customers the flexibility to decide their own re-payment cycles.

Godrej to acquire Megasari of Indonesia

• Godrej Consumer Products Ltd (GCPL) entered into an agreement to acquire the PT Megasari Makmur Group and its distribution company in Indonesia for an undisclosed amount.
• The Megasari Group manufactures and distributes a wide range of household products including household insecticides, wet tissues and air fresheners. Its products are category leaders in the Indonesian market.

Renault-Nissan, Daimler in small-car alliance

• Carmakers Renault SA, Nissan Motor Co. and Daimler AG unveiled a wide-ranging alliance to help them compete better in the market for small, fuel-efficient vehicles.
• The partnership comes amid a painful industry-wide slump and will be sealed with a cross-shareholding giving the three companies small, symbolic stakes in each other.
• The heads of Renault and Daimler estimated that they would achieve euro 2 billion ($2.7 billion) in cost savings and additional sales from the new alliance over the first five years.
• Renault and Nissan will each take on a 1.55 per cent stake in Daimler, which in turn will take a 3.1 per cent stake in each of the other two. The move will add to Renault and Nissan’s existing 11-year-old alliance that has made it the world’s fourth largest automotive group with sales of 6.1 million vehicles last year.

Cabinet approval for big ticket disinvestment in SAIL

• The Union Cabinet approved the big ticket disinvestment in Steel Authority of India Ltd. (SAIL) to mop up about Rs.16,000 crore by selling its equity and issuing fresh shares to the public.
• SAIL will be first state-owned company to hit the capital market this fiscal as part of the government’s ambitious disinvestment programme to raise the targeted Rs.40,000 crore.
• As part of the proposal, which was approved by the Cabinet Committee on Economic Affairs (CCEA), SAIL will raise an additional 10 per cent of the paid-up equity and the government, on its part, will disinvest 10 per cent of its holding.
• “The net result will be, after both tranches are completed, the government’s shareholding will be about 69 per cent. Public shareholding will be 31 per cent,’’ Mr. Chidambaram said. As of now, public shareholding in SAIL is 14.2 per cent.
• SAIL is now undertaking a Rs.70,000-crore expansion programme to raise its installed production capacity from 13.82 million tonnes to 23.46 million tonnes annually.
• The disinvestment is in line with the government policy, sharing ownership of CPSEs with the public, while also raising funds to finance its different social programmes.

Jet Airways to start daily flights to South Africa

• Jet Airways announced that it would commence daily non-stop flights from Mumbai to Johannesburg, South Africa, from April 14. This new international route marks the first time that Jet is adding destinations to Africa on its international route network. In fact, the Jet service will be the first by a private airline between India and South Africa. Only South African Airways offers four flights weekly between India and South Africa.
  Singapore to host CommunicAsia
• CommunicAsia2010, the most established information, communication and technology (ICT) event in Asia, was held in Singapore from June 15 to 18 at the Singapore Expo. The event brings comprehensive showcase of convergent technologies for the global infocomm, media and broadcasting industries and feature new attractions for exhibitors and visitors from the region, says a release.

Four PSUs pitch for Maharatna status

• Four major public sector undertaking (PSU) companies — Indian Oil Corporation (IOC), NTPC, Steel Authority of India Limited (SAIL) and Oil and Natural Gas Corporation (ONGC) — are aiming for the ‘Maharatna’ status paving way for their financial and boardroom freedom.
• The Union Cabinet had last year set out a criteria for seeking this status.
• Officials said the Maharatna status would provide enhanced financial autonomy for PSUs for taking decisions relating to investments in joint venture companies and mergers and acquisitions.
• NTPC and SAIL are hunting for captive coal blocks in foreign lands.
• At present, ONGC’s investment in any OVL project cannot exceed Rs. 1,000 crore but could stand enhanced to Rs. 5,000 crore if it acquires the Maharatna status.

Sany Group opens first plant in India

• China-based Sany Group, a global major in the construction machinery industry, inaugurated its first manufacturing facility in India at Chakan near(PUNE).
• The group first entered India in 2003 and has since been involved in the supply of construction machinery to infrastructure projects including the Adani power plant, Mumbai International Airport expansion, the Delhi Metro project and the Indira Gandhi International Airport Project.

RIL to invest in Deccan 360

• Reliance Industries Ltd (RIL) announced that the company would be investing an undisclosed amount in Capt. G.R. Gopinath-led Deccan 360.
• This investment would help Deccan 360 increase the air and surface network coverage across the country and introduce world-class services and systems to express end-to-end supply chain logistics space in business-to-business and the retail sector, said Capt. Gopinath

Mahindra Retail launches Mom & Me store

• Mahindra Retail has launched the Mom & Me store in Chennai. Mom and Me has developed private labels in order to bring products like ethnic fashion for women, infant apparel and traditional Indian toys.

Rangarajan to head panel on public expenditure

• The Planning Commission announced the setting up of an 18-member expert committee headed by Prime Minister’s Economic Advisory Council Chairman C. Rangarajan to recommend measures for efficient management of public expenditure.
• Among its terms of reference, the main brief of the high-level committee is to suggest an action plan for abolition of the present system of classifying public expenditure as Plan and non-Plan. This will include detailing of the changes in the mandate of the various organisational units in the government that deal with allocation of public resources and the management of public expenditure.

Jaypee’s huge outlay on Ganga Expressway project

• The Jaypee Group of Industries announced that it would invest Rs. 70,000 crore in the next five years to build the ambitious 1,047 km long Noida-Ballia Ganga Expressway project. It also said that the Yamuna Expressway project would be completed two years ahead of schedule by March 2011.

ICICI Bank, HDFC Bank not Indian-owned: Centre

• The Central Government said ICICI Bank and HDFC Bank could not be called Indian-owned banks, setting at rest the debate generated over the nationality of the top two private sector lenders.
• ICICI Bank had maintained that it continued to be an Indian bank as its management and board was Indian.
• However, ICICI Bank and HDFC Bank have over 74 per cent foreign holding, including that of foreign banks and overseas institutional investors.
• Going by the definition, they were certainly banks which were not owned by Indians, because equity of at least 74 per cent or around 74 per cent was from outside.

SEBI issues norms for credit rating agencies

• The Securities and Exchange Board of India (SEBI) has issued transparency and disclosure norms for credit rating agencies (CRAs) order to impart higher credibility to the processes and procedures associated with credit rating.
• The CRAs were asked to take necessary steps to implement this circular immediately and ensure its full compliance at the latest by June 30.
• The half-yearly disclosures, stipulated by the regulator, would be made by the CRAs within days from the end of the half-year (March/September). The yearly disclosures stipulated would be made by the CRAs within 30 days from the end of the financial year. However for 2009-10 only, the half yearly and yearly disclosures stipulated would be made by the CRAs by June 30.

Greece woes only tip of the iceberg

• After weeks of foot-dragging, mutual contradiction and confusion, a clear plan emerged ,and members of the European Union agreed to a euro 110-billion package to stave off Greek bankruptcy.
• The package has been decided upon jointly by the EU and the International Monetary Fund and the European body will be coughing up 80 billion of the 110 billion-deal, with the rest coming from the IMF.

Videocon barred from doing business with World Bank

• Accusing Venugopal Dhoot-led Videocon of indulging in fraud and corrupt practices in dealings with it, the World Bank has blacklisted the Indian company for three years, ending January 11, 2013.
• Videocon Industries has been barred from doing any business with the World Bank for violating “procurement guidelines”, for three years, beginning January 11, 2010, a notification on the Bank’s website said. The World Bank had taken a similar tough line with Satyam Computer months before the IT company’s founder chairman confessed to an accounting fraud.
• The Videocon group is a conglomerate with interests in consumer electronics, home appliances, oil & gas, telecom and media, among others.
• The list of debarred entities from India include two Kolkata-based firms B R & Sons and Hemant Tibrewal, and three Delhi-based entities — Om Prakash Jindal, Upasana Jindal and S M Scientific Instruments Pvt. Ltd.
• These five entities were debarred by the World Bank in January this year and the sanctions would be in place for three years till January 2013.
• In January 2009, the World Bank disclosed that it had banned three Indian firms — Satyam Computer Services, Wipro Technologies and Megasoft Consultants — from receiving direct contracts from the Bank group under its corporate procurement programme.

Sample Content: Economy & Energy "Economy Watch"

Verdict can impact ADAG’s power plans

• With the Supreme Court delivering its much awaited verdict on the gas dispute between the Ambani brothers, the 2-1 verdict against the younger sibling, Anil Ambani, could have an adverse impact on the outcome of its power projects, including the 7,000 MW plus Dadri power project in Uttar Pradesh.
• The Dadri project, hanging fire for years now, will now most likely have to buy gas at the government approved price of $4.20 per mBtu (million British thermal unit) as and when the Government makes any such allocation. The verdict has also rendered Reliance Natural Resources Limited (RNRL) as a shell company as it at present has little or no projects in hand.
• The Mukesh Ambani-owned Reliance Industries Limited (RIL) hinted that it might sell gas from its KG-D6 fields to RNRL at $4.20 per mBtu.
• It also said that the tenure of gas supply would have to be drastically cut from 17 years as being sought by RNRL. This could have an impact on the long-term cost analysis on the power generation plans of its gas-based projects, which are estimated at 8,000 MW, and projections by the ADAG would have to be re-drawn and re-done in the changed circumstances.
• There will be no impact of this verdict on its Ultra Mega Power Projects as they are all coal-based units and already half-way through with their implementation.
• The Supreme Court ruled that the Ambani family MoU could not over-ride the Government’s right to fix price and approve utilisation of gas and had asked the two firms to renegotiate fuel supply.
• In the 2005 family MoU, RIL was to supply 28 million standard cubic meters per day (mscmd) of gas to RNRL for 17 years at $2.34 per mBtu. The gas was sought by RNRL to fire its proposed 7,800 MW power plant in Dadri, Uttar Pradesh. (Locate In Atlas)

Set up loan guarantee authority for education loans

• The Planning Commission has suggested that the Human Resource Development Ministry examine the option of setting up a loan guarantee authority as a separate division within the purview of the proposed National Education Finance Corporation (NEFC).
• The proposed NEFC aims at refinancing student education loans and institutional loans at concessional rates with longer repayment, which will help expansion and new investments in the higher education sector, particularly universities.
• The NEFC will use the educational cess released by the government, which is free of cost and also borrows from the market, so that the average cost of funds advanced as loans is lower than the rate at which it lends to banks. This differential rate will be the NEFC’s margin or profit.

India, Singapore to double trade

• Seeking to put the trade relations between the two countries on a fast track, India and Singapore decided to double their trade in the next five years from $16 billion to $32 billion.
• India also asked Singapore to recognise its professionals, such as doctors, nurses, accountants and architects in Singapore. Both the countries also launched the second review of the India-Singapore free trade and services agreement officially known as the Comprehensive Economic Cooperation Agreement (CECA).
• India also signed a pact with Singapore for greater market access for its generic (off-patent) drugs in the Southeast Asian nation. The two countries also set new targets for their economic engagement in terms of further removing trade barriers and encouraging the flow of people from one country to the other.
• Both contries agreed to work towards doubling bilateral trade from $16 billion to $32 billion by 2015.

Automatic route allowed for IFCs

• To increase fund flow into the resource-starved core sector, the Reserve Bank of India allowed infrastructure finance companies (IFCs) to raise money from overseas markets through the automatic route.
• Created as a new category under the non-banking finance companies a few months back, IFCs can now raise external commercial borrowings (ECBs) up to 50 per cent of their owned funds automatically.
• The apex bank said, however, ECBs beyond the half the size of their funds would require its approval.
• Under the present ECB norms, funds can be raised in overseas markets at a maximum rate of global benchmark interest rate , LIBOR (London Inter-Bank Offered Rate), plus 200 basis points if the loan is for three years, up to 300 basis points if the debt is up to five years and 500 basis points if it is above five years.

Bank of Rajasthan to merge with ICICI Bank

• Bank of Rajasthan, one of the oldest private sector banks in the country, announced that it would merge with the largest private sector bank, ICICI Bank.
• Bank of Rajasthan is a listed bank with its corporate office in Mumbai and registered office at Udaipur in Rajasthan.

SBI Mutual launches PSU fund

• • SBI Funds, the joint venture between State Bank of India, and Societe Generale Asset Management (France), announced the launch of its PSU Fund, an open-ended equity scheme, which will invest in stocks of the PSU companies.

Jindal Steel buys Omani firm

• In a strategic move aimed at extending the presence of the company overseas, Naveen Jindal-owned Jindal Steel and Power Limited (JSPL) announced the acquisition of Oman-based Shadeed Iron and Steel Co for $464 million.
• JSPL, through its 100 per cent subsidiary Jindal Steel and Power (Mauritius) Ltd has decided to acquire Shadeed Iron & Steel Co (Shadeed), it said. “A definitive share purchase agreement (SPA) and other transaction documents have been signed at $464 million, including the assumption of liabilities,” it added.

Abbott buys Piramal’s formulations business

• Piramal Healthcare entered into a definitive agreement with Abbot Laboratories of Illinois, U.S., to sell its domestic formulations business (also referred to as healthcare solutions business) for a total cash consideration of $3.72 billion (around Rs.17,500 crore).
• Abbot will pay $2.12 billion on closing of the sale in the second half of 2010 and a further $400 million in each of the subsequent four years after the closing of the transaction, commencing in 2011.

Hindujas to acquire European bank

• The Hinduja Group, a diversified global business conglomerate, announced that it would acquire European private bank KBL epb for euro 1.35 billion ( about Rs.8,770 crore).
• KBL epb, a subsidiary of Belgium-based KBC Group, is one of the largest onshore private banking groups with affiliated local banks in 55 locations across ten European countries.
• As part of the deal, the Hinduja Group will acquire KBC’s entire interest in the subsidiary including all the private banking subsidiaries and life insurance businesses. KBL epb had assets under management of euro 47 billion. The closing of the transaction is subject to regulatory approvals and is expected to be completed in the third quarter of 2010, a joint statement said.

Maharatna status for 4 PSUs

• Paving the way for more financial autonomy and freedom in decision making for big ticket investments in India and abroad, the Central Government has granted ‘Maharatna’ status to four giant public sector undertakings (PSUs) — NTPC, Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC) and Steel Authority of India Limited (SAIL).
• However, while all four blue chip PSUs have been given the new status, only NTPC would be able to exercise it as it has the requisite number of non-official directors on its board.

EU seizure of Indian drugs improper: WHO

• India’s complaint against the European Union on the unjust seizure of cheap generic drug consignments meant for Latin America and African nations has received a boost, with the World Health Organisation terming such action “misuse of rules” against counterfeit medicines.
• In a statement issued in Geneva, the WHO rapped the EU for seizing the Indian generic drugs in transit for patent violation.
• India and Brazil have asked the EU and the Netherlands to enter into dispute settlement consultations over the alleged violation of global rules.
• The two countries raised the issue in 2008 also when Dutch customs authorities detained Indian generic drugs at the behest of leading Western pharmaceutical giants.
• Under the WHO dispute settlement provisions, the EU will have to enter into consultations with India and Brazil as a first step and amicably resolve the issue within two months. If they fail to reach an agreement through Article 4 consultations, the two countries can call for the establishment of a dispute settlement panel to adjudicate the alleged violations of trade rules by Brussels.

GSM operators move TDSAT

• Three leading mobile operators have pre-empted a policy change by approaching the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the Telecom Regulatory Authority of India’s (TRAI) recommendations on 2G spectrum, including a one-time fee for holding radio waves beyond 6.2 Mhz.
• The operators who have approached the telecom tribunal are: Bharti Airtel, Vodafone and Idea.
• The trio have been voicing their criticism of TRAI’s recommendations and have asked the government to dump the report, which according to them is “retrograde” and “absurd”. The GSM operators are also critical of capping the spectrum at 8 MHz in all circles except Delhi and Mumbai where the limit is 10 MHz, as they think it will restrict future growth prospects.

Ballmer sees big role for India in ‘cloud services’

• Steweve Ballmer CEO of Microsoft Corporation said India would play an important role in its overall cloud services strategy..
• Many IT firms, including NIIT, Cognizant and CDC Software, besides Bangalore-based Indian Institute of Science (IISc), would be creating solutions and train manpower based on its cloud computing platform,
• Cloud computing refers to Internet-based computing where applications and software are accessed over the Internet, resulting results in reduced IT costs. Today, Microsoft’s cloud infrastructure supports over 100-crore customers and two-crore businesses globally.
• According to the study, the global cloud computing market is expected to cross $70 billion by 2015. As a result of the growing demand for independent software vendors, developers and system integrators, additional three-lakh jobs related to cloud services are estimated to be created in India over the next five years.

Essar to acquire Avaya stake in AGC Networks

• The Essar Group and Avaya, a global leader in enterprise communications systems, software and services, said they had entered into a definitive agreement under which the Essar Group would acquire Avaya’s entire 59.13 per cent stake in BSE and NSE-listed AGC Networks (earlier Avaya Global Connect) for $44.5 million, or Rs.206.19 crore, at Rs.245 a share subject to customary Indian regulatory requirements and completion of the mandatory open offer.

Nano rolls out of Sanand plant

• Nano, claimed to be the world’s smallest and cheapest car, rolled out of the assembly line at its new plant at Sanand, near Ahmedabad, raising the hopes of the lower and middle class families in the country of fulfilling the dream of owning a four-wheeler.
• The Sanand plant set up at a cost of about Rs. 2,000 crore, would have the capacity to produce 2.50 lakh cars per annum to be achieved in phases and was expandable up to 3.50 lakh cars a year.

South Africa seeks $10 billion bilateral trade by 2012

• Visiting South Africa President Jacob Zuma sought a quantum jump in bilateral trade to $10 billion by 2012 between his country and India.
• Bilateral trade, valued at $1.3 billion in 2000-01, crossed the $7-billion mark in 2008-09, while investments in 2008-09 were pegged at $9 billion.
• Addressing the launch of the India-South Africa CEOs Forum, he said India was South Africa’s largest trading partner in South and Southeast Asia and among the top ten partners globally.

Wipro targets $100 million from China’s new hydraulics plant

• Wipro Infrastructure Engineering, the information technology giant’s hydraulics arm, will in six months launch one of Indian industry’s most ambitious attempts to tap China’s fast-growing motor vehicle market, when the gates open at its sprawling new $ 5.7 million facility in southern China.
• The company this week formally announced a deal with the local government in Changzhou to set up a manufacturing plant to make hydraulic cylinders to cater to the domestic truck market, during President Pratibha Patil’s visit to Shanghai.

25 % public holding mandatory for listing on bourses

• In a significant step aimed at attracting a larger number of investors and checking manipulation in share prices, the Central Government made it mandatory for companies listed on stock exchanges to raise public shareholding to 25 per cent over a five-year period by diluting at least five per cent each year.
• In line with Finance Minister Pranab Mukherjee’s budgetary promise of ensuring larger floating stocks of all listed entities, a Finance Ministry statement said the relevant regulations stand amended to the effect that “the minimum threshold level of public holding will be 25 per cent for all listed companies.”
• Under the new norms notified by the Finance Ministry, market analysts expect about 180 companies, including 35 public sector undertakings (PSUs), to enter the market for adhering to the 25 per cent public holding guidelines. In all, there are more than 4,500 companies listed on the bourses.

India opposed to EU plan on taxing banks

• India has opposed levying any tax on banks to mop up funds for managing financial turmoils and organising bailouts in future, the likes of which were put in place by some of the developed economies in the wake of the global financial crisis.
• At a meeting with Presidential Committee Chairman (for the G-20 meeting) Il Sakong at Busan (South Korea), Finance Minister Pranab Mukherjee made it clear that instead of a tax on banks, India would prefer a regulatory mechanism as was in operation in the country.
• With Australia and Canada also opposing the bank tax proposal which was put forward by the European Union and supported by the U.S. and the U.K., the G-20 meeting of finance ministers is unlikely to arrive at a consensus on this contentious issue.
• The differences over the bank tax proposal have cropped up because the fallout of the global turmoil did not impact the financial systems of India, Australia and Canada in the same way as it did in the U.S. and some of the EU countries.
• With many of the European economies saddled with huge public debt owing to increased public spending during the crisis years of 2008 and 2009, the levy on banks is aimed at sparing taxpayers from chipping in for bailouts in future.
• Report and make recommendations on the roadmap to roll out five projects – tax information network (TIN), the new pension system (NPS), the National Treasury Management Agency (NTMA), the expenditure information network (EIN) and GST.

Sample Content: Economy & Energy "Economy Watch"

Andhra Bank ties up with UAE Exchange

• Andhra Bank announced that it had tied up with the United Arab Emirates Exchange Centre at Kuwait in an arrangement under which the bank’s customers, NRIs there, can remit amounts that will be credited to account holders in India the same day.

Bharti completes acquisition

• In the largest-ever telecom takeover by an Indian firm, Bharti Airtel completed a deal to buy out Kuwa.
  Tweak rules to tap long term debt for infra fund
• Recommending that a debt fund of Rs.50,000 crore be set up for financing infrastructure projects, an expert panel headed by HDFC chief Deepak Parekh asked the government to change rules to allow funding by pension and insurance companies.
• The panel on the infrastructure debt fund has also urged the sectoral regulators — the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDA), and the Pension Fund Regulatory and Development Authority (PFRDA) — to weak their existing laws to enable market players to use the large amount of untapped insurance and pension funds.
• Such move would help reduce interest costs and hence cut user-charges since banks are not able to provide the required long-term funds for infrastructure projects, the report said.
• In its report submitted to the Planning Commission, the Parekh Committee further suggested that the proposed infrastructure fund with an initial corpus of Rs.50,000 crore be set up as venture capital fund (VCFs) to be managed and regulated by SEBI.
• For this purpose, SEBI should be asked to amend its guidelines for VCFs to enable investment in the debt market. At present, only a part of VCF is allowed to be invested in debt, the panel said.
• The report also said pension and insurance money should be permitted to be invested in the fund to provide long-term financing to infrastructure projects coming under the public-private partnership (PPP) model.
• The report suggested that the IRDA and the interim pension watchdog PFRDA be approached to modify the rules to enable these funds to invest in the infra fund.
• Besides, the report recommended that foreign insurance, pension and sovereign funds be asked to invest in the proposed infra fund. For this, the RBI will have to be approached to create a special window for these kinds of foreign debt with tenure of 10 years or more.
• Also, the multilateral agencies like the World Bank and the Asian Development Bank would be asked to invest in the fund.
• The recommendations of the Parekh Committee assume importance since infrastructure upgradation is required to sustain high economic growth and require $1 trillion during the XII Plan (2012-17).

L&T, Hindalco among six new SEZs

• The Board of Approval (BoA) of the Commerce and Industry Ministry approved six new special economic zones (SEZs), including proposals from L&T and Hindalco. It also granted time extension to Mukesh Ambani-led Reliance Industries’ (RIL) Haryana SEZ.
• These include TCS, Uttam Galva, Unitech Reality Projects Ltd and the Navi Mumbai SEZ.

LIC to act as registrar for UID project

• Life Insurance Corporation of India (LIC) signed a memorandum of understanding with the Unique Identification Authority of India (UIDAI) to act as a registrar for the delivery of the unique 16-digit identity numbers to customers, making it the first institution other than State governments to sign up with UIDAI.
• UIDAI has envisioned the UID as a number that will make it possible for Indian residents to easily establish their identity to facilitate their interaction with various public and private agencies across the country. It is to be based on demographic and biometric data, that is, photograph, fingerprints (all ten fingers) and iris scan of an individual and hence prevents duplication. The UID number has been branded ‘Aadhaar’ (foundation).

India investment fund mooted

• Union Road Transport and Highways Minister Kamal Nath asserted that “a very positive sentiment” towards India was discernible now among foreign investors, especially in its infrastructure domain.
• Mr. Nath said he had suggested to Temasek, a Singapore-based investment firm with a wide reach, to explore the possibility of setting up a dedicated India investment fund. Having first floated the proposal last October, he would now “raise” the subject again in follow-up talks.
• On a “conservative estimate,” India’s roads and highways sector recorded $2-3 billion worth of foreign direct investment in the last 12 months. Commitments of this order from various countries, including the U.S., were now at various stages of being utilised.

Mid-term appraisal of XI Plan gets Cabinet nod

• The Union Cabinet approved the mid-term appraisal (MTA) of the Eleventh Plan (2007-12) projecting a scale-down in average growth from 9 per cent targeted initially to 8.1 per cent during the five-year period as a consequence of the slowdown in the wake of the global financial crisis.
• The MTA, which was endorsed by the full Planning Commission headed by Prime Minister Manmohan Singh at its meeting on March 23, will now be placed before the National Development Council (NDC), the country’s highest policy making body, also headed by the Prime Minister, for final approval.

Centre restructures Bharat Bhari

• • The Centre laid out a road map to revive the sick engineering PSU Bharat Bhari Udyog Nigam ©Limited (BBUNL) and its four subsidiaries through a process of financial restructuring and change in administrative control.
• • The Cabinet Committee on Economic Affairs allowed the takeover of Burn Standard Company and Braithwaite and Company by the Railways and handed over the refractory unit of Burn Standard at Salem in Tamil Nadu to SAIL and merged Braithwaite, Burn and Jessop Construction Company with BBUNL.
• • These transfers have been backed by a financial package involving an expenditure of Rs. 1,139.16 crore as non-financial assistance by waiving government loan and interest of Burn Standard and assistance of Rs. 14.50 crore to it.

Reliance Industries to acquire Infotel Broadband

• Reliance Industries Ltd. (RIL) entered into an agreement to acquire a substantial stake in Infotel Broadband Services (P) Ltd investing about Rs. 4,800 crore by way of subscription to fresh equity capital at par to be issued by Infotel Broadband to RIL.
• Post-investment, RIL will own 95 per cent of the equity and Infotel Broadband will become a subsidiary of RIL.
• The Mukesh Ambani-led RIL and Reliance ADA Group companies owned by his younger brother Anil Ambani have agreed on May 23, to cancel all existing non-compete arrangements which the two groups entered in January 2006 at the time of corporate de-merger.
• However, RIL had agreed not to enter the gas-based power generation business for the period up to March 31, 2022, with an exception made in respect of RIL’s captive gas-based power plants.
• RIL sees the broadband opportunity as a new frontier of knowledge economy in which it can take a leadership position and provide India with an opportunity to be in the forefront among the countries providing world-class 4G network and services.

RCom to demerge Reliance Infratel

• Reliance Communications (RCom) proposes to restructure ownersip of its subsidiary Reliance Infratel (RInfratel) through a demerger or other options. The boards of directors of RCom and RInfratel approved in-principle a proposal to restructure ownership of RInfratel to facilitate creation of the world’s largest independent telecom infrastructure company, not owned or controlled by any telecom operator.

IRDA will regulate ULIP schemes

• The Central Government ended a two-month-long turf war between the Insurance Regulatory and Development Authority (IRDA) and the Securities and Exchange Board of India (SEBI), saying unit linked insurance products (ULIPs) will be regulated by the IRDA.
• “Life insurance business shall include any ULIP or any such instruments. This would set at rest all the issues regarding ULIPs between two financial regulators,” the government said in a statement after promulgating an ordinance to make necessary changes in the law.
• Besides, the government said a high-level committee chaired by Finance Minister Pranab Mukherjee would sort out all issues of jurisdiction regarding hybrid products.
• SEBI in April took the market by surprise when it banned 14 life insurance firms from issuing fresh ULIP schemes. However, the IRDA asked the life insurers to ignore the SEBI order and the matter then went to the Finance Ministry, which advised them to move the court and in the meanwhile had asked them to matain status quo. ULIPs account for more than 50 per cent of the life insurance business and the money collected is invested in equities.
• The ordinance promulgated by President Pratibha Patil amended the RBI Act, the Insurance Act, the SEBI Act and the Securities Contracts Regulation Act to bring about clarity on regulation of ULIPs. ULIPs are a hybrid instrument that combines both insurance and investment. While the Securities and Exchange Board of India saw ULIPs as investment products and hence asserted its right to regulate those products, the IRDA treats them as insurance instruments.

Manmohan: Double farm growth rate to ensure food security

• Prime Minister Manmohan Singh said the agricultural growth rate must be doubled to 4 per cent to ensure food security for the growing population.
• Agriculture growth rate in 2009-10 was 0.2 per cent owing to drought in 399 districts during last year’s kharif. As against this, the government set a target of 4 per cent agriculture growth per annum in the 11th Five-Year Plan (2007-12).
• India commands about 2.3 per cent of the world’s land area and about 4 per cent of the earth’s fresh water resources, but feeds 17 per cent of the world population. This puts tremendous pressure on our resources and makes the need for newer and better technologies even more critical.

Piramal Healthcare to buy Canadian firm’s assets

• Piramal Healthcare announced the signing of a definitive agreement to acquire Canada’s BioSyntech’s assets for a consideration of Canadian $3.9 million (about Rs. 17.65 crore).
• BioSyntech is a medical device company specialising in the development, manufacturing and commercialisation of advanced biotherapeutic thermogels for regenerative medicine (tissue repair) and therapeutic delivery.

India likely to halve poverty rate by 2015: U.N. report

• India is expected to reduce its poverty rate from 51 per cent in 1990 to 24 per cent in 2015, slashing the number of extremely poor by 188 million. But progress in the rest of South Asia is not sufficient to halve the level of poverty by that target date, according to a United Nations report on the Millennium Development Goals for 2010.
• The sharpest reductions worldwide continue to be recorded in East and South-East Asia, where the MDG target to halve extreme poverty has already been met, while most of South Asia is in danger of missing it.
• The percentage of people living on less than $1.25 a day in East Asia dropped from 60 in 1990 to just 16 in 2005, and from 39 to 19 in South-East Asia. The rate of poverty in China is expected to fall to around five per cent by 2015.

World Bank aid to India to touch $9.3 billion

• The World Bank’s total financial commitment to India’s development agenda is set to touch $9.3 billion by the end of its fiscal year ending June. Spread across 25 new projects, the loan assistance is aimed at helping the country sustain the much needed high growth to lift millions out of poverty.
• World Bank Country Director in India Roberto Zagha said the total expected lending would include $2.6 billion as interest-free credits from the International Development Association (IDA) and $6.7 billion in the form of long-term, low interest loans from the International Bank of Reconstruction and Development (IBRD).
• Till date, both IBRD and IDA-aided projects with a total new commitment of $8.3 billion had already been approved, while the remaining projects worth $1 billion were to be presented before the Bank’s board over the next few days, he said.
• He Pointed that huge funding needs of India’s fast growing economy such as the estimated requirement of $500 billion for infrastructure development alone during the current Plan period, 

RIL to acquire 45% interest in Pioneer Natural’s asset

• Reliance Industries Limited (RIL) announced that its subsidiary, Reliance Eagleford Upstream LP, has executed definitive agreements to enter into a joint venture with U.S.-based Pioneer Natural Resources Company, Irving, Texas, under which, Reliance will acquire a 45 per cent interest in Pioneer’s core Eagle Ford Shale acreage position in two separate transactions.
• Pioneer and Newpek LLC, Pioneer’s current partner in the Eagle Ford, will simultaneously convey 45 per cent of their respective interests in Eagle Ford to Reliance. Newpek, a wholly-owned subsidiary of ALFA, S.A.B. de C.V., at present owns about 16 per cent non-operated interest in Pioneer’s core Eagle Ford Shale acreage.

Differences on economy set to play out in Toronto

• World leaders were gathering in Canada for G8 talks on global security and development, amid calls to deliver on past promises and a brewing dispute on how to shore up fragile economic recovery.
• Under a tight security blanket, leaders from the Group of Eight richest nations were meeting in an exclusive, remote hotel resort in Huntsville, Muskoka, some 220 km north of Toronto.

RCom, GTL Infrastructure in Rs.50,000-crore deal

• The Reliance Communications (RCom) and its subsidiary, Reliance Infratel, have entered into a Rs.50,000-crore ($11 billion) deal with GTL Infrastructure to create the world’s largest independent telecom infrastructure company that will be neither owned nor controlled by a telecom operator.
• Under the deal, which has the in-principle approval of the Board of Directors of all the three companies, the tower assets of Reliance Infratel will be merged with GTL Infrastructure.
• According to a statement from the Reliance Communications, the company will continue to own Reliance Infratel’s 200,000-km fibre optic network and related assets, India’s largest optic fibre network.
• The quantum of cash infusion into the RCom and the share swap ratios for the RCom and Reliance Infratel minority shareholders will be finalised in due course with the help of independent valuers and advisors.

India joins select club to counter financial frauds

• After nearly a five-year wait, India has finally become a full-fledged member of the Financial Action Task Force (FATF), an inter-governmental body responsible for setting global standards on anti-money laundering (AML) and combating financing of terrorism (CFT).
• With its induction as the 34th member-country of the global body that chalks out policies to counter financial frauds, India will have access to information on suspicious financial transactions in Switzerland, China, the U.S. and the U.K. The development marks a significant step towards tracing the source of terror financing and black money stashed away in tax havens abroad.
• Having gained ‘Observer’ status at the FATF in November 2006, India has been working towards full-fledged membership. The decision to grant it full-member status was taken during the FATF’s plenary session held in Amsterdam during June 23-25. According to an official statement, the FATF discussed and adopted India’s mutual evaluation report, along with those of Saudi Arabia and Brazil, “assessing compliance with the international standards for combating money laundering and terrorist financing — the 40+9 Recommendations.”

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TRAI suggests 74 % FDI limit for broadcast carriage services

• The Telecom Regulatory Authority of India (TRAI) recommended that the foreign investment limit for broadcast carriage services such as DTH, IPTV, Mobile TV, HITS, Teleport and MSOs, which are upgrading to digital and addressable environment, may be raised to 74 per cent. The existing limit for most of these services is 49 per cent.
• It also said the foreign investment limit for local cable operators, news and current affairs TV channels and FM radio be fixed at 26 per cent, while there should be no restriction on FDI for uplinking and downlinking of TV channels other than news and current affairs TV channels.
• TRAI also recommended that all foreign investment less than 26 per cent would be through the automatic route, while investments of 26 per cent and above will require prior approval of the government.

World Bank approves $430 million to MUTP

• The World Bank approved $430 million to finance the Mumbai Urban Transport Project (MUTP) 2A to improve the suburban railway system in the Mumbai Metropolitan Region – one of the world’s largest urban centres with a population of 18 million in 2001. In 2006-07, an estimated 6.4 million passengers daily (2.3 billion passengers annually) travelled on the suburban railway, which makes it the lifeline of the city.

U.S. House passes financial reform bill

• The House of Representatives adopted legislation to revamp the nation’s financial regulatory system, voting mostly along party lines as partisan acrimony impeded cooperation even on the shared goals of averting economic crises.
• The bill gives government regulators the authority to liquidate failing financial companies by breaking them apart, selling assets and forcing creditors and shareholders to take losses so that taxpayers do not pay the bill.
• The legislation also vastly expands the regulatory powers of the Federal Reserve and establishes a systemic risk council of high-ranking officials, led by the Treasury Secretary, to detect potential threats to the overall financial system.
• It creates a powerful new consumer financial protection bureau and widens the purview of the Securities and Exchange Commission to broaden regulation of hedge funds and credit rating agencies.
• The measure restricts the ability of banks to invest and trade for their own accounts — a provision known as the Volcker Rule, for its proponent, former Fed Chairman Paul A. Volcker — and creates a new regulatory framework for derivatives, the complex financial instruments that were at the heart of the 2008 crisis.

MRPL to export products to Mauritius

• India has signed a three-year agreement to export fuel worth $2 billion to Mauritius and also agreed to look into the possibility of setting up a refinery in the Island nation.
• The agreement was signed by Mangalore Refinery and Petrochemical Limited (MRPL) Managing Director, U.K. Basu and Mauritius State Trading Corporation General Manager Ranjit Singh Soomarooah. It was agreed that MRPL would export 1.1 million tonnes of auto fuels, jet fuel and furnace oil annually for three years. Mauritius would buy one lakh tonnes of petrol, 3.50 lakh tonnes of diesel and 2.70 lakh tonnes of jet fuel annually for three years beginning August 1, Mr. Soomarooah said during the signing ceremony. Mauritius’ Minister of Commerce and Industry Showkutally Soodhun invited MRPL and its parent firm Oil and Natural Gas Corporation for a 50:50 joint venture to set up the Island nation’s maiden refinery.

Rebound in China’s demand for iron ore

• A resurgent demand from China’s fast-rebounding economy for Indian iron ore and raw materials has helped revive trade between the two countries in the first half of 2010 after a poor performance last year caused by the financial crisis.
• With an 80 per cent rise in Indian exports, two-way trade hit $ 25 billion in the first five months of this year, officials said. The two countries now expect to beat their $ 60 billion target for the year.
• Iron ore, slag and ash accounted for $6.4 billion — 63 per cent of India’s net exports to China. Chinese imports rose 82 per cent in the first five months of this year, largely driven by rising iron ore prices and a revival of Chinese industry following last year’s slump. The only other significant contribution to India’s export basket was cotton yarn and fabrics, which grew several fold year-on-year, accounting for $1.07 billion.

NMDC mulls joint venture with Japanese steel majors

• NMDC is in talks with Nippon Steel and Kobe Steel of Japan for partnership in two steel plant projects in Karnataka and Andhra Pradesh. The state-owned firm will also be investing Rs.3,000 crore to set up a 12-million tonne per annum pipeline in Chhattisgarh to supply iron ore to its domestic steel customers.

Easier access for Indian IT professionals in Malaysia

• Malaysia assured India that it would ensure smooth and hassle-free movement of IT and other professionals from India and other parts of the world. Both countries also set an ambitious bilateral trade target of $15 billion by 2015, indicating enhanced levels of engagement.
• Bilateral trade between two countries grew at an average growth rate of 23.7 per cent between 2004 and 2008 and it reached as high of $10.5 billion in 2008 just before the worst effects of the global financial crisis. However, in 2009, trade declined by 29 per cent and has shown a positive growth in the first quarter of 2010-11.

Bharti to invest $600 m in Nigeria

• India’s largest cellular service company Bharti Airtel will invest $600 million in Nigeria’s mobile market following its takeover of Zain Telecom’s African business for around $10.7 billion.
• Bharti Airtel embarked on the largest-ever telecom takeover by an Indian firm on June 8, when it completed a transaction to buy Kuwait-based Zain Telecom’s businesses in 15 African countries for $10.7 billion.
• The Africa holdings include Burkina Faso, Congo, Gabon, Ghana, Kenya, Malawi, Madagascar, Niger, Sierra Leone, Tanzania, Uganda, Chad and Zambia. (Locate In Atlas)

IMF raises global growth forecast

• The International Monetary Fund has raised its world economic growth forecast from 4 per cent to 4.5 per cent, reflecting the positive impact of economic activity in the first half of the year as much as it did “strong clouds [that] have appeared on the horizon,” according to an official statement.
• Specifically the Fund was cheered by the fact that the world economy expanded at an annualized rate of over 5 per cent in the first quarter of 2010 and that growth was stronger than expected in most countries, including the United States, Europe, Japan, Brazil, and India. “A good sign for the future,” according to the IMF, was the finding that in most cases such growth reflected stronger private demand.
• In particular the IMF forecasted estimated for advanced countries at 2.6 per cent for 2010 and 2.4 per cent for 2011, emphasising that these low growth rates implied that high unemployment would remain a central issue. In significant contrast however the Fund’s growth projection for emerging and developing economies was 6.8 per cent in 2010 and 6.4 per cent in 2011, which included an upward revision of 0.5 per cent for 2010 and a downward revision of 0.1 per cent for 2011.

HCL Info enters cloud computing

• HCL Infosystems launched its end-to-end cloud-based computing solution service — O’zone — mainly aimed at enterprises, mid-sized organisations and professionals.
• HCL O’zone will deliver the benefits of reduced capital expenses, increased data security, increased flexibility through server consolidation, reduced power and cooling, green computing and disaster recovery. The solution will also provide 24x7 technical support to manage scalability and deliver optimum performance.
• Meanwhile, HCL Infosystems announced the acquisition of 60 per cent stake in Dubai-based NTS Group.
• NTS, a ‘total solutions’ provider ranging from IT hardware to software services and consulting, has partnered leading enterprises in the region building customised solutions for a host of business needs.

World Bank approves two loans

• The Centre signed two agreements with the World Bank with latter agreeing to give $407 million loan to scale up microfinance services in unbanked areas and improve capacity to generate quality statistics.
• While $300 million is for ‘Scaling up sustainable and responsible microfinance project’, $107 million has been granted for ‘India statistical strengthening project’.
• The objective of ‘Scaling up sustainable and responsible microfinance project’ is to scale up access to sustainable microfinance services to the financially excluded, particularly in under-served areas of India through, among other things, the introduction of innovative financial products and fostering transparency and responsible finance.
• The project will be implemented by the Small Industries Development Bank of India (SIDBI) over five years.
• While $100 million is a credit from World Bank’s concessionary lending arm International Development Association, the remaining $200 million is a loan from the International Bank for Reconstruction and Development.

Slow progress in ASEAN talks on services, investments

• India’s negotiations with ASEAN for a comprehensive services and investment agreement are progressing at a “painfully slow” pace and major member countries fear that a ‘deal with India’ would lead to the services market being taken over by the former.
• Such are the reservations among countries like Singapore, Thailand, Malaysia and Vietnam that they are rather opting for Free Trade Agreements (FTA) at the bilateral levels rather than rushing in to formalise a multi-lateral deal on services and investments.
• Under the proposed services and trade agreement, India is demanding liberalisation of trade in services and investments, particularly movement of professionals. Once the pact is signed and implemented, Indian professionals will be able to increase their presence in ASEAN countries substantially. India has already signed the FTA on goods with ASEAN which came into effect from January 1, 2010.
• India had recently put in place a comprehensive agreement with South Korea and is in the advanced stage of negotiations with Japan. The 27-nation European Union and India are also holding extensive talks to clinch a deal on FTA within this year.

8 Indian firms on Fortune 500 list

• Eight Indian companies, including Indian Oil Corporation (IOC) and Mukesh Ambani-led Reliance Industries Limited (RIL), have made the cut on the list of the world’s 500 largest companies compiled by Fortune magazine.
• The league of 500 elite companies for 2010 is topped by U.S. retailer Wal-Mart Stores, followed by Royal Dutch Shell and Exxon Mobil, in that order.
• The other Indian companies on the list are: Tata Steel, Tata Motors, Bharat Petroleum Corporation Limited , Hindustan Petroleum Corporation Limited (HPCL), ONGC and the State Bank of India (SBI).
• Tata Motors has made an entry into the list for the first time this year, while seven other Indian entities, which were part of the list in the previous year, are also featured. The list also features Citigroup, ArcelorMittal, Pepsico and Motorola, led by people with Indian roots. IOC has the highest rank of 125 among the featured Indian companies, followed by RIL at the 175th spot, SBI (282), BPCL (307), HPCL (354), Tata Steel (410), ONGC (413) and Tata Motors (442).