F D I LIMIT TO INDIAN TELECOM COMPANY INCREASE TO 74%

On February 4 the cabinet eased the ceiling on foreign direct investment (FDI) in the telecom sector to 74 per cent from 49 per cent. FDI will be allowed in basic, cellular, unified access services, STD, ISD, VSAT, public mobile radio trunked services, global mobile personal communication services and other value-added services.
"We need at least $20 billion (Rs86,740 crore) of investment and part of this has to come as foreign direct investment," said Maran. The increase in the FDI limit is expected to usher in a 20 per cent jump in foreign investments in the telecom sector within the next two years from the current Rs10,000 crore
'We have very transparent and clear new FDI rules. Operators did not have clear FDI structures and as a result, many offshore firms were holding different stakes in them. Now, such operators can come clean on investments,' IT and Telecom Minister Dayanidhi Maran stated during a press media early this week - exactly a week after the policy change.
But strict conditions have been imposed in order to address the security concerns raised by the Left parties.
As per the new rule,
telecom companies serving Internet service providers with gateways;
infrastructure providers (category-II);
radio paging service
will now have to disclose the status of foreign holding and certify every six months that the foreign investment was within the ceiling of 74 per cent. "Potential foreign investors will, however, need government approval before they increase their stake beyond 49 per cent," clarified Maran.Prior to the new rules being announced, two companies - Bharti and Hutch - had managed to exceed the 49 per cent FDI limit. From now, the licences of the companies that do not comply with the new stipulations will be revoked.
Another condition that service providers will now have to comply with is that a majority of the directors, including chairmen, managing directors, chief executive officers, chief technical and finance officers, will all have to be resident Indians.
Earlier, the Telecom Regulatory Authority of India (TRAI) was established in 1997 to resolve the security concerns raised by various agencies and provide a regulatory framework to the private sector telecom industry, then still in its infancy.
The new guidelines also bar the rerouting of traffic (whether mobile or landline) originating from India to other subscribers within India through any other country.
Also, telcos have been barred from transferring accounting information relating to subscribers (except for roaming or billing) outside India. Further, the details of companies' infrastructure also cannot be passed on to anyone other than the telecom equipment suppliers or manufacturers who undertake the installation and commissioning of the licensee company on signing of non-disclosure agreement.
In the last two years the telecom sector has emerged one of the fastest growing sectors in the country. This has been due to intense competition that has brought down tariffs as well as simplification of regulation that has promoted healthy competition among various service providers. As a result, telecom density in the country has risen to 7.5 per cent in FY04 compared to 3.64 per cent in FY01. The mobile services segment alone has been growing rapidly and has emerged as the fastest growing market in the world. This sector is expected to reach nearly 75 million by FY06. Currently India has over 40 million mobile users (source: DoT, August 2004). The government hopes to further increase the number of mobile users to 200-250 million by 2007.
Though competition has increased manifold, certain government policies seem to be designed to favour telecom PSUs. Penetration levels in rural areas have more or less remained stagnant. To raise resources for new infrastructure in these areas, cellular operators have to pay an 'access deficit charge' (ADC) to BSNL, the fixed line carrier.
Since over 90 per cent of the fixed line infrastructure is owned by BSNL, cellular firms have to pay a usage fee to BSNL, which in turn is passed on to the consumers. This in keeps the tariffs high.
However, the hike in FDI gives the consumer more options to choose from. Earlier, on the international basic telephony front, the end of VSNL's monopoly in 2002 brought two private players in the international basic telephony business and the immediate effect was the fall in tariffs. In the first six months only, the tariffs fell by 50 per cent and can expect to fall further as new entrants crowd market.
The hike in FDI has increased the attractiveness of the sector for foreign telecom majors like Vodafone of UK and Telenor or Norway of (along with some from the US and Hong Kong) who have long wanted to participate in the growth of the Indian telecom sector, provided investment conditions were made more investor-friendly.
The increases in foreign investments will go a long way in improving the growth of this sector. Specifically, players like Bharti Televentures, Idea Cellular and Hutchison-Essar Telecom, which have foreign partners, are likely to benefit. Other companies that have till now not explored the possibility of raising capital in this manner can have a fresh look at this source of capital. Consolidation is also likely to speed up.
"With increased foreign capital now being allowed, the move will provide the Indian telecom industry the much-needed impetus to deliver on its ambitious target of reaching between 200- and 250-million phone connections over the next three years," says joint managing director, Rajan Mittal, Bharti Tele-Ventures.

F D I IN INDIA MINING

The new National Mineral Policy (NMP), which seeks to ensure assured right in mineral concessions, envisages foreign direct investment (FDI) of $2.5 billion annually, the Rajya Sabha was told today.
“FDI of about $2.5 billion per annum is expected in the mining sector from the fifth year of implementation of the new NMP,” Mines Minister Sis Ram Ola told the House in a written reply to a query.
He pointed out that the government did not accept the Hoda Committee’s report in toto on the NMP, which sought to ensure transferability of mineral concessions and transparency in allotment of concessions in order to reduce delays which are seen as impediments to investment and technology flow in the domestic mining sector.
The minister said the policy sought to develop a sustainable framework for optimum utilisation of the country’s natural mineral resources for the industrial growth in the country and at the same time improving the life of people living in the mining areas, which are generally located in the backward and tribal regions of the country.

FY-08 tax receipts top Rs 5.88 trillion

India's tax receipts crossed Rs 5.88 trillion during 2007/08, and senior officials said the government was confident of attaining this year's target despite duty cuts and a possible slower growth in the economy. Direct taxes grew by 38 percent to Rs 3.09 trillion in the last fiscal year, while indirect taxes were more than Rs 2.79 trillion, the chairmen of the two tax boards said late on Wednesday. Higher revenue growth is crucial for the federal government as it plans to spend more on social projects, subsidies and a farm debt scheme while cutting fiscal deficit to 2.5 percent of gross domestic product in 2008/09 from 3.1 percent in 2007/08. In February, India slashed excise duties on a wide range of manufactured goods including cars and raised the income tax exemption limit to boost demand in Asia's third largest economy. The federal government has also cut import duties on edible oils as part of efforts to tame inflation that hit a three-year high of 7.41 percent in late March. "The economy is growing at a robust pace, income of individuals have gone up and compliance has increased. There has been evidence that lower tax rates have led to higher receipts," Chairman of Central Board of Direct Taxes, P K Misra, said.

"We will be exceeding the target for this year also," he said, referring to a 3.65-trillion-rupee budget estimate for 2008/09. Direct taxes exceeded an upwardly revised target of 3.04 trillion rupees in 2007/08 with corporate tax receipts growing 33.4 percent to Rs 1.89 trillion while income tax was up 44 percent at Rs 1.1 trillion, he said. "Another Rs 3,000 crore is expected to come." P C Jha, chairman of Central Board of Excise and Customs, told media: "We will no doubt cross the budget target this year also." India has set a target of Rs 3.23 trillion in indirect taxes which includes excise, customs and service tax. While duty cuts will definitely have some impact on revenues, Jha said the robust growth in industry and buoyant imports would offset the duty foregone.

Invest in property, hedge inflation risk

Inflation has touched high levels. It soared past the seven percent mark pulling up with it prices of food, essential commodities and manufactured goods.

Investments in debt

Debt or fixed income instruments seek to preserve capital and provide relatively small returns. These are low-risk, low-return investments. In an inflationary economy, investment in debt may not work out to be feasible. Suppose there is an instrument that yields four percent returns and the lock-in period is five years. If inflation is marching up with leaps and bounds, the value or purchasing power of money will come down in these five years. In order to beat inflation, the returns have to be greater than the meager four percent. Debt funds and bonds will erode your hard-earned money in a high inflation economy. The minimal returns from long-term bank deposits will not help you for your expenses like saving for children's marriage or education.

Investments in equity

The stock markets are highly volatile. There are times of bull rides, and at other times, disappointing bear market conditions. The alternating patterns of ups and downs take investors by surprise. This unpredictability is a major drawback of equity. Many investors churn out big profits, many others lose everything. Investments in equity must be done with a long-term perspective. Small investors can see good returns if they stay invested for 5-10 years. Stock markets are an excellent hedge against inflation. But the investor must be knowledgeable to pick fundamentally-strong stocks with excellent growth potential. Wrong picks can prove detrimental.

Investments in property

Investments in property are an excellent hedge against inflation. With inflation the construction costs are bound to go upwards. As the years roll by, the value of the property increases many times. Unlike investments in debt, the returns here are in line with inflation. Investing in a house or piece of land gives you the pride of ownership, much-needed capital appreciation and excellent rate of returns. It is considered a wise way of risk diversification and an excellent hedge against inflation.

MARKET PREDICTION

GLOBAL MARKETS ARE POSITIVE AFTER CRUDE & GAS PRICE TUMBLED DOWN AND ALSO SOME POSITIVE RESULT BY USA FIRM.
TODAY IS THE LAST DAY OF APRIL SERIES.
NITY WILL OPEN POSITIVE NOTE........LEVEL OF NIFTY IS 5000-5060-5100
BUY FROM 5100 AND ABOVE ELSE FROM 5000 LEVEL
GOOD OI INTEREST BUILD UP AFTER JAN MELT DOWN THAT IS 75600 CR.
MAY OI IS 38000 CR.
PUT CALL RATIO IS 1.35.
THIS TIME OIL EXPLORATON,METAL,CEMENT SEEN GOOD ROLL OVER.
FEW MID CAP STOCK LIKE CAIRN,WELGUJ,RPL,BRFL HAVE SEEN GOOD ROLL OVER.
HAVE A NICE EXPIRY DAY