Sasol and the Liquid Coal Revolution

some companies are the children of closed markets and now are doing great in a free world - they began their existence and innovation for a reason - free markets were not allowed to operate. India's Wipro is often cited example. with the forced exit of IBM and other companies in the socialist revolution of the late 70s, firms like Wipro had a new market and were forced to innovate in the IT area. There are companies world over like this.

Sasol is terrific example. Due to the apartheid regime in south africa , oil was very difficult to get. so, they had to find a way out and focussed on improving the technology to get oil from coal. today, Sasol is worth $22 billion according to the stock market valuations!

"Liquid Coal: Then and Now

Enter an old technology that has been gaining plenty of new steam lately: Coal Liquefaction. The technology of producing a liquid fuel from coal or natural gas is hardly new. The Fischer-Tropsch process was developed by German researchers Franz Fischer and Hans Tropsch in 1923 and used by Germany and Japan during World War II to produce alternative fuels and overcome their limited access to oil. Germany utilized the technology to produce 6.5 million tons, or 124,000 barrels a day.

South Africa has also been producing liquid coal for a number of years, developing the technology to tap its large coal reserves and seeking ways around apartheid sanctions. In fact, liquid coal meets 30 percent of the transportation fuel needs in South Africa."

here

if u find more examples like these please do mail us, and we shall try to dig out more.

Imported coal

BL reports

In a bid to meet the increasing demand for coal, Government is examining whether the public sector behemoth Coal India Ltd (CIL) could be allowed to import coal and sell it to the domestic customers.

However, following the recent Supreme Court order stating that price discrimination through e-auctioning method violates the Constitution, the modalities of selling the imported coal is to be determined suitably, sources said.

"The question is whether CIL will have to sell the imported coal at market determined prices through e-auctions or the company has to stick to notified prices as in the case of domestically produced coal. This has to be a policy decision by the Government," sources said.

You would have thought, in a commodity like coal, price would depend on its quality and not on whether its imported.

TN farmers want govt to raise milk procurement rate

BL reports

The Salem-based United Farmers Association has asked the State Government to increase the milk procurement rate which will encourage producers to increase output and at the same time, buttress the farmers' income.

There is a need to supplement the income levels of the farmers in rural areas affected by high inflation and raising the procurement rate will directly benefit the rural folk largely involved in rearing milch animals, according to Mr P. Vyapuri, President of the association.

Real estate agents

With the power that real estate agents can only dream of. BS reports

Over 1,00,000 acres will be taken over by the Chhattisgarh, Jharkhand, Orissa and West Bengal governments or government agencies, as state administrations attempt to kick-start development by getting investors to put up smokestack industries.

The West Bengal government faces the unenviable task of acquiring more than 35,000 acres using the state land acquisition machinery for special economic zones (SEZs) in the state, besides 1,600 acres for the Tata projects, 6,500 acres for the Jindal Steel project and 1,000 acres for the Reliance Retail initiative.

More

K'tka govt reimposes ban on cola in schools

BS reports

The Karnataka government on Wednesday re-imposed a ban on the sale and distribution of soft drinks within the premises of schools, colleges and hostels with immediate effect. A notification to this effect was issued by the state government on December 18.

The decision evoked a strong response from industry body, Indian Soft Drink Manufacturers Association (ISDMA). “The Indian soft drink industry is shocked at today’s development in Karnataka,” said a statement issued by the association.

Only two days before the current notification, the Karnataka government had withdrawn the previous ban imposed on soft drinks in August 2006.

Justifying the current ban, R Ashok, Karnataka’s health minister, said, “We have consulted the legal cell of the state government and decided to reimpose the ban as per the provisions under Article 162 of the Constitution. However, we cannot ban sale of soft drinks in hospitals and government offices under this Article.”

Now look at this by Tim Harford in Slate: My school used to offer two varieties of food. There was cafeteria food, which was inedible, and there were chocolate bars from the snack shop. For two years, I had four chocolate bars for lunch every day.

These days schools are trying to outlaw the unhealthy options, but some markets are irrepressible. William Guntrip is a 13-year-old boy whose central England school banished vending machines and snack-shop food in favor of nutritious offerings at the cafeteria. Guntrip spotted a market opportunity and has been buying soft drinks and candy and reselling them in his school playground. The school is trying to stop him and claims that most students are happy with the new regime, although if that was true then Guntrip wouldn't be making nearly $100 a day.

Suppressing a market is a bit like squeezing a balloon—the trade will usually pop up somewhere else. Let's remember, here it's the government which is imposing the ban.

Cinema tickets in TN level-pegged

ET reports

RESPONDING to the demands from various segments of the Tamil film industry, the Tamil Nadu government on Wednesday announced rationalisation of cinema entry tickets across the state. It has also agreed to quash an earlier government order permitting theatres to increase entry tickets during the first fortnight of a new movie release.

The government has fixed a maximum ceiling of Rs 50 for AC theatres in corporation limits like Chennai, and a Rs 10 minimum rate. In the case of non-AC theatres, it will be Rs 7 at the lower end and Rs 30 at the higher side.

The move is likely to hit hard a number of multiplexes (which normally charge Rs 100 to Rs 150) being planned by PVR, Inox, Shringar, Adlabs and Cinemax in the state.

Veg oil industry against cuts in import duty

FE reports

The vegetable oil industry has demanded the restoration of earlier duty structure for imports of palm oil. They have cautioned that any move for further cut in import duty for vegetable oils would spell a doom for growers as prices of oilseeds have started declining. The industry has demanded that the import duty on refined palm oil be restored back to 90% and that on crude palm oil to 80%.

More

Indian justice - delayed, but not denied, atleast to a few

Nothing new. Economist writes

Proceeding carefully is no doubt a virtue in justice, particularly in complicated terrorist trials. But the time taken for the final blow to fall from the gavel reflects blockages in the system. There are currently more than 30m civil and criminal cases pending. India has 11 judges for every 1m people, compared with 107 in America, so the backlog will not be cleared soon. Whether a case is seen through or neglected can seem rather arbitrary. Those who demanded justice for Miss Lal and Miss Mattoo proved more fortunate than many.

The government is so underactive here, because it's so overactive here

Minimum wages

FE reports

Around 160 colleges under Calcutta University employ part-time teachers to fill the gap in permanent teachers. The part-timers get either Rs 2,000 for six classes a week or Rs 75 each class. They do not get any other benefits. Months ago, state finance minister Asim Dasgupta promised to address the gross injustice against part-timers who are post-graduates. He told the part-timers that they would get Rs 4,000 a month and the state would take on the additional financial burden. The only condition is that the colleges have to justify the engagement of part-time teachers. Today, the part-time teachers are jobless.

Export bias

Assocham secretary general DS Rawat writes in Financial Express

Indian exporters, especially small-scale exporters, cannot do without the fiscal incentives provided to them by the government. The small-scale sector we know is a principal contributor to the country’s exports; specifically they still constitute around 40% of India’s total exports. For the continued contribution of these units to exports, they must be provided with production and export incentives, support for adoption of latest technology, advisory services, and market support to sustain their competitiveness in the international market.

One of the most important arguments for not scrapping the corporate tax and excise duty exemptions is that the general exporter is extremely dependent on them. Our internal survey of ten major sectors in September 2006 shows that exporters were highly dependent on promotional schemes and incentives. They still look to the government to provide them support in their export endeavours.

Moreover, compared to other countries, both developing and developed, it has been felt that India offered its exporters relatively less incentives, and if the present exemptions were to be scrapped, it would seriously affect our future trade potential. Assocham is a firm believer in providing such institutional/financial/promotional incentives to boost production and exports and accelerate growth, so that India raises it share in global markets.

A couple of questions. These arguments - why don't they apply to those who supply to domestic market? What about importers?

Banks` exposure norms eased

Final guidelines remove Rs 10 lakh cap on loans for broking firms, corporates.

In a major relief for broking firms and corporates, the Reserve Bank of India has said that the ceiling on bank loans and advances against shares and debentures will apply to only “individuals” and not “single borrowers.” This means that there will not be any squeeze on bank advances to broking firms and corporates.

Any individual can now borrow from the banking system against security of such investments of up to Rs 10 lakh if the security is held in physical form and of up to Rs 20 lakh if it is in the demat form.

The central bank has kept the overall ceiling on a bank’s aggregate capital market exposure to 40 per cent of its networth.

here. (may require subscription )

it is interesting how the Central aims to influence the stock market.
particularly the clause - "Any individual can now borrow from the banking system against security of such investments of up to Rs 10 lakh if the security is held in physical form and of up to Rs 20 lakh if it is in the demat form."

maybe knowledge bankets and stock market participants should be a wee be exposed to market forces!

Continue textile tech fund till end of 11th Plan: Industry body

More lobbying from textile makers. BL reports

The Confederation of Indian Textile Industry (CITI) has asked the Centre to continue with the technology upgradation fund scheme (TUFS) for textile sector in its present form till the end of the 11th Plan period

Another argument here

One of the arguments forwarded in support of this approach, according to Mr Agarwal, is that support to individual companies under the TUFS would be inconsistent with the WTO norms.

If so, some of the largest trading countries in the world such as the US and China were too operating support schemes which are inconsistent with the WTO norms.

In many cases, these schemes were being continued despite specific objections from the WTO, he noted.

Who pays?

Should the state buy land for the private sector?

BJP leader M Venkaiah Naidu makes some good points in a debate in BS:

Land acquisition through the state is inherently unfair to the land owner since it is done through the Land Acquisition Act, which is a unilateral piece of legislation, heavily favouring the state in its power to acquire land. The Land Acquisition Act had been brought in primarily to acquire land for developmental purposes, for purposes serving the greater common good, like roads, bridges and other such projects. In such cases, the state is free to determine the amount of compensation that land owners get.

The SEZ or industrial unit that is being set up is in that sense not a “governmental” project, but a commercial one. Our examination of SEZs/industrial units has shown that promoters prefer that land be acquired by the states in question and then resold to promoters as a chunk. They prefer this to negotiating with each farmer on market prices. The Land Acquisition Act is so skewed in favour of the state government, that many times, there is a huge difference in the price paid by the government to the land owner and the rate at which the land is resold to the SEZ promoters/industrial units. The promoters who gain a lot from the project, don’t mind paying a bit more for the land. Would it not be better if this premium on the land could be encashed by the land owner rather than the government?

This puts the government in the role of a land shark or even a real estate agent, which is not its job. We want that SEZ promoters/industrial units negotiate with the land owner and determine a fair price through the mechanism of the market.

More here

Anti-dumping duty on non-radial tyres from China and Thailand

ET reports

The department of revenue has imposed provisional anti-dumping duties on imports of non-radial tyres, tubes and flaps imported from China and Thailand. The department has fixed the benchmark price for tyres originating from China at $88.82 per piece. Any import below this price would attract anti-dumping duty.
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While this may come as good news for tyre manufacturers like Ceat, Apollo, JK and Birla Tyres who had asked for an investigation into the entire pricing structure, the duty has ruffled the feathers of tyre importers and dealers. Truck and bus operators who had opposed the move would be affected due to higher prices, industry sources said.

India’s Absurdities

Omkar Goswami writes in BusinessWorld:

A friend of mine who has recently taken up a career as an independent consultant was given a serious run-around in getting a service tax registration. The authorities wanted proof of residence. He submitted the most recent bank statements as well as copies of his telephone bills — both of which carried his address. These were summarily rejected. Guess why? Because the bank statements were from a private, non-nationalised bank, and because his was an Airtel phone connection. According to the service tax babu, statements from private sector banks and telecom providers do not constitute valid proof of address. Those from state-owned banks and MTNL and BSNL do.

Eventually, my friend had to get a certified copy of his home rental agreement on stamped paper before the service tax office accepted it as a proof of residence. Had he been living in his father’s house, he would have been in serious trouble, for he would not have been able to give a rental agreement.

And concludes

The older I get, the more I focus on the micro: laws, rules, regulations, approval processes, and the nitty-gritty of doing business.

India’s macroeconomics is par for the course. It’s the myriad dysfunctional micros that drag us back. Like the absurdities that you have just read. And the many others that you, dear reader, could offer as examples. We are like that only.

I guess, this is yet another example of what we saw a few posts back. Rules are tilted in favour of businesses run by government - in many small ways.

Textile makers want interest rate subsidy to continue

BL reports

Any move to discontinue the technology upgradation fund scheme (TUFS) for the textile sector beyond March 2007 would lead to the collapse of investment plans drawn by the textile industry for the 11th Plan period.

Such a move may also erode the competitive edge wielded by the Indian textile sector in the global market because different free trade agreements signed by the country are expected to come into force only during the period, according to Southern India Mills Association (SIMA), the apex textile trade body.

Expressing apprehension over recent media reports suggesting that the Union Government is not keen on giving an extension to the operation of TUFS beyond March 2007, when the tenure of the scheme would expire, the SIMA Chairman, Mr S.V. Arumugam, noted in a communication that revival of the domestic textile industry took shape since 2003 due to Government's proactive measures such as fiscal policy changes, low interest regime and thrust for modernisation under TUFS.

Consider the reference to FTA. This in effect means, let Indian tax payers subsidize what foriegners buy, is it not?

How Much Does Violence Tax Trade?

Economists S. Brock Blomberg and Gregory D. Hess write (pdf)

for a given country year, the presence of terrorism, as well as internal and external conflict is equivalent to as much as a 30 percent tariff on trade. This is larger than estimated tariff-equivalent costs of border and language barriers and tariff-equivalent reduction through GSPs and WTO participation.

Amartya Sen says 'Indian government has been overactive, where it should have been underactive, and underactive where it should have been active.' So true. I guess we can add that a government is underactive in areas where it should be active because it has been overactive in areas where it shouldnt be active. Leaving running businesses to businessmen, and focussing on external security and law and order within, it appears, would be a double blessing for an economy.

Subsidy for rural mobiles: Bill passed

BL reports

The Lok Sabha today passed a Bill enabling cellular mobile service providers to get financial support from the Universal Services Obligation Fund for offering mobile services in rural and remote areas. At present, the USO fund is mandated to support only fixed line telephone in rural areas. However, with wireless technologies offering cheaper and more affective means of communications, the Government had introduced an amendment to the Indian Telegraph Act in Parliament to enable the fund to be used for supporting cellular services.

Replying to a debate on the Indian Telegraph (Amendment) Bill, the Communications and IT Minister, Mr Dayanidhi Maran, said that it was necessary to provide support to the mobile operators in order to replicate the urban success of telecom services in rural areas.

The subsidy would be given for a period of five years to cover nearly 2.5 lakh villages in remote areas. Some members expressed concern that the support to cellular operators may divert money from the USO fund, primarily created to finance fixed line projects by BSNL and MTNL.

Supporters of economic reforms have long cited the success of (private and relatively free) telecom sector in providing access even to poor. I dont know the details of this scheme, but i am not sure if subsidies are the best way to replicate urban success in rural areas.

When government runs a business

FE reports

Amidst the debate on creating another state-owned power equipment manufacturing company,Bharat Heavy Electricals Ltd on Friday dubbed the idea as "ironic" and said a company of its size would require an investment of at least Rs 20,000 crore.

"Do we need another such company when BHEL has operated below its capacity all through the 40 years of its existence due to the lack of demand in the country," BHEL chairman and managing director AK Puri said when asked about power ministry's indication to set up a BHEL clone for adding massive generation capacity.

Both power minister Sushilkumar Shinde and Secretary RV Shahi have said in the past that BHEL, the country's largest power equipment manufacturer with more than Rs 40,000 crore of orders in hand at present, was "overburdened" and there was a need to establish another state-owned supplier.

Why state-owned supplier?

Draft policy that seeks to control drug prices by Dec end

FE reports

The draft of the much-awaited new pharmaceutical policy that focuses on controlling prices of essential drugs has been finalised and would be sent to the Cabinet by this month-end, chemicals and fertiliser Minister Ram Vilas Paswan said on Friday.

“The Satwant Reddy Committee has submitted its report and we will be sending it to the Cabinet for approval by the end of this month,” he said on the sidelines of GlassTech International expo.

Asked about the differences with the industry on the mechanism of bringing down prices of 354 drugs under the National List of Essential Medicines, Paswan said the ministry has favoured the price control route. “We have proposed the price control model in the draft, but ultimately the Cabinet will decide,” he said.

The ministry and the pharma industry have been at loggerheads over ways to make medicines affordable to the common man as per a Supreme Court order.

Privatize, privatize, privatize?

BS reports

The urban development ministry has opposed the bid of Hotel Excelsior Private Ltd, which runs the five-star Shangri La Hotel in the Capital, to get its property converted from leasehold to freehold.

The company took over Kanishka Hotel during the disinvestment scheme under the NDA regime.

According to government policy, the hotel was given to the company on a 99-year lease. However, the company had approached the Delhi High Court two years ago, seeking conversion of the property from leasehold to freehold, thereby confirming its ownership rights of the land as well.

This permission was granted by a single-judge Bench. The ministry has now challenged the singe judge’s order and filed an appeal before the Division Bench of the high court.

With crores of rupees at stake, this will be a heavily contested litigation for the government because at the time of disinvestment, the government had not taken into account the market value of the hotel land while fixing the reserve price.

Only the business was sold and not the land. The land value assessed at that time was also much lower than the pre-determined commercial rate.

This vaguely reminds me of the privatisation in Russia, when state owned assets were sold to businessmen at throwaway price. Conversion of the property from leasehold to freehold - without compensating the government - would amount to just that, it seems to me.

At the sametime, i wonder what's the point in these kind of limited privatisations. May be it's a step forward - or is it half a step?

Allow broadband on DTH, VSAT: govt panel

"NEW DELHI, DEC 6: A high-powered inter-ministerial committee has recommended that DTH and VSAT operators be allowed to offer wireless broadband for a much faster, especially in rural areas, using satellites. The committee has said that suitable regulatory and policy initiatives be devised for permitting VSATs and DTH operators to provide broadband connections.

The move will benefit DTH service providers Tata Sky and Zee group’s Dish TV. Anil Ambani-controlled Reliance Dhirubhai Ambani has also announced a DTH venture while communications and IT minister Dayanidhi Maran’s brother Kalanithi Maran has plans to launch a DTH service under the Sun TV network. " here

we think the move to allow net access through DTH could do more for rural connectivity than all previous and future govt. efforts put together. imagine getting connected to the net anywhere and having access to net based telephone service like vonage or free ones like skype.

freemarkets are not just about free movement of good and services but govt. remaining technologically neutral to allow unhindered flow of technology for the benefit of humanity.

ps: a friend of ours says SKY TV in UK offers unlimited broadband for ten pounds a month (about rs 850) at speeds of 2 mbps! cheaper than airtel and bsnl 256 kbps connection here in india.

Rein in maize prices: Poultry firms urge

BS/PTI reports

The poultry industry is currently facing a severe crisis due to unprecedented increase in the price of maize, the most crucial ingredient of poultry feed accounting for more than 80 per cent of the cost of production of eggs and broilers, the committee said in a release here today.

At the present level of production, poultry sector contributes approximately Rs 35,000 crore to the economy and provides direct and indirect employment to more than 3.2 million persons, it said.

Normally at this time of the year, maize prices range between Rs 500 to Rs 550 per quintal.

However, this year, the price has gone up to Rs 900 per quintal and in some parts of North India, it is as high as Rs 1,000 per quintal, it said.

The government is apparently following the example of developed countries, where forward trading is a norm. However, there is a vast difference between agricultural farming of the developed countries and that of India, the NECC said.

“We are afraid the prices of eggs and chicken will further rise,” it said and asked the government to take steps to ensure that maize is available in adequate quantity and at affordable price to the poultry farmers.

Schools can’t levy fees at will: Court

TOI reports:

A consumer court has directed the Delhi government to set up a committee for fixing a ceiling for the maximum admission and tuition fees that private schools can charge at the time of a student’s admission.

Expressing anguish over the practice of airconditioned schools fixing very high admission fees, the president of the city’s apex consumer court—state consumer commission—Justice J D Kapoor, gave a month to the director of education to constitute the committee.

The panel will comprise representatives of private schools and societies which run schools, and fix the maximum limit of admission fees as well as tuition fees by taking into consideration the quality of education being provided by them, he said. ‘‘Education should be treated as a pious and noble cause and not a trade or commerce,’’ Justice Kapoor said, adding that quality of education in a school should be the only benchmark for fixing admission fee and other charges.


The commission said schools claiming to offer central ACs in their classrooms and providing airconditioned school buses should not be allowed to fix an astronomically high amount as admission fee.

Superb suggestion! In fact every school should have its own panel, comprising of parents of all the students (surely the parents have more concern about the quality of education their children get, and in a better position to know what fees they can afford). And those panel members who think the school is charging too much should enrol their children in some other school.

That will be a good lesson for the schools that charge too much!

[[[Update: I realised my comment needs some explanation.
There's no doubt that the quality and cost of education should be monitored. But by whom? A committee, says the consumer court.

But a committee is not the best solution - because its memebers can't be as diverse, as concerned about the quality, as knoweldgeable about the paying capacity of parents as the parents themselves. So, an ideal committee should include all the parents.

Let's suppose this committee tries to arrive at a maximum limit by asking each member to give the number they think is the ideal.

Now, if you set the lowest amount as max limit, that should satisfy everyone - but the school might have to close down. The average might be right for some, too low for some others, and too high for the rest. And the highest amount wouldn't make sense for anyone except for the highest bidder. A single number can't be fair to all. It's not right to impose a 'solution' on people who think it's not a solution. It's probably far better to let the people decide and take action for themselves.

So, how will they do that? Let's say, the fee is too high for 90% of parents, it's better for them to vote by feet, and look for another school. They can send a stronger message to school by doing this, than by spending hours to persuade them to reduce the fee. (Using government to reduce the fee is not fair, because it is just another way of saying using force, for the government essentially says 'do this or else you will be punished'. As long as the transaction is voluntary, there is no role for government. It's a different case if the school cheats or goes back on its promise.)

So if the 90% decide not to join, the school might decide to run with 10% of the students; or if it can afford, bring down the fees to retain some more; or close down. In short, letting the customers decide and take action is far better than let a committee do that. In other words, market is better than a committee.]]]]

Fuel price cut

BL reports

State-owned oil marketing company Indian Oil Corporation Ltd (IndianOil) said on Wednesday that it was facing an extra burden of Rs 8 crore per day due to recent fuel price cut. "We are losing an additional Rs 8 crore a day on sale of petroleum products after the recent price cut. Our total revenue loss per day is now close to Rs 53-54 crore," Mr Sarthak Behuria, Chairman and Managing Director, IndianOil, said.

The Government reduced prices of two petroleum products - petrol and diesel - by Rs 2 per litre and Re 1 a litre on November 29. The company is losing Rs 2.1 per litre on sale of diesel, Rs 132 per cylinder on cooking gas, and Rs 13.81 per litre on sale of kerosene. However, the company is making a profit of Rs 1.67 a litre on sale of petrol while it was about Rs 4 per litre prior to the price cut.

What happened to Rangarajan Committee report (pdf)?

Builders want more regulation in steel and cement

BL reports

The 22nd All India Builders Convention, which concluded here recently, called for establishment of an independent Ministry of Construction as the construction activity, with major thrust on infrastructure, being the key to achieve double-digit economic growth.....

Under free economy, consolidation in cement and steel industry has gathered momentum, resulting in "unfair, monopolistic trade practices detrimental to the construction industry," a press release said. A resolution called for establishment of a Steel Regulatory Authority and a Cement Regulatory Authority on the lines of SEBI, IRDA and TRAI.

How lobbying starts

BS reports

Even as the government is mulling an umbrella legislation to block investments on security grounds from other countries, 32 Chinese firms in India have come together to form the Chamber of Chinese Enterprises in India (CCEI), which will lobby for Chinese commercial interests here.

The chamber, set up recently in the capital, is the initiative of the Embassy of the People's Republic of China and headed by Hongsen Wang, managing director, Sino Steel India Pvt Ltd.

The formation of this chamber is also relevant in the context of complaints from China on discrimination against Chinese companies by the Indian government.

Sources in Sino Steel India said the chamber would work for the interests of Chinese enterprises and promote high-level business and political talks between the two sides. Currently, there are around 50 Chinese companies in India.

The CCEI will help Chinese companies resolve trade problems with the Indian government.

"It will help Chinese enterprises in appearing as a collective entity and the chamber will represent the companies’ interests to the Indian government," sources said.

According to Ficci Secretary General Amit Mitra, the formation of the Chinese chamber indicated the increasing presence of Chinese companies in India.

An interesting space to watch. (Remember Adam Smith quote here)

Doing business with India

BL reports

The Supreme Court has ordered the Union Government to allow export of pulses by two firms, which were refused permission to send their consignments on the grounds that a ban had been imposed on such shipments from July 22.

Dismissing an appeal by the Centre against rulings of the Gujarat and Delhi High Courts, a bench comprising Mr Justice S.B. Sinha and Mr Justice Markandey Katju, said any prohibitive order promulgated by statutorily could only have prospective effect.

The bench, however, said the Delhi High Court order declaring a notification issued by the Centre on July 4 as ultra vires, was not sustainable. The July 4 notification permitted export of pulses for which irrevocable letter of credit had been opened before June 22, when the ban was decided to be imposed.

Contracts

The case relates to contracts for export of 415 tonnes of pulses signed by Asian Food Industries and for shipment of 3,000 tonnes of chickpea by Agri Trade India Services Ltd, which won a tender floated by the Trade Corporation of Pakistan.

Asian Food had received orders from the Gulf and executed contracts between April 22 and May 2. It also received 20 per cent of the contract amount totalling $2,94,942 as advance for supplying pulses. As per the contract, it had to ship 107 containers, of which 20 were sent between June 22 and 24. The rest were to be sent from Kandla Port between June 23 and June 26.

However, as the Centre took a decision to ban pulses export on June 22 and issued a notification on June 27. This led to the port authorities refusing to allow the consignments despite being cleared by the Customs authorities.

Permission refused

Subsequently, the Centre came up with a notification on July 4 allowing exports of contracts for which the LC were opened before June 22.

Though Asian Food took up the issue with various authorities, it was refused permission resulting in the firm moving the Gujarat High Court. The High Court in its order said the shipments should be allowed as the Customs authorities had cleared and permitted loading of the goods on the ship. Moreover, the bill of lading had also been filed.

In the other case, Agri Trade signed an irrevocable letter of credit on June 24 and on June 2, it filed invoices with the Customs authorities. But again, Kandla port authorities said they would not allow the shipment in view of the ban. A writ was then filed in the Delhi High Court, which asked the authorities to permit the shipment.

It's not difficult to see why a ban should only come to effect prospectively. Forcing people to break the perfectly legal contracts they entered into won't do any good for a country's reputation. Wonder why it's more difficult for some to see that it's equally bad for a government to force people not to get into some contracts in first place.

Tariff

FE reports:

Lavin also said, although India had lowered its peak tariffs to 12.5%, average tariffs at 34% were still very high. Moreover, there were some products on which duties were more than 100%. In comparison, the US had average customs duties of just 4%, he said.

Corporate rivalry at play in Singur: CPM

FE reports:

The CPI-M on Monday hinted that corporate rivalry could be behind the recent land acquisition row in Singur where the Tatas are planning to set up their ambitious Rs 1 lakh small car project.

Without naming any company in particular, CPI-M leader Sitaram Yechury set the cat among the pigeons by saying there could be more than meets the eye for the motivation to turn the Tatas’ land acquisition process into a raging controversy. “There may be some whose interests would be hurt when the Rs 1 lakh car comes out. It is for the media to find out who could be behind all this,” Yechury said.

For the record, Yechury refuted the charges that farmers were getting a raw deal, asserting that the “highest level of compensation” was being granted. Comparing the deal with similar ones in Maharashtra, Yechury pointed out that CIDCO paid only about Rs 24,000 an acre in the state, while Singur farmers were getting Rs 8.4 lakh an acre for single-crop land and around Rs 12 lakh for multi-crop land.

Don't know how true this is. But who knows!

Tasting anti-dumping duty medicine

Being a victim often offers better perspective. FE reports:

Shrimp exporters have questioned the very relevance of the anti-dumping duty imposed by the US in the wake of latest reports of payouts of around $100 million by the US government to its domestic shrimp industry.

A major part of the payouts under the Byrd law of distributing revenues from dumping duties collected, exporters said quoting US reports, will go to a select few big firms, making the whole issue of dumping a farce.

According to analysis, around 60% of the money would go to 20 top seafood firms, they said. This would mean that a large section of the industry there would have very little benefit from the whole exercise of imposition of anti-dumping duty to ‘protect’ the domestic industry.

Of course, India leads the world in using anti-dumping measures.

Exporting iron ore is bad for country, says Jindal

JSW Steel MD Sajjan Jindal tells FE:

I think Indian decision-makers need to take a far-sighted view on this issue. In today’s cut-throat competitive world, while every nation is trying to play off its strength in order to remain competitive and survive, we are literally obliterating our strategic advantage by exporting our iron ore. In fact, in 2005-06, we exported almost 90 mt of our 165 mt iron ore production. Many in the mining fraternity believe India has abundant reserves—enough to last for hundreds of years. What they don’t understand is that India’s per capita iron ore availability is one of the lowest in the world at only 21 tonne per person.

Suppose the demand for steel picks up in overseas market, and domestic customers are not willing to pay enough I wonder if steel makers will still make 'strategic advantage' argument and ask the government to ban steel exports.

Anyway, case after case shows that the best way for a country to gain and sustain 'strategic advantage' is to simply let businessmen decide where they source money, material, machines and mangers from and to whom they sell their products/services. Even with this freedom to choose, high transaction costs would mean that businessmen often have to act sub-optimally. I dont know if there is any point in government adding to those costs (by tariffs, immigration restrictions etc). But, governments do that all the time - sometimes in the name of protecting domestic business, and sometimes in the name of national security.

Two examples from today's BS
After a delay of four months, Indian intelligence agencies have given security clearance to International Container Terminal Services Inc (ICTSI) of the Philippines for participating in the Rs 1,200-crore offshore container terminal project at Mumbai Port Trust (MbPT).

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Telecom firms that have non-Indian CEOs or CFOs may get to keep them, as the Department of Telecommunications (DoT) is understood to have convinced security agencies that such foreign executives were no threat to the country.

DoT, which held extensive discussions with security agencies in this regard, had also possibly found a practical solution to allowing companies remote access to haul telecom traffic from outside India, sources said.

When a government runs a business

BS reports

The government want perks of executives of Central Public Sector Enterprises (CPSEs) to be linked to their performance, but is also anxious to see that their earnings do not exceed those of bureaucrats.

The Pay Revision Committee, set up last week, has been asked to examine productivity-linked incentives and performance-related payments.

The government wants the committee, which will be headed by retired Supreme Court Judge M J Rao, to look at performance-linked payments and incentives as a tool to transform CPSEs into professional and successful commercial entities.

However, while talking about linking payments to performance, the government also wants to ensure that this does not lead to a situation where emoluments of officials of CPSEs far exceed those of bureaucrats.

* Governments tend to balance such constraints with its power to make laws that favour state-run organisations. (A recent example. A government agency in West Bengal acquired over 990 acres land for Tata's 1 lakh car project. But, it cannot transfer the land to Tata, because land ceiling laws in that state restrict private land ownership to 24 acres.)

* Some of us argue it's competition that matters, not ownership (pointing out to the much improved service by BSNL these days). But laws that favour state/state-owned businesses should make us think again.

* There is no reason why this should be so. Forget a government doing things that others see as immoral (killing dissenting people in authoritarian states, for example). We saw a few posts back that a government need not necessarily worry about doing things that even it sees as bad for the country. (Whether it's right in thinking so is a different issue)

Reliance wants a level playing field

BS reports:

The country’s leading retail chains have raised apprehensions that the collaboration between Bharti Enterprises and Wal-Mart could provide backdoor entry to the world’s largest retailer.

Retailers point out that the government allows 100 per cent foreign direct investment in wholesale cash-and-carry and Bharti Enterprises and Wal-Mart are planning a joint venture in this area.

However, there is nothing preventing them from supplying products to only stores controlled by Bharti Enterprises, which is planning to set up a nationwide retail chain.

According to sources, Reliance Retail boss Mukesh Ambani has met Commerce Minister Kamal Nath to seek a level field for Indian retailers.

What about government giving a level field for smaller retailers, facing unfair competition from Reliance Retail!