Sugar mills demand transport sop

BS reports

The Maharashtra State Sugar Co-operative Factories Association Ltd. (MSCFAL) has asked the state government to give transport subsidy and compensate losses they might incur on recovery due to extended crushing season.

Due to good monsoon this year, Maharashtra's sugarcane production for 2006-07 season has increased by almost 80 per cent from 445 lakh metric tonne to 700 lakh metric tonne.

Now, the state government is pressing those sugar co-operatives and private sugar mills who have excess capacities to take responsibility of crushing sugarcane. The sugar co-operatives have shown willingness to take this burden but sought financial assistance from the government.

Government bans wheat exports

BS reports

In its latest initiative to control the rising prices of essential food items, the government has banned wheat exports for the whole of 2007.

A notification from the Directorate General of Foreign Trade (DGFT) said the ban came into effect on February 9.

Agricultural commodities, including wheat, have contributed significantly to the steady rise in inflation, which stood at 6.58 per cent for the week ended January 27. The wholesale inflation level in wheat for the same week stood at 11.74 per cent.

Skype refutes Trai charges

BS reports

The Nasdaq-listed Skype has clarified that it is not a service provider nor a grey market operator, but is a software application allowing users to communicate free over the internet. The company, in its reply to the consultation paper on ‘Review of Internet Services’, stated that inclusion of Skype as a “grey market foreign company” was not correct......

The company is responding to a statement by the Telecom Regulatory Authority of India (Trai), which had mentioned Skype as a grey market company. The regulator, in its consultation paper on December 27, 2006, stated that companies such as Skype, MSN and Messenger were offering IP-based telephone services without paying the licence fee to the government.

The regulator had said: “Loss of revenues, unlicensed operation by certain firms and depleting market share of licensed operators are some of the reasons which necessitated a review of policy of internet services and ISP licensing conditions.”....

The US-based company sells ‘SkypeIn’ -- a number which allows the user to communicate over the internet using Voice over Internet Protocol. A ‘SkypeIn’ is being provided for either three or 12 months. SkypeIn is available in 14 countries. It is not available in India.

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Check this too

Microsoft, Skype seek removal of licensing curbs on Net telephony

NEW DELHI: Global internet telephony major Skype has demanded that India remove all rigid application-specific licensing requirements for internet service providers and replace them with a light-touch regulatory regime. It has also said that ISPs should offer full-fledged internet telephony services.

In its communication to telecom regulator Trai on the review of internet services in India, Skype has said that any revenue loss to the government on account of allowing full-fledged internet services, including internet telephony would be “more than compensated for by revenues generated by overall economic gains, taxes on new broadband and e-commerce services, efficiency savings and by e-enabling government departments”. here

An earlier post on internet through DTH services here

If these two services are permitted than rural telephone, net connectivity can be ensured overnight. one wonders if the govt will drag its feet as usual given the strong vested interests in the continuation of the present system and sadly disconnect the aspirations of a large part of the country.

Tata: we have proof of rivals’ role in Singur

FE reports

Tata group chairman Ratan Tata on Monday reiterated that competitors have had a role in stoking the controversy over farmland acquisition for Tata Motors’ small-car project at Singur, and said he has evidence which he will make public at the right time.

“This is true. We have quite clear evidence about it and we will make it public in due time,” Tata said, when it was pointed out to him that the managing director and CEO of Maruti Udyog Ltd, Jagdish Khattar, had dared the Tatas to name the competitor.

Industry for dumping duty on Chinese equipment

BL reports

The industrial sector today fielded one of the top Indian companies to convey to the Government the need for imposing an anti-dumping duty or countervailing duty on import of Chinese equipment.

Speaking in the context of the manufacturing sector, at a World Bank conference on public private partnership in infrastructure, the Larsen and Toubro Chairman and Managing Director, Mr A.M. Naik, said that with the Chinese currency at artificial levels and Chinese firms getting equity from their Government at zero cost, the firms enjoy a cost advantage vis-à-vis their Indian counterparts.

"In most of the contracts that the Chinese firms bag in India, domestic companies lag by a margin of 5-10 per cent," he said adding that Indian firms have to build in a 14-15 per cent cost of equity.

"Till China floats its currency and abides by the WTO norms, the benefit of low or zero duties (on goods imported to India) should not accrue to Chinese firms," Mr Naik said.

'Industrial sector', the report says. Wonder if it includes importers of these Chinese equipment.

Here's another way of looking at this: "A top industrialist complained that Chinese tax payers subsidize Indian buyers, lowering the price they have to pay for equipment. These products made by domestic companies cost 5-10% more. Now, Government should force these buyers to shell out more."

After tur & urad, traders want delisting of wheat

FE reports

The Indian Merchants Chamber, Federation of Associations of Maharashtra (FAM) and Poona Merchants Chamber have demanded the delisting of wheat from the MCX and NCDEX.

After tur dal and urad dal, the traders want wheat off the list. Kanhaiyalal Gidwani, president of the Maharashtra Pradesh Congress Committee’s consumer protection, market, industry & commerce department has sent a memorandum to the Prime Minister, finance minister and agriculture minister Sharad Pawar demanding a delisting of wheat.

Gidwani said, “Delisting of wheat would bring down prices by a minimum of 15-20%.” FAM president Mohan Gurnani said, “Trading of essential commodities will be successful only if there was a maturity level amongst the transacting parties else it will led to price fluctuations.”

BS in an editorial explains why it would be a bad idea to restrict futures trading - here:

The deeper reason why futures trading is extremely important lies in a strategic sense of Indian agriculture. Where is India going on the terrible distortions of the agricultural sector? Is India ever going to move away from the knee-jerk responses of hurting milk farmers one day by banning milk export, and then trying to set up a minimum support price for milk because milk farmers are unhappy? If India is going to make progress towards a well-functioning agricultural sector, then there is no question that futures trading belongs in it. Futures trading is as much a part of modern agriculture as fertilisers, drip irrigation and bio-technology.

Mr Hooda is not alone in his views. The political and bureaucratic establishment that deals with agriculture is deeply steeped in the mindset of a government that prevents agricultural markets from functioning. For this reason—if not for any other—the regulation of commodity futures trading needs to be moved to the ministry of finance, merging it with all organised financial trading, as is the case with all other mature market economies.

And have a look at this earlier editorial as well - here

If the government is concerned about inflation, meanwhile, it should consider how to strengthen the forces of competition in the system—an objective that could also spur growth. The country’s import basket suggests one course of action—the overwhelming bulk of India’s imports consist of intermediate products, which go into final products. The biggest items of import are petroleum and products, engineering items, minerals and metals. Finished products figure very little, except when it comes to electronic goods and technology-intensive items for which India still has a weak manufacturing base. If the imports of more finished consumer goods were to be encouraged, it would add a new element of competition in the Indian marketplace—and discourage producers from jacking up prices when margins are already comfortable. This suggests sharp tariff cuts as the required course of action. The government has already moved in this direction recently, but more can and should be done—judging by companies’ profits to sales margins.

The other reason for encouraging more imports is that capital can be expected to flow into the country in even greater quantities, following the economy being bumped up to investment grade by Standard & Poor’s (Moody’s did it two years ago). Sterilising the dollar inflow will be a challenge to the Reserve Bank of India, which is already grappling with the issue of monetary growth of 20 per cent. The natural balance is when the surplus on the capital account is matched by a deficit on the current (trade) account. This latter figure is now between 1.5 per cent and 2 per cent of GDP. Given the scale of capital inflow, and the cushion provided by foreign exchange reserves, the case can be made for targeting a higher current account deficit. That means encouraging more imports.