inNEW DELHI: Eighty-eight infrastructure and industrial projects, involving investment of nearly Rs 3 lakh crore – which is more than the Centre’s budgeted income tax collections for the current financial year – have become operational over the past few months. This will help in adding jobs and easing pressure on banks, which had lent to the projects that got stuck due to lack of government clearances.


In all, investments worth Rs 2.88 lakh crore have gone on stream in sectors as diverse as power, steel, airports and oil and gas, data collated by the Project Monitoring Group (PMG) in the Cabinet secretariat showed. Power sector saw the maximum number of projects cleared. While PMG was constituted in July 2013, a majority of the projects started getting completed around June this year and the remaining are going to be ready over the next few months.


A dozen projects, involving investment of over Rs 47,500 crore, are expected to be up and running by December-end. Another nine with investment of close to Rs 33,000 crore will be ready in 90 days and another 11 worth close to Rs 67,000 crore will be working in 120 days, the sources said.


Over the past 15 months, the PMG has managed to get all ministries on board to resolve 386 issues related to 181 projects-with a majority dealing with environment and forest clearances and coal supply. Of these 88 are operational but the list does not include several cases such as the Delhi Aerocity, comprising a number of hotels, as the entire project has not gone on stream. There are four hotels, which are yet to be opened and the civil aviation ministry will only treat it as “completed” after that, said sources familiar with the development.


In several cases, the projects have been treated as commissioned if one of the units of, say, a power plant has started working. There are cases where a project had been commissioned in 1981 but the expansion work could not be completed in the absence of fresh approvals.


Operational infrastructure facilities will reduce shortage of electricity and add capacity at several ports and airports. In addition, it will create jobs, especially on the shop floor.


For a number of business groups, it also means better finances as the companies had deployed capital and borrowed from banks to build plants or road projects but were unable to repay the loans in the absence of any cash flow. It had also piled up pressure on banks. With the projects getting commissioned, some companies may tap the buoyant stock markets to raise resources and retire debt accessed from banks and financial institutions.

(Source: The Times of India, October 21, 2014)




NEW DELHI: The government on Monday allowed private companies in the defence sector to sell equipment to state-run entities without prior approval of the defence ministry, a move that could attract investments in the sector. The decision came after the government opened the sector for higher foreign direct investments (FDI) and relaxed compulsory licensing for a number of equipment.


“The licencee shall be allowed to sell defence items to government entities under the control of ministry of home affairs, state governments, public sector units and other valid defence licensed companies without prior approval of the Department of Defence Production (DoDP),” said a commerce and industry ministry statement.


However, it said, for sale of the items to any other entity, the licencee shall take prior permission from DoDP. The government also decided to deregulate the annual capacity for production of defence items by industrial licencees with the condition that licencees shall submit half-yearly production returns to the Department of Industrial Policy and Promotion and DoDP.


Further, it said as a measure of ease of doing business, two extensions of two years each in the initial validity of three years of the industrial license would be allowed up to seven years.


Earlier, the government  had raised  FDI cap in the defence sector  to 49 per cent from existing 26 per cent and allowed even beyond that limit on a case-to-case basis if results in infusion of state- of-art technology.

(Source: Business Standard, October 21, 2014)




MUMBAI: After years of regulatory dithering, foreign and domestic institutions might look forward to entry into the commodity derivatives market.


The Reserve Bank of India (RBI) and the Forward Markets Commission (FMC) are meeting next week to consider the proposal, suggested by a sub-committee of the Financial Stability and Development Council.


Allowing domestic financial institutions such as banks and mutual funds was made by the commodities markets regulator many years earlier. The FSDC sub-committee has gone a step forward by suggesting even foreign companies and foreign institutional investors (FIIs) be allowed in commodities derivatives.


The suggestion was made at a meeting in August, the abridged details of which were released by RBI on Monday.


FIIs, banks and other financial institutions are presently allowed in all financial derivatives such as currencies and equities but not in commodities.


Samir Shah, managing director of the National Commodities and Derivatives Exchange said it had been asking for allowing foreign traders active in India’s physical commodities market to hedge their risk on commodity exchanges. “If allowed, the price discovery in commodities where India is a significant producer or consumer could shift to India,” he added.


Sources familiar with the developments said FMC Chairman Ramesh Abhishek had raised the issue of allowing players from financial institutions to hedge their risk in commodities derivatives. He is understood to have said in the meeting that banks should ask their borrowers who deal in commodities as producers or users to hedge their commodity price risk on the futures platform.


Another proposal was to allow foreign trading companies importing or exporting commodities while based in India to also hedge their price risk. There are some big multinationals like Cargill and Glencore, among others, which have huge trading interests in Indian commodities; they also export wheat, sugar, guar gum and maize, while importing edible oils and others. They are not able to fully hedge their risk.


The commodities derivatives or futures market is at a crucial juncture because volumes have fallen to their lowest level since 2009-10. The entry of new entities such as financial institutions are expected to provide depth, if banks’ borrowers dealing with commodities and foreign traders in the physical market and active in import or export, are allowed to hedge their risk on comexes.

(Source: Business Standard, October 21, 2014)




NEW DELHI: Telecom operators could get spectrum within 90 days after payment following a government panel asking Department of Telecom to work out a mechanism for allocating the airwaves to successful bidders in a reasonable period.


According to sources, inter-ministerial panel Telecom Commission at its meeting on October 15, discussed the issue of spectrum allocation to the successful bidders of February auction.


Telecom operators had paid for spectrum in the first week of March. However, though DoT has started allocating spectrum to companies this month, but is yet to completely assign all frequencies, especially in Delhi to mobile operators.


“After deliberations, the commission directed that a mechanism must be worked out by the DoT for allocation of spectrum to successful bidders within a reasonable period, preferably within 90 days, after receipt of payments from the bidders after conclusion of the auction,” sources said.


Sectoral regulator TRAI has also written to DoT on October 17 regarding the delay in allocating spectrum to successful bidders of February auction.


“The Authority is unable to understand the reasons for this inordinate delay in the assignment of spectrum despite the clear provision in the NIA for the assignment of spectrum and after the payment has been made by the licencees,” TRAI Chairman Rahul Khullar said in the letter.


He said telecom services in national capital may be disrupted partially from December due to delays by DoT in fresh spectrum allocation to leading operators Airtel and Vodafone.


These operators, which have about 20 million mobile subscribers on their network in Delhi or 45 per cent of the total subscriber base here, have bought spectrum as their current licences are expiring by November-end.


The two companies had 8 Mhz spectrum each in premium 900 Mhz band but Airtel could win back only 6 Mhz and Vodafone 5 Mhz of spectrum. The two companies bought some spectrum in 1800 Mhz band to make up for spectrum they lost in 900 Mhz band.


Industry body Cellular Operators Association of India and telecom operators individually also wrote to DoT for immediate assignment of spectrum.

(Source: The Financial Express, October 21, 2014)




NEW DELHI: Ending a delay that has raised doubts about whether the government’s budget estimates on disinvestment will be met, the finance ministry is set to start its FY15 disinvestment programme in the first week of November, with a 5% stake sale in ONGC, a top ministry official said on Monday.


“Keeping valuations in mind, this is the right time to divest ONGC,” the official said, adding that new disinvestment secretary Aradhana Johri was recently in Mumbai meeting merchant bankers in this regard.


The Cabinet had last month cleared the stake sale in ONGC. The disinvestment department has also selected 5 merchant bankers — Citigroup, HSBC Securities, UBS Securities, ICICI Securities and Kotak Mahindra Capital — for managing the stake sale. The ONGC scrip closed on Monday at R418.85, up 5.4%, on the BSE. At the current market price, the sale of 5 % stake, or over 42 crore shares, would fetch about R18,000 crore to the exchequer.


After a long wait, the government on Saturday deregulated diesel prices and raised the natural gas rates. While diesel deregulation is an important reform initiative, hike in gas prices will directly benefit oil exploration companies, including ONGC.


For FY15, the government is targeting a minimum of R43,425 crore from stake sale in 11 PSUs, and R15,000 crore from the sale of its stake in HZL-Balco. The DoD has got CCEA approvals for SAIL, HAL, RINL and HZL-Balco, Coal India, ONGC, and NHPC.


As reported by FE earlier, the bankers and the government were busy preparing to start disinvestment and divest SAIL by the last week of September or first week of October. However, a fall in share prices since the highs in June, and finance minister Arun Jaitley’s leave of absence due to health problems led to the delays.


The official, who is one of the key policymakers in the government, also said that the long-pending Insurance Bill, which seeks to raise FDI cap in the sector to 49%, is expected to be taken up in the forthcoming winter session of Parliament. “The select committee is looking into the Bill. We will take it up in the winter session,” he said.


Insurance sector analysts say that the reform is expected to increase the flow of foreign investment to R25,000 crore into the sector. The move would help private insurance firms to get much-needed capital from overseas partners. There are about two dozen private sector insurance firms both in life and non-life segment.


The Insurance Laws (Amendment) Bill, which proposes to hike the FDI limit in the insurance sector to 49% has been caught in a logjam with the Congress-led opposition of nine political parties insisting that it be referred to a select committee.


Bowing to the opposition pressure, the government had in August agreed to refer the Bill to the 15-member select committee. The panel is expected to submit its report by the third week of November. In his FY15 budget speech, Jaitley had said that the insurance sector is investment-starved and there is a need to increase the composite cap in the sector to 49%, with full Indian management and control, through the FIPB route.


He also said that in spite of a lower expected subsidy burden this fiscal due to diesel decontrol and low global commodity prices, the Centre was keeping its “fingers crossed” on the FY15 fiscal deficit coming in below the budgeted 4.1% of GDP. “We still have to wait for the revenue collections of the last two quarters to see where we stand,” he said.

(Source: The Financial Express, October 21, 2014)

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