Maira committee favours no change in pharma FDI policy

A high-level committee headed by Planning Commission member Arun Maira today recommended giving more teeth to the Competition Commission of India (CCI) in allowing mergers and acquisitions (M&A) in the pharmaceutical sector and not changing the foreign direct investment (FDI) rules.

The panel is of the view that the present FDI policy governing the pharma sector should not change, even as the necessary gate keeping should be done by CCI that has the provision to check such activities, Maira said. “There is no need to follow the government route when we have more updated and more sophisticated policy instruments under the CCI,” he told

Business Standard .

The report would be presented to the Prime Minister and Deputy Chief of Plan panel Montek Singh Ahluwalia.

The PM is scheduled to meet all stakeholders on the issue on October 10 to take a final view on the matter.

The committee under Maira was created on June 30 by the Cabinet Committee on Economic Affairs to look into the issue of creating an investorfriendly environment for promoting fresh investments in the sector and position India a leading destination for drug research and manufacturing hub.

“FDI policy in pharma should not be changed at all. It should remain the way it is. However, a proper gate-keeping is a must as it is a sensitive sector and the concerns raised by other ministries can be addressed by proper provisioning,” Maira said.

“We will now be presenting the report to the PM and the deputy chairman of the Planning Commission, after which aconfirmed view on this issue is going to be taken.” Currently, the government permits 100 per cent FDI via automatic route. However, the ministry of health had raised serious concerns on the impact of the series of takeovers that have been taking place since 2006 on the domestic drugs industry.

The concerns were also shared by the ministry of commerce and industry which wrote a letter to the PM suggesting imposition of certain restrictions in case of pharma M&As. It wants to allow the M&As through the government route unlike now.

The period from 2006 to 2010 saw some significant M&A deals that changed the face of Indian pharma industry. Some of them were the acquisition of Matrix Lab by USbased Mylan Inc in August 2006, Japan’s Daiichi Sankyo acquired Ranbaxy Laboratories in June 2008, Francebased Sanofi Aventis took over Shanta Biotech in July 2009 and last year, in May, US-based Abbot Laboratories acquired Piramal Healthcare.

India heads for ‘worrying’ 11/12 sugar surplus: Industry body

NEW DELHI: India is heading for a “worrying” sugar surplus in 2011/12 and the government should help by allowing four million tons of exports and buying two million tons to trim stocks, the head of a producers’ body said.

Output for the world’s second-biggest producer after Brazil is expected to be 26.5 million tons in 2011/12, Jayantilal B. Patel, president of the National Federation of Cooperative Sugar Factories Ltd. (NFCSF), told an industry meeting.

In 2010/11, India is likely to have produced around 24.2 million tons and with demand of around 22 million tons — making it the world’s biggest consumer — the government has already allowed unrestricted exports of 1.5 million tons.

“This expected surplus production of sugar during 2011/12 is worrying,” Patel said.

The Indian Sugar Mills Association (ISMA), another producers’ body, shares Patel’s 2011/12 output forecast, as does Farm Minister Sharad Pawar.

However, Food Minister K.V. Thomas recently estimated output in 2011/12 at 24.6 million tons.

“The sugar year 2010/11 has been a year of surplus production after two years of deficit. I shudder when I visualize what the situation would have been if the government had not permitted exports of 1.5 million tons in three equi-tranches,” Patel said.

Thomas last week said the government would take a call on permitting overseas shipments only after Diwali, the festival of light, in October. Sugar consumption peaks during the Diwali as sales of confectionery and traditional gifts of sweets soar.

Local sugar prices have fallen 6.5 percent since January while international benchmark London white sugar futures have lost nearly 18 percent.

By REUTERS

Take Credit Card Loan Only in Emergency

loans against credit card are like personal loans but without the cumbersome documentation. loan on credit card may not be available to everyone. banks provide this loan to credit card customers with high credit standing. this means that if you have been using a particular bank’s credit card for some time and you have a good payment track record, you are most likely to be eligible for a loan on credit card. some banks limit or block the cash withdrawal on your credit card to the extent of loan you have taken. for the rest, loan on credit card works like a personal loan — with a processing fee, repayment in monthly installments and prepayment facility, but often with a hefty pre-payment charge. this is useful only when there is an urgent need for liquid funds since any other loan will take at least two weeks to process and also because of the documentation involved which is not the case in loan against credit cards. one big issue is the service tax on interest which may be payable on loan against credit card but not on a regular personal loan.

3G roaming pacts under scrutiny

Vodafone, Airtel, Idea provide services without spectrum.

In a development that could make it difficult for third generation (3G) telecom operators to provide pan-India services, a Department of Telecommunications (DoT) division has asked them to refrain from offering services in circles where they do not have 3G spectrum by getting into roaming agreements with competing players which have. The companies will be liable for action if they do not comply.

The move could have an adverse impact on companies like Vodafone, Airtel and Idea Cellular, who have been able to offer 3G services across the country without having spectrum in many circles. This became possible after the three companies recently signed an inter-circle roaming agreement to use each other’s networks.

While Vodafone has spectrum in only nine circles, it offers 3G services to its customers in 20 circles. Airtel has 3G spectrum in 13 circles but offers 3G services in 20 circles. Idea Cellular has 3G spectrum in 11 circles but offers 3G services in 19 circles. The number of circles where 3G spectrum was auctioned is 22.

With the operators challenging the Telecom Enforcement, Resource and Monitoring (TERM) division’s stance and saying the practice is allowed under the UASL (Unified Access Service License)rules, a regulatory battle is expected. According to DoT sources, the department may refer the matter to the Telecom Regulatory Authority of India (Trai). Trai has started scrutiny on its own and asked telecom operators to give details of their 3G roaming agreements. A Trai source said there was a case for questioning such services.

Telecom operators that have refrained from providing 3G services where they do not have spectrum say their competitors’ action means an operator can pay Rs 1,750 crore for a pan-India licence and offer 2G, 3G and 4G services without bidding or having any spectrum. So, many of the new operators who had not bid for 3G spectrum could give 3G services across the county or even 4G, by having a UASL licence, though neither trading of spectrum or allowing MVNO (Mobile Virtual Network Operator) operations is permitted, says a senior executive of a telecom company. This, the companies say, could lead to a major loss in revenue for the government in the coming auctions for 3G and 4G, as operators would prefer to get into roaming arrangements rather than pay for expensive spectrum.

An Airtel spokesperson, confirming the communication, said: “All the desired information required by the TERM cell has been provided to them. Bharti Airtel is in complete compliance of the license conditions and all our agreements are as per the stated government policy.” Idea Cellular also confirmed the communication and said it had responded. Its action was “as per policy guidelines”, the company said.

According to the communication from the TERM cell, set up to ensure adherence to the licence conditions, it had come to their notice that telecom operators without spectrum and licence amended for the provision of 3G services had entered into inter-circle and intra-circle roaming arrangements (with other operators who have 3G spectrum in the circle), not permitted in the licence. It says the 2G operator cannot enter into a roaming agreement with a 3G operator for giving 3G services.

The cell has directed operators to refrain from giving the service, pending a clarification on this issue from the DoT and that anyone offering 3G services in this manner would be liable for action. The operators giving the service would be considered as unlicensed service providers, against whom action can be taken under the law, while action could be taken against the roaming partner, too, for breaching licence conditions.

The affected operators, such as Vodafone, have said in their reply their UASL allows them to offer “all types of access services”, including services like voice, data and triple play. They say under the terms, no additional licence is required for offering something like high-speed services. And, that under the UASL licence, companies can enter into agreements with others to offer national and international roaming services to customers. The Vodafone response also says that in response to an earlier query sent by the industry to DoT, on whether customers of UASL would be allowed to roam on 3G networks of other UASL networks in the same licence area, the reply was affirmative.

A senior executive of one of the operators said it was only after the issue was so clarified that operators were willing to pay such a high price at the auction of 3G spectrum, knowing no one could win pan-India spectrum for the services.

Pranab rushes to meet PM PAC wants copy of FinMin's 2G note

Finance minister Pranab Mukherjee is cutting short his Washington visit and rushing to New York to meet Prime Minister Manmohan Singh, amid the storm over his ministry’s note on the 2G issue. Sources said the meeting was for “obvious” reasons. Back home, in a move that could further embarrass the United Progressive Alliance government, the public accounts committee (PAC) and the joint parliamentary committee (JPC) have decided to write to the Prime Minister’s Office (PMO), asking for the note written by the finance ministry to the PMO on the spectrum issue.

At the PAC meeting on Friday, parliamentarians of opposition parties said since the report on 2G spectrum allocation scam, prepared by the last PAC, was returned by Lok Sabha Speaker Meira Kumar, the committee must ask for the note written by the finance ministry to the PMO to continue the probe. “It has been decided that PAC chairman Murli Manohar Joshi would write to the PMO and the finance ministry for the note to be sent to the parliamentary committee.

It is a very important note, and it completely contradicts the previous stand of the Union government,” said a senior PAC member.

In the course of the PAC meeting, Congress party members, Sanjay Nirupam and Saifuddin Soz, who were present at the meeting, were quiet and didn’t object to the demand. “Both Sanjay Nirupam and Saifuddin Soz were quiet when PAC members demanded Murli Manohar Joshi write to the PMO and the finance ministry to send a copy of the note,” the PAC member added.

The controversy involving home minister P Chidambaram and finance minister Pranab Mukherjee erupted after a finance ministry note suggested the telecom ministry could have conducted an auction of 2G spectrum licences, had the then-finance minister, P Chidambaram, insisted on it. The finance ministry had sent a detailed 10-page note to the PMO in March.

To add to the woes of the Union government, the JPC, which is also investigating the 2G spectrum allocation scam, is also writing to the PMO, asking for the note so that it could be taken up during the meeting on September 27. Prime Minister Manmohan Singh is also expected to return to India from New York on September 27.

“We don’t have a copy of the note sent by the finance Ministry to the PMO. This is an important piece of document, and we are in the process of writing to the PMO to send the note to the parliamentary committee,” said a senior JPC member.

FEMA – Summary of Recent Amendments in Forex Facilities for Individuals

RBI liberalises Forex Facilities for Individuals:

The Reserve Bank of India has further liberalised foreign exchange facilities for individuals under the Foreign Exchange Management Act, (FEMA) 1999.The facilities are:
1. NRIs can be Joint Holders in Resident’s SB/EEFC/RFC Accounts
Individual residents in India are now permitted to include non-resident close relative(s) as joint holder(s) in their resident bank accounts, namely, savings(SB), Exporter Earners’ Foreign Currency (EEFC) and Residents’ Foreign Currency (RFC) accounts, on ‘former or survivor’ basis. (A.P. (DIR Series) Circular No. 12, Dated- September 15, 2011)
2. Residents can be Joint Holders in NRE/FCNR Accounts
Non-Resident Indians (NRIs)/ Person of Indian Origin (PIO) , are now permitted to open Non-Resident (External) (NRE) Rupee Account Scheme/Foreign Currency (Non-Resident) (FCNR) Account (Banks) Scheme with their resident close relative(s) as joint holder(s) on ‘former or survivor’ basis. However, such resident joint account holder shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the lifetime of the NRI/ PIO account holder. (A.P. (DIR Series) Circular No. 13, Dated- September 15, 2011)
3. Residents can gift Shares/Debentures upto USD 50,000 Value
The Reserve Bank of India  has granted general permission to individual residents in India to gift shares / securities /convertible debentures, etc. to their NRI/PIO close relative (relative as defined in Section 6 of the Companies Act, 1956) subject to certain prescribed conditions. It has raised the limit as given in Regulation 10(a)(e) of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 to US $ 50,000 per financial year from the existing limit of US $ 25,000 during the calendar year . (A.P. (DIR Series) Circular No. 14, Dated- September 15, 2011)
4. Resident Indian can open NRE / FCNR (B) account with their Resident close relative
Resident individuals permitted to include resident close relative(s) as defined in the Companies Act, 1956 as a joint holder(s) in their EEFC/RFC bank accounts on ‘former or survivor’ basis. However, such resident Indian close relative, now being made eligible to become joint account holder, shall not be eligible to operate the account during the life time of the resident account holder. (A.P. (DIR Series) Circular No. 15, Dated- September 15, 2011)
5. Sale Proceeds of FDIs can be credited to NRE/FCNR (B) Account
Sale proceeds of Foreign Direct Investment (FDI) can be credited to Non-Resident (External) Rupee (NRE) Account Scheme/Foreign Currency (Non-Resident) Account FCNR (Banks) Scheme provided the original acquisition was by way of inward remittance or funds held in their NRE/FCNR (B) accounts. (A.P. (DIR Series) Circular No. 16, Dated- September 15, 2011)
6. Gifts to NRIs can be credited to NRO Accounts in Rupees
Resident individuals are now permitted to make rupee gifts within the overall limit of USD 200,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) to an NRI/PIO who is a close relative by way of crossed cheque/electronic transfer to the Non-Resident (Ordinary) Rupee Account (NRO) of the NRI/PIO.  (A.P. (DIR Series) Circular No. 17, Dated- September 16, 2011)
7. Loans to NRI Close Relatives can be given in Rupees
Similarly, Resident individuals are now permitted to lend in Rupees within the overall limit under the Liberalised Remittance Scheme of USD 200,000 per financial year to a Non Resident Indian (NRI)/ Person of Indian Origin (PIO) close relative by way of crossed cheque/electronic transfer, subject to the following conditions:

1.  The loan should be within the overall limit of USD 200,000 per financial year as per the Liberalized Remittance Scheme (LRS).

2.  The amount should be credited to the NRO Account.

3.  The loan shall not be utilized for the following purposes:

(i) Chit fund business, or
(ii) Nidhi Company, or
(iii) Agricultural/ plantation/ real estate business/ construction of farm houses, or
(iv) Trading in Transferable Development Rights (TDRs).

4. he loan amount shall not be remitted outside India.

5. Repayment of loan shall be made by way of inward remittances through normal banking channels or by debit to the NRO/ NRE/ FCNR account of the borrower or out of sale proceeds of the shares or securities or immovable properties against which such loan was granted.
  (A.P. (DIR Series) Circular No. 18, Dated -September 16, 2011)
8. Residents can repay the loans given to NRI Close Relatives
Resident individuals are now granted general permission to repay loans availed of in Rupees from banks in India by their NRI close relatives.Earlier, repayment of loans by close relative in respect of Rupee loan availed by NRIs was restricted only to housing loans. (A.P. (DIR Series) Circular No. 19, Dated- September 16, 2011)
9. Residents can bear Medical Expenses of NRIs
Residents will now be allowed to bear the medical expenses of visiting NRIs/PIOs close relatives. Earlier, residents were allowed to make payment in rupees towards meeting expenses on account of boarding, lodging and services related to it or travel to and from and within India of a person resident outside India and who is on a visit to India. (A.P. (DIR Series) Circular No. 20, Dated – September 16, 2011)
 

Pranab says Chidambaram didn't press for 2G auction

Mukherjee’s critical note sent to PMO in March placed before Supreme Court.

A finance ministry note on 2G spectrum sent to the Prime Minister’s Office in March has brought the war between UPA heavyweights Pranab Mukherjee and P Chidambaram out in the open.

The finance ministry, under Mukherjee, squarely blamed Chidambaram for not taking any concrete step to prevent the alleged 2G scam of 2007-08. The note was placed before the Supreme Court by Janata Party chief Subramanian Swamy on Wednesday.

The note, vetted by Mukherjee, states the finance ministry, under Chidambaram in 2007-08, did not press for the auction of 2G spectrum. The note is a collection of critical remarks and observations on the finance ministry inaction over 2G spectrum pricing, which may have resulted in the much talked about loss to the exchequer.
“The FM (Chidambaram) did not deal with the need, if any, to revise the entry fee or the rate of revenue share,” says the March 2011 note by the department of economic affairs or DEA (in the finance ministry). At another place in the lengthy note, it has said, “Ministry of finance representatives who attended the telecom commission meeting on January 15, 2008 did not raise the issue of revision of entry fee.”
Also, in a meeting on January 30, 2008, between the minister of telecom and the FM, “it was noted by the then finance minister (Chidambaram) he was for now not seeking to revisit the current regimes for entry fee or revenue share,” according to the communication to the Prime Minister’s Office.

Again, in meetings through 2008 (May 29 and July 4), the telecom minister and the FM agreed to enhance spectrum usage charges and pricing of spectrum beyond 6.2 MHz. The note, however, adds “the issue of revision of entry fee was not discussed in the meeting.”

Reiterating the finance ministry stand, under Chidambaram, the note points out that on November 11, 2008, the telecom commission took up the spectrum charge issue. In this meeting, the finance ministry raised the issue of updating the entry fee but “only for licences allotted after January 1, 2009.”
The note added, “thus, the ministry of finance implicitly agreed to the imposition of the same entry fee as prevailed in 2001 for licences allotted up to December 31, 2008.”
While attacking the then FM several times, the 11-page note has shown the then finance secretary D Subbarao (now the RBI governor) in a positive light. “The secretary finance had suggested to go for auction for initial spectrum of 4.4 MHz in early February 2008. DoT (Department of Telecommunications) was not keen to do the same since it had said it would disturb the level playing field...”
Chidambaram was the FM in the UPA-I government, when crucial decisions related to the allocation of 2G spectrum and its pricing were taken.
Last year, the Comptroller and Auditor General of India (CAG) estimated a 'notional’ loss to the exchequer of Rs 1.76 lakh crore due to the DoT, under telecom minister A Raja, opting for a first-come-first-serve 2G spectrum allocation policy. Raja was forced to resign as the telecom minister after that, and was then taken into judicial custody for letting some companies jump the queue to get 2G licences at “throwaway prices”, allegedly in return for favours.
Swamy, in a recent petition, said Chidambaram as the then FM had as much a role in the 2G scam as Raja. The CBI is opposing Swamy in court on the matter of investigating Chidambaram’s role in 2G allocation.