INDIA BUSINESS WORLD - FEBRUARY 2006
THE MONTH THAT WAS

•  Investment: Government to provide equity support of Rs.16,901 crore and loans of Rs.2,789 crore to Central PSEs (including Railways); infusion of Rs.1,180 crore in cash and non-cash sacrifices of Rs.2566 crore in last two years to restructure ten PSEs, including Indian Telephone Industries Limited and Heavy Engineering Corporation Limited; to develop India as a hub for gems and jewellery, an expert body to be constituted

•  Textiles: allocation for Technology Upgradation Fund (TUF) enhanced from Rs.435 crore to Rs.535 crore; Rs.189 crore to be provided for Scheme for Integrated Textiles Parks (SITP), Jute Technology Mission to be launched; a National Jute Board to be established.

•  Foreign Trade: share in world exports to be doubled by 2008-09.

•  Power: five ultra mega power projects of 4,000 MW each to be awarded before December 31, 2006; to create an enabling and empowered framework to carry out reforms an Empowered Committee of Chief Ministers and Power Ministers to be setup; Tenth Plan target of 3,075 MW of installed capacity for non-conventional energy sourcesexceeded by December 31, 2005 with installation of 3,650 MW capacity; Rs.597 crore provided for non-conventional energy resources; Rajiv Gandhi Grameen Vidyutikaran Yojana: 10,000 villages in 2005- 06 and 40,000 more villages in 2006-07 to be electrified

•  Petroleum: under NELP VI., 55 blocks and area of 355,000 sq kms offered; investment of Rs.22,000 crore expected in the refinery sector, in the next few years.

•  Road Transport: Budget support for NHDP enhanced from Rs.9,320 crore to Rs.9,945 crore in 2006-07; special accelerated road development programme for the North Eastern region at an estimated cost of Rs.4,618 crore approved with allocation of Rs.550 crore in 2006-07; 1,000 kms of access-controlled Expressways to be developed on the Design, Build, Finance and Operate (DBFO) model.

•  Capital Market: limit on FII investment in Government securities to be increased from $ 1.75 billion to $ 2 billion and the limit on FII investment in corporate debt from $ 0.5 billion to $ 1.5 billion; ceiling on aggregate investment by mutual funds in overseas instruments to be raised from $ 1 billion to $ 2 billion with removal of requirement of 10 per cent reciprocal share holding; limited number of qualified Indian mutual funds to be allowed to invest, cumulatively up to $ 1 billion, in overseas exchange traded funds; an investor protection fund to be setup under the aegis of SEBI; RBI's anonymous electronic order matching trading module (NDS-OM) on its Negotiated Dealing System to be extended to qualified mutual funds, provident funds and pension funds; steps to be taken to create a single, unified exchange-traded market for corporate bonds.

• Customs

per cent; duty on alloy steel and primary and secondary non- ferrous metals reduced from 10 per cent to 7.5 per cent; this will also be the rate of duty for ferro alloys; on steel melting scrap raised to 5 per cent and brought on part on par with primary steel;

. duty on mineral products reduced to 5 per cent, with a few exceptions.

· duty on ores and concentrates reduced from 5 per cent to 2 per cent.

· duty on refractories and on a number of materials for manufacture of refractories reduced to 7.5 per cent.

· duty to be reduced on basic inorganic chemicals from 15 per cent to 10 per cent; on basic cyclic and acyclic hydrocarbons and their derivatives to 5 per cent; on catalysts from 10 per cent to 7.5 per cent.

· duty to be reduced on major bulk plastics like PVC, LDPE and PP from 10 per cent to 5 per cent; on naptha for plastics to nil; on styrene, EDC and VCM which are raw materials for plastics to 2 per cent.

· reduction of customs duty on 10 anti-AIDS and 14 anti-cancer drugs to 5 per cent; on certain life saving drugs, kits and equipment from 15 per cent to 5 per cent ; these drugs also exempt from excise duty and CVD.

· duty on packaging machines to be reduced from 15 per cent to 5 per cent.

· concessional project rate of 10 per cent to be extended to pipeline projects for transportation of natural gas, crude petroleum and petroleum products.

· CVD of 4 per cent to be imposed on all imports with a few exceptions ; full credit to be allowed to manufacturers of excisable goods.

•  Excise

· with the intention to converge all rates at the CENVAT rate at 16 per cent; duty on aerated drinks and small cars to be reduced to 16 per cent.

· 8 per cent duty to be imposed on packaged software sold over the counter; customised software and software packages downloaded from the internet to be exempt; DVD Drives, Flash Drives and Combo Drives to be fully exempt from excise duty.

· condensed milk, ice cream, preparations of meat, fish and poultry, pectins, pasta and yeast to be fully exempt; duty on ready-to-eat packaged foods and instant food mixes, like dosa and idli mixes, to be reduced from 16 per cent to 8 per cent.