In this Issue
Message
Budget Highlights
News & Events
From the Press
From the Editor's Desk

Message

I am happy to note that the first issue of E-Newsletter was well received as reflected in the comments and suggestions of the readers.

I hope  the E newsletter will act as  an effective instrument for information dissemination on the Government policies/ programmes for the benefit of the investing community.

I wish investors and the team of E-Newsletter success.

Lakshmi  Chand
Secretary

Highlights of the Interim Budget 2004 -05

The interim Union budget for 2004-05 has given further impetus to economic reforms creating investment opportunities particularly in infrastructure sectors. The highlights are:-

Tonnage Tax Scheme for shipping Industry: To enhance international competitiveness, tonnage tax scheme, with notional income at a fixed rate is proposed.

Tax Exemption for Capital Goods Sector: Government to consider giving tax exemption to    capital goods manufacturers, when imported capital goods are exempt from such taxes (countervailing duty).

User Friendly Tax Administration:

Round the clock electronic filing of customs documents: to be introduced from March 31, 2004.

Economy updates: India
Economy in upswing

• GDP growth forecast at 8.1% during 2003-04 against 4% during 2002-03

• Industrial Production Growth: 6.3% during April- Dec 2003 against 5.5% in April –Dec 2002

• Exports higher at US $ 42.43 billion during April-Dec 2003 (13.48% increase)  as against US $ 37.39 billion during April –Dec 2002

• Imports growth 24.86% (US $ 55.05 billion during  April-Dec 2003 against  US $ 44.09 billion during April –Dec 2002).
  
  o          Non- Oil Imports during April –Dec 2003 at US $ 40.13 billion compared to US $ 21.13 billion during same period last year.

• For Foreign Exchange Reserves surged to US $ 107.51 billion on Feb 13, 2004 from US $ 75.43 billion as in March 2003

Industrial Investment on the Rise

• Letters of Intents/Industrial Entrepreneurs Memorandums   to set up industrial enterprises grew to 3991 in 2003 compared to 3261 in 2002.
  
  o          Proposed investment  has also grown to Rs. 1200 billion (highest since 1991) compared to Rs. 919.4 billion in 2002

• Credit disbursed by All India Financial Institutions increased by 72%  to Rs. 275 billion during April –Oct 2003 from Rs. 157  billion during the same period in previous year.

Details

(http://www.finmin.nic.in/stats_data/monthly_economic_report/index.html)

Self Assessment for Customs Clearance: to be introduced from June 30,  2004

Other Highlights:

Major Funds To be Created: Agriculture Infrastructure Funds, Small and Medium Enterprises Funds, Industrial Infrastructure Fund and Defence Modernization Fund to be created.

Enhanced Credit to Farm and SMEs Sectors: Farm and SMES sector credit limits to be substantially enhanced and conditioned eased.                        Details……

Tax Rates Reduced Further

Press Notes/Notifications

FDI Caps in banking enhanced to 74%

Government of India has increased Foreign Direct Investment caps in banking Sector:

1.FDI up to 74% in Private Banking sector under the automatic route including investments by FIIs, NRIs and OCBs.

• Water supply projects: Exempted from custom  and excise duties

• Laptops brought as part of baggage exempted from customs duty

• Customs duty on Information Technology Agreement        bound items reduced 15%/5% to 5%/Nil.
  
  

FDI Caps in petroleum & printing enhanced

Government of India has further  liberalized the FDI regime by raising the further Foreign Direct Investment caps for the following activities:

4.A foreign bank may operate in India through only one of the three channels viz.:-

           i.      Branch/es

         ii.      Wholly owned subsidiary

        iii.      A subsidiary with aggregate foreign investment upto a maximum of 74% in a private bank.

5.Foreign Banks will be allowed to either have branches or subsidiaries, not both.

6.Foreign banks with a banking supervisory authority in the home country will be allowed to set up a wholly owned subsidiary with RBI permission either through conversion of existing branches or fresh banking license.

For details, Press Note no. 2 (2004 series) of the Department may be referred.

1.        FDI up to 100% in Printing Scientific And Technical Magazines, Periodicals and Journals with prior Government approval.

2.        FDI up to 100% on automatic route for Petroleum Product Marketing.

3.        FDI up to 100% on automatic route  for Oil Exploration in both small and medium size fields.

4.        FDI up to 100% on automatic route for Petroleum Product Pipelines.

5.        FDI up to 100% with Government approval for Natural Gas/LNG pipelines.

For details, Press Note no. 1 (2004 series) of the Department may be referred.

Japan plans to source chip designs from India:  “Leading Japanese chip makers – Toshiba and Hitachi are interested in partnering Indian firms for IP and designs which includes both hardware and software solutions”.

India and Netherlands ink MoU for Investment Promotion, New Delhi February  27, 2004

Mr. Arun Jaitley, Minister of Commerce & Industry and Law & Justice, Government of India, signed a Memorandum of Understanding (MoU) with Mr. Laurens-Jan Bringkhorst, Minister of Economic Affairs, Kingdom of the Netherlands for promotion of investment between the two countries on 27^th February 2004 at New Delhi.  About 4 pilot projects with an average project size of Euro 1 million per investment, contributing 50% of the project costs, would be taken up within the scope of the MoU. 

Details……

Destination India, January 14-15, 2004, Israel

Department of Industrial Policy & Promotion in its continuous endeavour to promote bilateral co-operation and investment  organised Destination India event  at Tel Aviv, Israel during  January 14-15, 2004.      Full Story….

Interview of the Union Minister for Commerce & Industry, Mr. Arun Jaitley reproduced from the Economic Times, New Delhi January 29, 2004

“I am a firm believer in reforms”

 News Story…..

India becoming Global Sourcing base for retailers reproduced from the Hindustan Times, New Delhi February 13, 2004

“Global Retailers identify India as sourcing base”

India as  Global Manufacturing Hub

“Concentric pumps of the UK is setting up a new manufacturing facility (US$ 2.2 million) in India by April 2004…...”

News Story at The Economist Intelligence Unit (www.store.eiu.com ) February 25^th 2004

Privatization of Delhi and Mumbai Airports

“Govt to invite fresh bids for Delhi, Mumbai airports in a fortnight …”

Full News Story….
More news at Airports Authority of India

India –China Trade Booming

“India China bilateral Trade touches US $ 7.6 billion ….53.6% over previous year…India enjoys favourable trade balance”

News Story at The Economist Intelligence Unit (www.store.eiu.com ) February 25^th 2004

Informing prospective investors about business opportunities in India and Policy updates is a significant task considering vastness and variety India offers.  The responses received from our esteemed readers have guided us in preparing content of the second issue.

We hope that this issue will be useful to the investors, policy makers, academicians, researchers and others.  Needless to say, we will welcome suggestions for improvement.

Editorial Board

Contact Address:

Director (Investment Promotion & Infrastructure Development)
Department of Industrial Policy and Promotion
Ministry of Commerce and Industry
Udyog Bhawan, New Delhi
Tel:     + 91-11-2301 4820, Fax:   + 91-11-2301 1770
Reply e mail: dipp_sia@ub.nic.in
Web site: www.dipp.nic.in

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