Minutes of the meeting of Foreign Investment Implementation Authority (FIIA) with Investors from European Union Countries held on 13.8.2004 at 3 P.M. in the Department Of Industrial Policy and Promotion.
A meeting of Foreign Investment Implementation Authority (FIIA) with investors from European Union countries was held on 13.8.2004 at 3.00 P.M. in the Department of Industrial Policy & Promotion. List of participants is annexed.
2. Secretary (IPP) welcomed the participants and outlined the objective of the meeting. He highlighted that FDI policy of India is very liberal and the present meeting would facilitate the department in understanding the issues related to implementation of projects. He stated that India being a large country with federal polity, there could be problems at the state level/local level in the implementation of projects. He invited all the participants to express their views freely and raise policy as well as implementation issues relating to investment.
3. Ms. Desiree Bonis, Deputy Chief of Mission, Embassy of Netherlands welcomed the investors and appreciated the initiatives taken by the Department of IPP for organising the meeting for resolving the operational problems of Investors. She stated that the timing of the meeting was very appropriate as India-European Business Summit is scheduled to be held in October 2004 in Hague. She urged the participants to approach their headquarters with the request to attend the Business Summit.
4. Thereafter, the issues raised by Investors were discussed these are summarise as below:
Shri Bhardwaj was advised to send a background note for taking it up with the concerned authorities.
(Action: Ministry of Home Affairs)
Shri Ajay Kumar, CEO, informed that their company was engaged in LPG marketing in India since 1996. They had invested Rs. 300 crores. He informed that the Government had opened up the marketing of LPG to private sector in 1993. LPG marketing being in the domestic segment, 95 % market was not available to MNCs, like Shell, Caltex, etc because they found it uncompetitive due to subsidy admissible to Public Sectors. The Govt. had earlier considered to phase out subsidies. However, due to various considerations it was not found possible. He suggested that in the era of liberalisation and label playing field either the subsidy should be withdrawn or it should be made available to private sector companies.
The representative of Ministry of petroleum & Natural Gas informed that since withdrawal of subsidy of LPG had social implications, the Dept. was examining the issue of extending subsidy to private sector.
(Action – Ministry of P & NG)
Shri Sanjeev Lowe, Head Strategy, informed that they were also facing the same problem on account of subsidy on LPG and supported the issue regarding the extension of subsidy to private sector and requested for early settlement. He also raised the issue of LNG terminal and informed that their LNG terminal at Hazira was in the final stages of construction. He further informed that terminal would be the second largest in the country and had been developed on a business model. He also highlighted the need for a proper LNG policy.
He suggested that it would be useful if the sector wise interaction could be organised with the Parliamentary Committees wherein the stakeholders can be invited. Secretary, IPP welcomed the suggestion and stated that the present mandate of the Parliamentary Standing Committee did not include such interaction. However, the innovative concept could be taken up with Ministry of Parliamentary Affairs.
Representative of Ministry of Shipping informed that LNG Policy had not yet been finalised. He stated that the concerns of the company would be examined at the time of finalisation of policy.
(Action – Ministry of P & NG)
Shri G. Meenakshi Sundaram, Deputy GM (Communication & Marketing) informed that they were doing business in India for the last 19 years in the field of road construction. They had a project near new Mumbai for manufacturing Bitumen. They were importing their material from Netherlands. He requested for including Bitumen modification plant in list of activities exempted from the levy of import duty. He informed that they had already imported the plant and paid duties and requested that duties already paid be refunded to the company.
He also informed that they were also setting up a Bitumen Modification Plant at KosiKalan, in Mathura, (U.P.). No objection certificate from NHAI for construction of entry road to the plan was awaited. He further informed that though the land had been converted from non-agriculture to industrial use they were awaiting approval from Mathura Vrindavan Development Authority for change in land use.
Company representative was advised to send a detailed representation for taking up with the concerned authorities.
(Action – Ministry of Road Transport, Govt. of U.P.)
Dr. A.K. Rajput, Operations Manager, informed that their Company was facing problems in importing Grand Parents stocks from Netherlands due to ban imposed on import of poultry vaccines and poultry breeding stocks from Netherlands after the outbreak of bird flu. He requested for lifting of the ban on the import of poultry breeding stock immediately.
The Company was advised to send a representation for taking it up with the concerned authorities.
(Action - Deptt. of Agriculture)
Shri N.K. Ranganath, CEO, raised the issue of prescribing minimum efficiency norms for both the pumps and motors and reservation of manufacturing of most of the pumps in small-scale sector. He stressed that Customs duties on imported energy efficient pumps needed to be reduced. He further stated that the duty on the components and fully assembled pumps were the same which discouraged domestic manufacturing.
Shri Umesh Kumar, Joint Secretary informed that the Company could manufacture the pumps even though they were reserved for SSI sector by undertaking 50% export obligation. He further informed that general rate of customs duty has been reduced to 20% in January 2004. Special Additional Duties of customs of 4% had also been withdrawn. The Company was requested to send details of the issues relating to specifications of pumps reserved for small-scale sector.
(Action – Ministry of SSI & AR)
Shri Mohanjit Singh, Vice-President, informed that they were a new private sector Bank and could offer advisory assistance in the area of multiplicity of approvals, single window concept etc. He stressed the need of developing industrial clusters and also notifying consultancy organizations whom investors could approach.
Secretary IPP informed that the Govt. had identified 68 clusters for infrastructure development. Out of which 19 clusters were being taken up for development in the first phase. 6 clusters had already been sanctioned and the others were at the stage of appraisal. He further stated that Government does not shortlist or recommend any specific appraisal agency to industry. The consultancy firms could assist the industry in project implementation as per their mutual terms.
JS (UK) informed that many State Governments had been very active in establishing high-powered committees for clearances of projects.
viii) M/s. L.M. Glass Fibre India Pvt. Ltd.
Shri Nirmal K. Gupta, CEO informed that the company was in the business of manufacturing Rotor Blades for wind turbine generators since 1985. The Blades were made through moulding processes. They had to import moulds, since they were not manufactured in India. An import duty of 38.2 % is imposed on moulds with additional cess the duty comes to 40.5%. He requested for reduction in the import duties.
Company also requested for expediting the decision for allotment of 40 acres of land with requisite infrastructure for their second plant by the State Government of Tami Nadu.
The company representative also informed about the problems due to dispute between the Madras Port and P&O Port as a result of which there was a delay in the clearance of goods at the port. He further stated that even during normal time, clearance of goods took excessive time at the port.
Ministry of Shipping informed that the Port was being exclusively managed by P&O port and there was no tussle between the P&O Port and Madras Port in the operation. There might be problem between the workers of the P&O Port and P&O management. He informed that the issue would be resolved shortly.
Secretary IPP, advised the representative of Ministry of Shipping that an analysis of clearance time (time taken to allot berth) during last one year might be carried out.
(Action – Ministry of Shipping)
Shri A.P. Srivastava, Director appreciated FIIA for the initiatives in resolving the issue raised by the company in earlier meetings. He again pointed out the discriminatory treatment given to foreign contractors and requested the need of a level playing field by doing away with the 10% purchase preference being accorded to DCI while participating in the bidding process. He further requested for withdrawal of 5% import duty on vessel/dredger, imported temporarily on re-export basis. He also requested that for speedy determination of taxable income, special provision for computing profits and gains as has been done in the case of civil construction, Shipping exploration of mineral, oil etc., under section 44 AD to 44 DA of the Income Tax Act be introduced to determine taxable income for foreign dredging operators in India at 5% to 10% of the turn over. Such introduction of presumptive taxation would avoid litigations and at the same time generate revenue.
(Action – Ministry of Shipping,
Deptt. Of revenue,
Ministry of HI & PE)
x) M/s. Svitzer Wijsmuller India Pvt. Ltd.
Shri V.K. Kanwar, General Manager, India operations, informed that the company was a wholly owned subsidiary, registered in India under the Companies Act. He further stated that they are entitled to own flag vessels. He stated that in the tender documents of ONGC, the Indian companies, who own the vessels, were only allowed to participate.
(Action – Ministry of Shipping)
Shri Vivek Mehra of PWC, representing the company, informed that they had set-up two distribution centres in Bangalore in the initial phase. He informed that they were not being allowed to deal in agriculture produce due to restrictions contained in the Agricultural Product Marketing Act requiring them to carry out business only in designated market. The company’s one stop distribution centres with more than 15000 articles on sale could be located in the small space available in these yards. Company has requested the state Government of Karnataka and other state Governments to allow them to purchase directly from the farmers and sell from their distribution centres. The company informed that they are ready to pay Mandi Tax.
(Action – Govt. of Karnataka)
xii) European Business Group
The representative of European Business Group compared the opportunities available in China and India. She informed that it was very difficult to operate in India as compared to China. Europe was importing 13.5 % from china and only 3% from India. She suggested for constitution of working Group for sorting out the problems. She appreciated the initiative of the Department.
Shri B.N. Sharma representative of the company informed that their company was a leading manufacturer of vetenerary products in India. The Company was also importing vaccines from Netherlands. The Company informed that they had incurred heavy loss of Rs. 20 crores due to ban on import of vaccines and requested for lifting of ban.
(Action – Deptt. of Agriculture)
xiv) Deputy Chief of Mission, Embassy of Netherlands
She raised the problem of a company in setting up a hundred per cent subsidiary in Ahmedabad, as the Company faced delay in the in the grant of various approvals right from the grant of name of the company; registration of the company and long time taken in custom clearances, telephone and power connections in the State. Company also raised the issue of complex tax structure. She also stated that IEC code was granted only after the FIPB approval whereas the same could be processed simultaneously. She was requested to forward details received from the company for follow up with the concerned Ministry.
(Action – DGFT)
xv) Heinz India Pvt. Ltd.
Shri V. Mohan, General manager, Legal Affairs and Company Secretary raised `the issue of prevention of Food Adulteration Act and introduction of integrated food laws. He enquired about the timing of its introduction and categorisation of food products in Appendix B. He informed that one of the items i.e. Nycil manufactured by the company was being treated as cosmetic product He also raised the issue of refund of taxes in spite of having the decision in favour of the company by the tribunal as well Delhi High Court. He also mentioned about levy of mandi tax on manufacturing of ghee at their plant located in Aligarh in spite of Supreme Court’s order.
The Company was advised to send detailed representation for taking up with the concerned Ministry.
(Action – Ministry of Food Processing Industry)
xvi) Mesco Kalinga
Shri J. K. Singh informed that their plant was about to be commissioned. Trials were going on and production was to commence by October 2004. He pointed out that in China an Investors is provided with a list of Do’s and Don’t’s in the very beginning so that there are no delays in the implementation or operation of projects. He suggested for adoption of a similar system in India.
(Action – SIA)
xvii) Bejo Sheetal Seeds Pvt. Ltd.
Mr. Suresh Aggarwal, MD informed that their Company was engaged in R&D of vegetable seeds breeding in the State of Maharashtra. They were facing the problem of allotment of land required for the purpose and due to the ceiling imposed by the Government they were not able to undertake the R&D work properly as 500 acres of land were needed.
Secretary IPP suggested that a brief note on the issue could be sent for examination in consultation with the State Government.
(Action – Govt. of Maharashtra)
xviii) Shri Sanjeev Lowe, Head Strategy, Shell Gas Power stated that since liaison offices could not enter into any commercial activity and hence not generate income, it should not be subject to tax assessment. The representative of Department of Revenue clarified that the blanket exemption to all liaison offices could be granted as some such offices get into the commercial activity and start generating income.
(Action – Deptt. of revenue)
5. Mr Krishan Kalra, Additional Secretary General, FICCI appreciated the problems of investors relating to regulatory framework, tax structure. He infromed that according to the survey conducted by FICCI, as many as 93% of respondents have shown satisfaction in doing business in India. There were problems which the Government and the Industry has been addressing and hoped that the situation would soon improve.
6. All the participants were requested to send brief write-up on the outstanding issues/suggestions at fiia@ub.nic.in to facilitate proper follow up action.
7. Secretary IPP concluded by thanking the investors and officials of the Missions for attending the meeting. He informed that the issues discussed in the meeting would be followed up with concerned authorities.