Category: India Business

France President Woos India Against the United States

Article first published as French President Woos India Against the United States on Blogcritics.

France President Nikolas Sarkozy is now on India tour along with his wife Carla Bruni for fourSarkozy days from November 4 to November 7. The US president Barack Obama began his India visit with India’s business hub Mumbai. Sarkozy chose India’s technology hub to start his India tour. He brought 50 member business community and top cabinet officials including Economy minister Christine Lagarde along with him. Sarkozy seems to have come on a top mission along with signing some business contracts.

Strategic and Business Goals

During his speeches on November 4 and his interview to Times of India newspaper, Sarkozy outlined his top political and trade related priorities on global arena of his India tour. Very important offers extended to and requirements sought from India are as follows:

  • Supporting France’s G20 agenda to reform global monetary system during its G20 presidency in 2011
  • Improvements in global governance
  • Help maintain greater stability in commodity prices

In return, to the help in achieving the above-mentioned France’s goals, Sarkozy offered following package.

  • Helping Rupee to become one of the major currencies in the world
  • Support India’s long standing demand of securing permanent seat in UN Security Council

Some business contracts will be concluded during Sarkozy’s visit. Major one is a memorandum of understanding signed between a French nuclear group Areva and India’s Nuclear Power Corporation of India Limited (NPCIL) to supply at least two water-pressurised reactors worth 7 billion euros ($9.4 billion or Rs 43,240 Cr). France is competing with the US company Boeing to supply 126 fighter jets. France’s defence electronics group Thales is hoping to gain a contract to modernise 51 mirage 2000 planes.

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2G Scam: SC ticks off CBI for not questioning Raja

PTI | Yahoo News | 25/11/2010

The Supreme Court today came down heavily on the CBI for failing to question former Telecom Minster A Raja and Telecom Secretary in the 2G Spectrum scandal, saying it was "beating around the bush". A bench of justices G S Singhvi and A K Ganguly wondered why the premier investigating agency failed to question the duo despite the CVC and CAG report sharply indicting them for their involvement.

"We are on the limited point. The CAG under the constitution has a very important position. It is an authority set up under the constitution. "Any responsible person will question the involvement of the Minister and the Secretary and you (CBI) say that 8,000 documents have been examined. You are beating around the bush. It was (questioning) minimum expected of the CBI. What do you take this court for," the bench observed during the argument.

Explaining the delay, senior counsel K K Venugopal submitted that the CBI has its own methods of investigations.

Indian Government Mired in Corruption Scandals

Article first published as Indian Government Mired in Corruption Scandals on Blogcritics.

Indian Parliament’s winter session is facing a deadlock with the opposition parties demanding setting up of a Joint Parliament Committee (JPC) for probing into the Rs. 1.76 lakh crore ($39 billion) worth corruption scandal of the former Telecom minister A Raja. The government has been mired in series of scandals this year such as corruption in CWG arrangements because of which three top officials have already been suspended.

CAG Report

Telecom scandal has occupied headlines with the revelation of the government watchdog Comptroller and Auditor General in its report that the licenses for 2G spectrum were allotted at cheapest costs for a chosen set of companies. CAG has implicated the former Telecom minister A Raja, who resigned a week back for deliberately avoiding established procedures in sale of 2G spectrum to private companies.

CAG report said the government has lost $39 billion because of not auctioning 2G spectrumParliament licenses. Instead of going for auctions, the minister has sold the spectrum licenses on first-come-first basis. CAG alleged that the minister took interest in particular companies. He did not give much time to other companies to place their applications, CAG said. The minister did not even listen to the Prime Minister’s suggestion that he should go for auctioning spectrum licenses as per the CAG report.

Reprimanding Prime Minister

As if that is not enough, the Supreme Court has reprimanded the Prime Minister for keeping calm for 16 months on permission sought after by a lawyer through a Public Interest Litigation to prosecute the minister. The Prime Minister Manmohan Singh is considered Mr Clean among Indian politicians. The bureaucrat turned politician, Manmohan worked as finance minister in the Congress government during 1991-96 period and introduced globalization policies for Indian economy. He is the most sought politician by the western countries that have been pushing India to open up its economy for foreign multinational companies.

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The FDI discussion paper by DIPP 2010 – a summary

In the following, FII is providing a summary of the discussion paper by DIPP about the “Issue of Discussion Paper on Foreign Direct Investment (FDI) in Multi-Brand Retail Trading” with the most important points.

TKirana-Marketshe discussion paper starts with the present scenario, according to which Multi-Brand retailing is prohibited in India, but FDI in Single-Brand Retailing is permitted since 2006, to the extent of 51%. Since then, a total of 94 proposals have been received till May, 2010. Of this, 57 proposals were approved. An FDI inflow of US $ 194.69 million (Rs. 901.64 crore) was received between April, 2006 and March, 2010, comprising 0.21% of the total FDI inflows during the period, under the category of single brand retailing.

FDI in cash and carry wholesale trading was first permitted, to the extent of 100%, under the Government approval route, in 1997. It was brought under the automatic route in 2006, the paper reports.

A number of CONCERNS have been expressed with regard to opening of the retail sector for FDI. The first is that the retail sector in India is the second largest employer after agriculture. As per the latest NSSO 64th Round, in 2007-08 retail trade employed 7.2% of total workers and provided job opportunities to 33.1 million persons. A second would be that FDI would lead to unfair competition and ultimately result in large-scale exit of domestic retailers, especially the small family managed outlets, leading to large scale displacement of persons employed in the retail sector. Further, as the manufacturing sector has not been growing fast enough, the persons displaced from the retail sector would not be absorbed there. A third argument listed by the discussion paper is that the Indian retail sector, particularly organized retail, is still under-developed and in a nascent stage and that, therefore, it is important that the domestic retail sector would be allowed to grow and consolidate first, before opening this sector to foreign investors.

From the retail front, the discussion paper comes to the backend and argues that there would be “limitations of the present setup”, as there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables (about 180 million MT), it has a very limited integrated cold-chain infrastructure. The chain would be highly fragmented and hence, perishable horticultural commodities find it difficult to link to distant markets, including overseas markets, round the year. STORAGE INFRASTRUCTURE is necessary for carrying over the agricultural produce from production periods to the rest of the year and to prevent distress sales. Lack of adequate storage facilities cause heavy losses to farmers in terms of wastage in quality and quantity of produce in general, and of fruits and vegetables in particular.

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Panel majority want POSCO clearances scrapped

Reuters | Oct 18, 2010 | 8:32pm IST

A majority of an Indian review panel recommended on Monday that environmental clearances given to South Korea’s POSCO for a steel mill in Orissa be cancelled because the project could violate forest laws. The panel’s findings are not binding, and a final decision on what has come to be seen as a test case of India’s investment climate lies with Environment Minister Jairam Ramesh.

POSCO The panel recommended that POSCO be asked to carry out a fresh environmental impact assessment for the $12 billion mill, touted as India’s biggest foreign direct investment, which has already been delayed by more than three years. The South Korean company is among several corporations, including London-listed Vedanta Resources, whose Indian projects have come under scrutiny by an environment ministry that has been tightening rules — often bringing it into conflict with other government departments pushing for rapid industrialisation. A POSCO official in India declined to comment.

In August, India’s environment ministry ordered a halt to all work on the project, including land acquisition, while the panel investigated if the Forest Rights Act that seeks to protect forestland and settlers had been violated. POSCO was scheduled to begin production from its plant in Orissa’s Kujanga region by the end of 2011.

The memorandum of understanding for the mill was signed in June 2005 that also included captive iron ore mining rights in the state’s Khandadhar area. But the world’s third-largest steelmaker faced delays arising from protests from local residents who stand to be affected by the plant as well as the environment ministry probe.

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ONGC says to issue view on Cairn’s India sale

Reuters | Oct 8, 2010 | 7:18pm IST

Oil and Natural Gas Corp said it would issue its response to Cairn Energy’s plans to sell a controlling stake in its Indian unit to Vedanta Resources "very soon.” The company is also in talks with the Indian government about the royalties it must pay on the fields it co-owns with Cairn India, and hopes that it will find an outcome, which limits its liability — potentially at the expense of Cairn or Vedanta.

"We have been raising that issue… we are in discussions with the Petroleum Ministry and the Finance Ministry," said Chairman R.S. Sharma. "I’m very positive that we will be able to get a solution to our satisfaction." Following an exemption offered some years ago to encourage companies to explore in India; Cairn is not liable for royalties, while ONGC must pay royalties on the oil blocks.

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