As a formal move towards permitting entry of global retailers, the DIPP released a discussion paper on Tuesday inviting comments from stakeholders by 31st July
Unlike the defence sector, the government has adopted a cautious approach on opening up multi-brand retail to foreign investment, Department of Industrial Policy and Promotion (DIPP) secretary RP Singh said today, reports PTI.
"We have left it (fixing a cap on FDI) open. Based on the response which we get from the stakeholders, we will take a view," Mr Singh told PTI.
The secretary of the DIPP — which is responsible for the policy on the country's foreign direct investment (FDI) — indicated that the government has taken a cautious approach in the case of multi-brand retail.
"We have not taken a clear stand like we did in the case of defence. We did not give a stipulation as to what should be percentage (for FDI)" he said.
As a formal move towards permitting entry of global retailers like Wal-Mart, Carrefour, Tesco and Metro, the DIPP released a discussion paper on Tuesday inviting comments from stakeholders by 31st July.
India, at present allows 51% foreign direct investment (FDI) in single brand retail and 100% in the cash-and-carry (wholesale) formats. Though permitted in 1996, FDI inflows of just $195 million (about Rs900 crore) have come in the single brand retail segment, comprising 0.21% of the total FDI into the country.
Single brand investment is confined to sportswear, luxury goods, apparel, jewellery and handbags.
In the case of cash-and-carry trading, FDI of $1.77 billion (about Rs8,000 crore) has come since April, 2006, when it was brought under the automatic clearance route, though it was opened in 1997.
In the paper on FDI in defence, the DIPP favoured 75% foreign investment. It had said that even 100% would be desirable. However, the ministry of defence is known to be opposed to increasing the FDI cap beyond the existing 26%.
Asked how soon multi-brand retail, a politically sensitive sector employing about 33 million people in the neighbourhood mom and pop (kirana) stores, would be thrown open for overseas investment, Singh said it was difficult to fix a timeline.
"We cannot say... depends upon the kind of response we get, kind of concerns people express," he said, adding, "We have to find ways of addressing (concerns) and we are trying to build a consensus to the extent possible."
He said concerns over the impact on small traders by the entry of big retailers have to be taken on board. "You have to see how to integrate the retail sector with this value chain, that is important," Mr Singh said.
He said it also has to be seen how unorganised retail should cope with the competition.
2022 is the year when the revised non-compete agreement between the two Ambani brothers that bars Mukesh from taking up gas-fired power projects ends
Anil Ambani Group firm Reliance Natural Resources’ (RNRL) new gas supply agreement with Reliance Industries (RIL) is valid only till 31 March, 2022 and even in this, there is no mention of volume or the tenure of gas supply, reports PTI.
While the gas would be given by Mukesh Ambani-led RIL to the Anil Ambani group firm at the government specified price, the duration of the gas supply will be decided in the Gas Sales & Purchase Agreement (GSPA) as and when the two sides sign it.
The fuel supply, under such an agreement, could stretch beyond 2022 — depending on availability and allocation by the government.
2022 is the year when the revised non-compete agreement between the two Ambani brothers that bars Mukesh from taking up gas-fired power projects ends.
RNRL and RIL on 25th June signed a new Gas Sales Master Agreement (GSMA), which replaced a similar contract of January 2006, outlining the Mukesh-run firm's intent of supplying gas to Anil Dhirubhai Ambani Group (ADAG) power plants on terms set by the government, industry sources said.
The GSMA does not mention of any volumes that RIL will supply to the ADAG firm or specific power plants which will receive it and only states that gas will be supplied to power plants that are sanctioned by the government for receiving gas.
The new supply agreement was entered into after the Supreme Court on 7th May rejected RNRL's case for gas at rates lower than government approved price. The court had asked RIL and RNRL to enter into a suitable agreement bearing in mind the government's right to approve price and users.
Sources said the price of gas in the GSMA is stated to be according to the pricing formula that the government had approved in 2007. According to this formula, RIL is selling gas from its eastern offshore KG-D6 fields at $4.2 per million British thermal unit (mmBtu), at $60 dollars per barrel, till March 2014.
The rates may change in 2014 if the crude benchmark in the formula is changed in line with the international oil trend at that time.
Sources said unlike the January 2006 GSMA that provided for RIL supplying 28 million standard cubic meters per day (mmscmd) of gas to ADAG plants like the mega 7,800 MW Dadri unit near New Delhi at a fixed price of $2.34 per mmBtu for 17 years, the new supply pact does not mention either volumes or duration.
Once, the government approves of allocation to an ADAG power plant, RIL will enter into a specific Gas Sale and Purchase Agreement (GSPA) for supplying gas to the unit.
"This Agreement (GSMA) shall be effective upon its execution and shall terminate on 31 March, 2022. Provided, however, the GSPAs entered into pursuant to this 2010 Gas Master Supply Agreement shall remain in force and effect in accordance with their respective terms," a source said, quoting from the renegotiated GSMA.
So, if the government was to allocate gas for a tenure longer than the validity of GSMA, RIL will enter into GSPAs for the said duration and supply gas to ADAG plants accordingly.
Also, RIL is to supply gas to RNRL and its affiliates.
Affiliates are defined as Reliance Infrastructure Ltd and its subsidiaries and Reliance Patalganga Power Ltd and its subsidiaries.
Subsequent to signing of the GSMA, RNRL is being merged with another Anil Ambani Group firm Reliance Power, which plans to set up the Dadri plant, besides new units in Gujarat, Maharashtra and Andhra Pradesh, will inherit the GSMA.
In the new GSMA, RNRL has not only agreed to pay the price approved by the government but also a marketing margin of $0.135 per mmBtu.
RNRL had last year refused to pay marketing margin to RIL terming them as "illegal". It subsequently paid the amount, charged by RIL for its marketing effort, "under protest."
In the GSMA, the two firms have agreed that level of production of gas from the block would be subject to the Development Plan approved by the government.
Also, RNRL has agreed to not trade the gas it gets from RIL and the usage being restricted to the plants to which it is allocated.
Robust growth in industrial production, stabilising domestic consumption, rapidly growing investment demand coupled with increase in imports and exports seems to have supported growing business confidence
The Dun & Bradstreet (D&B) Composite Business Optimism Index (BOI) for the third quarter (Q3) of 2010 rose to a two-year high of 150.0 from 132.1 in Q3 2009, recording an increase of almost 13.6% on a year-on-year (Y-o-Y) basis, reports PTI.
The sustained improvement in the BOI, which is now at a two-year high, is reflective of the continuous strengthening of confidence amongst the corporates, D&B said in a statement in Mumbai.
Robust growth in industrial production, stabilising domestic consumption-demand, rapidly-growing investment demand coupled with increase in imports and exports seems to have supported growing business confidence, D&B said.
“Improvement in hiring intentions of corporates, as reflected in a 10-quarter high resultant optimism for employees, is a positive development and augurs well for the future growth prospects of the economy.”
“However, India Inc remains cautious regarding its profit expectations, as margins are likely to be under pressure on account of high input prices and rising interest rates" D&B's president & CEO, Kaushal Sampat, said.
"Going forward, the impact of inflation and rising interest rates on domestic demand conditions will be crucial in determining business expectations. Also, the advancement of monsoon and how it pans out during the rest of the season would play an important role in shaping business sentiment in the near future. The developments surrounding the debt crisis in some European countries would also cast their influence on business sentiment going forward," Mr Sampat said.
Majority of the BOI respondents expect demand conditions to improve in the forthcoming quarter.
While 81% of the respondents expect an increase in volume of sales, 5% of the respondents anticipate volume of sales to decline in Q3 2010. Around 14% of the respondents expect volume of sales to remain unchanged.
The resultant optimism for volume of sales stands at 76%, an increase of 2 percentage points as compared to the previous quarter.
Profit expectations of the Indian corporates remained muted, with the resultant optimism for net profits recording a marginal increase of 1 percentage point during Q3 2010 as compared to the previous quarter.
However, the resultant optimism for net profits which stands at 67% recorded an increase of 8 percentage points as compared to Q3 2009, D&B said.