Telecom body asks TRAI to remove uncertainty in sector

“The current situation has put at risk the existing investment of billions of dollars in mobile network infrastructure, in a sector that either directly or indirectly employs almost 10 million people and serves more than 894 million consumers,” global telecom body GSM Association said in a letter to TRAI

New Delhi: Following the Supreme Court’s order quashing 122 telecom licences, global telecom body GSM Association (GSMA) has asked the Telecom Regulatory Authority of India (TRAI) to outline quickly the future course of action to bring in transparency and certainty to investments made in the sector, reports PTI.

In a letter to the TRAI, GSMA said, “it is important to now move quickly to outline the process that will provide a rapid resolution to this situation”.

“Key to this will be to ensure that the new process guarantees the principles of fairness, transparency and certainty, to all who have been investing in India in good faith,” GSMA said in the letter.

Earlier this month, the Supreme Court cancelled 122 licences allocated by the then telecom minister A Raja.

Since then, two foreign companies—Bahrain Telecom and Abu Dhabi-based Etisalat—have announced their exit from India.

Another operator Loop has written to prime minister Manmohan Singh, asking the government to return the licence fee paid by the company along with interest.

“The current situation has put at risk the existing investment of billions of dollars in mobile network infrastructure, in a sector that either directly or indirectly employs almost 10 million people and serves more than 894 million consumers,” GSMA said.

Since the deployment of mobile networks is capital intensive and the return is long-term, “uncertainty is particularly damaging to the future growth of India’s mobile sector”, it added.

GSMA said the uncertainty generated by the current legal situation also runs the risk of deterring the much-needed investment in 3G and 4G networks.

The GSMA has also extended its participation in an open dialogue on this situation with the government, to ensure fairness in the future auction process and maintain confidence in India's position as a secure place to do business.

Exuding confidence in the world’s second largest mobile market, GSMA said India is in a strong position to shape the mobile industry of the future.

“Unless the government moves swiftly to clarify the process of licence reallocation, further investment in India could be deferred,” it said.

It added that this will have a “knock-on impact” on a number of key sectors of the Indian economy.

According to a recent GSMA report, a 10% increase in broadband penetration in India would contribute a combined $80 billion (Rs3,50,600 crore) of net revenues across the country’s transport, healthcare and education sectors by 2015.

Operators have been seeking clarity in rules to safeguard the multi-crore investments made by these players.

The government has already made a few proposals like de-linking license from spectrum, tenure of new licenses at 10 years and market-linked pricing of spectrum to be a part of the new telecom policy.


Vodafone judgement fallout: I-T reviews probe in 2G case

The department, which has till now detected Rs1,500 crore of tax irregularities in its probe in this case, has found that telecom companies involved in the spectrum allocation had sold their controlling stakes to foreign firms through Mauritius and other foreign shores after the allotment of the spectrum

New Delhi: In an apparent fallout of the Supreme Court’s order in the Vodafone case, the Income Tax (I-T) department has started a review of its probe in the second generation (2G) spectrum scam which relied heavily on the premise of capital gains generated in overseas deals by telecom firms, reports PTI.

The department, which has till now detected Rs1,500 crore of tax irregularities in its probe in this case, has found that telecom companies involved in the spectrum allocation had sold their controlling stakes to foreign firms through Mauritius and other foreign shores after the allotment of the spectrum.

It had also issued notices to various firms asking them to pay tax on the capital gains from such transactions which include a recent Rs80 crore tax notice to a real estate development firm under the transfer pricing clause.

“The department is looking at strengthening the probe from various angles which can stand scrutiny during prosecution,” reliable sources said while refraining from elaborating further about the steps being taken.

The I-T department, in its status report filed in the Supreme Court last year, had said that while telecom companies were physically present here, the transactions and the beneficiaries were outside India, and that the department was following the same principles as were used in the Vodafone taxation case.

According to sources in the department, the I-T is now reviewing its strategy while taking forward the case and it is eagerly waiting for a decision on the review petition it has filed in the apex court which is listed to be heard on 27th February.

“In fact one of the main cases which will have the implication of the Vodafone tax case is the 2G spectrum,” the sources said.

The review petition settled by solicitor general Rohinton Nariman last week had contended that there was a need for re-considering the 20th January verdict of the apex court as the law on deciding the case has not been correctly interpreted.

The apex court had held that Vodafone’s transaction with Hong Kong-based Hutchison Group was a ‘bonafide’ FDI which fell outside the tax jurisdiction of Indian authorities and that I-T department does not have jurisdiction to levy Rs11,000 crore as tax on the overseas deal between Vodafone International Holdings and Hutchison Group.

The I-T department, in the 2G probe, has also used the provisions of the Double Taxation Avoidance Agreement (DTAA) with various countries including Mauritius for obtaining financial data of these firms.

Under the DTAA, if a firm pays tax in one nation then it is exempted from paying any tax here.

The department has found a number of instances of tax evasion during its 2G probe where firms and entities have not paid taxes under the garb of change of share holding patterns, extension or receipt of huge loans, and purchase of infrastructure.


Mumbai mill workers to go on a march on 1st March

They are protesting against ‘fraud’ by National Textile Corporation by profiteering on realty deals

Nine associations of mill workers have organised a march on 1st March 2012 in Mumbai—from Currey Road to Gold Mohur Mills. About a thousand mill workers are expected to participate in the march, demanding that the land held by National Textile Corporation (NTC) be handed over to the authorities for constructing affordable housing projects for mill workers; instead of being given to joint ventures with private sector companies for development.

Maharashtra Girni Kamgar Union, Girni Kamgar Sangharsh Samiti, Rashtriya Mill Mazdoor Sangh, Sarva Shramik Sanghatana, Girni Kamgar Karmachari Nivara ani Kalyankari Sangh, Girni Kamgar Sena, Girni Kamgar Union, Girni Kamgar Sabha and ST & SC Mazdoor Union will be participating in the march.

Mill workers have demanded that the entire NTC land should be used for public benefit, land of the six unsold mills be handed over to MHADA (Maharashtra Housing and Development Authority) immediately for constructing an affordable housing project and that NTC must immediately scrap the joint ventures with private sector companies for developing the area of four mills.

Datta Iswalkar, president, Girni Kamgar Sangharsh Samiti, told Moneylife, “We demand that instead of giving the land to private companies for joint ventures (JVs) or letting them lying vacant, NTC must give them to the government to provide houses for the workers.”

The few housing units which MHADA has constructed for the mill workers are unaffordable to the workers. “The number of mill workers who have applied for housing under the amended DCR, is over 100,000. To build tenements for all of them, MHADA needs 200 acres of land, which comes to a third of the total mill land in Mumbai, not counting the space taken up by the former cotton godowns. Out of the total land belonging to the NTC mills in Mumbai (i.e., around 266 acres), they have given just 6.07 acres for mill workers’ housing. An equal area has been given to the city, making a total of less than 13 acres. What is happening with the rest of the land? Can the NTC, which is a public sector company, amass unexpected and unaccounted profits? Why cannot it contribute more land to workers and the city?” said a statement issued by the workers’ union.

Ms Krishna Menon, an eminent activist, said, “NTC has handed over the India United Mill No 6 property to the government for constructing a memorial for Dr Ambedkar. That area is near Chaityabhoomi in Dadar and it is a good step, because during and after Ambedkar Parinirvan Divas (which is celebrated on 6th December), everyone flocks to Chaityabhoomi and the area becomes too crowded. If they can give land for a public space, why can’t they give more land for such purposes?”

NTC, which manages affairs of sick textile undertakings, aims at modernizing units via sale of assets, and had proposed to sell 15 mills in Mumbai—seven of which are already sold. NTC has entered into joint ventures with private sector enterprises, namely Bhaskar Industries, Alok Industries & Pantaloon Retail (India) for ‘revival’ of four properties in Mumbai: India United Mills No1, Apollo Textile Mills. Gold Mohur Mills and New City of Bombay Manufacturing Mills. Four mills are claimed to be operative and six NTC mills are lying closed; and are not sold yet.

NTC declares on its website that it has sold assets worth Rs6,480.71 crore under the revival scheme. “All the above mentioned JVs are earning net profits consistently since last three-and-half years,” says NTC on its website.

The mill workers’ unions, however, say that NTC has cheated the workers. They claim that NTC is more concerned with making profits than providing jobs or housing to the workers. “The entire revival plan that NTC has presented before Board for Industrial and Financial Reconstruction (BIFR), based on which they are selling and developing mill lands as real estate in Mumbai, is fraudulent. NTC through its sale of just seven mills in Mumbai has amassed Rs3,999 crore by their own admission. For the revival plan for mills all over India that they submitted to the BIFR, they need only Rs547 crore.  They have made a staggering profit of Rs3,452 crore! What are they doing with this money?” the workers’ associations said in a statement.
The unions say that the joint venture projects, which are for ‘revival’, are actually being redeveloped. “For closure or re-development, these four mills would have had to give land to the city for open space and affordable housing under the DCR. They would have been asked what they are doing with the money. This is the reason they (NTC) are claiming that they are running the mills, as ‘textile–related’ activity,” said the statement issued by the unions.

The joint ventures, which NTC says are for “textile-related activities” are also lying mostly fallow, claim the workers. “In Gold Mohur Mills, Dadar East, which has a total land area of 7.05 acres, one small shed is being used for storing cotton. The rest of the land has been lying fallow since four years. In Apollo Mills, Lower Parel, with 6.41 acres, and New City (6.7 acres), Byculla, about 50 sewing machines each are running. In India United Mills No 1 (19.45 acres) in Parel there are 100 sewing machines. Cleary this is a sham,” the statement issued said.


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