NEW DELHI, JULY 28: Karnataka, a major producer and exporter of iron ore, has banned exports of the raw material from 10 ports, govt sources said.

“An order has been passed yesterday,” a source in the ports department in Bangalore, who did not wish to be named, said.

Two other junior officials also said an order has been passed banning iron ore exports.

The move comes in the wake of allegations of illegal mining by companies and corruption in the govt that has the state’s ruling party, the Bharatiya Janata  party, at loggerheads with the govt run by the congress party.

Chief minister BS Yeddyurappa said, he had banned exports of the commodity though there was no official notification on the move. “As all 10 minor ports come under state govt jurisdiction, my govt has taken the decision of banning of export,” Yeddyurappa said.

Karnataka is the country’s second largest iron ore producer. The state mined 45.94 million tonnes of the steel making ingredient out of total Indian production of 215 million tonnes in the year to March 2010, data from Federation of Indian Mineral Industries shows.

NEW DELHI, JULY 28: THERE is strong reason to believe that the Union government will fix the minimum export price (M E P ) on on shipments of premium rice (non-Basmati) at $ 900 a tonne, which will bring it on par with the Basmati, in the forthcoming meeting of the empowered Group of Ministers (eGoM).

The government is also weighing the possibility of easing the two-year-old export ban on non-basmati rice

The export ban on certain varieties of non-basmati rice (Sugandha and Sharbati from northern India and pooni, Sona Masuri and Matta from the southern parts) may be eased because they enjoy very high demand in the US, the UK and West Asia.

The premium variety of non-Basmati rice may be allowed for export because of its demand overseas. At home, the demand for such rice is negligible, it is learnt, Hence, there is no question of exports of this variety affecting the common man or the ration system.

The MEP for non-Basmati may be decided based on the prevailing in ternational prices, a senior official said.

Officials in the Agriculture Ministry also indicated that the exports may be permitted from October 8.

With the Ministries of Commerce and Industry, as well as Agriculture, having discussed the matter, a final decision will now be taken by the eGoM, headed by the Finance Minister, Mr Pranab Mukherjee, next month.

“The MEP should be fixed at around $900 a tonne on par with that of Basmati as that would ensure only the Premium (or the expensive range) is exported, said Mr A. K. Gupta, Head-Cereals Division, Agricultural and processed Food Products Export Development Authority (Apeda).

At present, four to five million tonnes of premium variety non-Basmati rice are produced every year. Hence, if one million tonnes is exported, it would not affect the domestic market very badly -dent of the All India Rice Exporters’ Association.

He pointed out that the two-year ban on non-Basmati rice exports had put competitors like pakistan, Vietnam and Thailand in an advantageous position. They had not only increased their shipments, but had been selling at a lower price, thereby cornering some of India’s traditional markets.

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WHILE the country managed to avoid being hit by the global slowdown, the growth in its steel production in the first half of 2010-11 is a pale shadow of the performance of the world leaders.

India did manage to retain its No.5 position; but it was the only country, with over 10-million tonne capacity, with a single digit growth. All others, including china, Japan, Korea, the US Russia, Brazil and Germany grew  much faster.

With land acquisition problems dogging almost every big project, the growth rate for India’s steel production is expected to remain in single digits for the rest of the year, This is a complete reversal of situation for India, which had climbed up to the third rank, ahead of the US and Russia in the first half of 2009.

For the full-year 2009, the country’s output grew by a mere 2.7per cent-but it was the only country apart from China to have logged growth.

Globally steel production grew by 27.9 per cent in the H1of 2010, with all regions reflecting growth, BUt only Asia and West Asia are reporducing more steel compared to 2007 (before the slow down).

                FOOD INFLATION DOWN TO 12.5 PC

Annual food inflation fell to 12.5 per cent for the week ended July 10 from 12.8 per cent in the previous week, on the back of decline in prices of vegetable, especially potato and onion, Overall, vegetable prices fell by 9.9 per cent; but prices of pulses were higher by 23.8 per cent during the week under review over the same period last year.

Commodity prices have tracked equity markets for the last two years, as traders try to gauge the strength the strength of the global recovery, when traditionally they have diverged with low raw material costs bosting growth and vice versa, Barclays Capital figures show commodity assets under management rose by $ 14.6 billion to $ 292 billion in the first half, but the rate of growth is down on a year ago, despite expectations 2010 could be a record year for investment.

MUMBAI, JULY 27: THE Reserve Bank of India (RBi) has raised its short term lending and borrowing rates by 0.25 per cent and 0.50 per cent, respectively, with a view to bringing inflation to six per cent by March 2011from the present double digit. But, the move will put pressure on banks’ interest rates.

The increase in short-term lending rate (repo) to 5.75 per centand short-term borrowing rate (reverse repe) to 4.5 per cent will be effective immediately.

In its monetary review put out on Tuesday the central bank, however , kept its cash reserve ratio (CRR) , the cash which banks are required to keep with RBI, unchanged.

RBI raised upwards the inflation target from 5.5 per cent to six per cent and said the economy would grow by 8.5 per cent, up from earlier projection of 8 per cent, this fiscal.

Earlier this month, RBI had hiked repo and reverse repo rates by 0.25 per cent as inflation remained above 10 per cent for the fifth month in succession, Priorto this, RBI had raised thrice its key rates, since January.

The Monetary Policy intends to:

*Contain inflation and anchor inflationary expectations, while being prepared to respond to any further build up of inflationary pressures.

*Maintain an interest rate regime consistent with price, output and financial stability.

*Actively manage liquidity to ensure that it remains broadly in balance so that excess liquidity does not dilute the effectiveness of policy rate actions.

Taking into account the progress of monsoon so far and the prevailing global macroeconomic scenario, for policy purposes, the baseline projection of real GDP growth for 2010-11 has been revised to 8.5 per cent, up from 8 per cent with an upside bias as indicated in April 2010 policy statement.

This upward revision is primarily based on better industrial production and its favourable impact on the services sector, giving due consid eration to the global scenario.

Revising upwards the GDP target for this fiscal, RBI said that indications are that the economy is steadily reverting to its pre-crisis growth trajectory.

However, uncertainty over global recovery could have possible adverse consequences for the country, the apex bank said.

If the global recovery slows down, it will affect all emerging market economies, including India, through the exports, financing and confidence channels, RBI, said.

A global slowdown also carries the significant risk of a potential slowdown in capital inflows, it said, adding that it may act as constraint to domestic investment.

In another significant move, RBI said it would now undertake mid-quarterly policy reviews, on the lines of major central banks abroad, “to take the surprise element out of the off-cycle actions.”

These reviews will be conducted at intervals of about a month and -a-half, after each quarterly review, RBI said. 

NEW DELHI, JULY 27: THE  Railway Ministry will involve the private sector in laying out, operating and maintaining tracks under a new policy framed by it to promote investment in railway infrastructure projects.

Private companies at present operate railway linkages to a few ports or have captive rail systems.

A resource crunch was delaying the execution of network capacity expansion projects of the Railways, a senior official admitted.

The R3i (Railways’ Infrastructure for Industry Initiative) policy has been formulated to tap alternative sources of funding to create additional tranport capacity and augment the Railways’ share in freight traffic. companies will be able to lay tracks -20 km or longer -and adopt one of the four business models proposed.

These are “full contribution -apportioned earning model”, “special purpose vehicle (SPV) model” and “private line model”.

The companies will be allowed to develop logistics related activities and stations on the project line.

The Ministry, however, has included a rider to keep connectivity to coal and iron ore mines, directly or indirectly, away from these companies. The reason being the Railways get 55 per cent of its freight revenue from moving coal and iron ore.

In all models, except in the private line model, land for building new lines will be acquired by the Railways. Funds for land acquisition have to pe paid upfront to the Railways by the private companies. The ownership of land and tracks will vest with the Railways.

In the cost sharing -freight rebate model, the Railways and private companies will enter into an agreement to construct the proposed line: the contribution of the private player being not less than 50 per cent of the total project cost.

The Railways will take up the laying operation and maintenance of the new tracks. The Private player, in lieu of investments made, will be entitled to a freight rebate varying between 10 and 12 per cent on incremental traffic moved on the line for a maximum period of 10 years.

Alternatively, the private players can contribute fully in developing and maintaining a proposed stretch for 25 years.

The interested party will receive earnings from traffic on the line, except for the operating and maintenance costs in curred by the Railways.

The Raiways will impose a fee of two per cent on the gross earnings of the partner’s share for the first 10 years of operations and four per cent for the remaining 15 years.

Expenses incurred to acquire the land will be refunded at the end of the concession period.

An SPV, with 26 per cent equity share of the Railways, can also be formed to execute a new line project.

Under this model, the SPV shall be granted a share in the revenues generated on the line for 30 years.

For port connectivity projects, as much as 100 per cent of the earnings generated, apart from the operational costs incurred by the Railways, will be forwarded to the consortium.

Private parties can also build a new line on non-railway land and claim revenues generated on the line for 30 years under the “private line model.”

Operational and maintenanes expenses of the Railways will be deducted from the gross revenues in this case.

Beside, the Railways will levy a fee on gross earnings of two per cent between 5 and 10 years, three per cent between 10 and 20 years and four per cent for the remaining period on the private entity.

BRUSSELS, JULY 27: THE European Union’s (EU) regulation calling for providing advance cargo declaration is to become mandatory from January 1, 2011. for all goods arriving in or leaving the EU.

It will apply in the following three cases:

*Import of goods from third countries to one or more EU member-states.

*Export of goods from one or more EU member-states to third countries.

*Transit of goods, which are not not into free circulation, over the territory of one or more EU member-states.

Shipping companies will be obliged to submit cargo information in advance to the customs office solely in case of import or export of goods. Consequently, the rules on advance cargo declaration in case of transit of goods are not relevant for shipping.

All shipping sectors are covered but with different provisions. The EU regime differs from its US counterpart in that it applies to all shipping sectors and not only to deepsea container shipping. However, there are some differences in the rules that apply amongst the different shipping sectors. The main difference relates to the time limit within a shipping company or its representative must declare the required cargo information in advance to the Customs office.

For deepsea container shipping, it is 24 hours before loading of the cargo onboard a ship in a foreign (non-EU)  port in case of import; or 24 hours before loading of the cargo onboard a ship at the EU port of departure.

In case of import, the declaration obligation applies to each foreign (non-EU) port loading and not just to the last foreign (non-EU) port of loading before entering the EU.

For deepsea bulk shipping, 4 hours before arrival of the ship in the first EU port of arrival in case of import; and 4 hours before departure of the ship form an EU port in case of export.

For shortsea shipping and combined transport, 2 hours before arrival of the ship in the first EU port of arrival in case of import; and 2 hours before departure of the ship from an EU port in case of export.

The distinction between “deepsea shipping” and “short sea shipping ” is based on geographical criterion. In sum, ships coming from or going to neighbouring countries of EU memberstates located either in the Baltic Sea or the Mediterranean Sea, will be qualified as shortsea shipping.

More details on the advance cargo declaration are available on the relevant websites.

NEW DELHI, JUL 27: Companies sitting on the fence are trying to see if they can use the eight month window still available to set up units in special economic zones. Units have to come up before March 31, 2011, to avail of income tax concessions available for SEZ units. The second draft of the Direct Tax code (DTC) has proposed to do away with the tax sops for SEZs units unless these are operational by this date. As a result, there is a spurt in queries, including from countries like the UK and Australia, but investors are not sure if they can have the units operational in eight months.

M S Jagan, consultant, Sri CIty pvt Ltd, said, “There’s a rush to take up space in the next six months. Developers are also not sure if they would get customers after April.” Sri City is a multi-Product SEZ coming up in Andhra Pradesh, close to chennai.

People trying to rush in include those trying to shift from software technology parks to SEZs, or multinationals keen to set up captive outsourcing units in India. Mid-size information technology (IT) firms vying for captive BPO (business process outsourcing) businesses are also keen.

Others who want to move include companies who have some exports but see this rising in future. “Once you have a unit, you can expand it later. The expansion will eligible for tax sops, but not new units,” said Hemal Zobalia, ED, KPMG. The uncertainty in policy environment is hurting investments. Iffco, for instance, is promoting a large agro processing zone in Nellore in Andhra Pradesh, which will see an investment of over Rs 5,000 crore spread across 2,700 acres, It has already invested around Rs 500 crore, but it is unlikely to invest the rest if the tax sops are taken away.

Though there have been a spurt in queries, the developers are not ready. Of 500 SEZs proposed, only 111 have come up. These, too, are being developed in a phased manner. The developers are not sure if they should go ahead and who will be the takers.

“For developers, the changes are severe, Many have spent hundreds of crore in acquiring land and are in the process of devel oping. Some could finish development by March 2011. but what if there are no takers? That is their biggest grievance,” said KPMG’s Zobalia. “Some mid-way path has to be found  for SEZs which have been approved and registered, so that their moneydoesn’t go down the drain.”

There’s another problem for IT companies Hence forth, tax saving concessions will be given only on investments . which is not good news for the IT industry, as they have no investments. “The most SEZs are only on IT, which is why the finance ministry wants to stop giving tax sops to SEZs. But this will also affect the multi-product SEZ developers and units there, who need tax sops.” said Jagan.

MUMBAI, JUL 27: The Finance Minister, Mr Pranab Mukherjee, has said the Reserve Bank of India’s decision to raise shortterm key rates will check inflation without hurting growth. “I expect this policy will lead to further easing of inflation which already is going down and it should also keep us fully on track in terms of growth,” Mr Pranab Mukherjee told reporters inside the Parliament complex on Tuesday.

In its first quarter monetary review on Tuesday the central bank has raised short-term lending and borrowing rates by 0.25 pc and 0.5 pc. respectively. The increase in short-term lending rate (repo) to 5.75 pc and short-term borrowing rate (reverse repo) to 4.5 pc will be effective immediately. “The monetary policy just announced by RBI is another by RBI is another calibrated step in the right direction… The RBI has not only raised policy rates but has narrowed down the spread between repo and reverse repo rates for a more efficient financial system,” he said. This is the fourth policy rate hike by the Reserve Bank so far this year.

The overall inflation has been in double digits for the past five months and stood at 10.55 pc in June.

RBI in order to keep sufficient liquidity in the system has, however, kept the cash reserve ratio (the amount of deposits banks park with RBI) unchanged at 6 pc. “It is a welcome measure and particularly I am happy that CRR has not been increased because of successful auction of 3G has created some strain on liquidity,” the Finance Minister said, The Government has raised over Rs one lakh crore from the auction of 3G and BWA spectrum against the estimates of Rs 35,000 crore, “Under these circumstances, not tightening credit by direct quantitative measures like the CRR, shows sophisticated thinking,” he added.