India says needs to double infrastructure spending
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By Rajesh Kumar Singh
NEW DELHI (Reuters) - The finance minister called on Tuesday for a doubling of infrastructure spending to $1 trillion in the five years to 2016/17, and said private sector firms would be allowed to sell special bonds to help pay for it.
Poor infrastructure is a long-standing roadblock to faster development in India, with choked roads and ports and inadequate power supplies acting as a brake on its economic growth.
The enormous funding needs cannot be met by overstretched banks alone and will require new sources of financing, Finance Minister Pranab Mukherjee told an industry conference.
Red tape and difficulties in acquiring land, along with an underdeveloped domestic bond market and wariness of overseas investors in committing to long-term, big-ticket projects have slowed infrastructure development.
The government has decided to allow private firms to issue infrastructure bonds, which will hopefully attract investments from big pension funds and other cash-rich firms, Mukherjee said. Issuance of these bonds, whose buyers can claim tax breaks, is currently limited to state entities.
"We have still not completely succeeded in exploiting the full potential of insurance and pension funds for deployment in infrastructure projects," Mukherjee said, without giving a timeframe for when the first such private bonds would be allowed to proceed.
"The availability of equity, both domestic and FDI (foreign direct investment), continue to remain an area of concern," he said.
The government has estimated the country needs $514 billion poured into infrastructure in the five years to 2011/12, the year when the economy is expected to expand an annual 9 percent. The bulk of this investment is seen coming from private sources.
Prime Minister Manmohan Singh told the conference India needed reforms to ensure increased resources for the sector and for more private sector participation.
"Our experience shows that private participation in infrastructure development is indeed a feasible proposition and can help expand infrastructure much faster than it would have relying only on public resources," he said.
The spending would help boost India's GDP growth into double digits, he said.
"We must aim at accelerating the pace of growth to about 10 percent per annum. This is the growth target we must work toward in the 12th five-year plan (2011/12-2016/17)," Singh said.
"It is not something that would happen automatically. We would need continuous improvements in our policy regime and our implementation process."
(Additional reporting by Nigam Prusty; Writing by C.J. Kuncheria; Editing by Kim Coghill)
(For more business news on Reuters Money visit http://www.reutersmoney.in)
WTO likely to rap Airbus aid but row to drag on
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GENEVA (Reuters) - The World Trade Organisation is expected to confirm criticism of European aid for Airbus when it issues a final subsidy ruling on Tuesday, but this won't spell an end to the record transatlantic trade dispute.
Subsidy rules lie at the heart of the battle for dominance of the market for civilian aircraft which aerospace firms estimate will be worth $3 trillion over the next 20 years.
The United States argues that Airbus got a total of $205 billion in unfairly priced loans and other benefits from France, Germany, Spain and Britain over two decades -- making the case by far the biggest international trade dispute.
Even if the ruling condemns support by European governments for Airbus, the European Union will argue that a full picture will emerge only when the WTO rules on a countersuit brought by Brussels.
Final resolution of the two cases -- which may yet involve a negotiated settlement -- will define the rules of the civil aviation market, where Airbus and Boeing have together nearly $1 trillion of aircraft on their order books, for years to come.
A confidential interim ruling in September found European government payments to Airbus were "actionable" and backed some U.S. claims that they fell into the more severe category of illegal export aid, sources familiar with the findings said.
But trade judges were said to have rejected the idea that the findings would apply to future programmes, meaning trade tensions with Boeing could continue over the funding for Europe's next generation of airliner, the Airbus A350.
Barring a major upset, Tuesday's final ruling is expected to endorse the earlier report which triggered trade rhetoric on both sides of the Atlantic, trade diplomats said.
Boeing and Airbus clashed before the final report had even been published, saying it was likely to justify their claims.
Boeing seized on a German promise to provide similar funding for the A350 to the disputed system of government loans which triggered the original U.S. complaint to the Geneva-based WTO.
FLYING IN THE FACE
The move "flies in the face of both the expected WTO decision and the rules-based global trading system we've all endorsed", said Boeing's top legal executive Ted Austell.
Airbus spokeswoman Maggie Bergsma said the ruling would be "significantly disappointing for Boeing and largely different to what they are predicting".
The WTO panel's ruling, although final, is confidential to the parties in the case. Publication of the 1,000-page document must await translation and could take until the end of April or longer.
U.S. and European officials gave their interpretations of the report before publication, with Washington saying it would prove that Airbus had harmed U.S. workers and Europeans stressing it was only one part of a long process.
In theory a WTO ruling could require the EU to desist from further aid within weeks. In practice both sides are certain to appeal both cases, stringing litigation out for months or years.
(For more business news on Reuters Money visit http://www.reutersmoney.in)
| Tuesday March 23, 02:27 PM | Source: Hindustan Times |
IPOs to follow IPL: 3 teams may sell stake
New Delhi, March 23 -- At least three of the 10 teams in the Indian Premier League (IPL) are planning initial public offerings (IPO) or other forms of stake sales of their clubs.
Sources tracking the IPL said they expected a lot of fresh investment activity in the coming months leading up to the fresh player auction in September-October.
According to IPL rules, for first three years no owner can exit by selling its entire stake.
Investment banking sources said India Cements Ltd, which owns the MS Dhoni-led Chennai Super Kings (CSK), is likely to be the first off the block in the race to getting the club listed on stock exchanges as a separate entity.
"The management had made its intention clear to put it (CSK) separately to another company," an analyst who had participated in an India Cements analysts' conference said. "When it passes that first holding period of three years, it plans an IPO to realise the value."
CSK is the only team that had achieved break-even in the first year itself. India Cements Vice chairman and managing director N Srinivasan said such reports were speculative.
"All I can say is that today it is well ensconced within India Cements," Srinivasan, who is also the Secretary of Board of Control for Cricket in India (BCCI), said.
Kings XI Punjab, which is owned by a consortium of promoters including Ness Wadia and Preity Zinta, is also learnt to be keen on divesting if it gets the right price.
The management, however, was tight lipped. "I cannot talk about it at this moment," its CEO Anil Srivastava said.
The Subroto Roy-promoted Sahara Adventure Sports, which stunned everybody by picking up the Pune team for a $370 million (Rs 1,702 crore) has also not ruled out the possibility of an IPO or a selling minority stake to a strategic partner.
"There are umpteen opportunities such as an IPO or selling stake to a new partner," a Sahara India Pariwar spokesperson said.
Venugopal Dhoot whose V C Digital - which with a bid of $320 million (Rs 1,470 crore) lost out in the auction for the two new teams on Sunday - is keen to buy a minority stake in one of the existing teams.
"I am disappointed that we lost out by a small margin," Dhoot said. "But at this point, I do not want to comment."
| Tuesday March 23, 04:20 PM |  |
Japan's Suzuki to invest $553.8 mln in engines, India R&D
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NEW DELHI (Reuters) - Japan's Suzuki Motor Corp would invest 50 billion yen ($553.8 million) in expanding engine capacity and on research and development in India, its Chairman Osamu Suzuki said on Tuesday.
The total amount, to be spent over two years would be roughly equally split between engines & R&D, a spokesman for its Indian unit Maruti Suzuki told reporters.
In August last year, Maruti Suzuki said it would be investing between 10 and 15 billion rupees ($219.8 million to $329.7 million) on its R&D unit.
The company is manufacturing K-series engines, developed specifically for Indian applications, at its plant in Gurgaon near Delhi. The first car to be fitted with this engine was the Ritz hatchback, launched last year.
Engine capacity would expand to 700,000 units over the next two years from the current 500,000 units, the spokesman said.
Suzuki is in India to mark the roll-out of the millionth car from the Maruti portfolio in 2009/10 and also to lay the foundation for capacity expansion at its plant in Manesar in northern Haryana.
"Taking this success to the 2 million mark is going to be a tough journey," Suzuki said.
"Presently we are seeing a lot of auto companies penetrating the Indian market. We are having severe competition at the moment," he said.
Maruti, which sells one of every two cars in India, has so far produced 8.8 million cars since its inception in 1983.
It faces competition in the compact car segment from carmakers such as General Motors, Volkswagen, Ford, Fiat, while more competition is expected in the future from Nissan, Toyota and Honda.
Compact cars, ranging in price from 300,000 to 600,000 rupees at the upper end of the segment, make up about 75 percent of the Indian car market.
Maruti shares, valued at nearly $9 billion, ended down 0.34 percent at 1,392.55 rupees while the main index closed up 0.23 percent.
Germany's Volkswagen AG owns 19.9 percent in Suzuki.
($1=90.28 yen=45.5 rupees)
(Reporting by Sanjeev Choudhury; Writing by Janaki Krishnan; Editing by Aradhana Aravindan)
(For more business news on Reuters Money visit http://www.reutersmoney.in)
| Tuesday March 23, 03:24 PM | Source: Financial Express |
'Toyota lifts 2010 global vehicle output plan'
Toyota Motor Corp has lifted its global production plans by 1 per cent to 7.57 million vehicles for 2010, anticipating better demand in Japan and other Asian markets, a source at a group company said on Tuesday.
The world's biggest automaker had told its suppliers in December that it planned to produce 7.49 million vehicles in the 2010 calendar year, but will notify them of the latest revision later on Tuesday, the source said, declining to be identified because Toyota does not make those plans public.
Fuelled by subsidy-led demand for fuel-efficient cars in Japan, Toyota lifted its domestic production plan by 40,000 units, the source said.
In North America, its biggest market, a recall-driven production and sales suspension prompted Toyota to lower plans by 60,000 units, but that would be more than offset by an upward revision of 100,000 units in non-Japan markets, the person said.
The new output figure, which excludes minivehicle unit Daihatsu Motor Co and truck maker Hino Motors Ltd, would represent a 19 per cent jump from 2009.
Toyota, like the rest of the industry, is counting on double-digit sales rises in China and India to make up for an expected fall in European car demand after government subsidies run out.
| Tuesday March 23, 04:30 PM | Source: Indian Express Finance |
Air India may lose 'national carrier' tag
By Smita AggarwalThe Union Cabinet is set to meet soon to decide if beleaguered state-owned carrier Air India should retain its 'national' character at all. It will also debate if strategic disinvestment is the best way forward for the airline, which is estimated to have accumulated Rs 7,200 crore in losses in 2009-10.
With most of Air India's woes emanating from its international operations - where it loses around Rs 3,000 crore a year on 30 routes - a group of ministers (GoM), chaired by finance minister Pranab Mukherjee, has recommended that the airline stop flying to these routes.
"This will change the character of Air India," a government functionary said, adding this would turn Air India into a regional airline.
The civil aviation ministry is preparing a detailed note for the Cabinet on the carrier's financial health and turnaround measures recommended by the GoM. "Cutting down loss-making international routes will have serious implications. Basically, the government has to decide if Air India continues to fly abroad or within India alone," the source said.
At the same time, the Cabinet may also debate the issue of strategic disinvestment as a long-term viable option for the carrier.
"The government cannot pump money into the National Aviation Company of India Ltd (Nacil) forever," the government source said. But, it is likely that the Cabinet refers back some of these issues to the GoM for its detailed and considered opinion, the source added.
A major blow to Nacil's finances comes from prestigious but loss-making daily non-stop flights to New York from Delhi and Mumbai on the latest long-range fleet of Boeing, accounting for losses to the tune of Rs 750 crore a year.
The GoM, set up to monitor Air India's turnaround plan, was also to decide on the politically sensitive matter of wage cuts of Air India's 31,000 employees. But it has now left the decision for the Cabinet.
To avail government bailout, the carrier was asked to undertake cost-cutting measures that would help it save around Rs 2,000 crore by March 2010. Air India was able to cut costs to the tune of Rs 700-800 crore till December last year.
As part of its turnaround strategy, the carrier has shortlisted five candidates for the post of chief commercial. A newly formed interview panel will interview these candidates on March 27
The carrier recently received a shot in the arm with the government releasing Rs 400 crore as a first tranche towards equity infusion. Air India had asked for Rs 5,000 crore as equity infusion and a letter of comfort from the government to convert its high-cost debt into low-cost ones.
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