INDUSTRY POLICY UPDATES – NOVEMBER 2011

              A performance update  of different industrial sectors in India and expectations. Keep a watch on the winter Parliamentary sessions, to know more!!

1.   AVIATION

POLICY: Allow foreign airlines to pick up stakes in India’s airlines.(Industry expectation)

STATUS: The industry ministry has proposed allowing foreign airlines to own up to 26% in domestic airlines but aviation ministry wants foreign ownership to be capped at 24%. A cabinet note was circulated for inter-ministerial consultations in the second week of November.

2.    BANKING

POLICY: Legislate the Banking Laws (Amendment) bill to empower the Reserve Bank of India to supersede banks’ boards and align the voting rights of foreign shareholders in banks to their equity holdings.(Industry Expectation)

STATUS: The government introduced the bill in the Lok Sabha in March 2011, but the standing committee on finance is yet to submit report.

3.    DIRECT TAXATION

POLICY: Introduce the direct taxes code to overhaul archaic income tax laws, which among other things will alter slabs, remove exemptions. (Expectations)

STATUS: Bill introduced in Lok Sabha in 2010; Standing Committee on finance yet to submit report.

4.    INDIRECT TAXATION

POLICY: Introduce a uniform goods and services tax that will dramatically alter the indirect tax structure to make it more efficient. (Expectations)

STATUS: Constitution Amendment Bill introduced in Lok Sabha in March 2011; Standing Committee on finance yet to submit report, consensus eludes state governments.

5.    INSURANCE

POLICY: Raise the limit for foreign direct investment in the insurance sector to 49% from 26%.(Expectation)

STATUS: The government introduced the amendment bill in the Rajya Sabha in 2008, but the standing committee on finance is yet to submit its report.

6.    LAND ACQUISITION

POLICY: Unveil a clearly defined policy on land acquisition. (Expectation)

STATUS: The government has unveiled a draft bill for public debate and is expected to introduce it in Parliament in the winter session.

7.    PENSION FUNDS

POLICY: Legislate the Pension Fund Regulatory and Development Authority bill to pave the way for giving millions of people social security by investing long-term household savings.

STATUS: The government introduced the bill in the Lok Sabha in March.The standing committee on finance has submitted its report to Parliament and the cabinet has recently approved  some of its recommendations, such as 26% foreign direct investment. The government is to introduce the amended bill in Parliament’s winter session.

8.    RETAIL

POLICY: Allow foreign direct investment in multi-brand retail outlets. (A development that is being closely watched by International players in Retail)

STATUS: The industry ministry and secretaries’ panel have proposed allowing foreign firms to hold up to 51% in multi-brand retail, with conditions. The cabinet note was circulated for inter-ministerial consultations in the second week of November.

9.    EMPLOYMENT

POLICY: Unveil a comprehensive national manufacturing policy with the hope of creating 100 million jobs over the next 15 years.

STATUS: Last month, the cabinet approved the policy, which sets the ground for the creating of mega-industrial cities. The first seven of these cities will come up along the proposed 1483-km long Delhi-Mumbai Industrial Corridor.

10.           TELECOM

POLICY: Draft a wide-ranging national telecom policy.( Expectation)

STATUS: Last month, the telecom ministry unveiled the draft policy, which proposes to do away with roaming charges, treat the entire nation as one telecom zone, set the ground for a market-oriented regime for scandal-hit spectrum allocation and provisions for telecom firms to exist.

11.           MINING

POLICY: Legislate a Mines and Minerals (Development and Regulation) bill defining the obligations of mining companies for displaced people. (Expectation)

STATUS: In September, the cabinet approved this bill, which says how much profit and royalty companies must share with project-affected people. The government is expected to introduce the bill in Parliament in the winter session.

12.           CORPORATE TAKEOVERS

POLICY: Introduce a new takeover code aimed at overhauling India’s corporate acquisition regime. (Expectation)

STATUS: In July, the Securities and Exchange Board of India announced a new takeover code, increasing the threshold for an open offer to 25% from 15% and the mandatory offer requirement to 26% from 2011

13.           MICRO FINANCE

POLICY: Set up a regulatory regime for micro-finance institutions in the wake of a spate of suicides linked to alleged coercive methods adopted by certain firms to recover loans. (Expectation)

STATUS: In July, the government unveiled a draft Microfinance Institutions Bill that recommends granting the Reserve Bank of India sweeping powers to regulate these firms. The government is expected to introduce the bill in Parliament in the winter session.

14.           FUEL

POLICY: Free the pricing of petroleum products from political and bureaucratic interference. (Expected)

STATUS: In June last year, the government allowed oil companies the freedom to fix retail prices of petrol based on crude oil prices movements. But the government still controls the prices of diesel, kerosene and LPG.

15.           BANKING

POLICY:  Grant licenses to new private sector banks. (Expected)

STATUS:  In August, the Reserve Bank of India unveiled draft license guidelines for new private banks, including that they must have a minimum net worth of Rs. 500 crore.

16.           INTEREST RATES

POLICY: Deregulate the savings bank rate and raise the rates on government administered savings scheme. (Expected)

SAVINGS: Last month, the Reserve Bank of India allowed banks to fix their savings interest rates. Some banks have already raised this rate to 6% from the earlier central bank-determined rate of 4%. Last week, the government raised interest rates on a range of popular post-office saving schemes, including the public provident fund and national savings certificates.