Monthly Archives: July 2017

Foreign Companies in Manufacturing Sector (Mobile Phones)

As per extant FDI policy, foreign investment up to 100 percent is permitted for a company engaged in the business of manufacturing mobile phones.

Under the automatic route, investment in the country can be made without prior approval either of the Government or the Reserve Bank of India. Moreover, FDI is largely a matter of private business decisions, and therefore, no such details regarding efforts made by foreign companies to set up i-phone and other manufacturing units in India can be maintained.

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Government has received representations seeking concessions including 30 per cent local sourcing of component, duty exemption on manufacturing and repair units, components, capital equipment and consumables for smart phone manufacturing and service/ repair.

As regards local sourcing requirement Government through Press Note 5 of 2016 dated 24.6.2016 provided that in case of ‘state-of-art’ and ‘cutting-edge technology’ sourcing norms can be relaxed subject to Government approval. However, with a view to promote domestic manufacturing capacities and value addition, it has further been provided that this relaxation will be valid for an initial period of three years from the opening of first store, and thereafter, such entities will be required to meet the domestic sourcing norms.

Further, the requests regarding rebate in customs duty on import of equipment were examined and the same were not accepted on the following grounds:

i. Nil basic customs duty [BCD], Nil excise Duty /Countervailing Duties [CVD] [except charger, battery, and speaker] and Nil Special Additional Duty [SAD] has already been prescribed for components and accessories and sub-parts for manufacture of parts, for the final manufacture of mobile phones /tablet computers.

ii. Further, Specified capital goods namely;

a. SMT lines;

b. Core test line;

c. Electrovet oven;

d. Acoustic test lines BTO-SW;

e. Hot bar machine;

f. Heat seal machine;

g. Pick and place machine; and

h. Older paste printer for manufacture of mobile handsets which have already been exempted from BCD with effect from 09.07.2004 [S. No 58 of Notification No 25/2002-Customs].

iii. There is no exemption from BCD, CVD and SAD on imports of parts for repair of mobile.

iv. Further, in GST regime, all imports will be liable to IGST and any exemptions from CGST/SGST/IGST can be granted only based on the recommendations of the GST Council only. Thus, all existing exemption from excise/ CV duty will also be reviewed by GST Council.

Moreover, with effect from 01.07.2017, 10% BCD has been imposed on cellular mobile phones [under tariff item 8517 12 10 and 8517 12 90] and their specified parts namely charger/adapter, battery pack, wired headset, microphone and receiver etc [except side key on which 7.5% BCD was imposed]. Further, exemption from BCD has been provided for inputs and raw materials for manufacture of all parts of cellular mobile phones.

In addition, with effect from 01.07.2017 both domestically manufactured cellular mobile phones and imported cellular mobile phones and parts for manufacture of phones attract 12% GST.

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This information was given by the Commerce and Industry Minister Smt. Nirmala Sitharaman in a written reply in Lok Sabha today

source: Press Information Bureau: July 31, 2017

Himachal promoting organic farming in a big way

Shimla : Jul 30 (PTI) A Rs 321 crore project is under implementation in Himachal for diversification of agricultural activities under which the farmers are being motivated to adopt organic farming and grow cash crops, an official said.

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The project, being implemented in five districts of the State, has yielded good results and  a large number of farmers have come forward to switch over to organic farming and go for off season cash crops cultivation as the state emerges as a front runner in organic farming, an official spokesman here said.


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Nearly 22,000 hectare has been brought under organic farming and 40,000 farmers have got themselves registered under the scheme.

A target of bringing 2,000 hectare of additional land under organic farming has been set while 200 bio villages have already been set up in the state.

The state government has announced first, second and third prizes of Rs 3 lakh, Rs 2 lakh and Rs one lakh respectively for the progressive farmers adopting organic farming.

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The scheme is being implemented in Kangra, Una, Bilaspur, Hamirpur and Mandi districts in collaboration with Japan International Co-operation Agency (JAICA).

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So far, Rs 212 crore had been spent under the scheme and a provision of Rs 80 crore has been made for the current financial year.

Agriculture Development Society is a key player in implementing the scheme engaged in developing irrigation facilities, motivating farmers to adopt organic farming and producing cash crops.

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Agriculture University Palampur has separately established Organic Farming Wing for giving direction and momentum to the campaign in the state.

The farmers of Shimla, Solan and Sirmour districts have already taken a lead in getting themselves registered for organic farming and taken up vegetable cultivation, supplementing the efforts of the state government to promote organic farming.

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Consumption of chemicals is very low at 158 grams as against the average of 381 gms per hectare in the country and potential for expanding organic farming was very high, the spokesman added.

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As ?Sericulture? is an important  component in promoting organic farming, the state government is giving special impetus to vermi-compost production in large scale and the farmers are being provided 50 per cent subsidy for installing vermi-compost unit and 1.50 lakh such units have been established in the state so far.

A target of setting up 20,000 more such units had been fixed to ensure adequate availability of vermi-compost to the farmers.

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The state government has fixed the norms for maintaining quality of vermi-compost and for giving commercial dimension to this activity, commercial units of vermi-compost are being established in the state and five units for production of Bio fertilizers have been established so far.

Himachal Pradesh has received ?Krishi Karmanya Awards? for two consecutive financial years in 2014-15 and 2015-16 for excellent enhancement in agriculture production.

source; indiatoday: July 30, 2017

Jeff Bezos Was the Richest Person in the World for a Few Hours. Then He Lost $6 Billion Overnight

At least Amazon CEO Jeff Bezos can say he was once the richest person in the world.

On Thursday, after earnings expectations skyrocketed Amazon stock, Bezos dethroned longtime richest-guy-ever Bill Gates with an estimated wealth of $92 billion. But, alas, it appears it wasn’t meant to last.
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By Thursday afternoon, Amazon’s reported earnings fell short of expectations, and the retail giant’s stock went tumbling as a result.

Because Bezos owns 16% of Amazon shares, his wealth took a dip right along with it. CNBC estimates his net worth dropped by $6 billion between Thursday’s peak and early Friday.

That’s not to say Bezos isn’t still exceedingly wealthy.

The CEO is still the second-richest man in the world, and his wealth grew by $25 billion over the past year alone, according to the network.

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source: Fortue: July 28, 2017

Amazon India to expand grocery offering to more cities in coming months

Grocery is one of Amazon India’s fastest growing businesses, says consumables head Saurabh Srivastava
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has proposed to invest at least $500 million for its food retail business in India.

Amazon India plans to aggressively invest in growing its grocery and food business, launch more categories and products and forge alliances with large offline grocery and supermarket chains as the online marketplace looks to beat arch-rival Flipkart, which is expected to launch its own grocery offering over the coming weeks.

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In an interview, Amazon India’s consumables business head Saurabh Srivastava said the company would launch its grocery offering in more new cities over the coming months. Currently, Amazon’s grocery and pantry business is available in over 30 cities.

“We launched consumables in June 2013, but two years before that when we started working on building out the India business, it was very clear that we wanted FMCG to be a big part of Amazon India’s offerings from the very beginning,” said Srivastava, director of category management for Amazon India’s FMCG (fast-moving consumer goods) business.In Association with Amazon.in

“The growth of the (grocery) business has been very good so far—in terms of units, we are the largest category on the (Amazon India) platform, and in terms of growth, we are one of the fastest growing (businesses),” he added.

Amazon India recently got the government’s approval to retail food products in India, which potentially allows the e-commerce giant to create a full-fledged food retail business and sell food products through its wholly-owned unit in India. Amazon has proposed to invest at least $500 million for its food retail business in India—a proposal that has been approved by the Department of Industrial Policy and Promotion (DIPP).

According to an executive aware of Amazon India’s plans, the company may launch a new private label to delve deeper into the grocery business—much like BigBasket. Even arch-rival Flipkart, which is expected to launch its grocery business in the coming weeks, plans to launch a private label when it enters the segment.

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Srivastava declined to comment on whether Amazon would launch a private label for its grocery business, but said that the company would look to build out an end-to-end food retail business in India.

“The food ecosystem needs investment, technology and infrastructure—and since the government was interested in making sure that companies come in and invest in (building) that, we believe that there is value that we can add as a strong technology company,” said Srivastava.

Amazon first launched its grocery offering in February last year in Bengaluru through its Amazon Now mobile app, as part of a strategy to take on hyperlocal grocery delivery businesses such as Grofers. Since then, Amazon has tied up with retailers such as Big Bazaar, Reliance Fresh, Bharat Petroleum In and Out, Godrej Nature’s Basket and Food World, among others. Amazon also set up Kirana Now in 2015, wherein the firm partnered with local kirana (neighbourhood grocery) stores for delivery.

Large online marketplaces have so far struggled to successfully crack the grocery business, according to experts such as Harminder Sahni, founder and managing director of Wazir Advisors.

For instance, Flipkart was forced to shut its grocery app Nearby in February 2016, barely five months after it started testing the service. Digital payments unicorn Paytm also shut down its grocery service in 2015, citing poor demand.

“If you look at the past decade, most large supermarket and grocery chains have struggled to build out proper supply chains and create sustainable businesses. Having said that, Amazon is probably the best placed to succeed in this category. They have deep pockets and they’ve already made inroads through Amazon Now and programmes such as Prime,” said Sahni.

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However, over the past two years, with the expansion and relative maturity of the e-commerce market in top-tier cities in India, large online marketplaces are betting that the grocery business is poised to take off in a big way.

“We think this category will mostly have value in top cities—it is an offering that customers in those cities would appreciate—that’s how we’ve looked at it,” said Srivastava.

Amazon’s rapid foray into the grocery business over the past one-and-a-half years prompted Flipkart to also rethink its strategy on a business it had abandoned earlier.

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According to at least two Flipkart executives who declined to be named, CEO Kalyan Krishnamurthy charted out a clear strategy in late 2016 to tap into the grocery segment and pushed company executives to roll out the business by the middle of 2017, not wanting to concede too much headway to Amazon India.

“We have seen strong growth from tier-2 and tier-3 cities—in fact, a big chunk of our subscriptions is going to those cities,” said Srivastava. “Over the last 14-15 months, we have collected a lot of data and we know that customers need this category. So, we’ll keep adding more selection over the next few months.”

Axis Bank likely to acquire Freecharge for Rs 350-400 cr

New Delhi: Private sector lender Axis Bank is believed to have finalised a deal to buy Freecharge from Snapdeal for Rs 350-400 crore, according to sources.

The deal is almost through and an announcement is likely to be made in the next few days, two people familiar with the development said.

They did not wish to be identified as the deal is yet to be announced and they are not authorised to speak on the matter.

Interestingly, Axis Bank has sent out an invite for a press conference tomorrow to “announce a strategic business initiative”.

When contacted, Snapdeal and Axis Bank did not respond to emailed queries.

Snapdeal is also looking at selling its e-commerce business and has been engaged in discussions with larger rival Flipkart for the past few months.

The city-based firm had bought Freecharge in April 2015, for an estimated USD 400 million. At that time, this was touted as the largest deal in the nascent start-up ecosystem in India.

Earlier, Freecharge was reported to be in discussions with Paytm for a sell-off.

However, the deal did not go through as the Alibaba- backed company was offering a much lesser price of about USD 15 million, one of the sources said.

Acquiring Freecharge’s business would give Axis Bank access to about 50 million mobile wallet holders of Freecharge as well as about 150-200 professionals.

Post demonetisation, there has been a strong growth in usage of digital payment channels, including mobile wallets.

Industry watchers said it would be interesting to see how Axis Bank integrates Freecharge as it already has its own mobile wallet, Lime.

Axis Bank had, yesterday, reported a 16 per cent year- on-year decline in its June 2017 quarter net profit at Rs 1,306 crore. However, the lender said it expects better days ahead as non-performing assets have peaked.

For Snapdeal, the transaction would provide it the much- needed cash, giving it a breather for a few more months, industry watchers said.

The turnaround in the fortunes of Snapdeal seems to have also had a drastic effect on FreeCharge that has seen a fall in the volume and value of transactions on its platform, they added.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

source;- Business Standard: July 27, 2017

Vedanta plans $2.4-billion capex over two years

Consolidated net doubles to Rs 1,525 crore on year-on-year basis

Mumbai: Anil Agarwal-led Vedanta has planned a capex of $2.4 billion over the next two years ($1.2 billion each in FY18 and FY19). The company will be investing in zinc projects of Hindustan Zinc, rebuilding volumes for its oil and gas business and doubling capacity at the Tuticorin copper smelter.

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In the June quarter, the company’s consolidated performance continued to be strong on the back of healthy earnings from its subsidiary Hindustan Zinc. The standalone business, however, put up a dismal show.

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“Weak performance of standalone business was expected as ongoing ramp up in the aluminium segment has pushed up depreciation. This was bound to come up,” Arun Kumar, chief financial officer at Vedanta informed at an earnings conference call. The company is currently ramping up its aluminium capacity to 2 million tonnes from 1.4 million tonnes last year. The total installed aluminium capacity of Vedanta stands at 2.3 million tonne, which the company aims to raise in the next financial year.

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Vedanta’s consolidated net profit during the period under review doubled on a year-on-year basis to Rs 1,525 crore, while its top line jumped 27 per cent to Rs 18,203 crore. Its earnings before interest, taxes, depreciation and amortisation (Ebitda) in the quarter also rose 40 per cent to Rs 4,965 crore. Sequentially, however, top line, net profit as well as Ebitda took a beating by 19 per cent, 42 per cent and 32 per cent, respectively.

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“Revenues in the final quarter of FY17 had risen substantially due to peaked mine production at our zinc business,” Tom Albanese, chief executive officer, informed. Vedanta’s consolidated revenue in the March quarter was at Rs 22,371 crore, while its net profit was at Rs 2,647 crore. According to Bloomberg estimates, the company was expected to draw revenues worth Rs 18,237 crore in the June quarter and report a bottom line of Rs 1,568 crore.

With an aim to lighten its balance sheet, Vedanta has managed to lower its gross debt by Rs 9,000 crore in the last four months. As on June 30, the company’s gross debt stood at Rs 67,342 crore with net debt/Ebitda at 0.8, it said.

source;- Business Standard: July 26, 2017

GST – Exports (Contd….-2-)

Question : Under the GST regime, will benefit of exemption from all duties available under Advance authorization scheme, EPCG scheme and duty credit scrips such as Merchandise Exports from India Scheme (MEIS) & Service Exports from India Scheme (SEIS) will continue?

Answer:• After 1st July 2017, the benefits under all the said schemes shall be restricted only to Basic Customs Duty, Safeguard Duty, Transitional Product Specific Safeguard Duty and Anti-dumping Duty in respect of goods leviable to IGST. For items specified in the Fourth Schedule to the Central Excise Act, 1944 (specified petroleum products, tobacco etc.) exemption from Additional Duty leviable under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 shall be available.

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Question : Under GST regime, can we get duty free benefit (all duties exempted) if we import capital goods using EPCG authorization?

Answer: Only basic customs duty will be exempted on imports made under EPCG Authorization. The EPCG holder will have to pay IGST on import of capital goods and take Input Tax Credit.

Question : Can duty credit scrips such as Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) be used for payment of GST?

Answer: No. MEIS and SEIS scrip can be used only for payment of Basic Customs Duty or additional duties of Customs on items not covered under GST for imports under
GST regime.

Question : Will export of goods to Nepal and Bhutan treated as zero rated and thereby qualify for all the benefits available to zero rated supplies under the GST regime?

Answer: Export of goods to Nepal or Bhutan fulfils the condition of GST Law regarding taking goods out of India. Hence, export of goods to Nepal and Bhutan will be treated as zero orated and consequently will also qualify for all the benefits available to zero rated supplies under the GST regime. However, the definition of ‘export of services’ in the GST Law requires that the payment for such services should have been received by the supplier of services in convertible foreign exchange.

source: CBEC/GST Law/Rules