FAPCCI requested to RBI Governor to reduce interest rates for Industries

 

Ref.No.FAPCCI/President/2012-13/                                                                                                        
                                                                                               
Dr. D. Subba Rao,
Governor,
Reserve Bank of India,
Central Office Building, Shahid Bhagat Singh Road,
MUMBAI - 400 001

Dear Sir,

Sub: Interest Rates – Reg.

We are one of the oldest Chambers in the country with a 97 year history of serving the needs of industry and trade.

Currently industrial sector is in doldrums and being squeezed from all sides. We request you to consider a reduction in interest rates as that is one of the major pain points for the industry.

Interest in Industrial Production:

The Interest Rates in India have been very high for the last two years. This has had a very negative impact on the industrial activity in India. The IIP Nos are trending towards ‘0’. In a developing country like India any IIP Nos less than 5% is disastrous. Less than 2% (which is population growth) should have been treated as an emergency situation. However, we find that the policy action both from the Government and the RBI seems to be indifferent. A rough back of the envelope calculation shows that in order to reach where China is today in the next 15 years, we require an industrial growth in excess of 10%. One reason why manufacturing decline is not hurting the entire economy is due to very low (16%) contribution to the economy, and this is how becoming lower. Any long term growth projection for an economy of India’s nature will require a contribution from manufacturing of over 20%, anything less than this will be unsustainable both in terms of employment and viability of the economy.

Interest & Inflation:

High interest rates are very important to keep inflation in check when there is demand led inflation. However, even a cursory study shows that in India Inflation is due to supply constraint.  Thus, the high interest rates are an impediment to creation of capacity. Only excess capacity can reduce the artificial scarcity in the market which is leading to inflation. High interest also adds to high inflation in a lot of sensitive areas including housing and durable goods. Interest rates add to EMI and thus increasing the cost to consumers. High interest rate is also creating difficulties for infrastructure companies which are unable to complete infrastructure projects. Lots of Infrastructure Projects are getting unviable. A lack of infrastructure once again increases the costs in the economy which leads to inflation.

The only other contributor to the Inflation in today’s situation is the huge Fiscal Deficit run by both the State and Central Governments contributing to inflation. The deficit is increasing due to welfare schemes of the Government. These are having bigger ripple affects on the wages than was envisaged when the policy was announced. Thus industry is being squeezed at both ends and facing enormous hardship. Lower interest rates will bring down some of the Government expenditure in the form of interest.

Interest and External Sector:

The interest rate differential between India and rest of the world is at a historical high.  With the libor at less than one and prime rate in India at around 14%, I cannot remember any time when this differential was at 13% for a sustained period of time. This interest rate differential is putting our companies at a big competitive disadvantage and making it impossible for the capital intensive industrial sectors to compete with the rest of the world. Thus indirectly the high interest rates are also one of the reasons for our high Current Account Deficit.

Request:

Given the above situation there is an urgent imperative for the RBI to reduce interest rates not by a token of 25% basis point or 50% basis point but by a 200% basis point. This will have an impact to stimulate the economy and reducing all the evils mentioned above.

Looking forward to your urgent action

Thanking you,

Devendra Surana

President, FAPCCI 

"India MSME Report 2012" Released

FAPCCI in association with Institute of Small Enterprises have organized the event of release of India MSME Report 2012 at Surana Udyog Auditorium.

Sri Srinivas Ayyadevara, Senior Vice President, FAPCCI in his address urged the government to take measures to improve the share of industrial sector in APGSDP, which is currently at around 11% to 16%, which is the national average. 

Dr. P.M. Mathew, Director, Institute of Small Enterprises and Development has given the highlights of the report.

Dr. Rajat Kumar, IAS, Commissioner of Industries released the Report and spoke on the occasion.

He congratulated Dr. Mathews for the exhaustive work done by the institute, which is referred by Government Planning Departments and also the Industry Associations.

He said that 80% of industry problems are related to 20% problems and termed it as 80-20 Policy. The major problem that is faced by the industry in the state now is power and said that government is ready to supply 400 MW of power to industry at a higher price and commended FAPCCI or taking up similar exercise. Other problem that needs immediate attention is Credit availability to the industry and said India is lacking Credit worthiness rating system as in Korea.

He stated that we need to focus on two things:

What all policies/programs are available for industry and how they are implemented and

Revival of sick units and apply our heart and mind to solve the problem of sickness.

Other Participants in the programme are Dr. Chandrasekha Reddy, Director General, NIMSME; Dr. Akadas, Director, MSME-DI; Mr. Kannan, General Manager (SMEs), Andhra Bank, Dr. Rammohan Rao, Head of the Department, Geetam’s Institute of Management, Mr. Arukumar Dukkipati, Chairman, Industrial Development Committee, FAPCCI

Mr. Shiv kumar Rungta, Vice President, FAPCCI has proposed vote of thanks.

FAPCCI and London Chamber of Commerce signed MoU

The Federation of Andhra Pradesh Chambers of Commerce & Industry organized an interactive meeting with Mr. Subhash V. Thakrar, Chairman, London Chamber of Commerce and Industry today 27th November 2012 at Federation House, Red Hills, Hyderabad.

In this occasion FAPCCI and London Chamber of Commerce signed Memorandum of Understanding to foster friendship and pursue trade and investment opportunities.On this occasion, FAPCCI and London Chamber of Commerce and Industry (LCCI), London signed a Memorandum of Understanding to foster friendship and pursue trade and investment opportunities in their respective economic regions by developing a friendly and cooperative relationship.  The MoU was signed by FAPCCI President Mr Devendra Surana and LCCI Chairman Mr. Subhash V. Thakrar. 

Accompanying a high level delegation of top London business people, Mr. Subhash V. Thakrar, Chairman, London Chamber of Commerce and Industry stated that their main mission is to promote London as the destination of choice for investors and international trade.   He mentioned that India is the world's second fastest growing economy, experiencing rapid urbanization and a growing consumer class. The Indian government has a target to invest £1trillion into infrastructure projects over the next five years. This all presents huge economic opportunities for London, both in attracting investment into the city and exporting goods, services and skills. For the last three years, India has already been among the top four global investors into London and the country's leading multi-nationals are already major employers in the UK.

On this occasion, FAPCCI and London Chamber of Commerce and Industry (LCCI), London signed a Memorandum of Understanding to foster friendship and pursue trade and investment opportunities in their respective economic regions by developing a friendly and cooperative relationship.  The MoU was signed by FAPCCI President Mr Devendra Surana and LCCI Chairman Mr. Subhash V. Thakrar. 

Mr. Srinivas Ayyadevara, Senior Vice President, FAPCCI, Mr. Colin Stanbridge, CEO, London Chamber of Commerce and Industry also spoke at the occasion. 

National Seminar on “IT & ITEs” on Jan 25, 2013: Mr. Ponnala Lakshmaiah, Minister for IT & Communications, Government of AP

The Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) in association with EduGate Foundation and Edex - The New Indian Express Daily organized Press Meet today on November 23, 2012 on proposed National Seminar & Exhibition on “IT & ITEs: Trends and Demands, Opportunities & Challenges” on January 25, 2013 at FAPCCI, Hyderabad.

Mr. Ponnala Lakshmaiah, Hon’ble Minister for Information Technology & Communications, Mr. Devendra Surana, President, FAPCCI, Mr. Srinivas Ayyadevara, Senior Vice President, FAPCCI, Dr. Ashok Kumar Kedia, Chairman, IT Committee and Mr. M.V. Rajeshwara Rao, Secretary General, FAPCCI have addressed the media.

Mr. Ponnala Lakshmaiah, Hon’ble Minister for Information Technology & Communications has announced the National Seminar on IT & ITEs at this time and he interacted with media on several Information Technology and Communications related subjects.

Mr. Ponnala Lakshmaiah, Hon’ble Minister for IT& Communications said that the State of Andhra Pradesh is pioneer in offering the best incentives and facilitations for the growth of the ICT sector, with business friendly policies and proactive approach of the Government. The ICT Policy 2010-2015 is to make Andhra Pradesh one of the forerunners in IT sector in the Country through Provision of congenial, industrial friendly and proactive climate for IT companies to locate, grow and sustain their operations most competitively in a hassle-free environment in the State. Creation of employment opportunities to the educated youth of all sections of the Society across all regions, Achieving higher levels of export turnover resulting in enhanced Andhra Pradesh, home to more than eighty million people, is the fourth largest state in India. With the third largest nominal GDP of 123 Billion US$ in 2011, it has emerged as one of India's fastest growing states and witnessed a tremendous decadal growth of 56.2% and per capita GDP growth of 43.9%. Over the last decade AP has transformed itself into a leading destination for IT / ITES sector and today Andhra Pradesh is the fourth largest exporter contributing to approximately 15% of India's software exports.

The Andhra Pradesh government's proposal for setting up a seven Information Technology Investment Region (ITIR) around the city, and two at Vishakhapatmam is giving a much-needed boost to the state's efforts to attract fresh investments into the industry. The ITIR would be developed in an area of 202 sq km (50,000 acres) in two phases over a period of 25 years. The ITIR is aimed at attracting an investment of Rs 2.19 lakh crore in the ITITES sectors and create direct employment for 15 lakh youths, according to state Information Technology Mr. Ponnala said.

Mr. Devendra Surana, President of FAPCCI said that the Seminar on National Seminar & Exhibition on “IT & ITEs: Trends and Demands, Opportunities & Challenges” will focus on Trends, Demands, Opportunities in IT and ITEs sector, particularly IT services, Animation, Gaming, Telecommunications, IT Entrepreneurship, PPP model in IT sector, IT in domestic Growth, Cloud Computing, Emerging Employment and Investment Themes in IT & ITEs, US policy: Effect on Outsourcing, BPO Industry, Internet Security and Challenges, Indian Gaming and Animation – International Strategy, New Generation Technologies – Opportunities and Challenges, IT & ITEs and Banking Services etc.

Mr. M.V. Rajeshwara Rao, Secretary General, FAPCCI said that –we invited eminent speakers from Google, Microsoft, Wipro, Face book, TCS, IBM, Mahindra Satyam, HCL, Genpact, Intel, Deloitte, Dell, IIIT, InfoTech, NIIT and Officials from IT & ITEs department, Govt. of AP and India, Entrepreneurs from Gaming and Animation sector, Banking and Finance, Telecommunications, IT & ITEs services has been invited to interact with participants.

Interested persons of attend the Seminar may contact on 040-2339 5515 for registration.

::Video:: Investment opportunities in Andhra Pradesh: Devendra Surana, President, FAPCCI

Revenue collection in the last financial year reached to Rs. 97000 Cr: Mr. M.K. Singh, IRS., Commissioner of Customs, Central Excise & Service Tax

The Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) organized an Interactive Meeting with Mr. M.K. Singh, IRS., Commissioner of Customs, Central Excise & Service Tax, Hyderabad- II Commissionerate on “Negative List of Services under Service Tax” on November 16, 2012 at 3.00 pm at Surana Udyog Auditorium, Federation House, Red Hills, Hyderabad.

Mr. Devendra Surana, President, FAPCCI in his welcome address stated that the Negative List under Service Tax is a Paradigm shift from the existing system. The newer additions to the list of services often raised issues of overlaps with the previously existing services, confounding both sides as to whether some activities were taxed for the first time or were already covered under an earlier, even if a little less specific head.

Mr. Karunendra S. Jasti, Chairman – Indirect Taxes Committee, FAPCCI in his introductory Remarks stated that "When all the information is entered online and returns are filed online, still the department is insisting for visiting the ST department for submission of documents is causing hardship to the assesses.

Mr. S. Thirumalai, Advisor – Indirect Taxes Committee, FAPCCI during initiation of the discussion, he broadly explained the authority to levy taxes by Central and State Governments. He further informed that there are number of services identified from time to time under various heads as taxable services. Considerable numbers of services identified as taxable services have the dual nature of sale / deemed sale as well as service. Advertising service, goods transport service, outdoor caterer service, pandal and shamiyana service, mandap keepers service etc., are some of the taxable services which have the dual nature of sale / deemed sale and service.

Mr. M.K. Singh, IRS., Commissioner of Customs, Central Excise & Service Tax in his address stated that  Education and creating awareness amongst the trade and the tax payers on the recent developments in the tax areas is of utmost importance and this interaction is indeed a welcome step in this direction. He complimented FAPCCI for organizing this interactive meeting.

The focus of interaction today is on Service Tax and rightly so, as this being the burning topic in the area of indirect taxes. Service Tax is envisaged as the tax of the future.  If you see the taxation structure in the developed economies, you will find a comprehensive system of taxing the goods and services across all sectors in the form of VAT or similar tax.  You will also find that the share of service sector in the GDP is substantially higher ranging from 60 – 80%.  Service Sector is one sector which holds promise for larger revenue generation without increasing the existing level of taxation.  Apart from revenue, the comprehensive taxation on services aligned with taxation on manufacture and trading is the prime requirement for bringing the VAT in its true form.

In India, history of service tax is not very old.  We started with service tax on three services in 1994 (i.e. telephones, stock broking and insurance) and collected a revenue of about Rs.400 Cr., in the first year.  From that point onwards, there has been expansion in the scope and introduction of new services in the Service Tax net.  Initially, it was at a slower pace which gathered momentum later.  The growth is evidenced by the revenue collection in the last financial year 2011-12 when it reached to Rs. 97000 Cr., from about 120 services.  However, this growth in service tax was not without any problems associated with it.  With the addition of new services, the issues relating to overlapping of services emerged and thus increase in litigation.

Comprehensive taxation of services thus came as an obvious and natural step not only to remove the existing administrative difficulties but also to avoid leakages and litigation.  It was also the required and desired step for widening the tax base and for eventual transition towards the Goods and Service Tax.  Thus, the new approach to Service Tax, i.e., the Negative List approach, was thought of.   After   deliberations and consultations with a wide section of stakeholders and experts, finally the new provisions took effect from 1^st July, 2012.

The new system of taxation of services is a paradigm shift from the existing one.   Till now, i.e., before July, 2012, only specified services covered under the service tax provisions were being taxed.  In the new system, all services, except those specified in the negative list are subject to taxation.  Certain exemptions are available and have been consolidated under a Mega Exemption Notification.

The department is conscious about the responsibility to provide explanations and guidance to the taxpayer so as to ensure that the new provisions are understood and implemented without any problem.  We are also aware that the intricacies of new changes might throw new doubts and differences.  The department has therefore made efforts and has come up with the educational guide on taxation of services.  This guide is different from the normal circular issued on such matters and gone in great details and explanations to the provisions to provide utmost clarity.  It is available on the CBEC Website.

Mr. R.S. Maheshwari, IRS., Addl. Commissioner of Customs, Central Excise and Service Tax, Smt. N. Padmasri, IRS., Additional Commissioner – Service Tax, Mr. V. Rama Krishna, IRS., Assistant Commissioner (Technical & Anti-Evasion) attended the meeting and clarified many issues like Filing of hard copy of returns after e filing is not required, all Show Cause Notice’s will be sent by RPAD by the department henceforth etc., along with the Mr. M.K. Singh, IRS., Commissioner of Customs, Central Excise and Service Tax, Hyderabad- II, Commissionerate.

Mr. Srinivas Ayyadevara, Senior Vice President and Mr. Shiv Kumar Rungta, Vice President, FAPCCI, Mr. M.V. Rajeshwara Rao, Secretary General, FAPCCI attended the meeting.

FAPCCI and Zaporizhya signed Joint Cooperation Agreement

The Federation of Andhra Pradesh Chambers of Commerce & Industry organized an interactive meeting with H.E. Mr. Goncharuk Petro, Deputy Head, Zaporizhzhya Regional State Administration and H.E. Mr. Oleksii V.Stepanov, Deputy Head, Embassy, Minister-Counsellor, Deputy Ambassador of Ukraine Embassy on 15^th November 2012 at Federation House, Red Hills, Hyderabad.

In this occasion FAPCCI and Zaporizhya Chamber of Commerce signed Joint Cooperation Agreement to establish and develop trade and economic relations.

Mr. Devendra Surana, President, FAPCCI stated in his welcome address is that There is tremendous scope for cooperation in the areas of mechanical engineering, shipbuilding, light industry, mining, metallurgy, steel, coking industry, construction of road and rail networks in India etc. Ukraine is a well-known manufacturer of world class gas and steel turbines for thermal, hydel and nuclear power plants, compressors, transformers, pumps, motors equipment for laying power transmission lines etc. Ukraine is keen to explore new avenues of joint development of power projects in India.  I am sure; the members present will explore the business opportunities available in Ukraine, for increasing the trade between the countries.

Investment opportunities in the State of Andhra Pradesh are abundant specifically in the manufacturing sector which includes food processing, floriculture, agro processing, petrochemicals, metals, textiles, leather, mining, transport equipment, telecom and so on.  The infrastructure sector is rife with opportunities, be it the areas of power, ports, roads, bridges, telecom facilities, development of coasts, waterways… Financial services, R&D and Tourism, particularly medical tourism, offer plenty of scope for investment.  I request you to kindly impress upon the Ukraine Businessmen and invite them to our State for exploring the business opportunities Mr. Devendra Surana said.

Mr. Oleksii V.Stepanov, Deputy Head, Embassy, Minister-Counsellor, Deputy Ambassador of Ukraine Embassy stated that the Ukraine is looking regional cooperation with the Government as well as from the industrialists to strengthen the bilateral trade between Ukraine and India. Ukraine and India’s bilateral trade has been very strong, has contributed more than 58 million US$ in Zaporozhye region in import and export.

Mr. Devendra Surana, President, FAPCCI, Mr. Srinivas Ayyadevara, Senior Vice President, FAPCCI, Mr. Grachev Serhiy Volodymyrovych, Head, Vasylievska District State Administration of Zaporizhzhya Region, Mr. Mezheyko Biktor Ivanovych, Chairman of the Standing Commission on Humanitarian Issues, Zaporizhzhya Regional Council, Dr.B. Divya Sunitha Raj, Indian Representative, USCIE, Ministry of Education, Science, Youth and Sport of Ukraine, Mr. Roman Puriy, First Secretary, Embassy of Ukraine, Mr. Shamilov Volodymyr Ivanovych, President, Zaporizhzhya Chamber of Trade and Industry, Mr. Kuts Andriy Vyacheslavovych, Vice President, Zaporizhzhya Chamber of Trade and Industry, Mr. Krasnoselskyi Vitalii Ignatiyovych, General Director, LLC, Zaporizhzhya Regional Agency for External Trade, Mr. Yakovenko Yuriy Petrovych, Head of the Board of Directors, Trest, Zaporizhaluminiumstroy, Belikov Serhiy Borysovych, Rector, Zaporizhzhya National Technical University, Mr. Arfanitskyi Stanislav Serhiyovych, Economist, Eltiz, Private Enterprise, Mr. V.S.R. Murthy, Director, NIMSTL of India and NEO Star India of Ukraine, Dr.BVK Raj, CEO, NEO NIMSTL, US Flight Academy, Texas, USA, Mr. Shyam Sunder Pasari, Chairman, International Trade Relations Committee and Mr. M.V. Rajeshwara Rao are the other speakers at the meeting.