Rupee slide to continue, RBI not likely to intervene

With the dollar gaining ground against major currencies like the euro, the rupee is expected to further weaken in the short term. On Friday , the Indian currency weakened 1.05% to 46.7425 against the greenback at the close, and for the week on a whole it weakened by 1.22%. Analysts believe the downward trend in rupee will continue for a while.

Says Madhusudan Somani, head of foreign exchange trading at YES Bank, "Going forward, one can expect some pressure on the rupee given a correction in the equity markets and an increase in the global risk aversion."

Somani adds in the last few days, there has also been a lot of dollar demand from the oil companies -which is leading to further weakness in rupee.

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Brown writes to Prime Minister on Vodafone tax issue

Over a year after the Supreme Court dismissed telecom major Vodafone’s petition challenging Indian tax authorities’ jurisdiction over its $11.2-billion acquisition of Hutchison Essar in 2007, UK Prime Minister Gordon Brown has written to Prime Minister Manmohan Singh warning that such tax treatment will affect India’s investment climate.

Brown’s missive follows a show cause notice by the income tax department to Vodafone in October 2009 — that was a step towards raising a tax demand on the firm for $1.7 billion on capital gains, and possibly even penalties with 18% annual interest since the transaction.

Vodafone had questioned the tax department’s jurisdiction over share transfer between two overseas companies

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Parikh: end fuel sops; Deora mum on political will

The government on Wednesday made clear its intention to scrap subsidies for auto fuels and move decisively towards market-aligning the price of LPG and public distribution system (PDS) kerosene. Petroleum secretary Sundareshan said Prime Minister Manmohan Singh has instructed the ministry to swiftly process the recommendations of an expert group headed by former Planning Commission member Kirit Parikh on the pricing of petroleum products.

In its report submitted to petroleum minister Murli Dora on Wednesday, the expert group proposed total decontrol of petrol and diesel prices. It also called for an immediate Rs 6-a-litre hike in the PDS kerosene price and a Rs 100-a-cylinder increase in the price of domestic LPG. While releasing the expert group’s report, Deora said his officers would move a Cabinet note very soon in this regard, but declined to comment on whether the recommendations are politically acceptable to the ruling coalition.

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Government plans to ease FDI norms for exchanges

Foreign investors in India’s stock and commodity exchanges will soon be able to raise their stakes, as the government plans to raise the cap on FDI by any single investor from the present 5%. However, the overall cap on FDI for these bourses would remain 49%.

Once the cap for individual investors is raised, India’s underdeveloped exchange business could receive a fillip, leading to more meaningful competition between the bourses resulting in efficiency of operations and better investor services. The move, sources said, could also pave the way for more exchanges being set up in the country.

Millions of potential investors are yet to enter the equity market, as the present system does not entice them enough

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`India has done a good job branding itself'

Martin Sorrell is CEO of WPP, one of the world’s largest media and communications services firms. In an interview at Davos with Express Group Editor-in-Chief Shekhar Gupta on NDTV 24x7’s Walk the Talk, Sorrell talks about Brand India, fragmentation of the media and why India needn’t be worried about its single-digit growth.

You have been saying these are not better times, these are less worse times.

It doesn’t apply to India. People in India, and people generally, thought nothing could happen to disturb the growth pattern in India.

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Clause 49 compliance to speed up CPSE listings

In a clear sign that the Centre’s disinvestment programme would be expanded substantially next fiscal, the government has decided to set an early deadline for central public sector enterprises (CPSEs) to reorganise their boards to meet Clause 49 of Sebi’s listing agreement.

“We are having a re-look at the process of appointment of independent directors in public sector firms. We have decided to fix a mandatory timeframe for making these appointments. For this, we are in talks with PESB (Public Enterprises Selection Board),” Department of Public Enterprises secretary Bhaskar Chatterjee told FE.

In normal course, the appointment of independent directors to a PSU board takes more than six months, due to the formalities involved.

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Obama targets outsourcing, wants US jobs

The country’s $50-billion software services export industry once again came in the line of fire with US President Barrack Obama reiterating his proposal to “slash the tax breaks for companies that ship our jobs overseas” and instead “give those tax breaks to companies that create jobs in the USA”.

Though the Senate is yet to pass the jobs Bill that “includes some of these steps”, Obama’s rhetoric once again sent shivers down the industry’s spines, as the US market accounts for close to 60% of its revenues. A report by IT consultancy firm Forrester Research estimates that 3.3 million American jobs will be lost to outsourcing in 15 years ending 2015.

Obama’s statement, which was part of his State of the Union address, while meeting with thunderous applause on Capitol Hill may not impact the Indian outsourcing industry immediately.

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