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Tax Refund on Exports to be Quicker
Tax Refund on Exports to be QuickerExporters will now be able to get a quick refund of service tax built into exports. This would be done through a faster system based on ad hoc rate according to the new electronic service tax refund mechanism. Besides, exporters can also continue to get refunds through filing of refund claims for actual service tax on exports with supporting documents, as they have been doing till now.
This development has taken place after a notification was issued by the finance ministry recently. While presenting the 2011 budget, the ministry had promised exporters that it would make required administrative changes to enable the traders claim refunds faster and in a simpler way, on par with the duty drawback facility available for merchandise inputs in exports.
Presently, the taxes that are paid on goods are built into the cost of products exported and are given back electronically on ad hoc rates. The option of getting full refund of the actual amount is available by filing a refund application with supporting documents. However, this process is said to be more time consuming and prone to disputes. It has been mentioned by the ministry that the ad hoc service tax rates of each class of goods would be notified in due course of time.
14% Duty on Power Equipment Imports Proposed
14% Duty on Power Equipment Imports ProposedIncreased demand by domestic power equipment players for immediate protection for the local industry from competition from Chinese manufacturers, the Ministry of Power has moved a cabinet note in which it has proposed imposition of 14% duty on imports of such electrical equipment.
The proposal has asked for the imposition of 5% customs duty, 5% special additional duty, and 4% countervailing duty on imported power equipment. The note has been sent for approval to the Heavy Industries & Public Enterprises Ministry and the Finance Ministry, and an announcement in this regard is expected during the forthcoming budget session.
A consensus had earlier emerged at a meeting organised by Ministry of Heavy Industries & Public Enterprises that domestic manufacturers like BHEL and L&T should be provided a level playing field. Besides, the Maira Committee had suggested the imposition of a 10% customs duty and 4% special additional duty. Currently, projects with less than 1,000MW generation capacity attract 5% import duty, while the rest are allowed duty-free import of equipment.
Solar Lighting for 120 Villages
Solar Lighting for 120 VillagesAn innovative solar LED lighting system is to light up 120 villages in the country. This project, to develop the rural population, is a joint initiative of BMC Technologies, Hanul Technologies and India800 Foundation, and has the approval of the President of India.
While speaking about this development, Amir Bhatia, vice chairman, India800 Foundation informs, “The innovative solar-powered LED lighting systems that we are installing are being developed by Pune-based Hanul Technologies. These lighting systems save over 60% electricity, and are sure to transform the lives of communities that still do not have access to basic infrastructure.” Bhatia adds that the system has already been installed in the Sakur village of Sangamner Taluka in Ahmednagar district, more projects are to be undertaken in Amravati and Ahmednagar districts in Maharastra.
BMC’s software site leader and vice president-R&D Tarun Sharma adds, “We have made a beginning by donating solar-powered LED lighting systems to 23 households in Sakur village. These lights have also been installed as street lights.”
LED Lighting to Grow at 45.53%
LED Lighting to Grow at 45.53%Citing issues of energy deficiency, electrification of rural regions and energy sustainability, energy-efficient lighting technologies and alternate technologies are gaining importance in the country. According to research by consultancy firm Frost & Sullivan, LEDs are the fastest emerging segment in the Indian lighting market.
According to this research, the LED lighting market in India in 2010 was estimated at US$ 73.3 million, and is expected to grow at a CAGR of 45.53% till 2015. Most of the growth is attributed to short-term drivers like street lighting applications and the railway sector. Frost & Sullivan predicts that around 60% of the total demand in the year 2012 would come from these two sectors.
However, the firm emphasises that penetration of LED lighting largely depends on standardisation, government support, awareness and affordability. The challenges include requirement ofmore complicated designs spanning optical, thermal and electronic domains, and the high price of these lamps. Besides, absence of uniform standards for different applications is also keeping the majority from adopting LEDs and is giving way to dumping of sub-standard cheap imports in the market.
The research, however, informs that the major challenges of absence of standards and lack of awareness are being mitigated by the efforts of Bureau of Energy Efficiency and the LED industry, so as to facilitate the use of LEDs in low usage application areas.
LV & MV Switchgear Market to Face Surge in Demand
LV & MV Switchgear Market to Face Surge in DemandAccording to a new analysis by global market research firm Frost & Sullivan, players in the Indian low and medium voltage switchgear market are charting out growth plans to capitalise on anticipated expansion and development in end user segments. According to the firm’s report, the low voltage switchgear market would grow from Rs.5,060 crore in the year 2010 to Rs.11,553 crore in 2017. On the other hand, the medium voltage switchgear market, which earned a revenue of Rs.4,234 crore in 2010, is expected to earn around Rs.9,239 crore in 2017.
“Growth in areas like oil and gas, petrochemicals, steel, cement, telecom, and the upcoming commercial and residential corridors in the country are sure to raise energy consumption,” says the report. “Therefore, the major participants in the low voltage switchgear space arefitting out their manufacturing facilities to take on this change.”
Industries across the country have increased their demand for space optimisation and efficient switching, and a lot of end user industries are investing on indoor and gas insulated switchgear. While manufacturers in the medium voltage market are set to diversify their offerings, some are looking to technological advancement for addressing demand for environment-friendly, compact and efficient solutions.
Pricing pressure arising from increased competition and customers’ bargaining power is also impacting overallgrowth of these markets. Raw materials like steel, copper and silver form a major component for manufacturing switchgear. Therefore, any change in their cost would immediately impact the priceof the switchgear. “It is challengingfor companies to ignore price fluctuation, maximise margins, and still be competitive. Still the price war can be offset to some extent by adopting best practices for improving production efficiency, and achieving economies of scale for reducing production costs and maintaining profit margins.”
21 Month Low Credit Growthat 2011 End
21 Month Low Credit Growthat 2011 EndAccording to data released by Reserve Bank of India, the growth in bank advances has fallen to a figure, which is lowest in the last 21 months. The major reasons for this capped credit off take are high lending rates coupled with slowdown in fresh investments, and an uncertain economic environment.
As on December 16, bank advances have grown to 17.08% annually, which is the lowest growth rate since March 2010. Credit growth has been below the projections of 18%, which were made by the central bank in the last two months. Leading consulting firm Deloitte has commented, “People have postponed investment decisions due to the growing uncertainty in growth prospects. To keep up with the high rate of inflation, RBI had raised the policy rates by 375 basis points thirteen times since March 2010, which took its toll on the credit off take as other banks increased their lending rates by around 250 basis points during the same period.” The firm believes the situation may improve in the coming year. “There could be higher credit off take in the fourth quarter in case the interest rates stabilise. This would happen only if the RBI does not change its policy rates during this period.”
Recent data on industrial production has shown that credit growth fell by 5.1% in October. A senior economist says that companies don’t foresee increase in demand for the next couple of quarters, and this has impacted their capital expenditure plans. It is also being expectedthat credit growth may be lower than the RBI projection of 18%. In fact it is expected to hover in the range of 16% till July. Earlier RBI had scaled down the credit growth projection for 2011 end from 19% to 18% in its second quarter monetary policy review.
