WTO sets up panel to examine India's auto policy
New Delhi: Despite strong protest by India at the WTO Dispute Settlement Body (DSB) meeting in Geneva in October, a panel has been set up to examine whether India's automobile policy `breaks' WTO rules and `distorts' international trade, as contended by both the United States and the European Commission (EC).

The WTO panel has been constituted disregarding the directives of the WTO general council chairman requesting members to exercise due restraint on issues relating to trade-related investment measures (TRIMs) and transition period matters.

India has contended that its auto policy is not a TRIM issue and argued that it is a measure taken under the balance of payment (BOP) cover. The quantitative restrictions in the auto sector is however, likely to be dismantled by March 31, 2001, when the process of dismantling quantitative restrictions on the remaining 715 tariff lines is completed.
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Ten-year tax holiday for food processing on anvil
Mumbai: After giving tax holidays for the information technology sector, the government is now considering offering a ten-year indirect tax holiday for the food processing industry. Addressing delegates at the International Conference on Cold Chain Warehousing Mr Omesh Saigal, secretary, department of food processing industries has said that the finance ministry was now positively inclined to consider the proposal.

Tax holiday for the food processing sector industry, which was a high risk, low gain industry, would not only help the agricultural sector but also spur growth of country's gross national product, Mr. Saigal has said. He said a decision in this regard is likely to be taken up in the next budget session of the parliament. The proposed Processed Food Development Bill is currently before the parliament. The bill is seeking to create a single authority to administer all the food laws under a single umbrella.

The proposed tax relief measures would be mainly in terms of exemption from sales tax, octroi and excise. The approach paper towards formulation of a national policy on food processing industry has already identified tax levels on processed foods to be among the highest in the world.
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Steel companies plan cutback production
Mumbai: With the sharp fall in international steel prices and a glut in the domestic market, country’s steel majors are planning to "regulate" their production with a cutback in production. Though production cutbacks are yet be quantifies industry sources say it could be in the region of 20 per cent. Financial institutions, however, are not too keen on the proposal to slash production.

FIs have already initiated debt restructuring proposals to bail out several steel companies. Of the many options being considered is the conversion of loans into equity. Of the total Rs 90,000 crore invested in the domestic steel industry till date, the financial institutions alone account for one-third.

Steel production showed an increase in the first half of the current fiscal, with finished steel showing a 12 per cent increase followed by crude steel growth at 10 per cent. The hot rolled coil segment recorded a consumption of 3.5 million tonnes for the first half, compared with 2.7 mt in the corresponding period of the previous year, a growth of 28 per cent.

The proposal to cut production comes close on the heels of a sharp fall in steel prices internationally. Prices of HRC products globally have come down to $190 per tonne, which is less than the domestic price of Rs 15,500.
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Nasscom to re-focus on domestic software market
Mumbai: Nasscom has projected that the domestic software market will grow by 35 per cent to $2.3bn or Rs 11,000 crore during the current financial year. According to the latest projections made by the association revenues from software exports during 1999-00, stood at $1.7bn or Rs 7,200 crore. This is further projected to grow further to $3.5bn or Rs 16,000 crore in ‘01-02.

Exports will continue to be the mainstay of the Indian software industry, but in recent years the domestic market has quickened its pace of growth and by the year ‘07-08 the market is expected to grow to $37bn. Nasscom president Dewang Mehta has said that e-governance and e-banking are emerging to be the key areas of growth in the domestic software market.

Mr Mehta has however, emphasised that the Nasscom’s re-focus on the domestic market did not imply a dilution in its focus on exports. Nasscom has estimated that by the year 2001-2, the central and state governments will spend about Rs 4,000 crore on e-governance and the e-governance market will amount to Rs 25,000 crore by 2007-8. In ‘00-01 alone, government expenditure on IT is expected to be about Rs 2,500 crore. E-banking is the second key emerging area of growth in the domestic software market and the association aims to facilitate at least 90 per cent computerisation in banking transactions by the year ‘03.
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