Byapaar.com – The Indian Business Blog

The third quarter review of Indian Monetary policy released by the Reserve Bank of India recently revealed that RBI has decided to retain the key rates in a bid to maintain financial and price stability. Keeping in view of the domestic and international financial conditions, the RBI has decided to leave unchanged all key rates, including repo (7.75 percent), reverse repo (6 percent) and Cash Reserve Ration or CRR (7.5 percent). The stance of the policy is to contain inflation close to five percent while conditioning expectations I the range of 4 to 4.5 percent. The Gross Domestic Product (GDP) projection for the year 2007-08 also remains same at 8.5 percent. The flexibility to conduct overnight or longer term repo including the right to accept or reject tenders under the liquidity adjustment facility (LAF) wholly or partially is retained. The major highlights of the monetary policy include emphasis on credit for employment intensive sectors, reasonably positive prospects for industrial sector, favorable prospects for services etc

The Indian Finance Ministry has recently announced a ten year tax holiday for developers f industrial parks set up during April 1, 2006 to March 9, 2009. The incentive is primarily aimed at providing a boost to India’s industrial infrastructure. The Industrial Development Scheme 2008 notified by the Central Board of Direct Taxes (CBDT) held that the industrial park developers would be eligible for 100 percent tax deduction which would be provided for ten out of fifteen consecutive assessment years after the commencement of operation of such units. Under the scheme, an industrial park should have at least 30 units. To avail of the tax benefit, the industrial park would have to be owned by a single undertaking. The area allocated or to be allocated to industrial units would have to be at least 90 percent of the allocated area. Ministry sources clarified that such industrial parks developed operated or maintained during 2006-07 would have 2007-08 as tax assessment year.

India is emerging as a favorite investment destination for top Japanese companies as large conglomerates from the far-eastern country begin to diversify away from neighboring China, their earlier hotspot. While China still maintains the top position as an investment destination, a lesser proportion of companies (68 percent) China as a promising country. China has seen a decline for four straight years since its peak in 200. India ranked second among Japanese companies as a promising country for investment. By industry, automobile-related companies saw a particularly positive stance. In fact India ranked highest among Japanese companies as promising country for doing business in the long term, ahead of China for the first time since the survey has been conducted for the last 18 years

The Indian Government on January 30^th brought major changes to Foreign Direct Investment (FDI) rules, easing existing curbs on overseas capital in such key areas as real estate, petroleum refining, commodity exchanges, mining and aviation.

The decision taken at a meeting of the Cabinet follows a month-long review of the FDI policy, which the government began as part of efforts to boost foreign capital inflows. The review however did not include the politically conscious issue of allowing foreign multi-brand retailers like Wal-Mart and Carrefour to open front-end stores here.

The changes cleared by the cabinet included increasing the limit of FDI to 100 percent for titanium mining and aircraft maintenance companies from 49 percent to 74 percent in cargo and chartered airlines, from 26 percent to 49 percent in public sector refining companies.