New Delhi: The government is likely to award 4,000 km of highway projects under the new engineering, procurement and construction (EPC) contract this year. This will be part of the 9,500-km target set for the national highways by Prime Minister Manmohan Singh.
Under the EPC model, the government funds the project completely and the contractor has to just construct the road. This move is expected to minimise the time and cost over-runs. This will also enable a faster roll-out of projects. Senior officials told Business Standard Union Minister of Road Transport and Highways C P Joshi, in a meeting of parliamentary consultative committee on Wednesday, had indicated the projects this year would largely be awarded on EPC basis. The cabinet committee on infrastructure is expected to approve the new EPC model this month after discussions with other ministries, an official said.
The new projects will primarily aim at double-laning of single-laned roads.
Officials close to the development said Joshi also explained that no National Highway Authority of India (NHAI) declared highway in the country would remain single-laned by the end of the 12th five-year Plan.
“Bringing these projects under the EPC will attract other construction companies, as now a lot of them are not attracted to other projects due to economic the slowdown,” an official said, adding that the minister also aims at completing double-laning of 20,000 km of roads under the EPC model. However, the time period for this target has not been set till now.
The EPC model actually means that the government funds the project completely and the contractor just has to construct the road. This move is expected to minimize the time and cost over-runs characteristics of the extant item rate contracts. This will also enable a faster roll-out of projects.
While the item rate contracts rely on specific designs provided by the government, the EPC contract only specifies the required design and performance standards and allows the contractor to bring in innovation to optimize efficiency.
Joshi informed the committee that the EPC contract provides performance based standards for the maintenance of the projects while specifying the dates on which different sections of land would be handed over to the contractor. It also addresses issues relating to suspension of contractors rights, change in law, insurance and indemnity.
Almost 7900 km of highways was awarded in the previous financial year. The PM, in June, scaled up the target for building national highways, from 8,800 km announced in this year’s Budget to 9,500 km for the current fiscal.
However, the award of projects in the first quarter has not been in line with the target as projects covering just 99 km were awarded by the NHAI against the target of 1,500 km.
Success in my Habit
Friday, August 3, 2012
Land transfer made easy for infrastructure projects
New Delhi: The Prime Minister has lifted curbs on transfer of government-owned land for infrastructure projects.
Last year, a ban had been imposed on transfer of government-owned land to any entity, except from one government department to another.
This was leading to long delays in awarding concessions for infrastructure projects, particularly public-private partnership (PPP) projects.
Now, all cases of land transfer from Ministries to statutory authorities or public sector undertakings will be allowed, subject to normal government rules.
Land alienation
Also, land alienation will be allowed for parcels on lease, rent or licence to a concessionaire appraised through the PPP Approval Committee route and approved by the Finance Minister or by the Ministers concerned or by the Cabinet, depending on the value of the project.
Transfers will also be allowed for development of railway land by the Rail Land Development Authority.
This would be according to the provisions of the Railways Amendment Act, 2005 and in accordance with the prevalent policies and guidelines of the Railway Ministry and the Government.
Last year, a ban had been imposed on transfer of government-owned land to any entity, except from one government department to another.
This was leading to long delays in awarding concessions for infrastructure projects, particularly public-private partnership (PPP) projects.
Now, all cases of land transfer from Ministries to statutory authorities or public sector undertakings will be allowed, subject to normal government rules.
Land alienation
Also, land alienation will be allowed for parcels on lease, rent or licence to a concessionaire appraised through the PPP Approval Committee route and approved by the Finance Minister or by the Ministers concerned or by the Cabinet, depending on the value of the project.
Transfers will also be allowed for development of railway land by the Rail Land Development Authority.
This would be according to the provisions of the Railways Amendment Act, 2005 and in accordance with the prevalent policies and guidelines of the Railway Ministry and the Government.
Indian hotel industry optimistic about economy
Mumbai: India was ranked fifth in the world for hotels with the best business outlook, while Greece ranked last, according to a survey carried out by online travel site, TripAdvisor.
Nikhil Ganju, country manager, TripAdvisor India said, "Most survey results for India cue a positive industry sentiment. In fact we designed an industry scale based on survey response on economic and business outlook of properties, which indicate better than average business health for India, which ranks second in APAC region and fifth in the world." He added that another highlight of the survey reveals that though Indian hoteliers recognize the importance of social and mobile marketing. ``They are slow at adopting their use to connect with current and potential customers, compared to global numbers."
According to the report, 50% of Asia-Pacific respondents reported optimism about the economy for the remainder of the year believing the economy would improve. It added that hoteliers in Asia Pacific, North America and Latin America were twice as likely to report being profitable in the last six months than hoteliers in the EMEA(Europe Middle East and Africa) region who are the least optimistic about the future. The report said that India showed unbridled optimism with the highest proportion of businesses in APAC that expect the economy to improve in the next 6 months. Sixty-six percent respondents support the claim that the economy will improve a little /lot in the second half of 2012, the survey said. The positive business outlook also seems to be evident from the staffing plans in second half of 2012, as India ranks highest globally among all countries surveyed, for staff turnover based on increased staff levels. While most respondents in APAC reported that there would be no change in their staffing levels in the next 6 months, respondents in India were more likely to increase their staff (39%), followed by Thailand (31%) and Indonesia (30%).
The TripAdvisor Industry Index collected more than 25,000 responses from hoteliers around the globe. It is the world's largest hotel survey, said a release issued by TripAdvisor. The Asia Pacific region accounted for slightly over a fifth of the entire sample and India formed the largest segment of this region with just over 1,500 respondents, making it the largest hotel survey in India as well, it added.
Nikhil Ganju, country manager, TripAdvisor India said, "Most survey results for India cue a positive industry sentiment. In fact we designed an industry scale based on survey response on economic and business outlook of properties, which indicate better than average business health for India, which ranks second in APAC region and fifth in the world." He added that another highlight of the survey reveals that though Indian hoteliers recognize the importance of social and mobile marketing. ``They are slow at adopting their use to connect with current and potential customers, compared to global numbers."
According to the report, 50% of Asia-Pacific respondents reported optimism about the economy for the remainder of the year believing the economy would improve. It added that hoteliers in Asia Pacific, North America and Latin America were twice as likely to report being profitable in the last six months than hoteliers in the EMEA(Europe Middle East and Africa) region who are the least optimistic about the future. The report said that India showed unbridled optimism with the highest proportion of businesses in APAC that expect the economy to improve in the next 6 months. Sixty-six percent respondents support the claim that the economy will improve a little /lot in the second half of 2012, the survey said. The positive business outlook also seems to be evident from the staffing plans in second half of 2012, as India ranks highest globally among all countries surveyed, for staff turnover based on increased staff levels. While most respondents in APAC reported that there would be no change in their staffing levels in the next 6 months, respondents in India were more likely to increase their staff (39%), followed by Thailand (31%) and Indonesia (30%).
The TripAdvisor Industry Index collected more than 25,000 responses from hoteliers around the globe. It is the world's largest hotel survey, said a release issued by TripAdvisor. The Asia Pacific region accounted for slightly over a fifth of the entire sample and India formed the largest segment of this region with just over 1,500 respondents, making it the largest hotel survey in India as well, it added.
India invites Belgian firms to invest in manufacturing zones
New Delhi: India on Thursday sought the participation of Belgian companies in the proposed National Manufacturing and Investment Zones (NMIZs), especially in the fields of training and research.
On its part, Belgium has offered its expertise in water treatment, waste disposal and in the energy sector in NMIZs, an official statement said.
This development follows a bilateral meeting between the Belgian Deputy Prime Minister and Minister of Foreign Affairs, Foreign Trade and European Affairs Didier Reynders and the Commerce, Industry and Textiles Minister Anand Sharma, here.
Last month, Sharma had, in a meeting with the British Foreign Secretary William Hague, in London, invited British participation in at least one NMIZ as a partner. The response was positive and Hague had asked his office to examine the opportunities in Indian NMIZs.
In February, India had invited Italy to be a partner in an NMIZ.
The zones will be set up under the National Manufacturing Policy, which aims to increase the share of manufacturing in GDP to 25 per cent from the current 16 per cent and generate 100 million jobs by 2020.
The minimum land area of each zone – or greenfield integrated industrial townships with the modern infrastructure – is to be 5,000 hectares.
According to the norms, no cultivable, agricultural and forest land will be allowed to be acquired.
The first phase will be established along the proposed 1,500-km, $90-billion Delhi Mumbai Industrial Corridor (DMIC).
The DMIC project, spanning seven States (Delhi, Uttar Pradesh, Haryana, Rajasthan and Madhya Pradesh), had recently won ‘global recognition’ when consultancy firm KPMG named it among the “100 most innovative and inspiring urban infrastructure projects in the world”.
The DMIC, coming up in partnership with the Japanese Government, has attracted interest from countries such as Singapore, the US and Korea.
Sharma had said in June that seven NMIZs had already been notified and another five would be notified by August-end.
In July, he had announced the ninth NMIZ, and a third for Maharashtra, in Nagpur, over an area of 6,280 hectares.
The other NMIZs are: Ahmedabad-Dholera (Gujarat - 900 sq km); Shendra-Bidkin Industrial Park city near Aurangabad, Maharashtra (84 sq km); Manesar-Bawal (Haryana - 380 sq km); Khushkhera-Bhiwadi-Neemrana (Rajasthan - 150 sq km); Pithampur-Dhar-Mhow (Madhya Pradesh - 370 sq km); Dadri-Noida-Ghaziabad (Uttar Pradesh - 250 sq km); Dighi Port Industrial Area (Maharashtra - 230 sq km) and Jodhpur-Pali.
On its part, Belgium has offered its expertise in water treatment, waste disposal and in the energy sector in NMIZs, an official statement said.
This development follows a bilateral meeting between the Belgian Deputy Prime Minister and Minister of Foreign Affairs, Foreign Trade and European Affairs Didier Reynders and the Commerce, Industry and Textiles Minister Anand Sharma, here.
Last month, Sharma had, in a meeting with the British Foreign Secretary William Hague, in London, invited British participation in at least one NMIZ as a partner. The response was positive and Hague had asked his office to examine the opportunities in Indian NMIZs.
In February, India had invited Italy to be a partner in an NMIZ.
The zones will be set up under the National Manufacturing Policy, which aims to increase the share of manufacturing in GDP to 25 per cent from the current 16 per cent and generate 100 million jobs by 2020.
The minimum land area of each zone – or greenfield integrated industrial townships with the modern infrastructure – is to be 5,000 hectares.
According to the norms, no cultivable, agricultural and forest land will be allowed to be acquired.
The first phase will be established along the proposed 1,500-km, $90-billion Delhi Mumbai Industrial Corridor (DMIC).
The DMIC project, spanning seven States (Delhi, Uttar Pradesh, Haryana, Rajasthan and Madhya Pradesh), had recently won ‘global recognition’ when consultancy firm KPMG named it among the “100 most innovative and inspiring urban infrastructure projects in the world”.
The DMIC, coming up in partnership with the Japanese Government, has attracted interest from countries such as Singapore, the US and Korea.
Sharma had said in June that seven NMIZs had already been notified and another five would be notified by August-end.
In July, he had announced the ninth NMIZ, and a third for Maharashtra, in Nagpur, over an area of 6,280 hectares.
The other NMIZs are: Ahmedabad-Dholera (Gujarat - 900 sq km); Shendra-Bidkin Industrial Park city near Aurangabad, Maharashtra (84 sq km); Manesar-Bawal (Haryana - 380 sq km); Khushkhera-Bhiwadi-Neemrana (Rajasthan - 150 sq km); Pithampur-Dhar-Mhow (Madhya Pradesh - 370 sq km); Dadri-Noida-Ghaziabad (Uttar Pradesh - 250 sq km); Dighi Port Industrial Area (Maharashtra - 230 sq km) and Jodhpur-Pali.
Wednesday, August 1, 2012
Increase in retailer enquires across cities in India: CBRE
Mumbai: According to the findings of CBRE's latest report titled "India Retail Market view", India witnessed increased transaction activity and retailer expansion in the first quarter of 2012. Leading brands and retailers pursued expansion plans aggressively, increasing their presence across key retail hubs. In all the seven cities presented in the review, the retail real estate market appears to be promising with an increase in retailer enquiries. Retail mall rentals witnessed growth in prime city micro markets of Delhi, while values in high streets increased in Mumbai, Bangalore and Pune.
The same can be attributed to the heightened interest by retailers coupled with a low base of supply addition as developers continue to focus on attracting tenants in completed products and reducing current vacancy rather than launching new projects. About 1.12 million sq ft of mall supply was added in H1 2012 (concentrated largely in Bangalore), which was less than 20% of almost 6 million sq ft of space added during the same period last year.
In Mumbai, international automobile majors such as Mini Cooper, Lamborghini and Volkswagen continued to be key occupiers of retail space with these brands opening their independent showrooms spread over an area of 2,500 - 12,000 sq ft.
Mini Cooper opened its flagship showroom at Santacruz (W) and Lamborghini and Volkswagen took space at Prabhadevi and Hughes Road respectively.
Steady demand levels and limited supply led to a marginal rental increment of 3-6% in leading high street locations of Linking Road, Colaba Causeway, whilst values increased by 7-8% in Kemps Corner. The demand for prime retail space continued to remain strong in high street markets such as Linking Road, Colaba Causeway and Breach Candy. Nascent high street areas of Borivali, Powai, S.V Road (stretch from Santa Cruz West to Andheri West) also gained prominence with brands preferring to open stores in these locations. During this review period, Linking Road observed opening of stores such as Guess, Hush Puppies and The Hab while Colaba Causeway and Waterfield Road witnessed space take up from retailers such as Pavers England, USPA, Hometown Cafe, Bora Bora, the latter two being new F&B concepts.
Palladium Annexe, part of the existing Palladium Mall at Lower Parel, commenced operations with opening of stores by brands such as Gucci, Bottega Veneta, Jimmy Choo, Tumi, Ermenegildo Zegna and Tag Heuer. This would be the first time Ermenegildo Zegna has taken up space outside the confines of a five star Hotel. Cafe Royale and Grillopolis opened their first stores in Market City mall in Kurla during the first half of 2012.
The same can be attributed to the heightened interest by retailers coupled with a low base of supply addition as developers continue to focus on attracting tenants in completed products and reducing current vacancy rather than launching new projects. About 1.12 million sq ft of mall supply was added in H1 2012 (concentrated largely in Bangalore), which was less than 20% of almost 6 million sq ft of space added during the same period last year.
In Mumbai, international automobile majors such as Mini Cooper, Lamborghini and Volkswagen continued to be key occupiers of retail space with these brands opening their independent showrooms spread over an area of 2,500 - 12,000 sq ft.
Mini Cooper opened its flagship showroom at Santacruz (W) and Lamborghini and Volkswagen took space at Prabhadevi and Hughes Road respectively.
Steady demand levels and limited supply led to a marginal rental increment of 3-6% in leading high street locations of Linking Road, Colaba Causeway, whilst values increased by 7-8% in Kemps Corner. The demand for prime retail space continued to remain strong in high street markets such as Linking Road, Colaba Causeway and Breach Candy. Nascent high street areas of Borivali, Powai, S.V Road (stretch from Santa Cruz West to Andheri West) also gained prominence with brands preferring to open stores in these locations. During this review period, Linking Road observed opening of stores such as Guess, Hush Puppies and The Hab while Colaba Causeway and Waterfield Road witnessed space take up from retailers such as Pavers England, USPA, Hometown Cafe, Bora Bora, the latter two being new F&B concepts.
Palladium Annexe, part of the existing Palladium Mall at Lower Parel, commenced operations with opening of stores by brands such as Gucci, Bottega Veneta, Jimmy Choo, Tumi, Ermenegildo Zegna and Tag Heuer. This would be the first time Ermenegildo Zegna has taken up space outside the confines of a five star Hotel. Cafe Royale and Grillopolis opened their first stores in Market City mall in Kurla during the first half of 2012.
InMobi acquires UK-based Metaflow Solutions
Bangalore: InMobi has acquired UK-based Metaflow Solutions for an undisclosed sum, the Bangalore and San Francisco-based mobile advertising network announced on Tuesday.
The latest acquisition comes less than a month after InMobi bought over San Francisco-based MMTG Labs. The financial details of both transactions are yet to be disclosed by the parties involved.
"Our acquisition of Metaflow Solutions will help us to continue to rapidly expand the distribution and monetisation of content for our developers and publisher partners," Naveen Tewari, founder and chief executive, InMobi, said in a press statement.
Metaflow, a mobile app management and distribution company, will see its entire team absorbed by InMobi, and will become an integral part of InMobi's developer-oriented efforts, led by Piyush Shah, vice-president and general manager, developer platforms and performance advertising, according to the press release.
"With the recent acquisition of MMTG Labs, along with today's acquisition of Metaflow, we will augment our value proposition by offering highly compelling distribution, monetisation, and engagement solutions to app developers globally," Shah said.
The latest deal is further affirmation of InMobi's strategy of growing through the inorganic route, as it looks to unseat global leaders Google and Apple in the $6 billion global mobile advertising industry.
The company has been intensifying its efforts to capture a greater share of the lucrative North American market, which contributes almost a quarter of the global market share. It estimates that it reaches about 500 million consumers, in over 165 countries, through more than 93.4 billion mobile ad impressions monthly.
InMobi has significantly ramped up its acquisition activity, after Japanese telecom company SoftBank invested $200 million in September 2011, and what is still regarded as one of the largest investment in the mobile internet space till date.
The investment - which was paid out in two tranches - has played a significant role in bulking up InMobi's war chest as it scouts for companies to add to its portfolio.
Other backers of the start-up include venture capital firms Kleiner Perkins Caulfield Byers and Sherpalo Ventures, both of which have invested $15.6 million across three rounds of funding, prior to the SoftBank investment.
The latest acquisition comes less than a month after InMobi bought over San Francisco-based MMTG Labs. The financial details of both transactions are yet to be disclosed by the parties involved.
"Our acquisition of Metaflow Solutions will help us to continue to rapidly expand the distribution and monetisation of content for our developers and publisher partners," Naveen Tewari, founder and chief executive, InMobi, said in a press statement.
Metaflow, a mobile app management and distribution company, will see its entire team absorbed by InMobi, and will become an integral part of InMobi's developer-oriented efforts, led by Piyush Shah, vice-president and general manager, developer platforms and performance advertising, according to the press release.
"With the recent acquisition of MMTG Labs, along with today's acquisition of Metaflow, we will augment our value proposition by offering highly compelling distribution, monetisation, and engagement solutions to app developers globally," Shah said.
The latest deal is further affirmation of InMobi's strategy of growing through the inorganic route, as it looks to unseat global leaders Google and Apple in the $6 billion global mobile advertising industry.
The company has been intensifying its efforts to capture a greater share of the lucrative North American market, which contributes almost a quarter of the global market share. It estimates that it reaches about 500 million consumers, in over 165 countries, through more than 93.4 billion mobile ad impressions monthly.
InMobi has significantly ramped up its acquisition activity, after Japanese telecom company SoftBank invested $200 million in September 2011, and what is still regarded as one of the largest investment in the mobile internet space till date.
The investment - which was paid out in two tranches - has played a significant role in bulking up InMobi's war chest as it scouts for companies to add to its portfolio.
Other backers of the start-up include venture capital firms Kleiner Perkins Caulfield Byers and Sherpalo Ventures, both of which have invested $15.6 million across three rounds of funding, prior to the SoftBank investment.
Gulf Oil, Hinduja Estates to develop large realty project in Hyderabad
Hyderabad: Gulf Oil Corporation Ltd has entered into a joint development agreement with Hinduja Estates for development of the 76 acre company land in Hyderabad.
The project, to be completed in five-six years will be located at their campus close to the busy residential-cum-business hub in Kukatpally, Hyderabad.
The company has agreed that the project will be taken up with 35:65 per cent based on the recommendations of property consultants. The company’s contribution will be land and the finances will be provided by Hinduja Estates, the developer.
The Managing Director of Gulf Oil Corporation, Mr Subhas Pramanik, told Business Line, “It is proposed to invest up to Rs 3,500-crore in the real estate project over the next five-six years. It will have over 10 million square feet of space in the project.”
The company contribution to the project is limited to land. “Based on the outcome of the project, we will be entitled to 35 per cent of the revenue and the developer the rest of the funds,” he said.
“The project will be developed like a township with residential, commercial and an integrated facility for research and development companies. The plans for 10.2-million sq ft have been frozen and we hope to secure various clearances by the end of the year,” he said.
The company had entered into a similar project development agreement with Hinduja Realty for their mixed use real estate project in Bangalore.
Its shares closed the day at Rs 89.75 up 3.52 per cent.
The project, to be completed in five-six years will be located at their campus close to the busy residential-cum-business hub in Kukatpally, Hyderabad.
The company has agreed that the project will be taken up with 35:65 per cent based on the recommendations of property consultants. The company’s contribution will be land and the finances will be provided by Hinduja Estates, the developer.
The Managing Director of Gulf Oil Corporation, Mr Subhas Pramanik, told Business Line, “It is proposed to invest up to Rs 3,500-crore in the real estate project over the next five-six years. It will have over 10 million square feet of space in the project.”
The company contribution to the project is limited to land. “Based on the outcome of the project, we will be entitled to 35 per cent of the revenue and the developer the rest of the funds,” he said.
“The project will be developed like a township with residential, commercial and an integrated facility for research and development companies. The plans for 10.2-million sq ft have been frozen and we hope to secure various clearances by the end of the year,” he said.
The company had entered into a similar project development agreement with Hinduja Realty for their mixed use real estate project in Bangalore.
Its shares closed the day at Rs 89.75 up 3.52 per cent.
Gulf Oil, Hinduja Estates to develop large realty project in Hyderabad
Hyderabad: Gulf Oil Corporation Ltd has entered into a joint development agreement with Hinduja Estates for development of the 76 acre company land in Hyderabad.
The project, to be completed in five-six years will be located at their campus close to the busy residential-cum-business hub in Kukatpally, Hyderabad.
The company has agreed that the project will be taken up with 35:65 per cent based on the recommendations of property consultants. The company’s contribution will be land and the finances will be provided by Hinduja Estates, the developer.
The Managing Director of Gulf Oil Corporation, Mr Subhas Pramanik, told Business Line, “It is proposed to invest up to Rs 3,500-crore in the real estate project over the next five-six years. It will have over 10 million square feet of space in the project.”
The company contribution to the project is limited to land. “Based on the outcome of the project, we will be entitled to 35 per cent of the revenue and the developer the rest of the funds,” he said.
“The project will be developed like a township with residential, commercial and an integrated facility for research and development companies. The plans for 10.2-million sq ft have been frozen and we hope to secure various clearances by the end of the year,” he said.
The company had entered into a similar project development agreement with Hinduja Realty for their mixed use real estate project in Bangalore.
Its shares closed the day at Rs 89.75 up 3.52 per cent.
The project, to be completed in five-six years will be located at their campus close to the busy residential-cum-business hub in Kukatpally, Hyderabad.
The company has agreed that the project will be taken up with 35:65 per cent based on the recommendations of property consultants. The company’s contribution will be land and the finances will be provided by Hinduja Estates, the developer.
The Managing Director of Gulf Oil Corporation, Mr Subhas Pramanik, told Business Line, “It is proposed to invest up to Rs 3,500-crore in the real estate project over the next five-six years. It will have over 10 million square feet of space in the project.”
The company contribution to the project is limited to land. “Based on the outcome of the project, we will be entitled to 35 per cent of the revenue and the developer the rest of the funds,” he said.
“The project will be developed like a township with residential, commercial and an integrated facility for research and development companies. The plans for 10.2-million sq ft have been frozen and we hope to secure various clearances by the end of the year,” he said.
The company had entered into a similar project development agreement with Hinduja Realty for their mixed use real estate project in Bangalore.
Its shares closed the day at Rs 89.75 up 3.52 per cent.
USFDA nod for Zydus Cadila schizophrenia drug
New Delhi: Zydus Cadila has received US Food and Drug Administration (FDA), the US health regulator's, approval to promote aripiprazole orally disintegrating tablets in the US market.
The drug is used as an anti- psychotic medication for the treatment of schizophrenia.
Cadilla has received tentative permission for the tablets in the strengths of 10 miligrams (MG), 15 (MG), 20 (MG) and 30 (MG), according to a company statement.
The drug is used as an anti- psychotic medication for the treatment of schizophrenia.
Cadilla has received tentative permission for the tablets in the strengths of 10 miligrams (MG), 15 (MG), 20 (MG) and 30 (MG), according to a company statement.
RBI breather for exporters on foreign exchange earnings
The Reserve Bank of India relaxed some of the restrictions it had placed on the foreign exchange market over the last six months.
On Tuesday, it allowed exporters to retain all their foreign exchange earnings in foreign currency, for a limited period. It allowed them to partially cancel and rebook forward contracts.
The moves appear to be aimed at boosting the turnover in the foreign exchange market. Exporters will also get some relief. But the movement of the rupee will not be impacted by these tweaks.
In May, the RBI had ordered that only half of the foreign exchange earnings could be held as it is in foreign currency in Exchange Earner’s Foreign Currency (EEFC) account.
The move was aimed at stemming the rapid depreciation in the rupee against the dollar
Partial relief
On Tuesday, the RBI gave partial relief to companies by allowing them to retain the entire foreign exchange earnings in EEFC account, but for a limited period only. The foreign currency has to be converted in to rupee on the last day of the month following the month in which the money is received.
For instance, if $1,000 is received on June 14, 2012, it can be parked in EEFC account only till July 31, 2012.
The amount converted to rupee can, however, be reduced to the extent of payment commitments in foreign currency of the company.
Lobbying by industry
According to Mr Abhishek Goenka, CEO, India Forex Advisors, factors such as lobbying by exporters and industry could be behind this move. Banks complaining about contraction in volumes could be another reason why the central bank has backtracked slightly.
Foreign exchange turnover in over-the-counter market is down from daily average of $26 billion in March to $20 billion in June.
It could be to resurrect volumes and activity in forex market that the RBI has now allowed exporters to cancel and rebook 25 per cent of their hedged position.
There were apprehensions of misuse of this facility by exporters. They could buy and sell multiple times with the same invoice as underlying under the guise of adjusting the hedged position. This facility was entirely withdrawn in December last year to curb speculation in rupee.
On Tuesday, it allowed exporters to retain all their foreign exchange earnings in foreign currency, for a limited period. It allowed them to partially cancel and rebook forward contracts.
The moves appear to be aimed at boosting the turnover in the foreign exchange market. Exporters will also get some relief. But the movement of the rupee will not be impacted by these tweaks.
In May, the RBI had ordered that only half of the foreign exchange earnings could be held as it is in foreign currency in Exchange Earner’s Foreign Currency (EEFC) account.
The move was aimed at stemming the rapid depreciation in the rupee against the dollar
Partial relief
On Tuesday, the RBI gave partial relief to companies by allowing them to retain the entire foreign exchange earnings in EEFC account, but for a limited period only. The foreign currency has to be converted in to rupee on the last day of the month following the month in which the money is received.
For instance, if $1,000 is received on June 14, 2012, it can be parked in EEFC account only till July 31, 2012.
The amount converted to rupee can, however, be reduced to the extent of payment commitments in foreign currency of the company.
Lobbying by industry
According to Mr Abhishek Goenka, CEO, India Forex Advisors, factors such as lobbying by exporters and industry could be behind this move. Banks complaining about contraction in volumes could be another reason why the central bank has backtracked slightly.
Foreign exchange turnover in over-the-counter market is down from daily average of $26 billion in March to $20 billion in June.
It could be to resurrect volumes and activity in forex market that the RBI has now allowed exporters to cancel and rebook 25 per cent of their hedged position.
There were apprehensions of misuse of this facility by exporters. They could buy and sell multiple times with the same invoice as underlying under the guise of adjusting the hedged position. This facility was entirely withdrawn in December last year to curb speculation in rupee.
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