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Iran minister plays down US sanctions threat on India-Iran gas pipeline
New Delhi: Iran's deputy petroleum minister for international affairs, M.H. Nejad Hosseinian has exhorted petroleum minister, Mani Shankar Aiyar, to give 'more push' to India-Iran gas pipeline project and not get bogged down by the Iran-Libya Sanctions Act (ILSA).

Listing out three reasons why India should not get intimidated by the threat of US sanctions Hosseinian said, the Americans had not taken any action against France and Malaysia for the investment by their respective companies Total and Petronas in Iran's South Pars gas field.

''This act has been dead from the very beginning,'' the minister was quoted as saying.

The second reason that he has pointed out is that the ILSA may fail to cover the pipeline if the project is structured in such a way that each country invested within its boundary.

''In case the Irani, Pakistani and Indian companies take care of the required investments in their own territories, ILSA does not apply,'' Hosseinian said.

Further, he argued that the US would not be able to put pressure on a large number of companies from different countries if the project were to be implemented by a consortium of international firms.

The ILSA provides for US sanctions against a country that invests more than $20 million in Iran's energy sector.

Hosseinian also mentioned that Pakistan was already on board and would participate in the proposed pipeline even if India decided to stay away. ''Earlier, the Pakistani side had indicated December 2005 as the deadline for taking a decision about their participation in the project. However, now they are ready to participate in the project any time,'' he said.
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Natwar: India will go ahead with fence on Bangla border
Dhaka: External Affairs Minister K. Natwar Singh made it clear that India would go ahead with the fencing of the border with Bangladesh, in order to curb smuggling, and illegal migration.
In an interview with the Bengali daily Jugantor, Singh said that there was a "sharp decline in illegal cross-border activities" where the fence was in place.

Singh, who led official talks with Bangladesh on Saturday, said the commerce ministers of the two countries would take up Bangladesh's concern over the trade imbalance between the two countries.

Bangladesh also welcomed more investment from India, saying negotiations on a $2.5 billion Tata investment were progressing.

India reassured Bangladesh that the river linking project was still in conception and it would not do anything without consulting with the lower riparian country.
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Kamal Nath: Indo-Pak trade up 76 per cent at US$600mn
New Delhi: thanks to the major trade initiatives taken by India and Pakistan last fiscal, bilateral trade has risen 76 per cent to touch 600.77 million dollar in 2004-05, with India enjoying a huge surplus, commerce minister Kamal Nath has said.

According to the minister, India's exports to Pakistan in 2004-05 jumped 76 per cent to 505.44 millions dollars last fiscal from 286 million dollar in 2003-04. Imports from Pakistan rose 65 per cent to 95.33 million dollars from 57.74 million dollars a year ago.

In Rupee terms, trade between two neighbours during 2004-05 grew 70 per cent to Rs26.99bn compared to Rs15.83bn in 2003-04, he was quoted as saying in an official release.

With a view to enhance bilateral trade, both countries had last year decided to set up Joint Study Group on Economic Co-operation. The first meeting of JSG was held in February this year at New Delhi. Indian exports to Pakistan included iron ore, dyes and chemicals, drugs and pharmaceuticals and plastic and linoleum products among others.

Fruits and nut, cotton yarn and fabrics, pulses, spices, man-made filament and leather were the top products imported from Pakistan, the release added.
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ICRA: VAT design suffers from major flaws
New Delhi: Credit rating agency ICRA has said that the design of the value added tax system, already implemented by 21 states, suffers from major flaws, with services being excluded from its purview and rates not being uniform across all items in the various States.

"A grievous shortcoming of the base (of VAT) is non-inclusion of services," ICRA said in an article in its latest bulletin on money and finance.

Whether the base of state VATs can be integrated fully with the tax on services eventually is not clear, the credit rating agency said.

Though VAT was expected to be fairly comprehensive, the number of commodities exempted from VAT in various states is not that small due to pressure from various quarters. Even after the new State VAT laws were made operative, the States are not strictly adhering to the VAT lists.

In several states, many items have been brought down from 12.5 per cent to four per cent and in the case of several commodities from four per cent to zero per cent, ICRA said adding the process of shifting the items from higher to lower rates is continuing.

The result of all this has been wide variation in rates and the purpose of fixing a floor rate at 12. 5 per cent for most commodities is getting undermined, it said. While paddy, rice, wheat and pulses are taxed at four per cent in Andhra Pradesh, they are exempted in West Bengal, Maharashtra and Delhi; it cited an example to prove its point.

Pointing out the flaws in the VAT design, ICRA said general VAT rate of 12.5 per cent is unduly high, classification of goods, in many instances, arbitrary and inclusion of capital goods and industrial inputs under 4 per cent rate goes against international practice.

ICRA said removal of glaring flaws in VAT will call for creating an authority that can enforce the decisions arrived at by the states through the empowered committee.
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