Govt expects $10bn FDI from fab units
New Delhi: The government today announced a capital subsidy of up to 25% to attract investments from global majors like Intel for setting up semiconductor fabrication and other high-end items manufacturing units.

The cabinet had earlier approved the policy, which will be operational till 2010. The subsidy will be in the form of tax breaks and interest-free loans.

Announcing the policy, IT Minister Dayanidhi Maran said the country can safely expect over $10 billion of FDI. "A typical fab requires a minimum three billion dollars investment. Our country has the eco system to take 2-3 such fabs," he said.

For semiconductor companies willing to avail the incentives, which will be 20% of the capital expenditure during the first 10 years, they have to invest a minimum Rs2,500 crore. Such companies will have to be set up in Special Economic Zones to avail this benefit.

The threshold investment limit for manufacturing other products like storage devices, micro and nano technology products, assembly and testing of all these products and organic light emitting diodes is Rs1,000 crore.

If the unit is located outside SEZ, the incentive would be 25% of the capital subsidy in the first 10 years, and countervailing duty on capital goods would be exempted.

Lack of a policy led world's largest chip maker Intel to turn its back on India and go to Israel for setting up a fab. India got its first proposal to start such a fab from a group, including Advanced Micro Devices and SemiIndia, for an investment consideration of $3 billion in 2005.
Back to News Review index page  

No nationwide searches by IT dept, says govt
New Delhi: The government today denied reports that nationwide searches are being conducted by the Income Tax Department on stock brokers and other market intermediaries.

"There is no truth in such reports. There are no nationwide searches being conducted by the Income Tax Department. No searches are being conducted on stock brokers and other stock market intermediaries as erroneously reported in the media," an official release issued by the ministry of finance said.

Income tax authorities, however, carried out searches on some real estate developers, doctors, interior decorators, IT firms and a flour mill spread across major cities in the country.

Central Board of Direct Taxes spokesperson A K Sinha denied that any nationwide searches were carried out on stock brokers and other stock market intermediaries. "There is no truth in such reports," Sinha said.

Sinha said local-level searches were carried out in Mumbai on some doctors, diagnostic centres and interior designers. Tax authorities also raided some real estate developers in Pune and some consequential searches were conducted at Chennai and Kolhapur.

Similarly, searches were carried out at a flour mill in Delhi and some IT firms in Kochin, Sinha said.

The authorities, last month, recovered Rs125 crore from a single real estate developer in a tax evasion case in Mumbai.
Back to News Review index page  

Govt to phase out central sales tax
New Delhi: The Union Cabinet has approved reduction of central sales tax (CST) to 3 per cent from 4 per cent from April 2007 and said it will phase it out completely in the next few years, Information and Broadcasting Minister Priyaranjan Dasmunsi said.
A Bill to amend taxation laws along with other key economic Bills would be introduced in the budget session that starts on Friday.
Analysts said this marks the beginning of the process of a very significant tax reforms measure, critical for the success of value-added tax and for introduction of GST in future.

Dasmunshi said India has also worked out a financial package to compensate states for the phase out of central sales tax, levied by the federal government but the receipts of which are passed on to states.
Back to News Review index page  

India, US, EU should be flexible in trade talks: WTO
New York: World Trade Organisation director general Pascal Lamy has said India, the US and European Union have to show flexibility for any progress in the Doha Round of global trade talks.

Lamy said in an interview published in the Wall Street Journal that the US needs to agree to reduce agricultural subsidies, the EU must reduce agricultural tariffs, and India must agree to reduce agricultural and industrial tariffs, he said.

He added that a 'formal conclusion' to a successful Doha round could occur within eight months of a breakthrough in the negotiating positions of the US, EU and India.

Lamy said he would not call a WTO Ministerial meeting to finalise a possible Doha round agreement until he was confident that it won't risk 'a breakdown with a lot of acrimony'.

But such a breakthrough is needed before the July 1 expiry of the US Trade Promotion Authority (TPA), Lamy said.
Back to News Review index page