Malaysian budget carrier, AirAsias joint venture with the Tatas and Telstra group for a domestic airline

moved another step closer to take-off following approval from the government on Tuesday. AirAsias proposal, cleared by the Foreign Investment Promotion Board (FIPB) on March 6, Following the opening up of the aviation sector to foreign direct investment (FDI) last September , AirAsia had formed a joint venture with Tata Sons and Arun Bhatia of Telestra Tradeplace to launch a new airline in India. AirAsia Group CEO Tony Fernandes had recently said the new airline would be based out of Chennai and, in the initial phase, would concentrate on destinations in South India and would also focus on providing connectivity to small towns. The airline needs to get a no-objection certificate from the Aviation Ministry and thereafter an air transport license from the DGCA (Directorate General of Civil Aviation) to be declared a scheduled airline.

Bank
United Bank of India (UBI), which has recently eased loans for the MSME (micro, small and medium enterprises) sector, has now signed a memorandum of understanding with the Small Industries Development Bank of India (SIDBI) to ensure smooth credit flow to the MSME sector under the programme Collaboration for facilitating Enterprise Loans (COFEL).

According to a Finance Ministry statement here, the approvals, based on the recommendations of the Foreign Investment Promotion Board (FIPB) headed by Economic Affairs Secretary Arvind Mayaram, include clearance to Malaysia-based AirAsia Investment Limiteds proposal to bring in FDI worth Rs.80.98 crore to set up a joint venture company for undertaking the business of operation of scheduled passenger airlines. At its meeting on March 6, the FIPB also approved SIDBI Social Venture Trusts proposal to allot Class A units of the Fund envisaging a foreign exchange inflow worth Rs.285 crore. However, out of the six approvals, the biggest clearance in terms of capital inflow pertained to Hyderabad-based Navayuga Road Projects Pvt. Ltd., which proposed to act as an investing company and make downstream investments worth Rs.357.60 crore in its Special Purpose Companies. Hyderabad-based AET Laboratories Pvt. Ltd. also received the go-ahead for infusing additional foreign equity worth Rs.5.34 crore in a pharmaceutical company while Bangalore-based Bharat Electronics Limited (BEL) has been permitted to set up a joint venture entailing foreign investment worth Rs.2.5 crore to carry out the business of design, development, marketing, supply and support of civilian and select defence radars for Indian and global markets. The FIPB also rejected one proposal and deferred its decision on seven others. Keywords: Foreign Investment Promotion Board, Finance Ministry, AirAsia Investment Ltd, SIDBI Social Venture Trust, FIPB

RBI The Reserve Bank of India (RBI), on Tuesday, reduced the indicative policy rate (repo rate) by 25 basis points from 7.75 to 7.50 per cent. Repo rate is the rate at which banks borrow short-term funds from the central bank. The foremost challenge for returning the economy to a high growth trajectory is to revive investment. A competitive interest rate is necessary for this, but not sufficient, the RBI said in its mid-quarter review of monetary policy. Sufficiency conditions, according to the central bank, include bridging supply constraints, staying the course on fiscal consolidation, both in terms of quantity and quality, and improving governance. Indias GDP growth in the third quarter of the current financial year, at 4.5 per cent, was the weakest it has been in the last 15 quarters. What is worrisome is that the services sector growth, hitherto the mainstay of overall growth, has also decelerated to its slowest pace in a decade, the RBI said. The RBI also said that inflationary pressures and the widening current account deficit (CAD) remained a threat to the economy. Even as the policy stance emphasises addressing growth risks, the headroom for further monetary easing remains quite limited, it said. Elevated food prices. have adverse implications for inflation expectations. Risks on account of the CAD remain significant notwithstanding likely improvement in the fourth quarter over an expected sharp deterioration in the third quarter of 2012-13,the RBI added. This time, the RBI did not cut the cash reserve ratio (CRR), the portion of the deposits that banks are required to keep with the RBI, which remains at 4 per cent. The RBI will, however, continue to actively manage liquidity through various instruments, including open market operations (OMO), so as to ensure adequate flow of credit to the productive sectors of the economy. Guidance Notwithstanding moderation in non-food manufactured products inflation, the apex bank expected the headline inflation to be range-bound around current levels over 2013-14. The RBI felt so in view of sectoral demand-supply imbalances, the ongoing corrections in administered prices and their second-round effects. In addition, elevated food prices, including pressures stemming from MSP increases, and the wedge between wholesale and retail inflation have adverse implications for inflation expectations, it added. Minimum support price

From an inflation perspective, upward revisions in minimum support prices should warrant caution in view of their implications for overall inflation. The Government, it said, had a critical role to play by remaining committed to fiscal consolidation, easing the supply bottlenecks, and improving governance surrounding project implementation. Even as RBI on Tuesday cut the repo rate to spur growth and revive investment, it sounded a note of caution on further easing of rates on account of high food inflation and current account deficit. Society of Indian Automobile Manufacturers (SIAM

Foreign lender Royal Bank of Scotland (RBS), too, reduced its base rate by 0.75 percentage points to 9 per cent
Bankers, on Tuesday, promised to reduce their lending rates soon after the Reserve Bank of India (RBI) cut repo rate and Cash Reserve Ratio (CRR). IDBI Bank was the first to take the cue and slash the rate. IDBI Banks loans, linked to Base Rate / Prime Lending Rate, will become cheaper following a 25 basis point reduction in its Base Rate to 10.25 per cent with effect from February 1, 2013. IDBI Bank has taken this pro-active step, keeping in view the policy measures announced by the RBI in its third quarter review of Monetary Policy on Tuesday, said IDBI Bank in a release. Foreign lender Royal Bank of Scotland (RBS), too, reduced its base rate by 0.75 percentage points to 9 per cent. Todays move by the RBI to cut repo and CRR by 25 basis points is in sync with our expectations, it said. The rate cut would be helpful in improving investment climate and start the capex cycle. SBI would do full monetary policy transmission and reduce cost of capital, said Pratip Chaudhuri, Chairman, State Bank of India. Stating that there was room for monetary transmission, he said, The overall cost of funds gets lowered by Rs.300 crore following the CRR cut which we will pass on to our borrowers without compromising on the net interest margin (NIM). But how and in which pocket will it be, would be decided soon. Our ALCO (risk management committee in banks) will be meeting tomorrow [Wednesday] to finalise the details, Mr. Chaudhuri told reporters. Given that there has been a cut in both the CRR and repo rates, there will definitely be monetary transmission. There will not really be any pressure on the margins and will remain within the range, said Aditya Puri, Managing Director, HDFC Bank. Both the CRR and repo cut will definitely reduce our costs by about Rs.70 crore. So even if we reduce the rates, it will be on the incremental and not on existing portfolios in large cases, Mr. Puri added. There is a case for transmission this time, though policy rate in itself does not directly benefit the banks but the repo rate cut coupled with a CRR cut will help banks improve the earnings and banks might attempt at transmitting this benefit to the customers, said K. R. Kamath, Chairman of India Banks Association.

Talks are under way to set up a Liquefied Natural Gas (LNG) power project at Cheemeni in the district to generate 2,000 MW to 2,500 MW, Electricity Minister Aryadan Mohammed has said. The Kerala State Electricity Board (KSEB) was passing through a grave crisis due to difference in the rates of power purchased and the power consumed. MONEY LAUNDERING The footage taken in Operation Red Spider purportedly shows a number of senior executives of the three banks verbally agreeing to take huge amounts of cash from the undercover reporter and putting them into a variety of long-term investment plans so that the black money ultimately is converted into white

India to host 4th Clean Energy Ministerial meeting in April

The CEM initiatives help reduce emissions, improve energy security, provide energy access, and sustain economic growth. Prime Minister Manmohan Singh will inaugurate the 4th Clean Energy Ministerial (CEM) meeting on April 17 which among other things would assess the steps being undertaken by various countries to pursue green initiatives. Energy ministers from 23 countries, including US Energy Secretary Steven Chu, will come together in the national capital from April 16 to 18 to review the progress of clean energy initiatives, an official statement said. Besides the ministerial meeting, the event will also host the Clean Energy Innovation Showcase, panel discussion on participation of woman in Clean Energy, Awards for the Super Efficient Appliances etc. The first Clean Energy Ministerial (CEM1) was hosted by US Secretary of Energy Steven Chu in Washington, DC, in July 2010. The United Arab Emirates hosted the second Clean Energy Ministerial (CEM2) in Abu Dhabi in April 2011. The United Kingdom hosted the third Clean Energy Ministerial (CEM3) in London in April 2012.

Bobby Pawar quits JWT over Ford ad row

A top executive of JWT India has stepped down from the advertising agency after a campaign it had created for carmaker Ford sparked controversy last week. The advertisements, which were leaked last week on the Ads of the World website, depicted a number of gagged and handcuffed women in the trunk of the Ford Figo along with various celebrities, alluding to the spacious nature of the small cars boot. As a leader, this incident happened on my watch. I have to take moral responsibility for it, said Bobby Pawar, Chief Creative Officer and Managing Partner, JWT India, who had joined the company over 15 months ago. The campaign, which was never officially aired, created a furore for its offensive and sexual nature. After a thorough internal review, we have taken appropriate disciplinary action with those involved, which included the exit of employees at JWT. These were necessary steps owing to the direct accountability of the concerned individuals as we work to ensure that both the right oversight and processes are strictly enforced so ttate-run Bharat Heavy Electricals Ltd. (BHEL), on Thursday, said it had decided to exit Udangudi Power Corporation by selling the entire stake to joint venture partner Tamil Nadu Generation and Distribution Corporation (TANGEDCO). The company did not share the financial details. The 1,600-MW Udangudi power plant is expected to cost around Rs.9,083 crore. In a filing to the Bombay Stock Exchange, BHEL said the exit from the joint venture was after request from TANGEDCO to undertake the Udangudi project as a State Government initiative. The joint venture was to develop the Udangudi power project. It was set up as a joint venture between power equipment major BHEL and Tamil Nadu Electricity Board in November, 2008. Following its restructuring in 2010, Tamil Nadu Electricity Board's stake in the joint venture was transferred to TANGEDCO. hat this never happens again, JWT said in a statement.

titan Industries, on Thursday, said one of its promoter firms, Tata Sons, had acquired an additional 4.37 per cent stake in the company from another

Committee on FDI, FII definition to meet on April 4

A four-member committee headed by Department Economic Affairs (DEA) Secretary, Arvind Mayaram, for giving clear definitions to FDI and FII with an aim to remove ambiguity over the two types of foreign investments, is slated to hold its meeting next week. The meeting of committee is scheduled for April 4. The committee will take about two-and-a half months to come out with the report, a senior finance ministry official said. The DIPP Secretary, an RBI Deputy Governor and a SEBI whole-time member are the other members of the committee. Mr. Mayaram had earlier said that there is a lot of confusion in mind of foreign investors because of distinction between FDI and FII. Mr. Mayaram, however, had said, the panel would look at definition of FDI and FII and not the foreign investment caps in different sectors. We are looking at definition not cap. How do you define FDI, how do define portfolio investment... The committee will come up with the definition, he had told PTI. At present, if an investor has a stake of 10 per cent or less in a company, the investment is treated as foreign institutional investment (FII). If an investor has a stake of more than 10 per cent, it is treated as foreign direct investment (FDI). The Finance Minister P. Chidambaram in his Budget speech had proposed to follow the international practice with regard to defining FDI and FII. The committee would be constituted to examine the application of the principle and to work out the details expeditiously, he had said.

CAD to show improvement in fourth quarter: Rangarajan

Having hit a record 6.7 per cent of GDP in December quarter, Indias current account deficit is expected to show some improvement in the last quarter of this fiscal on account of likely uptick in exports, Prime Ministers Economic Advisory Council Chairman C. Rangarajan said on Friday. The current financial year, he hoped, would end with a CAD of little over 5 per cent. The CAD (in December quarter) was higher than expected... But I believe CAD will come down during the fourth quarter (January-March). For the year as a whole, I expect CAD to be a little higher than 5 per cent, Mr. Rangarajan told PTI. CAD widened to a historic high of 6.7 per cent of GDP in December quarter to $32 billion on account of surge in oil and gold imports, besides weak exports. It was at $20 billion (4.4 per cent of GDP) in the corresponding quarter of last fiscal. CAD is the difference between inflow and outflow of foreign funds. Even at over 5 per cent, the CAD would be nearly double the mark of 3 per cent during 1991 the year when India faced the foreign exchange crisis. Ratings agency Crisils chief economist D.K. Joshi said the higher CAD could weaken the rupee. However, it is expected to come down as a whole, he said. The higher CAD increases vulnerability and dependence on foreign inflows. It causes lots of currency volatility which can weaken the rupee. Going ahead, we believe it will come down, Mr. Joshi said. On whether the current balance of payment (BoP) problem could be equated with the situation faced during 1991, he added, that was a different problem. Crisil in a note said governments effort to revive the economy should be able to cover the widening CAD in the next fiscal. We believe that if the domestic reform momentum continues, India should be able to attract sufficient inflows to cover its CAD in the next fiscal, Crisil said. However, rupee can depreciate sharply if capital flows dry up. If there are any signs of a global economic drought, capital flows can dry up suddenly resulting in a temporary, but a sharp depreciation of the rupee, it added further.

CAD to show improvement in fourth quarter: Rangarajan

Having hit a record 6.7 per cent of GDP in December quarter, Indias current account deficit is expected to show some improvement in the last quarter of this fiscal on account of likely uptick in exports, Prime Ministers Economic Advisory Council Chairman C. Rangarajan said on Friday. The current financial year, he hoped, would end with a CAD of little over 5 per cent. The CAD (in December quarter) was higher than expected... But I believe CAD will come down during the fourth quarter (January-March). For the year as a whole, I expect CAD to be a little higher than 5 per cent, Mr. Rangarajan told PTI. CAD widened to a historic high of 6.7 per cent of GDP in December quarter to $32 billion on account of surge in oil and gold imports, besides weak exports. It was at $20 billion (4.4 per cent of GDP) in the corresponding quarter of last fiscal. CAD is the difference between inflow and outflow of foreign funds. Even at over 5 per cent, the CAD would be nearly double the mark of 3 per cent during 1991 the year when India faced the foreign exchange crisis. Ratings agency Crisils chief economist D.K. Joshi said the higher CAD could weaken the rupee. However, it is expected to come down as a whole, he said. The higher CAD increases vulnerability and dependence on foreign inflows. It causes lots of currency volatility which can weaken the rupee. Going ahead, we believe it will come down, Mr. Joshi said. On whether the current balance of payment (BoP) problem could be equated with the situation faced during 1991, he added, that was a different problem. Crisil in a note said governments effort to revive the economy should be able to cover the widening CAD in the next fiscal. We believe that if the domestic reform momentum continues, India should be able to attract sufficient inflows to cover its CAD in the next fiscal, Crisil said. However, rupee can depreciate sharply if capital flows dry up. If there are any signs of a global economic drought, capital flows can dry up suddenly resulting in a temporary, but a sharp depreciation of the rupee, it added further.