ECB boost for India, world markets

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http://bsmedia.business-standard.com/_media/bs/img/article/2015-08/20/full/1440058499-7556.jpgThe Indian markets on Friday climbed to a two-month high after a rally in global equity markets in the wake of the European Central Bank (ECB) hinting at fresh stimulus measures. Most Asian markets ended up a little over one per cent, while Europe gained around two per cent.

The BSE exchange’s benchmark Sensex rose 183 points or 0.7 per cent to 27,470.8, the highest since August 20. This was its fourth straight weekly advance. The National Stock Exchange’s Nifty rose 0.5 per cent or 43.75 points to 8,295.45.

Experts said the markets could continue the upward trajectory as the Chinese central bank cut interest rates and the reserve ratio to give a boost to its economy. The announcement by People’s Bank of China, after the close of Indian markets, further buoyed the European and US futures markets.

“Both the ECB and China stimulus announcements are positive for the market, at least in the short term,” said U R Bhat, managing director, Dalton Capital Advisors. “However, these are artificial doses and when the central banks withdraw the stimulus there could be a lot of pain.”

The latest round of monetary easing, the sixth since November last year, comes as China’s growth rate for the September quarter dipped below seven per cent for the first time since the 2008 global financial crisis.

“The move by China might have a positive impact on the market in the near term. But, it indicates the extent of problem in the Chinese economy. On the margin, it is negative. One cannot rule out an increase in volatility, going ahead,” said Tirthankar Patnaik, India strategist, Mizuho Bank.

The stimulus packages by central banks in China and Europe might support stocks in the immediate term but the market remains vulnerable to correction, following the sharp gains made over recent weeks, say experts.

So far in October, the Sensex has gained five per cent, on the back of foreign flows of nearly $900 million. The index had declined nearly six per cent and one per cent in August and September, respectively.

“The next sets of (companies’) results are expected to be weak. The market could react negatively if there is earnings disappointment,” said Bhat.

ITC, which gained 2.8 per cent, was the best performing Sensex stock on Friday. Other major gainers were Axis Bank and GAIL. Bharti Airtel fell 3.4 per cent, the most among Sensex companies. Vedanta, Larsen & Toubro and Maruti Suzuki fell a little over two per cent each.

Foreign investors net-bought shares worth Rs 230 crore, while domestic institutions were net sellers by Rs 156 crore on Friday, provisional data showed.

The Indian markets on Friday climbed to a two-month high after a rally in global equity markets in the wake of the European Central Bank (ECB) hinting at fresh stimulus measures. Most Asian markets ended up a little over one per cent, while Europe gained around two per cent.

The BSE exchange’s benchmark Sensex rose 183 points or 0.7 per cent to 27,470.8, the highest since August 20. This was its fourth straight weekly advance. The National Stock Exchange’s Nifty rose 0.5 per cent or 43.75 points to 8,295.45.

Experts said the markets could continue the upward trajectory as the Chinese central bank cut interest rates and the reserve ratio to give a boost to its economy. The announcement by People’s Bank of China, after the close of Indian markets, further buoyed the European and US futures markets.

“Both the ECB and China stimulus announcements are positive for the market, at least in the short term,” said U R Bhat, managing director, Dalton Capital Advisors. “However, these are artificial doses and when the central banks withdraw the stimulus there could be a lot of pain.”

The latest round of monetary easing, the sixth since November last year, comes as China’s growth rate for the September quarter dipped below seven per cent for the first time since the 2008 global financial crisis.

“The move by China might have a positive impact on the market in the near term. But, it indicates the extent of problem in the Chinese economy. On the margin, it is negative. One cannot rule out an increase in volatility, going ahead,” said Tirthankar Patnaik, India strategist, Mizuho Bank.

The stimulus packages by central banks in China and Europe might support stocks in the immediate term but the market remains vulnerable to correction, following the sharp gains made over recent weeks, say experts.

So far in October, the Sensex has gained five per cent, on the back of foreign flows of nearly $900 million. The index had declined nearly six per cent and one per cent in August and September, respectively.

“The next sets of (companies’) results are expected to be weak. The market could react negatively if there is earnings disappointment,” said Bhat.

ITC, which gained 2.8 per cent, was the best performing Sensex stock on Friday. Other major gainers were Axis Bank and GAIL. Bharti Airtel fell 3.4 per cent, the most among Sensex companies. Vedanta, Larsen & Toubro and Maruti Suzuki fell a little over two per cent each.

Foreign investors net-bought shares worth Rs 230 crore, while domestic institutions were net sellers by Rs 156 crore on Friday, provisional data showed.

SEBI introduces uniform format of Listing Agreement for listed companies

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SEBI introduces uniform format of Listing Agreement for listed companies

Markets regulator SEBI today issued uniform listing agreement format incorporating the revised disclosure and regulatory requirements applicable for all listed entities.

The new listing regulations allow listed companies to seek shareholders’ approval for related party deals through ordinary resolutions.

Besides, SEBI’s provisions for listed entities have been aligned with those of the Companies Act, 2013.

CIRCULAR Note: The Securities and Exchange Board of India has issued a circular no. CIR/CFD/CMD/6/2015 dated 13th October, 2015 to provide a uniform format of the listing agreement for the listed companies. A listing agreement is the agreement which is required to be executed with the stock exchange where the securities of the company are listed.

CIRCULAR

CIR/CFD/CMD/6/2015                                                        October 13, 2015

To

All Listed Entities
All the Recognised Stock Exchanges

Dear Sir/Madam,

Sub: Format of uniform Listing Agreement

  1. The requirement of executing a listing agreement with the Stock Exchange is specified under different regulations related with initial issuance of capital, the details of which are as under:

Type of Securities, Regulation, Regulation No.

  1. Specified Securities (Equity & Convertible Securities on Main Board or SME or ITP) or Indian Depository Receipts, Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR”), Regulation 109
  2. Non-Convertible Debt Securities Securities, and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (“ILDS”), Regulation 19A
  3. Non-Convertible Redeemable Preference Shares, Securities and Exchange Board of India(Issue and Listing of NonConvertible Redeemable Preference Shares) Regulations, 2013 (“NCRPS”), Regulation 16A
  4. Securitised Debt Instruments, Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 (“SDI”), Regulation 35A
  5. Mutual Funds, Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 (“MF”), Regulation 31B
  1. In order to give effect to the requirements of Regulations mentioned at para 1 above, a simplified listing agreement which is uniform across all types of securities/listed entities is being specified under Annexure I.
  2. A listed entity which has previously entered into agreement(s) with a recognised Stock Exchange(s) to list its securities shall execute a fresh listing agreement with such Stock Exchange within six months of the date of notification of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) i.e. September 2, 2015.

Notwithstanding such novation, any action taken or purported to have been done or taken by the Stock Exchanges or SEBI, any enquiry or investigation commenced or showcause notice issued in respect of the existing listing agreement shall be deemed to have been done or taken under the corresponding provisions of the Listing Regulations in force.

  1. This circular is issued in exercise of the powers conferred under sections 11(1) and 11A of the Securities and Exchange Board of India Act 1992.
  2. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and “Issues and listing”, “Mutual Funds”, “Corporate Debt Market” “Continuous Disclosure Requirements”.

Yours faithfully,

Harini Balaji
General Manager
+91-22-26449372
harinib@sebi.gov.in

India, Singapore to sign strategic partnership pact during PM’s visit

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Taking their bilateral ties to the next level, India and Singapore are expected to sign a strategic partnership pact during prime minister Narendra Modi’s visit to that country from November 23 to 25.

The broad contours of the agreement were also discussed during the fourth India-Singapore joint ministerial committee meeting held here on Tuesday. It was co-chaired by external affairs minister Sushma Swaraj and her Singaporean counterpart Vivian Balakrishnan.

The strategic partnership agreement would comprise expansion of cooperation in five main areas: Scaling up investment and trade; speeding up air and maritime connectivity; smart city development and urban rejuvenation; skills development and capacity building, and state focus on strengthening business and cultural links, according to a press release issued by the Singapore High Commission.

“The strategic partnership will come with deliverables and concrete outcomes, with focus on urban solutions, smart cities and knowledge and skill transfer,” Balakrishnan told reporters after the meeting.

Balakrishnan also highlighted the need to enhance connectivity between India and Singapore, particularly in the aviation sector.

He also highlighted Singapore’s contributions to India in the areas of smart cities and skills development.

“Both ministers agreed on the need to enhance economic cooperation, including expanding trade and investment between both countries,” the release stated.

This will be Modi’s second visit to Singapore as India’s prime minister. He last went there in September to attend the funeral of Singapore’s founding father Lee Kuan Yew.

Singapore is planning for a similar reception Modi had received in San Jose in US last month. He has also been chosen to deliver the prestigious “Singapore Lecture” during the visit.

Source: http://www.business-standard.com/article/economy-policy/india-singapore-to-sign-strategic-partnership-pact-during-pms-visit-115101300787_1.html

Start-up investments in India to see three-fold rise to $6.5 bn in 2015: Nasscom

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NASSCOM President R Chandrashekar (C), Chairman NASSCOM Product Council Ravi Gururaj (R) and Vice President NASSCOM 10K Strart-up Rajat Tandon releasing the second edition of the start-up report

India will witness about $6.5-billion (Rs 42,300 crore) funding in start-ups this year, as global investors look at investing in firms that build products and solutions for the local market, while using them for emerging markets in Asia, Africa and Latin America. India is the world’s third largest start-up hub.

Global private equity (PE) and venture capital (VC) firms spent $2.2 billion (Rs 14,300 crore) in 179 Indian start-ups in 2014. Till October, these firms doubled their investments to $4.9 billion (Rs 31,900 crore) and expect to increase them to $6.5 billion by the end of the year, according to industry body National Association of Software and Services Companies (Nasscom). Indian start-ups that received funding doubled to 400 in 2015, said a Nasscom report, released during the product conclave that began Tuesday. The report added investors had reaped returns in 2015, with exits touching $700 million.

India sees four start-ups emerge every day. Those who get funded get an average valuation of $2.7 million and nearly two thirds of them are concentrated in Bengaluru, Mumbai and the National Capital Region.

The number of start-ups in India is set to cross 4,200 by the end of 2015. About 1,200 technology start-ups were incepted in India this year, of which more than 50 per cent were in the e-commerce, consumer service and aggregator space. Unlike in the West, a majority of the Indian start-ups were focused on solving community problems using technology solutions in health care, education, social platforms, hyper local services and analytics. “Apart from positively impacting the lifestyles of citizens involved, start-ups are creating innovative technology solutions that are addressing the key social problems that India is facing and creating significant growth opportunities for stakeholders,” said R Chandrashekhar, president of Nasscom.  There are about 292 active angels and 156 active VC and PE players in the country.

The number of active investors has more than doubled from 220 in 2014 to 490 this year. Eight of the top-10 investing PE, VCs in India is foreign.

The number of accelerators and incubators has grown by 40 per cent over 2014 to touch 110. India has also emerged as the youngest start-up country with the average age of start-up founders at 28 years.

The second edition of 10,000 Start-ups Report has also accommodated a 10-point agenda for the government to cultivate the start-up culture of India,including definition of start-ups, taxing rules, regulations in terms of funding, online payments and branding.

Source: http://www.business-standard.com/article/companies/start-up-investments-in-india-to-see-three-fold-rise-to-6-5-bn-in-2015-nasscom-115101300983_1.html

Income Tax dept lowers pitch on tax demands on multinationals

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The income tax department will withdraw from a few hundreds of tax cases with multinational corporations pending in tribunals by the end of this fiscal.

This marks a significant softening of approach given its high-pitched income reassessments for MNCs in recent years, mainly by contesting the pricing of their cross-border transactions.

Sources said the department, which has advance pricing arrangements (APAs) with 16 MNCs and aims to sign 150 such deals on the broad principles for future valuation of inter-country transactions for tax purposes, is willing to extend the conciliatory approach to transactions in the past four years too. Once the mutually agreed principles in an APA are applied to past transactions, the department would not pursue tax demands made earlier.

Wherever the department is the appellant in tribunals, it will withdraw the appeals. The move, part of the government’s efforts to reduce tax litigation and boost investor confidence, is set to benefit several large corporations including technology companies like Microsoft and IBM.

Tax tussles

* I-T department has resolved 45 double taxation disputes so far with the US bilaterally
* India and 16 MNCs have agreed on pricing of cross-border transactions under APA scheme, target 150 for the year
* APAs to allow agreements on pricing of transactions in the past years as well
* On this basis, tax department will withdraw from many disputes pending before tribunals

In the case of related-party cross-border transactions of MNCs alone, alleged tax dues has touched Rs 2.7 lakh crore. Earlier the government had decided not to appeal to the Supreme Court decisions of the Bombay High Court that held companies like Shell and Vodafone were not liable to tax on the alleged undervaluation of certain share transactions among group companies.

So far India has signed 16 APAs in the business of telecommunication, oil exploration, pharmaceuticals, finance, banking and software development and expects another 140 or so to be completed by the end of the fiscal. An APA is an agreement between the tax authority and companies on the principles of valuation of certain transactions, which will exempt the company from rigorous tax audits on cross-border deals.

Many of the tax demands raised on MNCs on cross-border transactions in the last few years have led to disputes. Scores of cases are pending with the Income Tax Appellate Tribunal. The government wants to stop these disputes from escalating to the higher judiciary. The number of cases in which the tax department has received favourable orders from tribunals are not very encouraging.

Finance minister Arun Jaitley has promised that all legacy tax disputes would soon be resolved through administrative or judicial means.

While an APA between a company and the tax department will resolve a dispute in India, the possibility of double taxation would be fully addressed only when the tax authority in the company’s home country too becomes party to such agreement. The US, which is home to many technology firms facing tax disputes in India, has recently started steps to implement such “bilateral APAs”.

Source: http://www.financialexpress.com/article/economy/income-tax-dept-lowers-pitch-on-tax-demands-on-multinationals/148358/

Vodafone gets a reprieve in Rs. 8,500-cr transfer pricing case

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The Bombay High Court on Thursday gave a favourable ruling to Vodafone in the transfer pricing case related to the sale of the company’s call-centre business to Hutchison and assignment of call options to Vodafone International.

The tax dispute, which dates back to 2007-08, arose after the tax authorities added Rs. 8,500 crore to the taxable income of the call centre unit. It had initially received a tax claim of about Rs. 3,600 crore.

While the Income-Tax Appellate Tribunal had upheld the I-T department’s claim, the High Court has accepted Vodafone’s position that the Department had no jurisdiction.

The court was of the view that there is no transfer of the ‘call options’ and, hence, the transaction does not fall within the purview of transfer pricing.

The I-T Department can challenge this order in the Supreme Court.

“We will study the order of the Bombay High Court on the Vodafone transfer pricing issue and then take a call,” Revenue Secretary Hasmukh Adhia said.

The I-T Department had issued its draft transfer-pricing order in December 2011. In 2012, Vodafone India Services moved the High Court challenging the Department’s jurisdiction.

This is the second major victory for Vodafone in tax-related cases in India. In October, the Bombay High Court had ruled that Vodafone is not liable to pay Rs. 3,200 crore in taxes in a 2009-10 transfer pricing case.

However, a verdict is still awaited in the $2.5 billion capital gains tax case, where the Department had asked Vodafone to pay tax for acquiring Hutchison’s telecom operations in India.

(This article was published in the Business Line print edition dated October 9, 2015)
http://www.thehindubusinessline.com/todays-paper/vodafone-gets-a-reprieve-in-rs-8500cr-transfer-pricing-case/article7740178.ece