Financial Daily from THE HINDU group of publications
Friday, Apr 18, 2003
Industry & Economy
Prospects bright for business in Iraq: Assocham
HYDERABAD, April 17
THE President of Assocham, Mr R.K. Somany, has said that Indian companies can play a meaningful role in the reconstruction of the war-ravaged Iraq and a delegation would soon head to Baghdad to explore business potential there.
Speaking at the Federation of Andhra Pradesh Chamber of Commerce and Industries (FAPCCI), where he chaired a management committee meeting on Thursday, Mr Somany, said under the auspices of the Chamber's International Trade Committee, the Assocham was considering sending a business delegation to Iraq soon.
It is estimated that the reconstruction would involve a total investment of about $100 billion. With established credentials of Indian enterprises in various fields, the country could play a role in infrastructure, telecom and related spheres, which would be a mammoth task, he said.
He expressed concern about the level of inflation, which has touched six per cent last week. He said a further increase of inflation to about 10 per cent might not auger well for the country as this would have a cascading affect on a whole lot of issues including the possibility of hardening of interest rates.
The prolonged drought, which has impacted the agricultural production, and the Iraq war, which has resulted in hardening of oil prices, together contributed to about 75 per cent of the overall inflation. But the nagging question is how long this will last, he questioned given the prediction of a relatively poor monsoon for the next season. As such the agricultural segment of the inflation is expected to persist till about October 2003 and the oil price-led inflation could be trimmed if the Government reduced the price of petroleum products further.
He said that while the Budget proposals were good, there were a few areas that needed to be addressed by the Finance Minister. For instance, the issue concerning the definition of a manufacturing company had left many unhappy. By broadening the scope of manufacturing segment, the Finance Ministry has complicated the business concerns further.
The over stretched concept of deemed to be manufactured covering labelling, re-labelling, packaging or re-packaging of unit containers must be considered under the head deemed manufacture, would create problems and needed a reconsideration, he said.
In the area of service tax, the welcome feature was the extension of service tax credit across different services, but the increase in the rate from five per cent to eight per cent was not warranted. The withdrawal of service tax exemption on payment of foreign exchange was a retrograde step and would adversely affect exports, he said.
The Finance Bill that seeks to withdraw duty exemption with retrospective effect violated the sanctity of Government assurance and created a crisis of confidence. This should be seen in the backdrop of similar duty concessions being given to units in the specified backward areas in more States. At best, it could be prospective, not retrospective, he felt.
In a statement, he also said that the chamber had recommended to the Government the immediate establishment of a national Biotechnology Development Fund with an outlay of $1billion, and creation of an autonomous management structure to develop this infrastructure and institutionalisation of a biotechnology regulatory commission as the single window mechanism for biotechnology policy and regulation.
Further, he suggested starting of new national institutions of biotechnology on the lines of Indian Institute of Information Technology or IITs. Alternatively, Mr Somany said re-engineering selected national laboratories could be upgraded to Indian institutes of biotechnology where industrial research and academic work go hand in hand.
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