No to commodity broking proposal
New Delhi, Feb. 9The Government has rejected Switzerland-based Visa Minmetal's plan to undertake high sea sales through one of its wholly owned Indian subsidiaries and has also refused permission to undertake commodity broking.
Visa Minmetal is the promoter of Kolkata-based Visa Steel Ltd, which hit the capital market last year and is in the process of setting up an integrated steel plant in Orissa.
The group had planned that one of the group companies, Visa Comtrade Ltd, currently under Indian ownership, would be converted into a wholly owned subsidiary of the Swiss company, controlled by the same promoter family, and would import ferrous and non-ferrous metals, minerals, ores, concentrates, scrap, ferro alloys, coal, coke, pig iron, steel and all other types of industrial raw materials and products.
The company had sought permission from the Foreign Investment Promotion Board (FIPB) to undertake high sea sales in various commodities on grounds that since such sales transactions would be effected outside the Indian territory, they would not be subjected to any sales tax or VAT or other taxes as they would be outside the territory of the relevant taxation laws of India.
The company's plan was to transfer the title in respect of ownership documents for the goods carried in the ships outside the territorial waters of India, sources said. Permission had also been sought to undertake commodity brokerage, sources said.
On examination of the proposal, the FIPB observed that high sea sales is not a well defined trading activity for foreign direct investment, nor is FDI permitted in commodity brokerage. Consequently, it refused to grant permission. However, it has allowed conversion of Visa Comtrade into a wholly owned subsidiary of Visa Minmetal and undertake cash and carry wholesale trading, sources said.