14.04.2007

• Plugging loopholes in excise duty collections
• Big companies usually float small companies for exclusive contract manufacturing services and escape excise duty.
• An SMC (Small and Medium Company) is an unlisted company with less than Rs. 50 crore turnover a year. It should not be a holding or a subsidiary company of a non-SMC.
• At present there is an exemption given to SMCs from disclosing their transactions with related parties.
• The government, sensing that big companies are resorting to evasion of excise duty – either by floating SMCs or by entering into exclusive product supply contracts – has decided to withdraw the exemption given to SMCs from disclosing their transactions with related parties from this fiscal onwards.
• Transfer pricing
• We covered a bit about transfer pricing sometime back on Discover It blog. Look at it here. Today we note a bit more about it.
• Transfer pricing refers to the price charged by one group company to an associated enterprise for an international transaction relating to supply of goods, services and property. Since transfer prices can be used to shift profits out of the country and hence avoid taxes, revenue authorities in various jurisdictions have a regulation in place to check such violations.
• India introduced transfer pricing legislation in 2001 and there have not been any major changes since then. However, with the surge in the number of cross-border flow of goods, services and funds, transfer pricing disputes have become a significant concern for MNEs (Multi National Enterprises).
• The transfer pricing law in India says that income accruing from international transactions should be at arms’ length price. Currently, Indian regulations outline five methods to compute the arms’ length price and the expert group is looking at the feasibility of adding more to this list.
• Disease resistant rice varieties developed
• Hyderabad based Directorate of Rice Research (DRR) along with CCMB (Center for Cellular and Molecular Biology) has developed a new version of ‘Samba Mahsuri’ variety of rice, which is resistant to bacterial leaf blight.
• The IARI (Indian Agricultural Research Institute) has come out with Pusa Basmati -1 variety.
• Research scientists at these institutes have shown that three genes – xa5, xa13 and xa21 – can impart resistance in rice varieties against the dreaded disease. They clarified that these genes are imparted to them through molecular markers and that it is not any genetic modification.
• Babus and managers
• Read today’s editorial in ET. It championed a cause that is close to my heart. Lateral entry into the higher echelons of the civil services. I am strongly of the opinion that the top posts in the civil services – a portion of them, if not all -- should be reserved for lateral entry from private sector and otherwise. Similarly the civil servants also should be allowed to work in private sector for some time and come back to the government service. This will give them a new perspective, which otherwise is very hard for them to get and sensitize them to the issues faced by private sector. Private sector is as important as public sector in taking the country forward. With the perspective gained by them from their stint in the private sector, the senior civil servants will be better equipped to handle with policy issues than what they are at present.
• Read the editorial here.
• Why do reform measures fail? Look at some sane advice coming from Pradeep Mehta
• Weak communication and a lack of public understanding and consensus about reforms have been the key impediments to successful economic reforms in many countries. Major reform failures have resulted from closing eyes to the political, social and cultural context within which the reforms take place and not from a failure to put in place the right policy environment.