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  HIGHLIGHTS
   
 

India celebrates 150 Year of "First war of Independence
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  Hub of engineering process outsourcing
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  Arunachal Pradesh: Mysterious Magical
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03. INVESTMENT UPDATE

INDIA POISED TO BECOME HUB OF ENGINEERING PROCESS OUTSOURCING

India is poised to become the hub of Engineering Process Outsourcing (EPO) with the size of the Indian EPO market expected to touch US $ 30 billion annually by year 2015, from the current size of a little over US $ 3 billion.  The estimated demand for engineering process outsourcing to India has grown at 30% to 35% from 2004-06.  The global EPO market is poised to grow to US $ 110 to 140 billion by 2015.     

This is indicated in the Strategy Paper on “Growth of Engineering Process Outsourcing from India” which was released by Shri Kamal Nath, Union Minister of Commerce & Industry, at the All India Awards presentation function of the Engineering Export Promotion Council (EEPC).  

Responding to some of the issues raised by Shri Shah in his speech, Shri Kamal Nath mentioned that the Duty Entitlement Pass Book (DEPB) had been extended till March 2008 and his Ministry was working to develop an alternative Duty Neutralisation Scheme that would replace the DEPB Scheme, which would lapse next year. He further pointed out that the Annual Supplement 2007 to the Foreign Trade Policy had addressed the issue of Service Tax component that gets factored into exports price.  

He urged the engineering exporters to use the Focus Market Scheme to their utmost advantage in promoting exports of Indian engineering products to these markets, as the potential growth for India’s engineering exports in focus markets especially the CIS was huge.  In this context, he mentioned that government had given export thrust to newer markets by expanding the list of Focus Market Scheme to include 16 new countries including the CIS and stressed that it was important to concentrate on developing markets in these countries.

PM COMMENDS RECORD FDI INFLOWS

Prime Minister Dr. Manmohan Singh, has in a letter written to Shri Kamal Nath, Union Minister of Commerce and Industry, complimented him for the record foreign direct investment (FDI) inflows in 2006-07.    Appreciating the record performance of bringing in US $ 19 billion FDI in 2006-07, the Prime Minister has commended the Minister and his team on their success in achieving this record performance.

Last year, the FDI equity inflows into India were US $ 5.5 billion and there has been 275% jump to US $ 16 billion during the year 2006-07.   Adding the quantum of retained earnings reinvested by the foreign investors in India in 2005-06, the gross FDI was US $ 7.7 billion while in 2006-07 it is put at US $ 19 billion.   Lauding his energy and dynamism, the Prime Minister has expressed the optimism that the Minister and the Department of Industrial Policy & Promotion (DIPP) would be able to cross the FDI target of US $ 30 billion during the current year.

FILING OF FORM 16 BY TAX PAYERS NOT REQUIRED FOR CLAIMING REFUNDS

News item has appeared in print and electronic media that individual taxpayers have to submit Form 16 – a certificate of tax deducted at source – along with income tax returns to obtain refunds.

It is hereby clarified that the Government has amended Rule 12 of the Income Tax Rules so as to notify the new income tax return forms for assessment Year 2007-08 with effect from 14th May 2007. These new return forms (other then new Form ITR-7 for charitable/religious trusts and institutions) are annexure-less. A taxpayer is not required to file any document relating to computation of income or challans or TDS certificates (Form 16 or form 16A) or TCS certificates alongwith these annexure-less returns, irrespective of whether a refund is claimed or not.

In view of the above position, the contents of the news item regarding the need to file Form 16 for claiming refund is baseless. The taxpayers are advised to strictly follow the instruction annexed with the new return forms and Rule 12 of the Income Tax Rules.

The new return forms along with the instruction and Rule 12 are available on the website http://incometaxindiaefiling.gov.in.

TOP INVESTING COUNTRIES

FDI equity inflow during the financial year 2006-07 at nearly US $ 16 billion (US $ 15.7 billion) has been 2.8 times more than the inflow (US$5.5 billion) received during the previous year.  This is the highest FDI equity inflow into the country during any financial year since the commencement of economic reforms. FDI equity inflow in the month of March 2007 was US$3.8 billion which is the highest inflow received so far in a single month.  

MAJOR SECTORS RECEIVING INFLOWS AND TOP INFLOWS

The five sectors which have attracted highest FDI into India during 2006-07 are Services, Electrical Equipments (including computer software & electronics), Construction Activities, Telecommunications and Real Estate. The Construction and Rear Estate Sectors have together received US$ 1.45 billion during the year 2006-07 which is about 12% compared to 3.4% of the total FDI inflows received during the year 2005-06. The Services sector has received 38% during the year 2006-07 compared to 10.5% in the previous year. The share of the Electrical Equipment sector has been 22% in the year 2006-07 compared to 26.1% in 2005-06 and the Telecommunication sector has received 4% in 2006-07 compared to 12.2% in 2005-06.



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