Showing posts with label India. Show all posts
Showing posts with label India. Show all posts

Tehelka : In pursuit of happiness

By: Geeta Rao on 1st May 2012

From biscuit makers to life insurance to mining companies, brands are determined to make fortunes by faking the language of happiness

IN A SIMPLER advertising world, less obfuscated by political correctness and social posturing, happiness was a cigar called Hamlet. The communication had an algebraic simplicity to it i.e., — x (life going awry) + y (lighting up a Hamlet)= happiness. The average reader may not have heard of this iconic British commercial but India’s advertising fraternity would certainly know of it.

Happiness, advertising’s biggest cliché has been used by every entity who gives us a chance to be happy with their products and services. Coca-Cola has been uncorking happiness for quite some time and a recent commercial shows us a delightful happiness factory, should we doubt for a moment that happiness were manufactured elsewhere.

Hyundai is happiness, claims the Korean auto maker.
Britannia is celebrating 25 years of happiness, thankfully limiting it to 25 years of its Good Day biscuit.

This is what we do in advertising. We are the great foragers — hunting and tracking human insights, values, cultural codes, trends, social mores, and popular culture and interweaving them with complex hierarchies of motivations and emotions to sell products and services and build brands. We co-opt the rhetoric of revolution, feminism, George Orwell and the teachings of Gandhi to create ads that sell.

But with this fabulous mother lode of information and research we don’t change society or bring revolution. As long as consumers recognise the transactional nature of adverting and communication, everyone is happy. Consumers are hardwired to cut out the hype. The grey areas are lobbying and PR, where the real motives of selling are often masked in editorial content or advertising that does not look like advertising, breaking that transparent buyer-seller relationship.

Vedanta has continued this happiness trajectory in a campaign (now off air) ‘a cross between PR and advertising’ that tells us how young children and families in villages are finding happiness thanks to Vedanta’s initiatives. Five hundred and fifty villages was the number being talked about.

In my opinion, taking any nation-building mantle in communication should be left to God and governments — not to corporations. Even the Bhutanese government with its happiness index has to turn a blind eye (or at least not mention it in advertising) to the disturbing number of country liquor shops that dot every village in the denizen’s pursuit of happiness. In actual fact, National Rural Employment Guarantee Act (NREGA), a government of India initiative, may have brought more happiness into the lives of little girls like Binno and their families than Vedanta.

Like many readers, I have followed Arundathi Roy’s strong writing on the mining cartels in Odisha in a magazine and Amnesty’s reportage from there and it is difficult to be unaware of Vedanta’s involvement in the development vs displacement issues that dog the government. And there are environmentalists’ reports on red oxide effluents contaminating the areas where tribals live, but I will stick to the communication. As Vedanta discovered, happiness as a platform can be counterproductive if one does not treat the environment (pun unintended) correctly. In this case the social and political one.

Their advertising has drawn considerable flak from activists, but their strategy is what needs close examination. How did Vedanta assume that by speaking of sustainable integrated communities and happy little girls (Binno being one of them) in Rajasthan, they could turn attention away from tribal communities in Odisha? These little Binnos are not human carbon credits — the more Binnos they talked about the more likely they were to draw activists’ attention to what they were not talking about.


Vedanta has continued this happiness trajectory in a campaign (now off air ) a cross between PR and advertising that tells us how young children and families in villages are finding happiness thanks to the company.

Britannia is celebrating 25 years of happiness, thankfully limiting it to 25 years of its Good Day biscuit’s existence.

Hyundai is happiness personified, claims the Korean auto maker.

In the time of social networks and consumer activism, which is growing more aggressive in India, how did Vedanta assume its rather obvious attempt at ‘green washing’ would work? In a post-Anna Hazare environment, it was either very naïve or very arrogant of Vedanta to assume no one would notice the disconnect!

On the other hand, the activists and liberals who launched a strong social media campaign against Vedanta’s communication took the softest targets to vent their ire on. To take on the advertising agency is equivalent to killing the messenger — the agency has no power and withdrawing ads will not change anything at the ground level. Asking filmmaker Shyam Benegal or actor Gul Panag to step down from committees sponsored by Vedanta seems a battle won, but it does not have any impact on the real issue.

If the cause is so strong, the activists need a much more powerful strategy to take on the government or the company directly. Often activist campaigns fizzle out because their strategies are not thought through and scattered while corporations focused on brand building are much more single minded.

Sometimes issues fizzle out. Nike was embroiled in a sweatshop controversy in Asia in the ’90s now long forgotten. Coke dealt with a groundwater depletion and contamination issue in India not so long ago. For many years Unilever was the focus of criticism from women’s groups and feminist groups for selling fairness creams — now fairness has become a mainstream grooming concern for men as well. It is likely that Vedanta and its red-oxide pond will be forgotten as other issues become more important.

But moving on, the question is what do you do if you are an advertising agency and you are asked to create corporate communication for a brand? Most agencies have clear-cut positions on political advertising and advertising for religious groups. Some may stretch it to liquor and tobacco products. Now, should we think about blood diamonds before we sign on a jewellery brand? Should we ask about fair trade practices before taking on a luxury clothing brand? Should we ask questions about shadow political investors before signing on a real estate business or look at track records in Mexico, China or other parts of Asia when multinationals come knocking on our door? Should we refuse the tender system for selecting agencies on big government projects?

It could open a Pandora’s Box — advertising agencies might end up becoming mini-investigative agencies. In the final analysis, they may succeed in creating greater happiness all around.

The author is an advertising and media professional, specialising in policy influences on consumer lifestyles. The views expressed are her own.

Business Standard : With ~40 k- cr tax at stake, Fin Min firm on I-T amendments

Published on 28th April 2012

Pressure from various quarters notwithstanding, the government is sticking to its guns on retrospective amendments to the Income Tax Act, as it eyes ~35,000-40,000 crore tax realization from deals similar to the $11-billion Vodafone Hutchison deal in 2007.

Finance ministry officials said if the government did not opt for the amendments, those who had paid tax in such deals would ask for refunds.

The merger and acquisition deals pending in courts include the $150-million Idea Cellular AT&T deal, the GE’s $500-mn deal with Genpact, the $981 million Mitusi - Vedanta Sesa Goa deal, the SAB Miler- Fosters deal and the $770-mn Sanofi Aventis- Shanta Boitech deal.

Though officials said other deals were also being investigated, they refused to divulge the details.
According to the Income Tax Department’s estimates, deals similar to the Vodafone Hutchison one would yield ~35,000-40,000 crore. Officials, however, said these were rough calculations.

In the $6-billion Cairn India deal between Cairn Plc and Vedanta, the parties concerned have already made an arrangement to pay capital gains tax to the government. In fact, London-based Cairn Plc has already paid more than $500 million to the Indian government.

In the recent Max New York Life deal, Japan’s MS&AD Insurance Group withheld tax while acquiring 26 per cent stake in the company for ~2,731 crore.

New York Life Insurance Company said the capital gains should not be subject to tax in India, as it held the shares in the life insurance joint venture with Max India through a holding company in Mauritius. However, it has allowed the Japanese company to withhold the tax as a precaution, and would file for a refund with the tax department later.

Meanwhile, officials claimed retrospective amendments would not impact foreign direct investment in India, as investors do not look at only taxes, but the overall economic environment.

Vodafone, however, does not agree. A source in Vodafone said even as tax rates may not be minutely assessed while investing, the certainty of tax laws and the policy environment what certainly looked at.

He also contested the finance ministry’s view that retrospective amendments to income tax laws were not being carried out in India alone, but in the UK as well In the Barclays deal, the UK government had amended a tax law in 2009 to clarify certain assistance given to companies in distress would not qualify as tax deductions. But when Barclays continued to avail of that exemption, UK authorities clarified the company would have to pay tax for these for the period when the tax laws were first clarified.

"It was not as if the law was amended with retrospective effect, as is being done in India. In no other country is it done after a court verdict and that too, with a retrospective effect. You cannot change the rule of the game in between," the source said.

At a meeting between Finance Minister Pranab Mukherjee and his UK counterpart George Osborne, Mukherjee had mentioned the UK’s move to amend its tax law a day before Mukherjee presented the Budget in Parliament. Osborne had told Mukherjee investors were anxious, as India proposed to amend the Income Tax Act retrospectively. VODAFONE- TYPE DEALS IN COURTS:

|Idea Cellular-AT&T’s $150-mn deal pending in Bombay HC |GE- Genpact $500-mn deal pending in Delhi HC | Mitsui- Vedanta $981-mn Sesa Goa deal pending in Goa HC |SAB Miller-Fosters 2006 deal pending in Bombay HC |Sanofi Aventis-Shantha Biotech $770-mn deal pending in Bombay HC.

Rediff : Foreign funds to NGOs: Why better scrutiny is needed

Published on Rediff 17th May 2011

The Foreign Contribution Regulation Act was passed in 1976. It seeks to regulate receipt of funds by non- governmental organizations (NGOs). It is managed by the Union ministry of home affairs.

Any organization that wants to receive contributions from abroad has to apply and get approval from the home ministry.

All remittances are received into a single bank account of a scheduled bank. The NGO has to annually submit audited receipts and payments account, balance sheet, etc to the home ministry.

The ministry scrutinizes the returns to ensure that contributions received for a particular purpose are used for that purpose only. It does a detailed check of randomly picked associations and then collates the data received to present the FCRA Annual Report, i.e. uploaded on the ministry's web site here.

As on March 31, 2009, there were 36,414 registered associations under FCRA. These organization could be religious, social, educational, cultural and educational organizations.

Why do we need to analyze inflows under FCRA?

Because of the sheer magnitude of inflows. Reported inflows into India were $2.4 billion in 2008-09, $2.15 billion in 2007-08 and $2.45 billion in 2006-07.
Reported contributions received from 1993-94 to 2008-09 were to the tune of Rs 84,182 crore (Rs 841.82 billion). Actual are much higher.

Read the complete story on :  http://www.rediff.com/business/slide-show/slide-show-1-why-more-scrutiny-of-foreign-funds-to-ngos-is-needed/20110517.htm

Food for thought

NGOs are required to file their accounts by December 31 of the subsequent year. The FCRA report for year ended March 31, 2009 was signed in December 2010, i.e. nearly 12 months after the due date of receipt. So either NGOs filed reports late or there was a delay at the ministry of home affairs. Either way a delayed report has historical value.
NGOs should file their audited accounts within six months of March 31 so that FCRA report is ready by December. The MHA site now allows NGOs to file returns electronically, a welcome move. It should help in speedier consolidation.
Since 45 per cent of the NGOs have not filed audited accounts, any NGO which does not file accounts for two years should not be allowed to receive further remittances. The bank branch that is authorized to receive remittances should be empowered to ask the NGO for proof of filing annual return.
Is the field inspection of books of accounts of a few NGOs good enough to monitor the activities of over 36,000 NGOs country wide who receive in excess of $3 billion annually?
Since that does not seem to be the case, should the ministry of home affairs involve the home departments of respective states? The ministry of home affairs sources say that states have refused to co- operate. The issue should be resolved through a dialogue between the ruling and the opposition parties.

The deeper intent behind the Western world remitting thousands of crores (billions) into India annually needs to be probed and acted upon. After all poor people live in the West, the East and also in the Middle East.

More importantly should a country growing at 8 per cent-plus per year allow Western NGOs to have such a toehold in India?

Would the United States, Germany, the Netherlands, the UAE, and the UK allow Indian NGOs similar freedom as does the government of India?

Speaking in the Rajya Sabha in 2010, whilst moving certain amendments to the FCRA, Home Minister P Chidambaram said that the government would like to ensure "that the foreign money does not dominate social and political discourse in India. There is enough money within India."

Intent exists! However, India needs to improve the monitoring mechanism for funds received.

The author is a chartered accountant and founder http://www.esamskriti.com/.

Hindu Business Line : The big picture on FDI in retail

By : Nilanjan Banik on 11th December 2011 -
The author is Associate Professor, IFMR

India's FDI inflows have improved since 2005, perhaps at China's expense. In this context, the expected FDI inflows from retail are not significant. However, retail FDI can lead to FDI flows in other sectors and improve our BoP situation.

Foreign direct investment (FDI) in the retail sector has been at the epicentre of national debate. Much has been said on India possibly losing out on investment by sending a wrong policy signal. But do we really need to get so worked up?

INDIA AS FDI DESTINATION

Considering the anticipated level of inflows on account of FDI in retail, there may not be much reason to worry. During 2000, India attracted significantly lower FDI ($3.5 billion) than many other South-East Asian countries, such as South Korea ($10. 5 billion), Thailand ($6 billion) and Malaysia ($5 billion).

However, an interesting pattern has started to emerge since 2005. FDI inflow into India increased by leaps and bounds, from $7.6 billion in 2005, to $35 billion in 2009. FDI flow in the whole of East Asia and the Pacific remained more or less constant during this period — $104 billion in 2005 and $102 billion in 2009.

For China, the figure is $79 billion in 2005, and around $78 billion in 2009. In 2000, India's share among middle-income countries, in terms of attracting FDI, was only 2.4 per cent, compared with China's 26 per cent. In 2009, China's share fell to 22 per cent, whereas India's share increased to 10 per cent (Global Development Finance: Country and Summary Data 2011). India's gain has been at the cost of China losing out in terms of being a favourable FDI destination.

CHINA'S PROBLEMS

India has outdone China due to the high inflation rate in the latter country. Wages of migrant workers, land, property rents and power prices, have all registered an increase in China.

Measured as a year-on-year basis as of November 2010, labour costs went up by 21 per cent, and the home prices across 70 cities in China went up by 7.7 per cent. Property prices have also been on the rise, despite the government having ownership rights over land — indicating a real-estate bubble.

What is evident from data is also being witnessed in reality. Multinationals such as Ford and Hyundai are shifting their manufacturing base from China to India. During the early part of last fiscal, India exported 2,30,000 cars, vans, sports utility vehicles, and trucks — a growth of 18 per cent, whereas Chinese exports have tumbled 60 per cent to 1,65,000 units. Perhaps due to these reasons, Nokia and Lotte, are setting up their manufacturing base in India.

It is no surprise, therefore, that India has attracted, on an average, an annual FDI inflow of $20.4 billion per annum between 2006 and 2009.

The estimated inflow from FDI in retail, of $3 billion over the next five years, seems modest in comparison. To get a sense of proportion, the Reserve Bank of India generally uses this sum of money daily in the foreign exchange market.

Even so, there are reasons to be concerned if FDI in retail were to be stalled in the long run. So, what are the problem areas?

SUPPLY LOGISTICS

FDI in retail will bring down inflation by investing in supply chain logistics, that is, by investing in transport and refrigerated storage necessary for perishable items. Typically, if a farmer were to sell his produce, he needs to bring it to the local market where he usually auctions it to the retailer, who, in turn, will sell to the final consumers.

This process of auctioning in the mandi (central market) is facilitated by the middleman, who charges a commission from the farmers. Add to this the cost of bringing the agricultural produce to the local market; the price difference between what the farmers get and what the consumers pay is what society loses out due to inefficiency.

By investing in supply chain logistics, the players in multi- brand retail will reduce the cost, and bring down inflation. They will procure the produce directly from the farmers, keep it in their storage, and transport it directly to their retail outlet. It is worthy to note that there is a huge investment involved to get the supply chain logistics in place — something that FDI in retail promises.

Those who have been arguing that the local kirana and the marginal farmers may be hurt — the former losing out on business, and the latter not getting the right price – are not right. Currently, the local kirana, and retail outlets such as Reliance Fresh, Tata-Tesco, and Spencer, to name a few, are co- existing comfortably with each other.

Marginal farmers also stand to gain. Recent evidence suggests that marginal farmers who have entered into contracts with Pepsi India have on average realised double the price in comparison with the local mandi and the local mahajan (in absence of the local mandi). This is an eye-opener for those suggesting that multinationals will squeeze the farmers by not offering them the right price.

Experience from around the globe suggests that the local kirana needs to worry from the spread of e-commerce, and not the presence of corporates in the retail sector. India badly needs corporatisation of the agriculture sector to even out distribution of income. The ITC and Pepsi examples have shown that, in their best interest, corporates directly get in touch with the farmers, and give them the necessary information on how to increase crop output and productivity.

It is to be noted that the agriculture sector receives minuscule investment, while supporting the livelihoods of around 55 per cent of the population.

RIGHT POLICY SIGNAL

The UPA government also stands to gain substantially by sending the right policy signal. Moreover, FDI in retail can bring in forms of FDI, at a time when our trade figures aren't doing really well. The trade deficit for April-October, 2011-12, was estimated at $94 billion, which was higher than the deficit of around $85 billion during April-October, 2010-11.

India's credit-worthiness can improve, with more FDI inflow resulting from reforms. International rating agencies usually look at total foreign exchange reserves and the FDI inflow as a criteria for rating any country.

Tailpiece: Mamata Banerjee is smart, and is playing her cards right. She has already got Rs 8,750 crore, out of her demand for Rs 19,000 crore as part of the Bengal package.

Who knows, she might actually give in if the UPA government meets her demand.

Financial Express : Vedanta, Vodafone, Victory

By : Sunil Jain Posted on 08th May, 2012

India’s current account deficit may be at a historical high of over 4% of GDP, making the country critically dependent upon foreign flows in a never-before manner, but finance minister Pranab Mukherjee is made of sterner stuff. Instead of going soft on the tax demands from the likes of Vodafone ($5 billion from Vodafone and $2.5 billion from others like SABMiller and AT&T), he’s made peace with the FII community (see accompanying edit, FII versus FDI). For now, the dividends have been huge—his decision to give FIIs relief by putting off GAAR for a year resulted in a 400 point hike in the Sensex from the day’s lows, brought about by the dramatically heightened tension in the eurozone following the French and Greek election results.

While there was some confusion over whether Vodafone had indeed got relief when the FM said the ‘retrospective clarificatory amendments … will not be used to reopen any cases where assessment orders have already been finalized’, tax officials are quite clear—Vodafone, like SABMiller and others, is an ongoing case. And while some believe the Supreme Court verdict on it had ‘closed’ the case as it were, clause V of Explanatory Memorandum F in the Finance Bill makes it pretty clear it is the taxman who will decide what is ‘open’ and what is ‘closed’—Clause V, or the validation clause, says it ‘shall operate notwithstanding anything contained in any judgment, decree or order of any Court or Tribunal or any Authority’.

But before you rush to condemn the finance minister as someone who is ruining India’s chances with foreign investors—after rising to $41.9 billion in FY09, FDI flows fell each subsequent year and rose to FY09 levels only in FY12—it’s a good idea to keep a few things in mind. First, the FM is not the only one playing the heavy with foreign investors—indeed, the Cabinet as a whole passed his budget. Two, if he has to find the funds to pay for all the Rights (to Eduction, to Work, to Food, etc), you can’t expect him to give up $7.5 billion easily. Three, given few have ever been able to take on a government, the government has always emerged the victor while arm-twisting investors—it’s true investors can walk away or not come in, but that’s in the future and no one can really quantify investment not coming in as easily as you can the tax not collected!

Take Cairn-Vedanta. Though the government really didn’t have a leg to stand on, it refused to give permission to Cairn to sell its India assets to Vedanta until the former agreed to its concessions. These involved getting Cairn to release the state-owned ONGC from its obligations. In earlier decades, when no big oil firms were interested in coming to India, the government had got ONGC to agree to pay all royalties and cess on oil finds on behalf of foreign firms—in return, ONGC got to be an equity partner. This worked fine but when Cairn found lots of oil, ONGC found it was bleeding since the royalty/cess payments exceeded its share in profits. While this was hardly Cairn’s fault since it had an iron-clad contract, the government refused to let it sell—Cairn then took a $3.5 billion hit by agreeing to share royalty/cess payments and by virtue of the fact Vedanta bought 60% of this, it took a $2.1 billion hit. Though the finance ministry was part of the arm-twisting, the main role was that of the petroleum ministry.

In the ongoing saga of Qualcomm which paid $1 billion in a government auction in June 2010, the main actor is/was the telecom ministry. It never gave Qualcomm its licence for nearly two years—Qualcomm got this only after the matter was incessantly raised by the media but even then, the ministry managed to delay matters by slapping all manner on penalties on its JV partner. Though some of the demands looked positively flaky, Qualcomm paid R410 crore of the JV partner’s dues (a year’s delay itself costs it R500 crore based on a 10% interest rate) and got its licence on March 7. That’s a worthless piece of paper without spectrum which Qualcomm still hasn’t got and chances are Qualcomm’s spectrum usage licence will be shortened from 20 years to 18 even though it is not to blame for the delay in getting the licence!

The telecom ministry’s arm-twisting, sadly, is not restricted to Qualcomm and it isn’t restricted to A Raja either. Under Kapil Sibal, the ministry has backtracked on a written commitment to allow intra-circle roaming in 3G spectrum and leading telcos face the possibility of large fines. If this wasn’t bad enough, the telecom regulator has jacked up spectrum costs 11 times at least and delayed the chances of telcos getting meaningful chunks of fresh spectrum for years. Theoretically, the firms can go to court, and they will, but each one knows the futility of it all. They have not just the Qualcomm example in front of them, when they won their case against ‘limited mobility’ firms like Reliance Infocomm at the TDSAT in 2003, the government simply refused to implement the order and, with Trai help, just changed the law! Ditto for ITC which won its tax case in the Supreme Court.
Which brings us to the Vodafone case where, though Vodafone officials deny them, there is a strong buzz about an impending settlement. While the original tax demand was for $2 billion, once the penalties are thrown in, this goes up to over $5 billion. At some point, Vodafone’s management, and shareholders, would certainly want to weigh the chances of winning a $5 billion claim against the government and still being able to run a profitable business in India against perhaps settling at $2 billion—as per the buzz, the government would waive the penalties in the interests of getting a settlement; and think of how, after having done it in badly on the 3G roaming and now on auction fees, the government is in a position to grant it ‘concessions’ here! As Theodore Roosevelt once said, "If you’ve got them by the balls, their hearts and minds will follow."

The only thing that can save Vodafone now is Sonia Gandhi deciding to move Pranab Mukherjee sideways to Rashtrapati Bhavan.

Hindustan Times : Kudankulam: 4 NGOs' books being audited


By : Aloke Tikku on 28th February, 2012

The home ministry ordered probe against four NGOs on Tuesday for alleged diversion of foreign funds to fuel protests against the Kudankulam nuclear power project.

But the ministry did not cancel their registration, as was initially claimed, nor did it name them. As Tuesday, government sources confirmed that the ministry asked the CBI to probe two NGOs where the suspected amount of diverted funds exceeded Rs. 1 crore, while the other two will be handled by the Tamil Nadu crime branch.

Sources said the communication was sent in the first week of February, long before Prime Minister Manmohan Singh's remark on foreign-funded NGOs channelling money into the protests. Besides, accounts of some more NGOs operating in Tamil Nadu's coastal belt were still being audited.

Home ministry officials said the claims made by some central ministers that the licences of the NGOs had been cancelled were inaccurate.

"There is a procedure to be followed for cancelling the registration of an NGO. That stage has not been reached yet," said an official.

As Hindustan Times reported first on February 25, the home ministry only froze the foreign contribution accounts of the NGOs because of accounting loopholes.

That's why home minister P Chidambaram declared on February 4 that the Centre was probing the flow of funds received by anti-project activists.

Home secretary RK Singh confirmed that the Centre had directed agencies to register cases for violating the Foreign Contribution Regulation Act. But there was no confirmation if cases had been registered.

"We need the Tamil Nadu government's consent before we can register the case," a CBI official in Delhi said, acknowledging that proving the charge of diversion of funds in court would be a near-impossible task.

It will require the CBI and the crime branch to build a money trail to establish that foreign funds - meant for the stated charitable purposes, and not money generated through local or domestic contributions - were spent on protesters.

Link :  http://www.hindustantimes.com/India-news/NewDelhi/Kudankulam-4-NGOs-books-being-audited/Article1-818531.aspx