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India and Kazakhstan sign Protocol to amend the Double Taxation Avoidance Convention (DTAC)
Jan 06,2017

India and Kazakhstan signed here today in the national capital a Protocol to amend the existing Double Taxation Avoidance Convention (DTAC) between the two countries which was earlier signed on 9th December, 1996 for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.

Salient features of the Protocol are as under:

(i) The Protocol provides internationally accepted standards for effective exchange of information on tax matters. Further, the information received from Kazakhstan for tax purposes can be shared with other law enforcement agencies with authorisation of the competent authority of Kazakhstan and vice versa.

(ii) The Protocol inserts a Limitation of Benefits Article, to provide a main purpose test to prevent misuse of the DTAC and to allow application of domestic law and measures against tax avoidance or evasion.

(iii) The Protocol inserts specific provisions to facilitate relieving of economic double taxation in transfer pricing cases. This is a taxpayer friendly measure and is in line with Indias commitment under Base Erosion and Profit Shifting (BEPS) Action Plan to meet the minimum standard of providing Mutual Agreement Procedure (MAP) access in transfer pricing cases.

(iv) The Protocol inserts service PE provisions with a threshold and also provides that the profits to be attributed to PE will be determined on the basis of apportionment of total profits of the enterprise.

(v) The Protocol replaces existing Article on Assistance in Collection of Taxes with a new Article to align it with international standards.

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ADB Sells Dual-Tranche $3 Billion 3-Year and $1 Billion 10-Year Global Benchmark Bonds
Jan 06,2017

The Asian Development Bank (ADB) returned to the US dollar bond market with the pricing of a dual-tranche $3 billion 3-year and $1 billion 10-year global benchmark bond issues, proceeds of which will be part of ADBs ordinary capital resources.

n++The first week of January has traditionally been an extremely busy issuance period with clear first-mover advantages and New Year cash flows we were keen to capitalize on. As the supply picture unfolded, there was a clear window to navigate the building pipeline with a maturity differentiating 3/10-year dual-tranche transaction. This format allows us to respond to demand in the front and back-end of the curve and I am pleased to see the solid investor response for ADBs credit and support of its mission in the region,n++ said ADB Treasurer Pierre Van Peteghem.

The 3-year bond, with a coupon rate of 1.750% per annum payable semi-annually and a maturity date of 10 January 2020, was priced at 99.942% to yield 28.05 basis points over the 1.375% US Treasury notes due December 2019. The 10-year bond, with a coupon rate of 2.625% per annum payable semi-annually and a maturity date of 12 January 2027, was priced at 99.451% to yield 23.75 basis points over the 2.000% US Treasury notes due November 2026.

The transactions were lead-managed by Citi, Goldman Sachs, J.P. Morgan, and Nomura. A syndicate group was also formed consisting of Bank of America Merrill Lynch, BMO Capital Markets, BNP Paribas, Credit Agricole CIB, Daiwa Securities, DBS Bank, Mizuho International, RBC Capital Markets, SMBC Nikko, and TD Securities.

Both issues achieved wide primary market distribution with 40% of the 3-year bonds placed in Asia, 29% in Europe, Middle East, and Africa, and 31% in the Americas. By investor type, 72% of the bonds went to central banks and official institutions, 8% to banks, and 20% to fund managers and other types of investors. For the 10-year bonds, 27% were placed in Asia, 20% in Europe, Middle East and Africa, and 53% in the Americas. By investor type, 47% of the bonds went to central banks and official institutions, 11% to banks, 42% to fund managers and other types of investors.

ADB plans to raise around $25-30 billion from the capital markets in 2017.

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Attractive compensation package to recruit best professionals for PSBs on anvil: Vinod Rai
Jan 06,2017

The Banks Board Bureau is working on a fairly attractive compensation package including elements of bonus, employee stock ownership plans (ESOPs), non-monetary perks and others at all management levels as part of corrective steps to ensure that best of professionals are recruited for public sector banks (PSBs), its chairman, Mr Vinod Rai said at an ASSOCHAM event.

n++In some ways the compensation package of these public sector institutions needs to be improved, maybe we are not able to do much with fixed part of compensation package but variable part we certainly are looking into it and we are hopeful that by next financial year we will be able to introduce a far more attractive package,n++ informed Mr Rai.

n++An attempt will be made to introduce accountability in the system, to ensure that you appoint a whole time director or a CEO (chief executive officer) at an age where he has got a minimum of six years more to go in the institution so that he can be held accountable for the decision,n++ added Mr Rai.

He also said that the Banks Board Bureau is in the process of filling up vacancies. n++We are looking for the right people, and we are trying to ensure that we choose the best and not the second-best.n++

Mr Rai further said, n++We are in the business of trying to collate people who are from different walks of life and who will be willing to join boards of PSBs and be able to provide that kind of expertise which these banks have not had in the past and the effort is to ensure that it is these boards which run the banks.n++

He said that all these activities are being carried out to establish a system and structure sans unhealthy practices that led to huge stress in the banking sector.

Mr Rai said that though the Corporate Debt Restructuring Cell was created with very noble intentions in early 2000s but later it found itself sagging with humongous amount of stressed assets in which there was no way it could manage those resources.

He said that there have been innumerable cases where project reports were inflated, balance sheets manipulated and submitted, funds siphoned off and others.

While on the other hand there are an equal number of instances where irresponsible or lazy lending took place, due diligence was given the go by and where supervision was callous.

n++In the Banks Bureau we are engaged in the task of trying to ensure that going forward, these things do not repeat themselves, a project report needs to be scrutinised very effectively, maybe we were lacking in experience in the banks which scrutinised or appraised these project reports, these have to be done by one or may be two independent agencies not having anything in common with each other,n++ he said.

Sharing his perspective on the most recent demonetisation move of the Union Government, he said that there is no harm in trying to cleanse the system and there are various ways to do it and demonetisation was one very effective way.

n++Any attempt to cleanse the economy is a very noble attempt and we should lend our energies in ensuring that process of cleansing takes place,n++ said Mr Rai.

n++It is far too early for us to say it is a success or not a success,n++ he added.

He also said that over the period of time banks may go in for mergers, consolidation and lots of thinking was going into the entire process.

n++The entire process is being thought of, it is not going to materialise in two or three months, it is a long drawn process, there is a lot of work which has to be done and once the roadmap is ready and hopefully in the next two to three years it will be rolled out,n++ said Mr Rai.

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Japan to assist in making Chennai, Ahmedabad and Varanasi Smart Cities
Jan 06,2017

Japan has decided to be associated with the development of Chennai, Ahmedabad and Varanasi as smart cities. This was today conveyed by Japans Ambassador to India Mr.Kenji Hiramatsu during his meeting with Minister of Urban Development Shri M.Venkaiah Naidu.

Mr.Hiramatsu further said that Japan is quite interested in urban development initiatives of the Government of India and decided to be a partner.

Responding to Shri Naidu observation about the need for speedy action, Japans Envoy said n++We would like to match the action oriented approach of the Government under Prime Minister Shri Modin++. Both of them discussed growing cooperation between the two countries further to the last meeting between the Prime Ministers of the two countries.

High Commissioner of United Kingdom Mr.Dominic Asquith also met Shri Venkaiah Naidu and discussed converting into action the MoU signed between the two countries during the recent visit of British Prime Minister to India Ms.Teresa May, on cooperation in urban development sector. He said institutionalizing Government to Government cooperation for smart city development has huge potential.

So far, leading countries have come forward to be associated with development of 15 smart cities. These include: United States Trade Development Agency (USTDA) -Visakhapatnam, Ajmer and Allahabad, UK-Pune, Amaravati(Andhra Pradesh) and Indore, France-Chandigarh, Puducherry and Nagpur and Germany -Bhubaneswar, Coimbattore and Kochi.

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SIDBI and LIC jointly signs agreements with 7 Venture Funds under SIDBI - LIC MOU
Jan 05,2017

In a bid to boost the venture capital ecosystem for MSMEs in the country Small Industries Development Bank of India (SIDBI) has tied up with Life Insurance Corporation of India (LIC) for augmenting the capital support to enterprises in the country. Under Fund of Funds operations, SIDBI operates various Funds viz. India Aspiration Fund with corpus of Rs.2000 crore, ASPIRE Fund with corpus of Rs.60 crore and Fund of Funds for Startups (FFS) with corpus of Rs.10,000 crore.

During April 2016, Small Industries Development Bank of India (SIDBI) and Life Insurance Corporation of India (LIC) had signed Memorandum of Understanding to supplement funds under India Aspiration Fund The MoU with LIC was launched in the presence of then Minister of State for Finance, Shri Jayant Sinha in Mumbai. Under the MoU, LIC has earmarked an amount of Rs.200 Crore for investment. Under the MOU, as part of first phase, LIC and SIDBI have signed Contribution Agreements on January 03, 2017 in New Delhi with 7 Venture Capital Funds (VCFs), with an aggregate commitment of Rs.99.50 Crore from LIC. This is over and above commitment of Rs.162.75 crore already given to these funds by SIDBI.

In order to bring in more professional outlook, SIDBI constituted a Venture Capital Investment Committee (VCIC) comprising experts.

There has been major upsurge in the activity during the current year as seen through growth in sanctions under Fund of fund operations. Commitments made by SIDBI in FY2015 and 2016 were- Rs.314.40 (11 funds) and 606.75 crores (19 funds) respectively. Compared to this, during the current year, SIDBI has so far accorded formal sanction already to 20 Alternative Investment Funds with aggregate commitments of Rs 714 crore. In addition there are further cases cleared by VCIC which are under detailed appraisal and due diligence. It may be pertinent to note that after constitution of VCIC in July 2015, out of 40 cases recommended by VCIC, 32 funds have already been given final sanction by SIDBI for an aggregate commitment of Rs. 1006.75 crores out of which 19 funds had announced first closing and have commenced investments.

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MCX Launches Castor Seed Futures
Jan 05,2017

Multi Commodity Exchange of India (MCX), launched a futures contract in Castor Seed, after receiving approval for the same from the Securities and Exchange Board of India. With this launch, MCX has added another contract to its agri-commodities products suite, in the oil and oilseeds complex.

The exchange has currently launched February, March, April and May 2017 contracts in Castor Seed, with 10 MT as the trading unit and Deesa (Gujarat) as the basis centre. Besides, in order to cater to the demand of a wide and diverse participants group, MCX has decided to levy a flat transaction charge of 50 paise per one lakh rupees of transaction, the lowest in any commodity levied by the Exchange.

The response to this new contract has been quite satisfactory with traded volumes and Open Interest clocking 6050 tons and 1300 tons respectively, till the time of going to the Press.

India is the leader in global Castor Seed production and the country dominates international Castor Oil trade, meeting more than 80% of global demand of castor oil. Indias export of Castor oil and derivatives are estimated to be over Rs.3,000 crores per annum, with indispensable usage in several industries like cosmetics, surface coatings, toiletries, pharmaceuticals, perfumes, soaps, lubricating formulations and medicines. By also meeting the hedging requirements of castor oil exporters and those connected to its exports, MCX Castor Seed Futures would fill in a critical gap in Indias agri exports, playing its part in the Governments Make in India initiative.

Mr. Mrugank Paranjape, MD and CEO, MCX said, n++The decision to launch Castor Seed futures contracts was made to cater to the need of the stakeholders of Castor Seed, particularly those from the physical market of this crop, for a reliable instrument for price discovery and risk management. With India dominating the global castor oil trade and rising volumes of production of Castor Seeds commensurate with an increasing trend in exports of its extract, there was a need felt for an effective instrument for hedging and appropriate price discovery, which the MCX Castor Seeds futures would address. Given the proven soundness of our Risk Management System and robustness of MCXs technology backbone, we are confident that all stakeholders of Castor Seed would find hedging their price risks on the MCX platform a superior economic proposition.n++

Mr. Atul Chaturvedi, President, Solvent Extractors Association said, n++We are very glad that SEBI has permitted Commodity Exchanges to launch contract in Castor Seed futures, which we have been looking forward to, especially after futures contract in this commodity became unavailable since last year. Businesses like ours are significantly exposed to castor oil price movements and our bottomlines are often adversely affected by the uncertainty and volatility of its prices.n++

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FM: Though world economy is quite fragile yet India appears to be much better placed on back of improvement in its macro-economic fundamentals
Jan 05,2017

The Union Finance Minister Shri Arun Jaitley said though the world economy is quite fragile yet India appears to be much better placed today on the back of improvement in its macro-economic fundamentals. The Finance Minister said that the Governments measures to eliminate the shadow economy and tax evasion are expected to have a positive impact both on GDP and on fiscal consolidation in the long run. The Finance Minister Shri Jaitley was making his Opening Remarks while chairing the Sixteenth Meeting of the Financial Stability and Development Council (FSDC).

The Council reviewed the major issues and challenges facing the economy and noted that India appears to be much better placed today on the back of improvement in its macro-economic fundamentals. The Council also noted that the Governments measures to eliminate the parallel economy and black money are expected to have a positive impact both on GDP and on fiscal consolidation in the long run.

The Regulators offered their suggestions/proposals for the upcoming Budget 2017-18, which were deliberated upon by the Council. The Council also reviewed the present status of NPAs in Banks and the measures taken by Government & RBI for dealing with the stressed assets and discussed on further action in this regard.

FSDC discussed about the various initiatives taken by the Government and Regulators for promoting financial inclusion/financial literacy efforts and discussed further measures for promoting the same.

A Brief Report on the activities undertaken by the FSDC Sub-Committee chaired by Governor, RBI was placed before the FSDC. The Council also undertook a comprehensive review of the action taken by members on the decisions taken in earlier meetings of the Council.

The Council also discussed issues pertaining to Fintech, digital innovations and cyber security. The Council took note of the initiatives taken in this regard by the Government and the Regulators and discussed on further steps to be taken.

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FM: World economy fragile; India appears to be much better placed on back of improvement in its macro-economic fundamentals
Jan 05,2017

The Union Finance Minister Shri Arun Jaitley said though the world economy is quite fragile yet India appears to be much better placed today on the back of improvement in its macro-economic fundamentals. The Finance Minister said that the Governments measures to eliminate the shadow economy and tax evasion are expected to have a positive impact both on GDP and on fiscal consolidation in the long run. The Finance Minister Shri Jaitley was making his Opening Remarks while chairing the Sixteenth Meeting of the Financial Stability and Development Council (FSDC).

The Council reviewed the major issues and challenges facing the economy and noted that India appears to be much better placed today on the back of improvement in its macro-economic fundamentals. The Council also noted that the Governments measures to eliminate the parallel economy and black money are expected to have a positive impact both on GDP and on fiscal consolidation in the long run.

The Regulators offered their suggestions/proposals for the upcoming Budget 2017-18, which were deliberated upon by the Council. The Council also reviewed the present status of NPAs in Banks and the measures taken by Government & RBI for dealing with the stressed assets and discussed on further action in this regard.

FSDC discussed about the various initiatives taken by the Government and Regulators for promoting financial inclusion/financial literacy efforts and discussed further measures for promoting the same.

A Brief Report on the activities undertaken by the FSDC Sub-Committee chaired by Governor, RBI was placed before the FSDC. The Council also undertook a comprehensive review of the action taken by members on the decisions taken in earlier meetings of the Council.

The Council also discussed issues pertaining to Fintech, digital innovations and cyber security. The Council took note of the initiatives taken in this regard by the Government and the Regulators and discussed on further steps to be taken.

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Gartner Forecasts Flat Worldwide Device Shipments Until 2018
Jan 05,2017

Worldwide combined shipments of PCs, tablets, ultramobiles and mobile phones are projected to remain flat in 2017, according to Gartner, Inc. Worldwide shipments for these devices are projected to total 2.3 billion in 2017, the same as 2016 estimates.

There were nearly 7 billion phones, tablets and PCs in use in the world by the end of 2016. However, Gartner does not expect any growth in shipments of traditional devices until 2018, when a small increase in ultramobiles and mobile phone shipments is expected.

The global devices market is stagnating. Mobile phone shipments are only growing in emerging Asia/Pacific markets, and the PC market is just reaching the bottom of its decline, said Ranjit Atwal, research director at Gartner.

As well as declining shipment growth for traditional devices, average selling prices are also beginning to stagnate because of market saturation and a slower rate of innovation, added Mr. Atwal. Consumers have fewer reasons to upgrade or buy traditional devices (see Table 1). They are seeking fresher experiences and applications in emerging categories such as head mounted displays (HMDs), virtual personal assistant (VPA) speakers and wearables.

The embattled PC market will benefit from a replacement cycle toward the end of this forecast period, returning to growth in 2018. Increasingly, attractive premium ultramobile prices and functionality will entice buyers as traditional PC sales continue to decline. The mobile phone market will also benefit from replacements. There is, however, a difference in replacement activity between mature and emerging markets. People in emerging markets still see smartphones as their main computing device and replace them more regularly than mature markets, said Mr. Atwal.

Device vendors are increasingly trying to move into faster-growing emerging device categories. This requires a shift from a hardware-focused approach to a richer value-added service approach, said Mr. Atwal. As service-led approaches become even more crucial, hardware providers will have to partner with service providers, as they lack the expertise to deliver the service offerings themselves.

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Moodys: Global oil and gas industry to see continued tepid prices, belt-tightening in 2017
Jan 05,2017

Oil prices likely will remain volatile and range-bound in the coming year, Moodys Investors Service says in a new report discussing its expectations for the global oil and gas industry. Alongside anticipated changes in US energy policy focused on domestic development and deregulation, the industry will see increased merger & acquisition (M&A) activity in both the North American E&P and midstream sectors.

The rating agencys oil and natural gas price estimates -- within a medium-term oil price band of $40-$60/bbl for both Brent and West Texas Intermediate (WTI) crude globally and in North America -- remain unchanged for 2017-19 from its November 2016 update. Moodys expects prices to remain volatile within this band.

We foresee three possible scenarios for oil prices in 2017, each with their own impact on ratings, says Moodys managing director, Steve Wood. If they retreat to the low $40s, stress in the oil and gas industry will again increase, while prices in the mid-to-high $40s would continue to offer some relief for oil producers. At a sustainable mid-$50/bbl level, however, we could take more positive rating actions on integrated and exploration and production companies.

Under the Trump administration, US energy policy likely will prioritize domestic oil and coal production, in addition to reducing federal regulatory burdens. Energy infrastructure projects would benefit most immediately, but the success of other policy goals, such as easing the permitting and leasing of new coal mines, will depend on their ability to generate favorable economic returns. Meanwhile, a US failure to work toward the Paris Climate Agreement commitments could lead to a carbon tax on US exports or other retaliatory trade measures.

Increasing confidence in the oil and gas industrys prospects will spur acquisition activity among North American exploration and production (E&P) firms, Moodys says. Debt and equity markets are again offering financing for producers seeking to re-position and enhance their asset portfolios after a lull. M&A will also pick up in the midstream sector. At the same time, integrated oil and gas firms will continue to improve their cash flow metrics and leverage profiles by cutting operating costs, further reducing capital spending and divesting assets.

Even so, the oilfield services and drilling (OFS) sector is in for another tough year, with continued weak customer demand, overcapacity and a high debt burden.

Demand for the services of OFS companies will grow only very gradually next year, while pricing recovery and cash flow growth will lag those of upstream customers by at least a year, Wood says. Within the broader energy sector, we expect the OFS sector to suffer the most defaults in 2017 as more companies run out of cash and credit lines, struggle with debt covenants and maturities and produce barely breakeven cash flow.

Meanwhile, EBITDA growth of 5% or less in 2017 will strain the North American midstream sectors ability to reduce debt leverage, in some cases putting investment-grade ratings at risk. Midstream growth capital spending will again drop by about 20%, with slower growth leading more companies to resort to self-help measures to address balance-sheet, funding and distribution concerns.

And though funding risk has declined somewhat for Latin Americas national oil companies, it will remain an issue for years to come, given tight capital market conditions and volatile oil and gas prices and cash flows, Moodys says. Meanwhile, Russias agreement to cut oil production next year poses little difficulty for the countrys oil companies, since the move effectively freezes production rates and likely will entail the resumption of cuts in Western Siberia, which is already in decline.

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Moodys and ICRA: Stable outlook for Indian corporates reflects sustained economic growth
Jan 05,2017

Moodys Investors Service and its Indian affiliate, ICRA, say that their stable outlook for non-financial corporates in India (rated Baa3 positive by Moodys) over the next 12-18 months reflects in large part the countrys sustained economic growth.

Strong GDP growth, capacity additions and stabilizing commodity prices will support EBITDA growth of 6%-12% over the next 12-18 months, says Laura Acres, a Managing Director in Moodys Corporate Finance Group.

Moodys also points out that the capex cycle for Indian corporates has peaked, as projects near completion, and declining investments will slow the pace of borrowing over the next 12-18 months. Moreover, refinancing needs are manageable for most corporates in 2017, given their better access to the capital markets and large cash balances.

As for specific sectors, our outlook for the power, hotel and sugar industries is stable, while that for the real estate and cement sectors is negative, says Subrata Ray, Senior Group President and Head of Research for ICRA.

ICRA says that distribution utilities will benefit from the lower cost of power purchases, due to improved domestic coal availability, the subdued tariff level of short-term traded power, and flexibility provided by the government to generating companies for the optimal utilization of coal.

ICRA also points out that an improvement in domestic coal availability has substantially mitigated coal supply risk and the risk of under-recovery in fuel costs n++ due to a reliance on costlier coal imports n++ for thermal independent power producers.

Moodys stable outlook for exploration & production companies reflects higher production volumes, low subsidy burdens and a recovery in oil prices, which will offset lower natural gas prices and higher royalty payments.

In the refining & marketing segment, Moodys says that its stable outlook is based on the fact that capacity additions will partly offset weaker refining margins, while marketing margins will remain stable.

Moodys also maintains a stable outlook on the Indian telecommunications sector. Moodys says that while companies in this sector face intensifying competition n++ which will pressure margins n++ such a situation should be offset by growth in data consumption.

As for the auto sector, Moodys says that its outlook for the industry is stable, because companies in this industry should benefit from improving customer sentiment, following an above-average monsoon season, as well as likely falling vehicle prices, after the implementation of the goods and services tax in April 2017 that will replace a web of taxes. In the near term, however, sales volumes could be negatively affected by demonetization.

ICRA explains that its outlook on the cement sector is negative, because cement demand growth n++ which has stagnated around the mid-single digit over the last few years n++ will likely be further negatively affected by demonetization through the real estate sector, which is a major consuming segment.

In the short-term, ICRA says that the cement industry will likely experience stretched receivables, given their need to provide liquidity to offset the impact of demonetization. ICRA points out that cement prices have fallen across regions following demonetization; this situation, combined with increased input prices n++ such as petcoke and rising freight costs n++ will adversely affect profitability.

ICRAs outlook on the sugar sector is stable. ICRA expects domestic sugar production to fall 8% during October 2016 - September 2017 on lower cane availability, owing to poor monsoons in CY 2015. While monsoons have been relatively better in CY 2016, its impact on sugarcane production will be felt only between October 2017- September 2018. Accordingly, ICRA expects sugar prices to remain firm in the near-term, on lower production, low sugar stocking levels and a global supply deficit.

ICRA points out that while sugar prices have remained strong, cane prices have only increased modestly. This situation, along with strong by-product prices for molasses, alcohol, and bagasse should support profit margins for sugar companies. However, company balance sheets will remain under strain, due to past losses.

With the real estate sector, Moodys expects the countrys demonetization to negatively affect sales volumes. Nevertheless, volumes will start to pick up, as interest rates fall.

On the hotel industry, ICRA says that large supply additions n++ which had plagued the industry in the past several years n++ will likely moderate to a compound annual growth rate of about 8% over the next four years.

Based on the improved supply absorption n++ supported by double-digit growth in demand n++ ICRA expects a gradual improvement in revenue per available room. Better profit margins will also improve debt coverage indicators.

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Moodys Liquidity-Stress Index falls again in December, points to fewer defaults in year ahead
Jan 05,2017

Moodys Liquidity-Stress Index (LSI) extended its declining trend in the final month of 2016, pointing to a more benign default environment in the year ahead, the rating agency says in its most recent edition of SGL Monitor Flash. The speculative-grade liquidity gauge fell for a ninth straight month in December, to 5.9% from 6.0% in November.

Moodys Liquidity-Stress Index falls when corporate liquidity appears to improve and rises when it appears to weaken.

The LSI enters 2017 on a much calmer tone than it began 2016, with the energy sector strains that drove liquidity weakness and pushed up defaults now moderating, said Senior Vice President, John Puchalla. Meanwhile, a steady stream of new speculative-grade issuance continues to provide lower-rated companies with liquidity support, while generally positive economic sentiment should help them maintain healthy cash flows.

Moodys forecasts that the US speculative-grade default rate will fall to about 4.0% by the end of 2017, from 5.6% currently.

In December, downgrades of Moodys speculative-grade liquidity (SGL) ratings exceeded upgrades due mainly to company-specific or transaction-related issues. SGL rating volatility declined as 2016 progressed, and will be considerably more muted this year now that the worst of the energy crisis has passed. Decembers SGL ratings downgrades included two retailers, one being the indirect parent of J. Crew, Chinos Intermediate Holdings A, Inc., which has been experiencing operating pressures, as well as broadcast company iHeartCommunications, Inc.

As investors continued their hunt for yield in a low interest rate environment, combined speculative-grade loan and bond issuance jumped roughly 20% in 2016, despite a slow start to the year, according to Dealogic data. In 2017, the prospect of higher interest rates could create selective challenges for low-rated companies with weaker operating performance, Moodys says, but these wont be of the same magnitude as energy companies confronted in 2016.

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Revoke notification vis-n++-vis input tax credit withdrawal on natural gas by Gujarat govt.: ASSOCHAM
Jan 05,2017

In the larger interest of industries, apex industry body ASSOCHAM has urged the Union Government to immediately get revoked the notification vis-n++-vis withdrawal of input tax credit on inter-state sale/branch transfer of natural gas issued by Finance Department of Gujarat government on November 28, 2016.

n++Consequent to this notification, cost of Re-gasified Liquefied Natural Gas (RLNG) supplied by Petronet LNG, a Gujarat-based public sector undertaking (PSU) to other PSU gas distributors like GAIL India, Indian Oil Corporation (IOCL) has shot up from four per cent to 15 per cent,n++ highlighted ASSOCHAM in a communication addressed to Union Minister for Commerce and Industry, Ms Nirmala Sitharaman and Finance Minister of Gujarat, Mr Nitin Patel.

n++These PSUs have passed on the increase in tax to industry outside Gujarat, thus making RLNG costlier by 11 per cent with adverse impact ranging from Rs 2.50 to Rs three per standard cubic meter (scm),n++ noted the letter.

Considering that many industries are stuck with long-term supply agreements with PSU distributors of costly RLNG and therefore cannot switch over to cheaper alternate source of energy due to take or pay clause in said agreements.

n++This notification has thus made matters worse by making RLNG further costlier hitting industries outside Gujarat very hard,n++ highlighted the ASSOCHAM letter.

n++At a time when trade and industry are moving towards implementation of goods and services tax (GST), this withdrawal of input tax credit is unjust for industries outside Gujarat as it is making them highly uncompetitive,n++ it added.

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Central Board of Direct Taxes signs three more Advance Pricing Agreements pertaining to the Engineering Goods and Shipping sectors
Jan 05,2017

The Central Board of Direct Taxes (CBDT) has started the year 2017 by entering into three unilateral Advance Pricing Agreements (APAs).

The three APAs signed pertain to the Engineering Goods and Shipping sectors of the economy. The international transactions covered in these agreements include Intra-group Services and Support Services.

With this, the total number of APAs entered into by the CBDT has reached 120 which includes 7 bilateral APAs and 113 Unilateral APAs. A total of 56 APAs (4 bilateral APAs and 52 unilateral APAs) have been entered into in the current financial year till date. The CBDT expects more APAs to be concluded and signed in the near future.

The APA Scheme was introduced in the Income-tax Act in 2012 and the n++Rollbackn++ provisions were introduced in 2014. The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance. Since its inception, the APA scheme has evinced a lot of interest from taxpayers and that has resulted in more than 700 applications (both unilateral and bilateral) being filed in just four years.

The progress of the APA Scheme strengthens the Governments resolve of fostering a non-adversarial tax regime. The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner. The approach and functioning of the officers in the APA teams have been appreciated and acknowledged by the industry in India and abroad.

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Government issues notification of Indian Skill Development Service
Jan 04,2017

The Ministry of Skill Development and Entrepreneurship (MSDE) has issued the notification of setting up of Indian Skill Development Services (ISDS). This service has been created for the Training Directorate of the Ministry of Skill Development and Entrepreneurship.

The purpose of instituting a formal service in Group A category was initiated almost two years back when the Ministry was formed and the union cabinet approved its creation on October 7, 2015. With notification of this service the skill ecosystem is expected to get strengthened and modernised in line with the current scientific and industrial development in the country.

ISDS will be a Group A service where induction will take place through Indian Engineering Service Examination conducted by UPSC. It is an attempt to attract young and talented administrators for Skill Development. The knowledge acquired by the engineers recruited will give new impetus to the initiative of the government to the skill development and also efficient and effective implementation of the schemes. In years to come the ministry will be able to create a workforce of trained skill administrators who will enable us to achieve the goal of increased skilled youths. Administered training is paramount to face big challenge of skilling Indians. Under the leadership of Prime Minister skill development has taken a priority with a hope that Skill India mission will supply huge human resource not only in India but also Internationally. This is a step forward to meet the target of skilling 500 million people by 2022.

The Training Directorate is involved in implementation of various schemes like Craftsmen Training Scheme (CTS) covering 126 trades, Apprenticeship Training Scheme (ATS) covering 259 trades and Skill Development Initiative Scheme (SDIS) for the Modular Employable Skill (MES) covering 578 modules. The Training Directorate also conducts examinations and awards certificates under National Council of Vocational Training (NCVT), they also organise advance skill training supervisory training staff training through its various field institutes spread across country.

The Indian Skill Development Service (ISDS) will have 263 all India posts. The cadre shall comprise of 3 posts at Senior Administrative Grade, 28 posts at Junior Administrative Grade, 120 posts at Senior Time Scale and 112 posts at Junior Time Scale. The Academy for training of the cadre will be National Institute of Skill Development.

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