The order follows a decision by GAIL India’s board to enter the wind market, with plans to build four 25MW wind farms across Tamil Nadu and Karnataka states during the current financial year.

GAIL was formed in the 1980s as a Central Public Sector Undertaking (PSU) to build and operate the 1800km HVJ project, one of the largest gas pipelines in the world.

It has since built a number of natural gas and LPG pipelines, LPG processing plants and petrochemical facilities, expanded into gas exploration and production inside and outside India, and acquired companies around the world.

This is Gamesa’s first order from an Indian PSU. “We are glad to partner with GAIL India and look forward to playing a relevant role in decreasing India’s energy deficit,” says Ramesh Kymal, chairman & managing director of Gamesa India.

Gamesa recently opened a new manufacturing facility to make blades for its G5X-850kW and G9X-2.0MW turbines, and a tower factory built through the Windar Renewable Energy joint venture, in which the Spanish group owns a 32% stake.

Gamesa says that India accounted for 20% of its megawatts sold worldwide in the third quarter of 2011, after the company’s sales in the country increased by 2.8 times from the same period a year earlier.

It has become India’s third-largest turbine manufacturer in terms of market share since starting production in the country in early 2010. As a developer, Gamesa has a portfolio in India of more than 2.1GW of capacity at different stages of development.

Gamesa today also announced the sale of two operational French wind farms with a combined capacity of 16MW to Allianz Renewable Energy Partners.

The two 8MW developments – Aussac, located in Region Poitou-Charentes, and Belrain in Lorraine – each consist of four Gamesa G90 2.0MW wind turbines.

As a wind developer, Gamesa has brought 114MW of capacity on line in France, and has a project portfolio of 800MW at varying stages of development. As a turbine supplier, it has installed 640MW in the country to date

Gamesa’s wind farm development division has built 4.3GW of capacity in total, and has about 24.5GW in progress around the world.

New Delhi: The government is liberalising its foreign direct investment rule that repatriate its original investment before a three-year lock-in period from the day it completes its minimum capitalisation norm for the sector.

Despite reservations of the Department of Industrial Policy & Promotion (DIPP), the government has contended that this restriction can be done away with, if the investor offers acceptable reason for not making the investment.

The stance will encourage many foreign investors whose projects in India might get stuck due to hiccups like questions of environment and inability to acquire the requisite land in the earmarked area, lending them an exit route much before three years.

Under the FDI policy, companies in many sectors have to bring in a minimum amount of capital as a condition for clearance.

In a sector like township that permits 100 per cent FDI under the automatic route, foreign companies have to bring in $10 million in a 100 per cent subsidiary and $5 million in a joint venture as minimum capitalisation.

The three-year lock-in issue came for discussion in the case of Cyprus-based Barrods Services Ltd, which had signed an agreement and had bought 99.7 per cent equity in Copper Beech Infrastructure Pvt Ltd from the existing shareholders some years ago.

 The Indian company was planning to start a 1,000-acre project for establishing a new township featuring educational infrastructure, including schools, universities and homecare, and had paid some advance for land acquisition in Ratnagiri district of Maharashtra.

However the project — at Nate village of Rajapur tehsil — became unviable as the governments of India and France signed an agreement to set up the world’s largest 9,000-Mw power project at Jaitapur in the same western state.

This November 2010 decision forced Copper Beech to abort the project and ask for repatriation of its FDI funds, as the educational project is located only 15 kilometres from Jaitapur. (It is not feasible to have such a project next to a nuclear plant.)

At this, Copper Beech had asked the Foreign Investment Promotion Board to liquidate the company.

It also sought repatriation of the funds back to Barrods or wanted the repatriation of the FDI by way of sale of shares which they had bought in the company. In that case, Barrods had to look for a new investor.

However, at a series of meetings by the FIPB on the issue in the last few weeks, DIPP had contended the proposal should be rejected, as it did not meet the minimum lock-in period of three years required for repatriation of original investment.

But overruling their contention, the board observed that while FDI was bought in this project through the automatic route, negative developments, too, have happened. Over those, the firm had no control; therefore, it has no choice but to abort the project.

It felt the applicant should be given permission to liquidate the firm and repatriate the money though prescribed banking channels.

MELBOURNE: South Australia government is keen to enhance economic ties with India has placed the country on top of the list of future trade partners.

“The state must have a clear strategy to take advantage of emerging trade opportunities with India,” Premier Jay Weatherill said today as he launched a South Australia-India economic development directions paper ahead of a visit this week by a delegation of Indian investors.

“India is expected to become the world’s third-largest economy within 20 years and is going to be a very significant part of our economic growth in the long term,” Weatherill was quoted as saying by Australian news agency APP.

“While our trade, education and cultural ties provide a strong foundation, we need a more broadly-based alliance across many sectors of our state’s economy,” he said.

Manufacturing Minister Tom Koutsantonis said Indian investors, business operators, skilled migrants, students and tourists were already discovering opportunities in South Australia. India was already the state’s fourth largest export market.

“Australia and India share many common bonds, including a Commonwealth background, a common business language and a passion for cricket,” Koutsantonis said, adding that the state government wants to build on these common interests to maximise the potential investment Indian companies can provide in South Australia.

The government said its engagement strategy for India would align business and government activity to benefit both South Australian and Indian people.

“Our strategy will include a clear set of targets and aims for trade, investment and business migration, identifying where we want to be in our relationship with India over the coming years and how we intend to get there,” Koutsantonis said.

The paper has listed five target regions in India which share similar interests to SA and advocates expansion of non-resources trade to harness the state’s burgeoning “knowledge-rich economy”.

The regions include Maharashtra, which takes in Mumbai and has a gross regional product more than double that of SA, and the motor car producing province of Tamil Nadu.

The paper has pinpointed the Federal Government’s decision to sell uranium to India should lay the foundation for “an even deeper long-term partnership” including renewed focus on the growing Indian middle class has been seen as a ripe target for SA’s wine and food industries and international student education sector.

Weatherill said China remained important to the state’s economic future but the rest of Asia was expected to achieve rapid growth in the coming decades.

“India is at the top of the list of the partners that can contribute most to South Australia,” he said.

“While our trade, education and cultural ties provide a strong foundation, we need a more broadly based alliance across many sectors of our state’s economy,” Weatherill said.

Opposition industry spokesman Steven Marshall said the state’s foreign economic policy was “in disarray” and two of its eight trade offices – in Vietnam and Chile – were unstaffed.

“SA’s priorities haven’t been right for a very long time,” he said.

Business South Australia acting chief executive Brett Mahoney said India presented a big opportunity but a was “very difficult place to do business if you don’t have the contacts”.

A visiting Indian delegation this week will hold talks on mining, energy and information technology as well as attend the Test, beginning tomorrow at Adelaide Oval.

The trade paper has been released for discussion and strategies will be developed following consultation with officials and business leaders in both jurisdictions.

NEW DELHI: The commerce ministry will announce rules to simplify and rationalize procedures to revive special economic zones, hoping to draw investors to these enclaves once touted as centres of export excellence.

The changes, which will be notified in a week, could include a reduction the minimum-area requirement, easier vacancy and contiguity norms and allowing multi-product SEZs in sector-specific zones.
“There will be reforms and changes in policies pertaining to SEZs mainly to simplify procedures and make things easier. These will be notified by the end of the month,” commerce secretary Rahul Khullar told ET.

Experts have welcomed the rethink on SEZs, which had caught investor fancy when they were announced five years ago but subsequent policy changes and other hurdles made them a non-starter.

“With the government going back on its promise of not imposing any taxes on SEZs for the first few years, the least that it can do now is to make implementation projects easier,” a Delhi-based SEZ consultant told ET.

Finance minister Pranab Mukherjee had slapped a 18.5% minimum alternate tax, or MAT, on SEZ units and a 15% dividend distribution tax in this year’s budget, leading to a sharp drop in new proposals and an increase in the number of withdrawals.

While approvals fell to 14 in during April to November last year from 25 in 2010 and 36 in 2009 periods, withdrawal of SEZ applications increased to 28 in the eight-month period from 27 and 19 in the previous two fiscal years.

“This (MAT and dividend tax) has affected cash flows and has resulted in a fall in net margins to 4-4.5%, from 7-8%, says R Sonthalia, a Kolkata-based SEZ owner.

The ministry has the power to make changes in SEZ rules as long as they do not have anything to do with taxes. “The SEZ Act empowers the commerce department to bring about any changes in rules and procedures as it deems fit by coming up with an appropriate notification,” an official explained.

Since land acquisition is one issue that corporate India is struggling with, the proposed changes are likely to relax rules related to purchase of land. According to a discussion paper put out on the official website, the minimum land requirement for multi-product SEZs is proposed to be reduced from 1,000 hectares to 250 hectares and for multi-services and sector-specific ones from 100 hectares to 40 hectares.

A lower size threshold will allow SEZs to begin operations with smaller land parcels and expand as and when more land is available.

The definition of vacant land, the type of land on which SEZs have to be built, is likely to be relaxed. Flexibility in contiguity norms in areas where production activity is not taking place is also in the offing.

Other issues being considered by the commerce department include giving incentives to developers to build SEZs in areas away from cities and allowing some tax-breaks to SEZ units for selling in the domestic market.

KOLKATA: The National Bank for Agriculture & Rural Development, or Nabard, has started lending directly to infrastructure projects out of its own resources for the first time in 30 years, in an attempt to diversify its activities and make itself relevant at a time when the dynamics of the rural market are changing.

Essentially a refinance bank till recently, Nabard has created a Rs 1,000-crore special window for lending to build core projects, two officials familiar with the development said. To start with, it has sanctioned four power projects amounting to Rs 292 crore in Andhra Pradesh, Gujarat, Karnataka and West Bengal.

The bank has been a nodal agency for lending to rural infrastructure projects under the Centre’s Rural Infrastructure Development Fund, or RIDF, but this is the first time it is lending using its own funds. It becomes the latest entrant in the country’s infrastructure lending space, which needs investments of $1 trillion during the 12th Five-Year Plan (2012-17 ).

According to Nabard officials, state government undertakings are very keen to avail of loans using the Nabard Infrastructure Development Assistance (NIDA) window as they can get the loan at a very competitive interest rates ranging between 10% and 10.75% a year .”It’s a very attractive proposition for state undertakings as there is no processing fee or hidden cost,” said NSP Rao, Nabard chief general manager in Kolkata.

It offers one to threeyear moratorium, which is a norm for infrastructure lending. It is learnt that Nabard is considering 30-odd project proposals across states. “The bank will enhance the size of the corpus from Rs 1,000 crore after seeing the initial response,” Rao said. It has centralised the loan-sanctioning power for NIDA. The development bank has sanctioned Rs 140 crore to Transmission Corporation of Andhra Pradesh, Rs 93 crore to West Bengal State Electricity Transmission Corp, Rs 42 crore to Karnataka State Warehousing Corp and Rs 17 crore to Gujarat State Electricity Corp.

MUMBAI: Reserve Bank of India Governor Duvvuri Subbarao, known to overrule majority opinion, could spring a surprise with a cut in the cash reserve ratio (CRR) to ease liquidity pressure on the system, which may also reduce funding costs for industry.

“The open market operations (OMO) have been an instrument of first preference for the purpose (easing liquidity pressure), but additional instruments could be considered as and when required,” said the quarterly Macroeconomic and Monetary Developments Review of the RBI that lays the foundation for the governor’s monetary review. OMO refers to purchase of government bonds from investors that raises cash in the financial system.

The cash reserve ratio, the proportion of deposits that banks have to hold with the RBI, is a popular instrument to inject cash into the system. It is at 6%. Banks are borrowing more than Rs 1.2 lakh crore from the RBI, which is double of what the central bank has said it is comfortable with. Few are expecting a cut in repo rate, the rate at which the RBI lends to banks, which is at 8.5%.

“While our earlier expectations were that the RBI would begin the repo rate cutting cycle in January, the stickiness of core inflation in the December WPI print has meant that the RBI will likely postpone the first rate cut to March,” says Tushar Poddar at Goldman Sachs. “We put the probability of a 25-basis-point CRR cut at 60%, with a chance that the RBI may opt for 50 basis points.” A basis point is 0.01 percentage point.

The commencement of interest rate cut may take longer despite slowing growth, as the two-year-low inflation number may be short-lived due to fiscal profligacy, widening of welfare schemes, and a weak currency.

“With inflation projected to decline in Q4 and monetary rate cycle peaking, a revival of business optimism could occur, especially if fiscal imbalances are contained so as to provide more room on monetary side,” said the review.

Governor Duvvuri Subbarao will present his decision at 11 am on Tuesday. The second round impact through input costs and the lagged pass-through of the first round may sustain and even amplify the price pressures in the next few months,” it said, referring to the possible impact of the currency depreciation last year. “Given that imported goods account for 22% of GDP, the inflationary impact could be significant.”

Calls for interest rate cuts are getting louder after the fiscal second quarter economic growth fell to 6.9% and inflation fell to 7.5% in December from an average of more than 9% for nearly two years. But the fall in inflation could be deceptive since prices of key petroleum products and many other fuels such as coal are subsidized, suppressing actual inflation. With property prices still rising and demand for many commodities remaining inelastic, price rise could return to haunt.

NEW DELHI: The heavy industries ministry has urged Prime Minister Manmohan Singh to ban foreign equipment in ultra mega power projects, citing the need for a level playing field for domestic companies. The suggestion has not found favour with the power ministry, which is struggling to meet the country capacity addition target that has been pared twice during the current Eleventh Five-Year Plan.

Of the four UPMMs approved so far, only one promoted by the Tatas has begun partial production. The heavy industries ministry has proposed to make it mandatory for UMPPs bidders to source equipment from domestic companies or entities that have an India presence. If the proposal goes through, foreign equipment suppliers to the mega projects will have to agree to set up manufacturing base in a phased manner.

Heavy industries minister Praful Patel said partnerships between project developers and equipment suppliers can also be explored. Patel met Shinde and the PM separately on Monday. However, power minister Sushilkumar Shinde said UMPPs should be free to tie up equipment. “These projects are based on competitive bidding and companies will obviously look for monetary benefits,” Shinde told reporters before meeting Patel.

The heavy industries ministry proposal is in line with NTPC’s bulk tendering model under which equipment suppliers should be able to commission units in a time-bound manner and failure to do so would lead to forfeiture of bank guarantees. With this model, the government has also been able to keep foreign companies, especially Chinese, at bay. Patel said he would also discuss import duty on power gears.

His ministry has proposed 10% import duty, 5% special additional duty and 4% countervailing duty on power equipment. The power ministry is believed to have agreed to import duty and special additional duty of 5% each besides the countervailing duty. Bharat Heavy Electricals and Larsen & Toubro have repeatedly expressed concerns over Chinese imports

NEW DELHI: Iconic US jeweller Tiffany & Co is in talks to enter India through a 51% joint venture with actress-turned-luxury entrepreneur Reena Wadhwa, who already has a joint venture with Italian luxury brand Gucci, a person familiar with the negotiations said. “The deal is on the table now and could be signed soon,” the person said.

Reena Wadhwa, who is married to investment banker and Ambit Group CEO Ashok Wadhwa, will float a new venture to run Tiffany’s business, the person said.

Wadhwa confirmed she has been in talks with Tiffany’s, but said nothing has been finalised. Tiffany & Co Vice President, Emerging Markets, Laurent Cathala said: “We have been pursuing discussions with potential partners and will announce the details of a business structure in India when we have finalised our plans and have signed the appropriate agreements.”

Started as a stationery and fancy goods store in New York in 1837, Tiffany’s is today the world’s second-largest luxury jewellery retailer behind Chinese jeweller Chow Tai Fook, operating around 230 stores world over.

During its long history – Tiffany’s will complete 175 years in September – the jeweller helped shape American culture including creating a design for the Union Army that would become baseball team New York Yankees’ “NY” logo.

The company is fighting falling sales in the US and most European countries. During the festival season, better sales in Asian countries helped Tiffany’s post a 7% rise in worldwide sales.

The company’s management recently identified India as one of the key markets for the future. “We view India as an attractive long-term growth opportunity for Tiffany’s,” said Cathala, who heads Tiffany’s emerging markets business, which covers the Middle East, Gulf countries, Europe, Africa, Turkey and India, and is based in Dubai.

Tiffany’s is hoping to capture a pie of the country’s $5.8-billion luxury market, which is expected to grow more than 20% a year to $14.7 billion by 2015.

Cathala is leading Tiffany’s negotiations with Wadhwa being held out of Dubai, said the unnamed person quoted earlier.

Wadhwa had converted her company Luxury Goods Retail Pvt Ltd into a joint venture with Gucci in 2009, with the Italian firm holding 51% share. Gucci ended a franchisee deal with the Murjanis to form the joint venture.

A number of luxury brands have set sights on India as the luxury market is growing more than 20% a year. With the number of high net worth individuals increasing and aspiration levels of the young consumer class rising, the potential is big.

India has three million affluent households, defined as those with more than $100,000, or more than 50 lakh, of investable surplus, according to a global affluence study by research firm TNS.

The Indian government had recently allowed 100% foreign direct investment in single brand retail, but with a rider that retailers having more than 51% FDI will have to source at least 30% of their products from Indian small and medium enterprises, or those firms having invested not more than $1 million, or over 5 crore, in plant and machinery.

Sniffing an opportunity, real estate developers are expected to add more than one million sq ft of exclusive space for luxury retail over the next two-three years across the country.

New Delhi: For the 12th Plan Period (2012-17), the Government may fix power capacity addition target at around 1,00,000 megawatt. This is the Power Ministry’s proposal to the Planning Commission.

“The final call would be taken by the National Development Council. It may be between 90,000 MW and 1,00,000 MW,” Member Planning Commission, Mr B.K. Chaturvedi, told newspersons at the India Energy Congress 2012 here on Tuesday.

In his address, the Power Minister, Mr Sushilkumar Shinde, called for strengthening research and development in power generation, transmission and distribution sectors.

He said while progress in the sector had been made during the 11th Plan, a lot still needed to be done.

The Minister said that during the 11th Plan period, the country has added about two-and-a-half times the capacity that was added during the 10th Plan period. He said that 80,000 MW capacity was under construction for the 12th Plan.

Mr Shinde also emphasised the need of energy conservation through efficiency improvement. He said that through various initiatives such as star labelling of products, the achievement in the avoided generation capacity during the 11th Plan will be over 10,000 MW.

He asked the delegates to look into the issues such as prices of fuels and the local problems.

Smart Grid

Adding that Smart Grid could be an answer in this direction, he said that it was also necessary to find out other causes of transmission losses such as theft and non-billing. Mr Shinde said his Ministry was taking steps to bifurcate the losses between commercial and those due to other reasons, including technical and theft.

Hyderabad: Power major NTPC Ltd is taking small but decisive steps towards renewable energy projects, spanning solar photovoltaic, solar thermal and wind. It is setting up a 5 MW photovoltaic power generation unit close to Port Blair airport in Andaman and Nicobar Islands.

NTPC will invest Rs 57 crore for the solar PV plant. Photon Energy has been chosen to implement the project. Work will commence next month, according to Mr R. Venkateswaran, Regional Executive Director.

The company has internally targeted a capacity of about 1,000 MW from renewable energy projects in the near term, including a clutch of wind energy farms in Karnataka and solar power generation projects in Andhra Pradesh and Karnataka.

ACROSS SOUTH

The NTPC official said, “In the South, we are setting up a 25 MW solar photovoltaic power plant at Ramagundam in Andhra Pradesh. Of this, 5 MW would be taken up immediately. In Karnataka we are setting up 2×50 MW power plants. In Kerala, the renewable energy arm is setting up wind farms at Idukki and Palakkad.”

At Idukki, a feasibility report for 20 MW has been approved. It is estimated that the location has potential for 60 MW. “Often we get hostile terrains for some of the projects like in Andamans. But we would ensure they come up on time. The low gestation period for renewable energy projects augurs well,” he felt.

“The Ministry of Power had assigned us the job of setting up diesel generation (DG) sets in Andaman and Nicobar Islands to augment power generation to help in the reconstruction of the island after the tsunami that led to extensive damage. Now we have been awarded a project to commission a 5 MW solar PV plant.”

Mr Venkateswaran said NTPC has completed installation of a series of DG sets of different capacities at Katchal Island, Teressa, Rangat Bay, Car Nicobar and Hut Bay, apart from strengthening high tension switchgear at Chatham Power House.