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MOTLEY COLLECTION OF BUSINESS AND ECONOMIC NEWS |
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 British award for Hyderabad scientist
Dr K. Thangaraj, a scientist at the Centre for Cellular and Molecular Biology (CCMB), Hyderabad, has received the first Major UK-India Education and Research Initiative (UKIERI) Award.
Launched by British Prime Minister Tony Blair during his last visit to India, the UKIERI award is aimed to promote the innovative research and academic excellence between the two countries.
The award has been given to Dr Thangaraj and his collaborators Dr Mart Mirazon Lahr and Dr Toomas Kivisild of Cambridge University for a four-year collaborative project involving genetic analysis of the various populations in India.
It also involves mutual exchange visits of scientists between CCMB and Cambridge University.
This is the first major award given to carry out the research in the field of genomics, out of the six major awards selected from 103 proposals from India and the UK.
The award was presented by Gordon Brown, chancellor of the exchequer of Britain, at a function in New Delhi recently, according to a CCMB release.
It carries a research grant of Rs 2.5 crore. The project aims at probing the question: “Was the first `out of Africa ‘ settlement of homo sapiens in India?”
Dr Lalji Singh, director of CCMB, said that the initiative would bring many more international research collaborations in future to the
centre.
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 Budget 2007-08: What’s in it for NRIs?
India’s latest budget has little to offer to NRI investors. If anything, the tax burden on them has only gone up.
More Indians are paying more taxes, the economy is growing at over 9%, exports are booming and foreign reserves have touched a new record of $180 billion. So Finance Minister P. Chidambaram focused on the poor to lower prices, provide better education and healthcare, offer selected insurance cover and improve infrastructure.
Now that foreign companies are rushing to India and Indian companies are buying out foreign companies, new investment incentives take a back seat. Thus it is no wonder the budget did not have any special provisions to attract NRI investors. However, NRIs, like all Indians, will pay less income tax but also get lower returns on Indian stocks.
NRIs who file income tax returns in India will benefit marginally as the tax exemption has been raised by Rs 10,000 to Rs 110,000; to Rs 145,000 for women and Rs 195,000 for senior citizens. However, the education cess has increased from 2% to 3% percent on all direct and indirect taxes to finance higher education.
NRIs will get lower returns from their investments in stocks. The budget raised the dividend distribution tax from 12.5 to 15% on dividends paid by a domestic company from April 1, 2007. When the education cess of three percent is added, it amounts to over 18%. This means the dividend is reduced by over 18% on Indian stocks. Similarly, NRIs investing in a money market mutual fund or a liquid fund would pay 25% dividend distribution tax. But not many NRIs invest in these very short-term funds and the return is negligible.
NRI tenants occupying any property for commercial use will now have to pay service tax of 12.5%. This increases their cost of doing business in India. NRI landlords will not be affected, as they will collect this service tax from their tenants.
The budget did not make any provisions for greater individual real estate investment. NRIs remit funds through legitimate banking channels and so they are at a disadvantage when the seller demands the majority of the price in cash as the sale price is a fraction of the total price paid for a property.
As avid collectors of Indian art, if NRIs sell their art pieces in India, they will have to pay a capital gains tax. An NRI selling any work of art in India including drawings, paintings, sculptures or archaeological collections will now pay capital gains tax of 20% on the net gains or 10% on the total price.
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 India emerging as new business destination
India is emerging as the new destination for American business after China, with several states planning to send trade missions to take advantage of its “fast-growing market”. Governors from Virginia and Iowa have been there, and Minnesota, California and Utah are lining up gubernatorial visits for this year, according to Michael Taylor of the US-India Business Alliance that helped organise the earlier missions. “There is sort of a stampede thing. India is very much on everyone’s radar scope now,” said Taylor, the alliance’s executive vice-president, who has been in contact with at least a dozen states about possible trips.
Taylor added: “It’s just a question of when they decide to go and how they decide to go. I think they feel a necessity to do it. The China mission was something you had to tick off. India has now become that.”
Minnesota’s Republican governor Tim Pawlenty is planning to lead a 30-member trade mission to India from October 20-27 with stops in New Delhi, Bangalore and Mumbai. “We view this as a tremendous opportunity to better acquaint Minnesota with India and better acquaint India with Minnesota,” said Pawlenty. India makes up a tiny fraction of Minnesota’s roughly $14 billion in annual manufactured exports.
The agenda will include market and industry presentations, networking events, customised one-on-one business matchmaking meetings and other similar events.
With an overwhelmingly favourable impression of the US, India is one of the most pro-American countries in the world and is eager to work with American businesses.
More than 58 percent of the Indian population is under age 20. That’s more than 564 million people—nearly twice the total population of the US.
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 High net worth NRIs go long on realty
What could a mall in Ahmedabad, an office complex in Hyderabad and a residential township in Baroda have in common? Answer: all three are being built courtesy funds put together by wealthy NRIs.
Real estate sector analysts say that given the returns offered by Indian real estate, investments through informal funds floated by such NRIs are on the rise.
Around $600 million may have come in through such investments in the last calendar year, analysts believe. Investments through the formal channels will easily be many times more, though exact estimates are not available.
Said Akhil Hirani, managing partner at Majumdar and Co, a Mumbai law firm, “We get around five or six such enquiries every week, mostly from NRIs who want to put together a fund to build a property, stay through the stipulated lock-in period and then sell and exit.”
The investment is usually $10-25 million, with most of the funds being sourced from the extended NRI clan and friends, Hirani said. Most of the investors, he said, were interested in projects in their native cities where family or close friends could oversee the investment. Several such investments have taken place in smaller cities like Jaipur, Hyderabad, Vijayawada, Ahmedabad, Baroda and Surat.
Most of the investments are routed through Mauritius, to leverage double tax treaties. Typical investments take place in projects in which the costs are low. Both developer and investor gain, the former by easy access to capital, the latter from an attractive return on investment.
Investment in Indian real estate has grown rapidly over the past three years, with annual average returns in the smaller cities going up to 50%.
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more...
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April 2007
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