andhra pradesh

Confederation of Indian Industry Southern Region

Deccan Despatch – Economic Update

June 2007 Vol. 1

IN THIS ISSUE ANDHRA PRADESH ¾ Policy Tracker ¾ Investment Tracker ¾ Notification Tracker

KARNATAKA ¾ Policy Tracker ¾ Investment Tracker Deccan Despatch–Economic Update is a monthly review through which we aim to present up-to-date news and an analytical view of policies, investments and notifications, issued by the southern states and that impact the industry.

¾ Notification Tracker

KERALA ¾ Policy Tracker ¾ Investment Tracker ¾ Notification Tracker

PUDUCHERRY ¾ Policy Tracker ¾ Notification Tracker

TAMIL NADU ¾ Policy Tracker ¾ Investment Tracker ¾ Notification Tracker

Confederation of Indian Industry, Southern Region 98/1, Velacherry Main Road, Guindy Chennai – 600 032 Ph: 91-44-42444555, Fax: 91-44-42444510 E-mail: [email protected] Website: www.cii.in

No.35

ANDHRA PRADESH POLICY TRACKER Complaint boxes for better medicare system

To make the medicare system more accountable to the people, the Government of Andhra Pradesh has decided to install complaint boxes at all government hospitals. The government has also decided to conduct ‘clinical classes’ in hospitals to educate the patients on the necessary steps to be taken during serious ailments. During these classes at the hospitals, the complaint boxes will be opened and grievances will be settled. According to the government, the main aim of the policy is not to suspend or dismiss the medical staff but reminding them of their basic duty towards to people.

Website for educated unemployed youth

To bridge the gap between industry and academia and to provide employment to all educated unemployed youth in the state, the Government of Andhra Pradesh plans to launch a website to inform the youth about vacancies in all sectors in the state. According to the government, the website would contain details about vacancies in each industry and sector and will be updated on a weekly basis. The government also proposed to synergise the activities of Jawahar Knowledge Centres, Language Labs, Gurukulams and Industrial Training Institutes, undertaken by the state council for higher education.

Andhra Pradesh considering imposition of tax on software exports

Andhra Pradesh stands at fourth position in IT exports in the country after Karnataka, Maharashtra and Tamil Nadu and is witnessing robust growth of the sector. On the lines of neighbouring states, Karnataka and Tamil Nadu, the Government of Andhra Pradesh is considering for imposing sales tax on IT exports from the state. According to the government sources, in this regard, the state government is discussing with the IT industry representatives and decision will be taken after considering their views.

Revised power procurement plan to meet additional demand

The Government of Andhra Pradesh and AP Transco have revised power procurement plan to meet the additional demand power during 2007-2008. According to the government, this revised plan would incur an additional investment of Rs2,832 crore. As an initiative, the state government has assured an additional financial support of Rs1,040 crore in the form of subsidy to AP Transco. The government also directed AP Transco to ensure that there would be no power cut and also seven hours power supply to the farm sector operations in the state.

AP government plans power subsidy to textile units

In a move to provide special attention to the textile units in the state, the state government has decided to reimburse the subsidy portion of the power charges already paid by the textile units. According to the government, the textile units in the state need special attention since they have the capacity to generate significant employment.

AP plans bio-diesel plantation

To encourage bio-diesel plantation in the state, the Andhra Pradesh government plans to come out with an exclusive bio-diesel plantation policy and act. According to the government, under this policy, the government has targeted to plant 3.6 crore pongamia seedlings during 2007-08, covering about 1.60 lakh acres of land.

AP plans to expand crop cover scheme

The Government of Andhra Pradesh has decided to expand the crop insurance scheme beginning this kharif season. According to the information released by the state government, the scheme would now cover the following districts and their respective crops: Vizianagaram, East Godavari, West Godavari (paddy), Kurnool (groundnut) and Medak (maize). Currently, the scheme is implemented in Karimnagar (maize), Mahboobnagar (maize), Anantapur, Kadapa (groundnut) and Prakasam (red gram). With this expansion, over five lakh farmers would receive loans this year.

AP issues Ordinance to curtail supply of inferior seeds

To control the cotton seed activity in Andhra Pradesh, the state government plans to introduce legislation and has issued an Ordinance to curtail supply of spurious and inferior seeds. According to the government, the AP Cottonseeds (Regulation of Supply, Distribution and Fixation of Sale Price) Act, 2007 comprises clauses to award serious punishments to the offenders. The government also notified that the Ordinance calls for constitution and appointment of a Controller at the state-level to oversee and evolve a regulatory system to ensure quality and fair price.

ANDHRA PRADESH INVESTMENT TRACKER Domestic Investment

Moser Baer to set up photovoltaic unit in Hyderabad

Under its expansion plan, the Moser Baer Photo Voltaic Limited (MBPV), the wholly-owned subsidiary of optical storage media manufacturer Moser Baer plans to set up a photovoltaic cell unit at the proposed Fab City in Hyderabad. According to the company sources, Moser Baer is considering a photovoltaic unit along with another project with an investment of about Rs3,000 crore. With the setting up of the new facility, the photovoltaic manufacturing capacity of the company will increase from 40MW to 80MW.

Lee Pharma plans to set up facility at Pharma SEZ in Vizag

Hyderabad-based Lee Pharma Limited, a pioneer in producing active pharmaceutical ingredients, intermediate chemicals and pellets and granules is planning for setting up of a manufacturing unit in the pharma special economic zone (SEZ) at Duvvada in Visakhapatnam. According to the Lee Pharma Ltd, for this project, the company plans for an estimated investment of Rs15 crore. To capture export opportunities, the company plans to start the new facility by agreements with the US FDA, the Therapeutic Goods Administration of Australia, the Medicines and Healthcare Products Regulatory Agency (MHRA) of UK and other European regulatory agencies. According to the company sources, currently Lee Pharma has two manufacturing facilities in Hyderabad with a combined capacity of 300 tonnes and exports its products to nearly 30 countries.

New fertiliser unit in East Godavari district of Andhra Pradesh

Keeping in view the huge demand-supply gap in fertilisers in the Andhra Pradesh market, KPR Fertilisers Private Limited plans to set up a fertiliser unit at Bikkavole village in East Godavari district with an estimated investment of Rs20 crore. As per the company sources, the plant will have a capacity to produce 60,000 tonnes of single super phosphate and 40,000 tonnes of NPK (complex fertilisers). The new plant is expected to provide employment to 500 people, both directly and indirectly.

Wellquest’s new clinical research facility in Hyderabad

Wellquest, an independent clinical research organisation of Nicholas Piramal India Limited, opened its clinical research centre in Hyderabad by investing Rs10 crore. According to the centre, it will undertake Phase I-III clinical trials on new chemical entities, bioavailability and bioequivalence studies for evaluation of generic and novel drug delivery system products, besides paediatric clinical trials.

E-City Ventures’ major expansion plans worth Rs250cr

Considering the growing leisure activity in Andhra Pradesh, Mumbai-based E-City Ventures, a division of Essel Group, chalks out a major expansion plan for the state. Under this expansion plan, E-City plans for an investment of Rs250 crore for leasing out theatres and setting up multiplex screens in AP in the next three years. In the locations like Anantapur, Hyderabad, Eluru, Tirupati, Chittoor and Rajahmundry, the company plans to put up 100 multiplex screens and around 200 individual theatres will be taken on a lease basis

DLF plans for Rs5,000cr investment in Andhra Pradesh

DLF, the major real estate development company, plans for an investment of Rs5,000 crore in Andhra Pradesh for the expansion of retail market and setting up of two SEZs near Hyderabad. Under this plan, DLF is developing a DLF City – an SEZ at Gachibowli in Hi-tec City in Hyderabad with an investment of about Rs800 crore. In a joint venture with US-based Hilton group, DLF plans to construct service apartments and a 100-room hotel in the proposed SEZ, which involves an investment of Rs300 crore. The company is also exploring retail development opportunities in Visakhapatnam and Vijayawada.

Prajay Syndicate to invest Rs110cr in housing projects in Vizag

Prajay Syndicate is planning for two housing projects in Visakhapatnam, one at Parawada and the other at Madhurawada. Under this project, the company will construct 600 houses in the first phase and 500 houses in the second phase. Apart from this, the company will also construct a budget hotel. The total estimated investment for the project is Rs110 crore.

New low-grade barytes benefaction plants in Andhra Pradesh

The state government of Andhra Pradesh has approved for setting up three benefaction plants with a total investment of Rs90 crore. According to the government released information, there is a huge potential for barytes in the Mangampeta mines, which is estimated to have about 3035% of low-grade barytes. To make use of this low-grade variety, the Andhra Pradesh Mineral Development Corporation has commissioned a benefaction study by the National Metallurgical Laboratories, Jamshedpur and the results of the study were very encouraging.

Tata Tele plans for expansion in Andhra Pradesh

Tata Teleservices Ltd (TTSL) plans to expand its network in Andhra Pradesh with an investment of Rs200 crore. With this expansion, the TTSL services will be available to another 127 towns and more than 1,000 villages in the state from the current 357 towns and over 9,000 plus villages.

Rain Industries expand capacity

to Rain Industries Ltd, a wholly owned subsidiary of Rain Commodities Ltd, plans for expansion of

New coal-based power units in Anantapur

its cement plant located at Kurnool in Andhra Pradesh. According to the company, the plant will be expanded from 1.4m tonnes per annum (tpa) to 2.9m tpa with an estimated investment of about Rs334 crore. VP Cements Pvt Ltd is planning for setting up of a 3MW coal-based power unit and a 2MW coal based power unit at Tadpatri in Anantapur district of Andhra Pradesh. According to the company, the total investment involved in this project is Rs30 crore.

Foreign Investment

International campus Hyderabad

in

US-based Georgia Institute of Technology signed a memorandum of understanding (MoU) with Andhra Pradesh government for setting up of its international campus in Hyderabad. The new international campus will be operational by 2009. The institute also plans an extension unit in Visakhapatnam. Under the MoU, the state government will allot 20 acres of land in Hyderabad and 470 acres of land in Visakhapatnam for developing and expanding the campus of Georgia Tech. As per the information released by Georgia Tech, initially the institute will spend about US$10m per annum for developing the campus.

Genpact to expand in Hyderabad

The global provider of high-quality business and technology services, Genpact signed an MoU with the government of Andhra Pradesh to expand its operations in Hyderabad by setting up its third state-of-the-art campus in Hyderabad. As per the agreement, Genpact plans to invest Rs1.21 billion for the new facility. Under this expansion plan, Genpact will construct about 1m sq ft IT/ITES space on about 50 acres of land at Jawahar Nagar in Hyderabad.

Cynosure to set up battery manufacturing unit in Hyderabad

Hyderabad-based Cynosure Enterprises Limited, in joint venture with Chinese Zhejiling Changton e-bike Company Limited, is planning for setting up of a manufacturing unit of batteries at Hyderabad for battery-powered scooters. This will be the first-of-its-kind manufacturing facility for battery-powered vehicles, which are currently being imported into the country from China, as per the company sources. The company has already acquired 10 acres of land from the Andhra Pradesh Industrial Infrastructure Corporation-promoted industrial estate at Hyderabad and plans to invest an estimated Rs25 crore in the battery manufacturing facility.

ANDHRA PRADESH NOTIFICATION TRACKER Revenue Department

Amendment to the Andhra Pradesh Value Added Tax Rules, 2005. [G.O.MS. NO. 816, Revenue (CT.II), dated the 15th June 2007] NOTIFICATION In exercise of the powers conferred under sub-section (1) of section 78 of Andhra Pradesh Value Added Tax Rules, 2005 (Andhra Pradesh Act No.5 of 2005), the governor of Andhra Pradesh hereby makes the following amendments to the Andhra Pradesh Value Added Tax Rules 2005, in G.O Ms. No 394, Revenue (CT.II) Department, dated the 31st March, 2005 and published in the rules supplementary to Part I extraordinary issue of Andhra Pradesh Gazette No. 29, dated 20th April, 2005 as subsequently amended from time to time. 2. These amendments shall be deemed to have come into force on the 1st April, 2005. AMENDMENTS In clause (a) of sub Rule (6) of rule 35 of the said rules,1) Sub Clause (ii) shall be omitted. 2) After sub clause (v) the following sub clause shall be added viz., “(vi) Copy of the document in proof of export duly certified by Customs Department” GRANT OF LETTER OF INTENT FOR ESTABLISHMENT OF NEW DISTILLERIES FOR MANUFACTURE OF EXTRA NEUTRAL ALCOHOL/SPIRIT/MALT SPIRIT FOR POTABLE PURPOSES OR EXPANSION OF PRODUCTION CAPACITIES OF THE EXISTING DISTILLERIES FOR POTABLE PURPOSES UNDER RULE 4 (2) OF THE A.P. DISTILLERIES (MANUFACTURING OF SPIRITS) RULES, 2006.

[G.O.MS. NO. 748, Revenue (Excise.III), dated the 4th June 2007] NOTIFICATION I. –Under Sub-rule (2) of rule 4 of the Andhra Pradesh Distillery (Manufacture of Spirits) Rules, 2006 issue din G.O.Ms.No.91 Revenue (Ex. III) Department, dated 27th January, 2007, the Government hereby invites applications from the intending persons/holders of licence to manufacture Extra Neutral Alcohol for potable purposes for grant of Letter of Intent for establishment of new distillery for manufacture of Extra Neutral Alcohol by re-distilling Molasses based Spirit for potable purpose or expansion of production capacities for the existing distillery manufacturing Extra Neutral Alcohol by re-distilling Molasses based Spirit for potable purposes. II.—Under Sub-rule (2) of rule 4 of the Andhra Pradesh Distillery (Manufacture of Spirits) Rules, 2006 issued in G.O.Ms.No.91 Revenue (Ex. III) Department, dated 27th January, 2007,

the Government hereby invites applications from the intending persons/holders of licence to manufacture Extra Neutral Alcohol for potable purposes for grant of Letter of Intent for establishment of new distillery for Manufacture of Extra Neutral Alcohol buy re-distilling Grain based Spirit for potable purpose or expansion of production capacities of the existing distilleries manufacturing Extra Neutral Alcohol by re-distilling Grain based Spirit for potable purposes.” Note: Please refer G.O. Ms. No. 748, Revenue (Excise III), 4th June, 2007 for further details of the notification. GRANT OF LETTER OF INTENT FOR ESTABLISHMENT OF NEW BREWERIES OF EXPANSION OF EXISTING BREWERIES UNDER RULE 3 (2) OF THE A.P. BREWERY RULES, 2006. G.O Ms No 749, Revenue (Excise. III), 4th June, 2007 NOTIFICATION Under sub-rule (2) of the rule 3 of Andhra Pradesh Brewery Rules, 2006 issued in G.O. Ms.No. 92, Revenue Ex. III) Department, dated 27th January, 2007, the Government hereby invites applications from the intending persons/holders of licence in Form-B2, for grant of Letter of Intent for establishment of new breweries or expansion of production capabilities of the existing breweries. AMENDMENTS TO THE ANDHRA PRADESH EXCISE (GRANT OF LICENSE OF SELLING BY BAR AND CONDITIONS OF LICENSE) RULES, 2005 G.O. Ms. No. 868, Revenue (Excise.II), 21st June, 2007 NOTIFICATION In exercise of the powers conferred by Section 72 read with Sections 17, 28 and 29 of the Andhra Pradesh Excise Act, 1968 (Andhra Pradesh Act 17 of 1968), the Governor of Andhra Pradesh hereby makes the following amendments to the Andhra Pradesh Excise (Grant of License of Selling by Bar Conditions of License) Rules, 2005 issued in G.O. Ms. No. 997, Revenue (Excise II) Department, dated the 24th May, 2005 and published in the Andhra Pradesh Gazette in Rules Supplement to Part II, Extraordinary, dated 24-05-2005 and subsequently amended. Note: Please refer G.O. Ms. No. 868, Revenue (Excise. II), 21st June, 2007 for further details of the notification.

KARNATAKA POLICY TRACKER Karnataka plans to build coastal roads

Deep-sea fishing ban imposed in 3 coastal districts of Karnataka

The Fisheries Department of the Government of Karnataka plans to construct a two-lane 397km-long concrete road from Talapady in Dakshina Kannada to Karwar in Uttara Kannada. The existing fisheries road in these districts will also be widened and upgraded as part of the project. According to the government, the total estimated investment involved in this project is about Rs800 crore. The Government of Karnataka has notified that a 67-day deep-sea fishing ban has been imposed from June 10 in the three coastal districts of Karnataka—Dakshina Kannada, Udupi and Uttara Kannada. According to the government, the ban would be in force up to August 15, 2007. The ban will be applicable to those who go for deep-sea fishing with mechanised boats and trawlers and country boats. The government also notified that strict action will be taken against the violation of the laws and the government will not pay any compensation in cases of accidents at sea during the ban period.

Karnataka plans to offer incentives to Nagarjuna Power Plant

The Karnataka Cabinet plans to extend certain concessions related to entry tax, stamp duty and registration fee to the 1,015MW Nagarjuna Thermal Power Project coming up in the coastal district of Udupi. According to a government press release, the state government has granted concessions to the Rs4,299 crore coal-based project in accordance with the State Industrial Policy 2006-11. The project is being implemented by Nagarjuna Power Corporation Ltd whose promoters include Lanco Group, Nagarjuna Fertilizers and Chemicals Ltd and Nagarjuna AgriChem Ltd.

Subsidy to SSI units in Karnataka

To clear the Rs300 crore dues of SSI units towards subsidy in the state, the Karnataka government plans to release Rs100 crore every year towards arrears of subsidy amount for three years. The government also stated that under the Suvarna Khayaka scheme, over 65,000 jobs were generated in SMEs in the state.

Karnataka plans to set up Sanskrit Directorate

To propagate Sanskrit language, the Karnataka government plans to set up a Sanskrit Directorate in the Bangalore. The government also announced to set up a world-class Academy at the Kuvempu University in Shimoga. The main objective of the academy is to promote innovative research and education in social sciences and humanities.

Karnataka to have 2 new districts

To facilitate better administration, the Karnataka Cabinet has approved the formation of two new districts—Ramanagara and Chikballapura. According to the government, Chikballapura will have six taluks with a population of 11.49 lakhs in 1,514 villages. The population in Ramanagara district will be 10.08 lakhs with 827 villages.

Karnataka extends child labour elimination programme in the state

In a move to eliminate child labour from the state, the Karnataka government plans to set up rehabilitation centres and extend the comprehensive child labour elimination programme by 2012. Under this programme, the main aim of the government is to identify children, aged below 14 years, working in both hazardous and non-hazardous sector and rehabilitate them. According to the government sources, the government had approved a grant of Rs6 crore per annum for implementing the action plan.

700 tanks to be renovated in Karnataka at a cost of Rs300cr

Karnataka government plans to take up a major project to renovate about 700 tanks in the state with an estimated investment of about Rs300 crore. According to the government, the renovation works would be taken up in phased manner and by August 2007, about 300 tanks would be rejuvenated and during the second phase the balance 400 tanks would be rejuvenated. With this rejuvenation of tanks, about 1.91 lakh hectares of land would get irrigation facilities.

Creation of Infrastructure Upgradation Fund with Rs500cr

For the up gradation of infrastructure facilities across 157 industrial estates in the state, the Karnataka government has decided to create an Infrastructure Engraftation Fund with Rs500 crore. According to the government, Karnataka State Industrial Infrastructure Development Corporation is the nodal agency to take up the project and the government would allocate Rs100 crore every year over the next five years under this project. Also the government notified that up gradation would also be taken up in those industrial areas that are handed over to local civil authorities and weightage will be given to those industrial areas that come under the backward districts of North Karnataka.

Karnataka plans land bank for tourism development

To develop the tourism infrastructure in the state, the Department of Tourism, Government of Karnataka plans to create a land bank. The land bank will comprise both government and private land suitable for setting up hotels, resorts, amusement parks and entertainment complexes at places of interest to tourists across the state. The Department of Tourism has also identified three tourist places—Pattadakal, Belur and Kodachadri—for setting up hotels as joint ventures with private hotels and resort chains.

New Silk Park in Karnataka

The Karnataka government has cleared a proposal to set up a silk park on 60 acres of land at Anekal near Bangalore. The Central Government will provide 40% of the project cost and the silk mills will invest the remaining 60% in the project. According to the government, High-Tech Weaving Park Ltd, a special purpose vehicle, will implement the project. The silk park will provide land to 150 silk weaving mills for setting up integrated silk mills for producing silk fabric. It will have facilities like silk twisting, weaving, dying, processing and marketing.

KARNATAKA

INVESTMENT TRACKER Domestic Investment

Development in Karnataka on PPP basis

Along with the public sector, about 19 companies in the private sector have shown interest in the development of Bijapur, Shimoga and Gulbarga airports under the public-privatepartnership (PPP) basis. According to the government sources, the land has been acquired for the proposed airports and major highway projects in the state would also be developed under the PPP model. The projects like Sandur, Hospet and Belekere by-pass road works were also being taken up under the PPP mode at a cost of over Rs110 crore.

Bioscience Park to come up in Bangalore

The Silicon Valley of India, Bangalore will have another feather to its cap with the construction of Bioscience Park. The proposed park will be constructed with an estimated investment of US$120m. According to the government sources, the park will be built on 8m sq ft area and the work order would be issued soon.

JK Cement to invest Rs2,500cr

To increase the capacity three fold to 15m tonnes from the present 4.4m tonnes, JK Cement is planning for investing about Rs2,500 crore over the next five years. Under this expansion project, JK Cements chalked out plans for the capacity expansion at the plant located at Muddapur in Karnataka with a capacity of 3.5m tonnes.

DLF to Rs4,200cr Bangalore

invest in

Real estate major DLF Ltd is planning for an investment of about Rs4,200 crore in two residential projects and a large retail mall in Bangalore. According to the company, the retail mall would be developed on a 15-acre land in Whitefield with an investment of Rs1,200 crore and the residential projects involves an investment of about Rs3,000 crore.

Bangalore Infra plans to invest Rs140cr in 5 projects

The real-estate division of Rajesh Exports Ltd, Bangalore Infra is planning to develop five projects using land bank in and around Bangalore. The company has 23 properties in and around Bangalore and plans for an investment of about Rs140 crore in these projects.

Brigade Hospitality plans to invest Rs1,000cr in Bangalore

Brigade Hospitality Services, the hospitality services division of the Brigade Group, is planning for investing about Rs1,000 crore in five hotel properties in Bangalore that would be operational by 2009-10. According to the company, it is also exploring opportunities in Mangalore, Kochi, Chennai, Hyderabad, Coimbatore and Nagpur.

CIPSA-RIC India's major expansion plan

CIPSA-RIC India Pvt Ltd, a major player in the domestic printed circuit board industry, is planning to expand the production capacity of its existing unit at Doddaballapur in Bangalore from 12,000sq metres per month to 40,000sq metres per month. According to the company, the expansion plan entails an estimated investment of about US$10m.

Hothur Ispat plans to set up unit at Venivirapura

Hothur Ispat Pvt Ltd plans to set up a 12MW coal-based captive power unit at Venivirapura in Karnataka. The estimated investment involved in this project is Rs85 crore, according to the company sources.

New coal-based power unit in Gulbarga

Kesoram Industries Ltd plans to set up an 18MW coal-based power unit in Gulbarga, Karnataka. The total investment involved is estimated at Rs70 crore. According to the company, the work will commence from June 2007 and is expected to complete by December 2008.

Foreign Investment

CAE to invest US$20m in training unit in Bangalore

CAE, the Quebec-based provider of simulators and pilot training solutions, is planning to invest an additional amount of about US$20m in its aviation training centre in Bangalore. The centre is located near the upcoming Bangalore International Airport. The company is initially installing two simulators, which will provide flight operations support on the Airbus A320 and Boeing 737 platforms. The major aim of the centre is to train 1,000 pilots in the first year of its operations.

KARNATAKA NOTIFICATION TRACKER Finance Department

[No. FD. 195 CSL 07, dated the 4th June 2007] NOTIFICATION In exercise of the powers conferred by Section 8-A of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), the Government of Karnataka hereby exempts with immediate effect and unto 31.03.2008, the tax and cess payable under the said Act on purchase of sugarcane by a sugar manufacturing unit in the State.

[No. FD. 192 CSL 07, dated the 23rd June 2007] NOTIFICATION In exercise of the powers conferred by clause (3) of section 4 of the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004), the Government of Karnataka hereby reduces with immediate effect, the tax payable by a dealer under the said Act to four percent on the sale of denatured anhydrous alcohol.

KERALA

POLICY TRACKER Kerala plans new IT policy with incentives

The Kerala government plans to declare new IT policy with incentives to fresh investors. According to the new policy, the biggest incentive is that the subsidies for investment in IT in all districts have been increased from 20% to 40% except Thiruvananthapuram and Kochi. Since these two districts have the highest concentration of IT units in the state, subsidies have been hiked from 20% to 30%. The new policy also stressed on Kerala to become the headquarters of free software industry. The policy also stated that all major offices in the state and educational institutions would be networked.

Industrial and Commercial Policy 2007 released by KeralaAuthority

With a vision to convert Kerala into an investment-friendly destination and to focus on high and sustainable economic growth through rapid industrialisation activities in the state, the Government of Kerala has released the new Industrial and Commercial Policy 2007. According to the government, under this new policy, the government would encourage all sorts of investments in the state on mutually beneficial terms, which would contribute for the growth of economy, employment and tax revenue. The major objective of the policy is to convert the state into a favoured destination for manufacturing, health service, agro-processing, knowledge-based industries and services. The policy also envisaged to make traditional industries more competitive through modernisation, value addition and skill development.

Kerala plans to set up holistic tourism centres

To promote medical tourism and to attract more tourists into the state, the Government of Kerala plans to set up holistic tourism centres in the state. According to the Department of Tourism, Kerala, these centres would combine various segments of tourism like ayurveda, farm tourism and medical tourism.

Kerala plans to set up ICC at Kochi

To encourage industrial activities in the state and to promote Kerala as an industrial hub, the Kerala government is planning to set up an International Convention Centre (ICC) at Kochi. According to the government, the centre will come up in 4 lakh sq ft area and involve an estimated investment of Rs400 crore. The Mumbai-based Zoom Developers has been entrusted for the development of the centre.

Kerala plans to revive The Kerala government is taking necessary initiatives to revive sick state-owned Public Sector sick PSUs through Undertakings (PSUs) through joint ventures with Central PSUs. In this regard, Kerala joint ventures government has signed an MoU with the National Thermal Power Corporation to rejuvenate the PSU Transformers and Electrical Kerala Limited. According to the government, projects like Smart City and Vallarpadam Terminal would act as the engine for growth in the state.

Village Tourism Development Scheme launched in Kerala

In an attempt to decentralise tourism development in the state, the Kerala government has launched Kerala Tourism's village tourism development scheme. Under this scheme, the government gives greater emphasis to domestic tourism. The scheme stresses on the slogan as ‘My Village, A Tourism Friendly Village’ and is intended to involve local communities in the planning and implementation of tourism projects. Under this scheme, resources will be allocated to local self-government institutions to design and implement tourism projects.

New building rules The Kerala government has extended the Municipal Building Rules to all its panchayats. Earlier, to cover more the rules were applicable to the corporations, municipalities and 184 panchayats in the state. As Panchayats in Kerala per the latest notification issued by the government, the rules will cover additional 815 panchayats. With this rules in place, permission of the Grama Panchayats would be required to undertake construction works in these panchayats.

Kerala extends the Akshaya e-literacy programme

The government of Kerala has extended the implementation of first-phase of the Akshaya eliteracy programme in the districts of Kollam, Pathanamthitta, Ernakulam, Thrissur, Kozhikode, Kannur and Kasaragode till September 30, 2007. According to the government, the second phase intends to add the modules of e-pay, e-krishi, learn-and-speak programme and online railway ticket vending to make Akshaya centres full-fledged ‘Jana Sevana Kendrams’.

KERALA INVESTMENT TRACKER Domestic Investment

Pranavah expanding operations in Kerala

Bangalore-based service engineering and construction company Pranavah Promoters Pvt Ltd is planning for expanding its operations in Kerala by undertaking housing projects in several parts of the state. According to the company, the new project includes budget housing to luxury flats, which will be located in Thrikkakkara near Kochi, Guruvayur, Thrissur and Aluva. The company is planning for an investment of Rs1,500 crore for these housing projects to be completed in the next 2-3 years.

Suzlon and Vestas plan 15MW wind energy in Kerala

Suzlon Energy and Vestas, wind turbine majors, signed an agreement with the state government of Kerala for 15MW wind power project. According to the official sources, the companies will spend roughly Rs5 crore per mega watt for installing the wind turbines.

Air-India plans to set up MRO base in Kochi

National carrier Air-India, in partnership with Cochin International Airport, plans for setting up of an airframe maintenance, repair and overhaul (MRO) facility near the Kochi International Airport, Kerala. The investment decisions needs to be finalised. In an official statement released by Air-India, it is mentioned that Air-India has already tied up with the US-based aircraft manufacturer Boeing Company to set up an MRO at Nagpur, Maharashtra.

Manjilas Group to invest Rs10cr in Food Park

The makers of Double Horse brand of instant mix rice and rice-derived products, Kerala-based Manjilas Group plans for an investment of Rs10 crore for an integrated food park near Thrissur in Kerala. The main objective of the company in setting up the food park is to bring all the branded products of the company under one roof.

SIFL is planning to expand capacity

With continuous improvement in performance over the last few years, the state-owned Steel and Industrial Forgings Ltd (SIFL) is planning to expand capacity to produce new products. The expansion plans will involve an investment of Rs13 crore in its company located at Thrissur, Kerala. SIFL is engaged in the manufacturing of steel forgings and supply to a wide range of customers including Railways.

KERALA NOTIFICATION TRACKER Finance Department

[No. 46160/SSI/2007/Fin., Dated 14th June, 2007] NOTIFICATION Government of Kerala hereby notifies the sale of Kerala State Government Stock (Securities) of 10 year Tenure for an aggregate amount of Rs.300.00 crore (Nominal). The sale will be subject to the terms and conditions spelt out in this notification (called Specific Notification) as also the terms and conditions specified in the revised General Notification No. 105743/SS1/2003/Fin. Dated 15th December 2003 of Government of Kerala. Object of the Loan 1. (i) The proceeds of the Loan will be utilised for financing the developmental activities of the State. (ii) Consent of Central Government has been obtained to the flotation of this loan as required by Article 293 (3) of the Constitution of India. Method of Issue 2. Government Stock will be sold through the Reserve Bank of India, Mumbai Office (PDO), Fort, Mumbai-400 001 by auction in the manner as prescribed in paragraph 6.1 of the revised General Notification No. 105743/SS1/2003/Fin. Dated 15th December 2003 at a coupon rate to be determined by the Reserve Bank of India at the yield based auction under multiple price format. Place and Date of Auction 3. The auction will be conducted by the Reserve Bank of India, at its Mumbai Office, Fort, Mumbai on June 19, 2007. The application form duly filled in with the bids should be submitted to the aforesaid office on June 19, 2007 by 12.30 p.m. Result of the Auction 4. The result of the auction shall be displayed by the Reserve Bank of India at its Mumbai Office, Fort, Mumbai on June 19, 2007. The payment by successful bidders will be on June 20, 2007. Method of Payment 5. Successful bidders will make payments on June 20, 2007 before close of banking hours by means of cash, bankers’ cheque/pay order, demand draft payable at Reserve Bank of India, Mumbai/Thiruvananthapuram or a cheque drawn on their account with Reserve Bank of India, Mumbai (Fort)/Thiruvananthapuram. 6. The Stock will be of ten year tenure. The tenure of the stock will commence on June 20, 2007.

Date of Repayment 7. The Loan will be repaid at par on June 20, 2017. Rate of Interest 8. The cut-off yield determined at the auction will be the coupon rate per cent per annum on the Stock sold at the auction. The interest will be paid every half yearly on December 20 and June 20.

[G.O (MS) No7/2007/PD Dated, 11.5.2007] Read: 1. G.O (ms) No.23/2004/PD dated 06.11.2004 2. Letters No. 02-N/RK Medu/WPC/2303/ANERT/8 dated 02.03.2007 from the Director ANERT, Thiruvananthapuram 3. Letters No.02-N/RK Medu/WPC/2303/ANERT/ dated 17.03.2007 from the Director, ANERT, Thiruvananthapuram 4. Letters No.02-N/RK Medu/WPC/2303/ANERT/ dated 20.03.2007 from the Director, ANERT, Thiruvananthapuram ORDER In the G.O. read as first paper, Policy Guidelines for the Development of the Wind Power in Kerala Through Private Developers were issued. Part III of the said guidelines contains “Guidelines for Development of Wind Farms in Private Lands”. The Director, Agency for Non-conventional Energy and Rural Technology (ANERT) has informed that according to the present policy guidelines, those who intend to set up wind farms in private land shall obtain technical approval from the ANERT. Before submitting the proposal for approval he should obtain NOC from the concerned LSG institution and should purchase/obtain on lease the land proposed. On getting approval, the developer shall file a petition before the Kerala State Electricity Regulatory Commission for open access and enter into a bulk power supply agreement with Kerala State Electricity Board/State Transmission Utility or other traders for sale of power. Since a number of agencies are involved, a developer finds it very difficult to start the wind farm after obtaining various clearances. Similarly, as per the existing guidelines the ANERT shall finalize and develop the pooling substation and transmission line from the pooling substation to the KSEB substation/interconnection point in consultation with the KSEB/STU as per the laid down specifications, after realizing the expenditure from the developer in tow instalments. ANERT can finalize the location and capacity of pooling substation only after considering the technical proposals received by it. Also ANERT is not in a position to take up this work due to lack of sufficient staff and financial support. 2. As per section 3.0 of the policy guidelines, the surplus transmission capacity will be available for wheeling power on payment of wheeling charges and other levies as determined by the State ?Electricity Regulatory Commission. Also transmission and distribution losses for wheeling power will be accounted at the rate determined by State Electricity Regulatory Commission. If these figures are available beforehand the developers can calculate the

economic viability of the project and hence investor’s risk will be minimized. 3. In the light of the facts mentioned above, the Director, ANERT has furnished a proposal for modification to Part III of the existing Guidelines, for approval of the Government. 4. Government have examined the proposal of the Director, ANERT in detail and are pleased to revise Part III of the Guidelines issued in the G.O read as first paper, as should in the annexure to this order. Note: Please refer [G.O (MS) No7/2007/PD Dated, 11.5.2007] for further details

PUDUCHERRY POLICY TRACKER Puducherry to connect all government departments through WAN

Under the e-Governance programme, about 500 government departments in the four enclaves of the Union Territory will be connected through Wide Area Network (WAN) by the end of 2007. According to official sources, the government has identified areas such as software development, content development and portal management for adopting the best and proven practices of e-governance programmes in other states. Apart from this, training to government officials in using Information Technology is also under consideration.

New renewable energy park in Puducherry

Puducherry Chief Minister laid foundation stone for the Rajiv Gandhi Renewable Energy Park in Lawspet near Ponniamman Koil in Puducherry. The park would come up on a 1.6-acre area and the investment involved is Rs1.5 crore.

PUDUCHERRY NOTIFICATION TRACKER Finance Department

[G.O.MS. NO. 21/2007/F2, dated the 6th June 2007] In exercise of the powers conferred by sub-sections (1) and (2) of section 71 of the Puducherry Value Added Tax Ordinance, 2007 (No. 1 of 2007), the Lieutenant Governor, Puducherry hereby makes the following rules, namely: THE PUDUCHERRY VALUE ADDED TAX RULES.2007 CHAPTER I PRELIMINARY 1. Short title and commencement --- (i) These rules may be called the Puducherry Value Added Tax Rules, 2007. (ii) They shall come into force on the 1st day of July, 2007. 2. Definitions-- (1) In these rules, unless the context otherwise requires,(a) “Departmental Representative” means an officer not below the rank of Commercial Tax Officer appointed by the Commissioner to receive on behalf of the assessing authority, notices issued by the Appellate Assistant Commissioner or Commissioner and to appear, act and plead on behalf of the assessing authority before the Appellate Assistant Commissioner or Commissioner, as the case may be; (b) “Form” means a form appended to these rules; (c) “Government Treasury” means a treasury or sub-treasury of the Union territory Government, which includes the main branch of State Bank of India at Puducherry, Karaikal, Yanam and the Syndicate Bank at Mahe and any branch of any other bank as may be notified by the Government from time to time; (d) “Importer” means any dealer who imports goods from outside the Union territory; (e) “Month” means a calendar month; (f) “Ordinance” means the Puducherry Value Added Tax Ordinance, 2007; (g) “prescribed authority” means any officer of the Commercial Taxes Department, not below the rank of Assistant Commercial Tax Officer, as notified by the Government or authorised by the Commissioner to exercise any of the powers conferred by the Ordinance or by these rules; (h) “reversal of tax credit” means reversal of input tax credit already claimed and availed under the Ordinance; (i) “Section” means a section of the Ordinance; and (j) “Tax Payer Identification Number (TIN”. means the registration number allotted to a dealer under the Ordinance and these rules.

PUDUCHERRY (2) Words and expressions used in these rules but not defined shall have the meanings respectively assigned to them in the Ordinance. Note: Please refer G.O.MS. NO. 21/2007/F2, dated the 6th June 2007 for further details

TAMIL NADU POLICY TRACKER Tamil Nadu plans for development of roads and bridges

To develop the surface transport infrastructure in the state, the Tamil Nadu government has sanctioned Rs2.3 billion for development of roads and bridges in the state. The ministry for rural development has already inspected the key plan of road projects proposed for Trichy district.

New charge on building projects

The Government of Tamil Nadu imposed new charge on building projects in the state. With this imposition, real estate developers in Tamil Nadu will face a new levy of Rs100 per sq ft depending on the type of building projects. The objective of the infrastructure and basic amenities charge is to create an infrastructure and amenities fund for the sustainable development of urban areas for providing better services related to water supply, drainage and road connectivity. Industry estimates that over 40m sq ft of residential space, commercial buildings and IT space are in the pipeline over next 15-18 months in Chennai. This means the Chennai Metropolitan Development Authority is set to collect around Rs500 crore in the first year itself.

Tamil Nadu allocates funds for RCH project

The Tamil Nadu government has allocated an amount of Rs352.25 crore for Reproductive and Child Health project (RCH) in the state for the year 2007. As per the government sources, under National Rural Health Mission, a premier RCH centre will be established under Madras Medical College with an investment of Rs100 crore.

Tamil Nadu all set to start evening courts

The Tamil Nadu government is all set to start evening courts in the state and will become the second state in the country after Gujarat to have evening courts. According to the government, the first batch of 11 evening courts will be inaugurated on July 3, 2007 with four courts in Chennai, two each in Coimbatore and Tirunelveli and one each in Salem, Madurai and Tirucharapalli. The working hours would be from 1800 hrs to 2000 hrs on all working days.

Medical college in every district of Tamil Nadu

To provide better healthcare facilities to all the people in the state, the Tamil Nadu government is making efforts to set up medical colleges in every district. According to the government, the policy is under consideration and the investment decisions are yet to be finalized.

Tamil Nadu allots land to IITM for setting up of Research Park

To foster the research activities in the state, the Tamil Nadu government has allotted 11 acres of land to Indian Institute of Technology Madras to set up a research park with an estimated investment of Rs100 crore. According to the government, the park is planned on the lines of research parks in Stanford University and Massachusetts Institute of Technology, which will provide scope for the companies to set up labs in the park.

Tamil Nadu plans to set up a state-ofthe-art library near Chennai

The Government of Tamil Nadu is planning to set up a state-of-the-art library at Kotturpuram near Chennai with an estimated investment of about Rs100 crore. The library will come up on a 9-acre land on Government Data Centre ground. The library will be housed in nine storeys with a built-in area of over 315,000sq ft. The facilities include a multimedia centre, auditorium, children’s park and conference hall.

TAMIL NADU INVESTMENT TRACKER Domestic Investment

Lanco to invest Rs600cr in building township in Chennai

Hyderabad-based Lanco Horizon Properties Private Limited has entered into a joint development agreement with a private land owner for development of 47.58 acres land located near Sipcot Industrial Estate, Siruseri on the Old Mahabalipuram Road in Chennai. According to the company, the project is estimated to cost Rs600 crore and would be completed within 36 months.

Chennai port to construct a roll on/roll off car terminal

Ever since the port of Nhava Sheva’s roll on/roll off car terminal had been converted into a common berth, the country was in need of this vital facility. What comes as an opportune development is the Chennai Port Trust’s (ChPT) plans to construct a roll on/roll off car terminal with an estimated investment of around Rs80 crore. According to ChPT, the terminal will be built on a build-own-transfer basis for a period of 30 years. The port has additional plans like building a multi-level car parking facility inside with an investment of Rs50 crore. According to the sources, the roll on/roll off terminal will help transportation of wheeled vehicles driven into and out of the ship. It will be constructed on the southern end of the container terminal and have a capacity to park around 5,000 cars in an area of 10,000sq metres.

GV Films plans to invest Rs50cr for multiplex theatre in Chennai

GV Films plans to invest Rs50 crore in constructing a multiplex theatre in Chennai in a joint venture with a land owner. According to GV Film sources, the complex would house a 100room hotel, 10 screens for exhibiting movies and space for shopping malls.

New biomass power plant at Pudukudi

GB Engineering Enterprises plans to set up an 8MW biomass power unit at Pudukudi, near Thanjavur in Tamil Nadu. According to the company, the unit would generate power from the rice husk, de-oiled rice ban and agricultural waste. The total estimated investment involved in this project is Rs35 crore. The project is expected to complete by March 2008.

Foreign Investment

Sanmina to invest Rs225cr in Tamil Nadu

US-based electronic hardware maker Sanmina-SCI Corporation plans for an investment of Rs225 crore for setting up of an electronic hardware components project at Oragadam Hi-Tech zone. According to the company, the project is likely to provide direct employment to 4,000 people and indirect employment opportunities to 6,000 people.

TAMIL NADU NOTIFICATION TRACKER Revenue Department

[G.O.MS. NO. 118, No. SRO A-19(f) / 2007), dated the 4th June 2007] NOTIFICATION

AMENDMENT TO THE TAMIL NADU VALUE ADDED TAX RULES, 2007. In exercise of the powers conferred by sub-section (1) of Section 80 of the Tamil Nadu Value Added Tax Act, 2006 (Tamil Nadu Act 32 of 2006), the Governor of Tamil Nadu hereby makes the following Amendment to the Tamil Nadu Value Added Tax Rules, 2007:-AMENDMENT In the said Rules, in rule 10, in sub-rule (3), in clause (b), in sub-clause (vi), for the expression "within ninety days from the date of receipt of the same", the expression "not later than seven months from the date of commencement of the Act" shall be substituted.

This Tracker has been prepared by Cygnus Business Consulting & Research (www.cygnusindia.com), a knowledge partner of CII.