IRDA allows insurers more flexibility to invest

Mumbai: Insurance companies will now have more leeway to invest in sectors such as IT and pharma. The Insurance Regulatory and Development Authority has increased the sector specific exposure limit for investments by insurers from 15 per cent to 20 per cent of their total investment.

Hitherto, insurers, both life and non-life, were permitted to take an exposure in a specific sector up to 15 per cent of their investments (which includes debt and equity), with the exception of banking and financial services where the limit is 25 per cent and infrastructure where there is no exposure limit.

According to IRDA investment norms, at any point of time, insurers are permitted to have excess weightage beyond 15 per cent in only one industrial sector (except BFSI and infrastructure sectors).In a circular issued on Wednesday, the regulator observed that the industrial weightage vis-a-vis the benchmark indices is dynamic and at present the IT industry contributes more than 15 per cent to the benchmark indices. As the weightage keeps on changing from time to time, the regulator said it has decided to give general permission to have a further exposure of 5 per cent in one industrial sector (not applicable to BFSI).

“This was a long pending request from the industry. We will be now able to allocate more funds to other sectors such as IT and pharma, which have been performing very well,” said the chief investment officer of a private life insurer.

For raising the investments in a specific sector, insurers are required to take prior permission from their board.

IRDA also relaxed norms for fixed deposit investments in the promoter group of insurance companies.

“Considering the representations from the industry and the Life Insurance Council, we have decided to permit fixed deposits, as stated in the regulations, in promoter group scheduled banks within the 5 per cent limit prescribed for Promoter Group subject to the overall limits,” said the regulator.

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Pharmaceuticals Purchase Policy (PPP) for pharmaceutical central public sector enterprises

New Delhi: The Union Cabinet today approved the Pharmaceuticals Purchase Policy (PPP), for a period of five years.

The renewal of the PPP aims at ensuring optimum utilization of the installed capacity of the pharma CPSEs. It would not only provide necessary fillip in reviving these CPSEs, which are ailing but also ensure availability of quality medicines at low prices to the masses besides ensuring drug security of the nation.

The salient features of the Pharmaceuticals Purchase Policy (PPP), are as follows:

i) Pharmaceuticals Purchase Policy in respect of 103 medicines would be valid for a period of five years from the date of issue of orders by Department of Pharmaceuticals.

ii) Pharmaceuticals Purchase Policy will extend only to Central Public Sector Enterprises (CPSEs) under the administrative control of Department of Pharmaceuticals such as Indian Drugs and Pharmaceuticals Limited (IDPL), Hindustan Antibiotics Limited (HAL), Bengal Chemicals and Pharmaceuticals Limited (BCPL), Karnataka Antibiotics and Pharmaceuticals Limited (KAPL) and Rajasthan Drugs and Pharmaceuticals Limited (RDPL) and their subsidiaries where Government of India owns 51% or above shares.

iii) This would be applicable to purchases by Central Government departments, their Public Sector Undertakings, and Autonomous Bodies, etc. This would also be applicable to purchase of medicines by State Governments under Health Programmes funded by Government of India such as the National Rural Health Mission etc.

iv) The pricing of the products would be done by National Pharmaceutical Pricing Authority (NPPA) using the cost based formula, as mentioned in the Drugs Price Control Order, 95. A uniform discount of 16% would be extended to all products. All the taxes, whatsoever, would have to be passed on to buyers.

v) Annual revision of prices would be linked to Wholesale Price Index as per provisions contained in Drugs Prices Control Order, 2013.

vi) The procuring entity would purchase from pharma CPSEs and their subsidiaries subject to their meeting Good Manufacturing Practices (GMP) norms as per Schedule 'M' of the Drugs & Cosmetic Rules.

vii) In case pharma CPSEs and their subsidiaries fail to supply the medicines, the procuring entity would be at liberty to make purchases from other manufacturers. If the pharma CPSEs or their subsidiaries fail to perform as per the purchase order, they would also be subject to payment of liquidated damages or any other penalty as per the terms of the contract.

viii) The list of medicines may be reviewed and revised by the Department of Pharmaceuticals as per requirement.

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India Inc raises Rs 1.70 lakh crore in first half of the current fiscal

Mumbai: Indian corporates raised Rs1.70 lakh crore through commercial papers (CPs) during the first half of the current fiscal. A total of 169 issuers raised this amount, which was down 15% from Rs 2.01 lakh crore raised by 184 issuers in comparable period of the previous fiscal, a report by Prime Database, the country's premier database on primary capital market, noted.

CPs are unsecured money market instruments issued to raise short-term funds with maturity period of less than one year. According to Pranav Haldea, MD, Prime, fund raising through CPs, which had witnessed a lot of buoyancy in the last two years, nearly dried up after RBI in mid-July raised the lending rates by 200 basis points (100 basis points = 1 percentage point) under the marginal standing facility, which is a penal lending rate.

"This had pushed up the short-term rates by more than 300 basis points, making it unviable for companies to borrow from the markets," Haldea said. The subsequent easing of short-term rates has again led to companies going to the CP market in place of higher-cost borrowings from banks, the report said. "Funds raised through CP, which were at Rs 36,702 crore in June but fell to Rs 29,520 crore in July and further to just Rs 7,652 crore in August, saw a reversal of trend in September with Rs 18,684 crore being raised," he said.

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Scania sets up assembly plant in India

New Delhi: Sweden's Scania Commercial Vehicles has set up an assembly plant in India to manufacture about 2,500 heavy haulage trucks besides 1,000 inter-city buses and coaches annually at a factory near Bangalore. Currently the localisation is 18% for trucks and 100% for bus bodies, the company said, adding that initial investments will be Rs 250 crore.

The facility will serve as the company's head office and centre for all commercial operations . The operations will consist of final assembly of trucks with bodywork and building of complete coaches along with a service workshop and a central parts warehouse.

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Railway Ministry sets up High Speed Rail Corp.

New Delhi: The Railway Ministry has formed a High Speed Rail Corporation, which will evaluate ways to implement high-speed train projects in India.

Incidentally, this is not the first such body announced by the Ministry. Earlier, the Ministry had announced formation of a High Speed Railway Authority to do a similar task. According to Ministry officials, both organisations will co-exist.

“The two institutions will co-exist. HSRA will be under the Ministry of Railways to form standards on ticketing, tracks, rolling stock, while HSRC will be under Rail Vikas Nigam Ltd and will be an institution that will do ground level work,” said Railway Board Chairman Arunendra Kumar. Kumar also added that HSRA is a medium to set technology standard, “but we need not wait for HSRA, as we have Railway Design and Standards Organisation (RDSO), a body which sets such standards.”

However, an official press release of Railway Ministry stated that HSRC (and not HSRA) would undertake project activities such as preparation of project related studies and technical standards high speed rail corridors.

Kumar avoided a clear reply on which body will come first: HSRA or HSRC, but indications are that HSRC will be operational first.

Safety measures
Meanwhile, Railway Minister Mallikarjun Kharge said that while it is good to have high-speed railway systems, India should not rush into adopting some high speed rail technology just because it is cheap. It is important to be aware of the safety aspect, he said.

“Today, we have started the process. Later on its terms and condition, appointment of members, other things will be decided,” Kharge said.

Indicating that full costs of high speed rail technology may not be clear upfront, he added, “One should not buy horses because horse shoes are freely available. We should not get even if it is available free. Some time they sell it to buyers saying it is cheap. We should think whether it suits or not even if it is free or cheap.”

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CCEA approves Rs 500 cr for ‘green’ scheme for textile units

New Delhi: The Cabinet Committee on Economic Affairs (CCEA) has approved an Integrated Processing Development Scheme (IPDS) with a corpus of Rs 500 crore to make textile processing units more environment-friendly and globally competitive.

The fund will be used to set up four to six brownfield projects and three to five greenfield projects over the 12th Plan period addressing environmental issues faced by textile processing units, a Government release said.

The eligible projects under the scheme would cover Common Effluent Treatment Plants, captive power generation on technology preferably renewable/green technology, infrastructure such as storm water management, necessary roads and pipelines for water & wastewater and, facility for testing and R&D centres, the release added.

The scheme will support upgradation of existing processing clusters/centres specifically in the area of water and waste water management and also encourage research and development work in the textiles processing sector.

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Indian businesses turn to IT to fuel growth: Study

Mumbai: Nearly nine out of every 10 (89 per cent) respondents in India believe that cloud computing or ‘as-a-service’ approach, is relevant to their organisation, according to a study by VMware.

The study ‘VMware Cloud Index’ also states that nearly eight out of every 10 (79 per cent) respondents in India have a cloud-related initiative in place within the organisation, or are planning to implement cloud in the next 12 months.

Indian organisations are turning to IT to help them grow the business in the current economic environment. IT is seen as a change enabler and source of business value for organisations by 85 per cent of the respondents.

In terms of the top business priorities in India over the next 12 months, 87 per cent of IT decision makers said improving the quality and capabilities of their products and 85 per cent said addressing the rising expectations of customers and improving customer satisfaction. The study also shows that the current perception of IT remains positive in India with 63 per cent of respondents noting that the perceived credibility, influence and power of the CIO in their organisation is increasing.

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