Bid to put US ties on fast track

India and the US are keen on quickly thrashing out the prickly issues relating to investment and other economic matters that are coming in the way of a closer relationship between the two countries.

Top finance officials of the two countries are meeting next week to work out ways to improve economic co-operation and tackle investment curbs.

India and the US have agreed to fast-track technical negotiations for an early bilateral investment agreement and discuss Washington’s demands that New Delhi opens up foreign direct investment in retail, defence industries and financial services.

India has also been demanding US support for a bigger role for itself in global financial institutions such as the World Bank and IMF.

Finance minister Pranab Mukherjee will hold talks with US treasury secretary Timothy Geithner as part of the India-US economic partnership dialogue.

Indian officials are likely to agree to demands for greater investment opportunities in insurance and banking in a calibrated manner, so as to give large Indian banks and other financial entities time to consolidate their positions.

India may also increase foreign voting stake in its banks beyond 10 per cent but will tie this up with greater opportunities for them in setting up branches abroad.

Another major demand of the US and EU negotiators is their banks should be accorded the same treatment as given to those from Singapore.

India treats Singapore banks on a par with its own banks, giving them easy access to retail customers and the financial sector.

“Virtually every nation wants us to extend national treatment to their banks. We have not agreed to anyone’s request except for Singapore’s two designated banks,” said an official. National treatment is a euphemism for allowing level playing field to foreign banks.

At present, foreign banks are restricted in many ways. They are not allowed to enter retail banking on a large scale. There are also fetters on the number of branches they can set up as well as on the areas they can enter.

However, the government is unwilling to give in at this point as it feels this will jeopardise its own plans for banking reforms.

Top finance ministry officials said India would not open up its banking market completely but instead allow more foreign bank branches to be set up along with some concessions in retail banking.

The finance ministry wants state-run banks to morph into mega-corporations capable of meeting the challenge of global banks, before agreeing to finally open up the market.

Besides Geithner, Federal Reserve chairman Ben S Bernanke, Securities and Exchange Commission chairman Mary Schapiro and Commodity Futures Trading Commission chairman Gary Gensler would take part in the discussion.

Impressed by the economic growth of India, Washington has said it wants closer economic co-operation and greater market access, which will help to make India one of Washington’s top 10 trading partners.

The talks will focus on infrastructure development, capital markets reforms, co-operation on the Group of 20 efforts to reduce trade imbalances and combating money laundering.

Commerce minister Anand Sharma yesterday met US trade representative Ron Kirk as part of his US trip. Sharma said the two countries had agreed to speed up a bilateral investment agreement.

Curtsey- http://www.telegraphindia.com/1110624/jsp/business/story_14154050.jsp

Super rich Indians soar

India had the 12th largest millionaire population in the world in 2010. The country for the first time entered the Top 12 league of high net worth individuals (HNWIs) on the back of a robust economy and strength in key wealth drivers such as equities.

According to the World Wealth Report released by Merrill Lynch Wealth Management and Capgemini today, the number of HNWIs in India soared to 153,000 in 2010. India took over Spain, which dropped to the 14th position.

HNWIs are individuals with investible assets of $1 million or more, excluding primary residence, collectibles, consumables and consumer durables.

The growth in HNWIs was nearly 20.8 per cent from 126,700 in 2009, the highest among the top 12 countries, and more than that of China where the number grew to 535,000 from 477,000.

“India with a GDP growth rate of 9.1 per cent in 2010 and an increase in market capitalisation by 24.9 per cent presents a great opportunity and continues to remain an important market for wealth management providers worldwide,” said Atul Singh, managing director and head of Merrill Lynch Global Wealth Management, India.

According to the report, the Asia-Pacific region continues to contribute the greatest year-on-year additions to global HNWI ranks. During 2010, the millionaire population in the Asia-Pacific rose 9.7 per cent to 3.3 million, overtaking that of Europe where the growth at 6.3 per cent saw the total number of HNWIs at 3.1 million. The wealth of Asia-Pacific HNWIs’ rose 12.1 per cent to $10.8 trillion, more than the $10.2 trillion held by their peers in Europe.

Asia’s growth has been led by India and China and it is being felt that the Asia-Pacific will soon overtake North America (3.4 million) in terms of the number of high net worth individuals.

The millionaire population remained concentrated in the US, Japan and Germany, which together accounted for 53 per cent of the world’s HNWIs.

The US had the single-largest population of millionaires (3.1 million) accounting for 28.6 per cent of the global HNWI population.

General insurance IPO

The insurance regulator will come out with a separate set of guidelines for general insurance (non-life) companies that are looking to tap the capital market with initial public offerings. The regulator is waiting for Sebi’s recommendations on the disclosure requirements.

According to R.K. Nair, member (finance and investment) of the IRDA, the disclosure requirement for non-life insurance companies will be different from those of life insurance firms given the nature of cash flows and risks underwritten by them.

“We are awaiting the recommendations of SCODA (Sebi Committee on Disclosures and Accounting Standards) which is still working on the disclosure requirements for non-life insurance companies. Once we get these recommendations, we’ll come out with the IPO guidelines,” Nair said on the sidelines of an insurance summit of the Indian Chamber of Commerce here today.

He declined to give any time frame for releasing the guidelines.

Early this week, the Insurance Regulatory and Development Authority (IRDA) unveiled draft IPO guidelines for life insurance companies. In the draft, the requirement that an IPO applicant should be profit-making has been replaced by the condition that the embedded value of a life insurer must be twice the paid-up equity capital of the company. The embedded value is the value of all in-force policies plus the net worth of a life insurance company.

Tax returns relief for salary Person

If you are salaried and your gross annual income is Rs 6.55 lakh or less, you need not file income tax returns for the assessment year 2011-12.

The Central Board of Direct Taxes (CBDT) today notified that salaried individuals having a total income up to Rs 5 lakh after allowable deductions, including salary from one employer and interest income from deposits in a savings bank account of up to Rs 10,000, need not file income tax returns.

Under current tax exemption rules, a person with gross annual income of Rs 6.55 lakh can be left with Rs 5 lakh after the allowable deductions.

This means those with Rs 6.55 lakh gross annual income in 2010-11 need not file tax returns in the assessment year 2011-12 if they don’t earn salary from more than one employer, they don’t have additional income from sources other than bank accounts and they don’t have any tax refund claims.

However, they should get from their employer Form 16 — the certificate of tax deducted at source. The returns-exempt salaried will also have to give details of their interest income from bank deposits to their employer for deduction of income tax at source.

If the new rule had not come into force, salaried persons earning more than Rs 3.15 lakh a year would have had to file returns by July 31 this year.

Filing returns is a hassle that involves seeking the services of a tax consultant for a fee ranging between Rs 250 and Rs 500, though it can be done by individuals on their own either manually or through an online process which requires the purchase of a digital signature.

According to CBDT officials, the revised rule, which was announced in the budget, will benefit 85 lakh income tax assessees. The notification mentions only the assessment year 2011-12 but the government is expected to extend the relief.