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Would NC, PDP vanish because top leadership is in detention?

Political activity by the rival parties of the NC and the PDP have already started with the BJP taking the lead in both the Valley and the Jammu region.

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After the recent detention of former chief ministers – Omar Abdullah and Mehbooba Mufti under Public Safety Act (PSA, it is time for other leaders to decide whether they can wait long enough to allow the National Conference (NC) and the Peoples Democratic Party (PDP) to vanish from the political arena of Jammu and Kashmir.

Asked whether the NC would start its political activity in the Valley as the harsh winter nears its end, a senior party leader said, “How can genuine and credible political activity be started by us unless our top leaders, Dr Farooq Abdullah, Omar Abdullah and Ali Muhammad Sagar are released”, said a senior leader of the NC.

Similar reaction was shown by a senior leader of the PDP when asked whether the party would resume normal political activity in the absence of Mehbooba Mufti.

Under the stringent PSA, a person can be detained without trial for two years and the authorities can invoke the Act against persons inimical to peace and security in the union territory.

Interestingly, the Act was passed during the rule of NC founder, late Sheikh Muhammad Abdullah in 1978 and it was originally intended to be used against timber smugglers.

Buub Khan of north Kashmir’s Ganderbal district was the first person to be detained under the Act for being involved in timber smuggling in 1978.

It was during the NC, PDP and coalition governments by the two parties with the Congress that PSA came to be used against political adversaries.

Local offices of the NC and the PDP in different districts of the Valley seem to be hibernating while the party rank and file wait for the release of their top leaders.

Ironically, the decimation of the PDP that started when Mehbooba Mufti was the chief minister still continues as Mufti languishes in detention.

Encouragingly for the NC, there has so far been no flight of party men.

The writ of Dr Abdullah and his son, Omar runs in the party, but that is no guarantee that flight of party men can be checked for long.

“We have to address the basic problems of our followers. Their troubles cannot wait for long. For this, it is very important that we start our political activities despite the handicap of having our top leadership in detention”, said a senior NC leader on the condition that his name would not be revealed.

The fact that no senior or middle rung leader of the NC is prepared to attract the wrath of the Abdullahs clearly indicates that there is no evolving alternative to the Abdullahs so far.

In sharp contrast to this, the PDP seems to be overloaded by leaders who would willingly replace Mufti.

“The only thing that keeps other leaders from coming out in the public to replace Mehbooba Mufti is that they do not want to make her a political martyr of any kind”, said a dissident PDP leader who deserted the party even when Mufti was the chief minister.

Political activity by the rival parties of the NC and the PDP have already started with the BJP taking the lead in both the Valley and the Jammu region.

The Congress has also started holding meetings and mobilising its rank and file.

The writing on the wall is very clear for both the NC and the PDP. Will other leaders and party men allow these two parties to vanish because their top leadership is unlikely to be released soon?

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Research and development activity to get hit as WD benefit to cease from FY21

According to experts, R&D activity is a key proponent of the ‘Make in India’ strategy and to further expand the manufacturing sector in the country.

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New Delhi, Feb 19 : India Inc’s R&D activity might get adversely impacted as weighted deduction (WD) benefits, including those on capital expenses, stand withdrawn from the next fiscal.

Till now, the Income Tax Act allowed for weighted deduction for all R&D activities.

However, four years back a sunset provision was introduced in the Budget on the availability of weighted deduction from April 1, 2020.

This deadline was expected to have been extended in this year’s Budget. However, that did not happen.

“The weighted deduction was a key reason for entities to invest in R&D infra. This withdrawal will impact future investments in this area,” said Amarjeet Singh, Senior Partner, International Tax and Regulatory, KPMG in India.

According to experts, R&D activity is a key proponent of the ‘Make in India’ strategy and to further expand the manufacturing sector in the country.

Besides, R&D investments into India have grown with many MNCs establishing their research bases here.

“The ‘Make in India’ programme has got the booster of a reduced tax rate. Similarly, had the government continued with the weighted deduction for R&D, it would have surely ensured that India marched ahead both in manufacturing and in the corresponding R&D,” said Gukul Chaudhri, Partner, Deloitte India.

“So, while India may not lose its tag as the R&D lab of the world, the availability of weighted deduction would have ensured that India continued as one of the most attractive destinations for R&D in the world,” Chaudhri added.

The Finance Act, 2016, restricted the availability of expenditure incurred on scientific research to 150 per cent from April 1, 2017, and no weighted deduction from April 1, 2020.

“Globally, most countries are encouraging R&D activity as it generates new ‘intellectual property’ (IP), which in turn creates sustainable revenues. Such IP or new product gives rise to a new industry and other supporting activities,” said Samir Kanabar, Partner, Tax and Regulatory Services, Ernst & Young.

“In India, several sectors like auto, pharma etc. have invested substantially in R&D facilities to develop new IPs, patents and hence, a new tax regime to boost R&D was a major expectation,” Kanabar added.

However, Suman Chowdhury, President, Ratings, Acuite Ratings and Research, said that the reduction in weighted tax deduction will not have any significant effect on India Inc’s R&D activity.

“India’s R&D activity has held steady at 0.7 per cent of GDP over 5 years and no visible signs of positive outcomes were seen emanating from private enterprises despite such benefits,” Chowdhury said.

“Nevertheless, corporates now enjoy a reduced effective corporate tax structure, which should more than compensate for the loss, at least for the manufacturing sector. Service oriented enterprises, whose business model thrives on innovation, do not require incentives to do R&D in our opinion,” Chowdhury added.

(Rohit Vaid can be contacted at [email protected])

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AGR risk for GAIL, OIL and Powergrid stays: Fitch

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New Delhi, Feb 19 : India’s telecom-related regulatory dispute still is event risk for GAIL, OIL and Powergrid, Fitch Ratings said on wednesday.

Fitch Ratings continues to treat any payments that three India-based companies – GAIL (India) Limited (BBB-/Stable), Oil India Limited (BBB-/Stable) and Power Grid Corporation of India Ltd (BBB-/Stable) – may have to make under a demand notice from the Department of Telecom as an event risk for the companies’ ratings.

Fitch is not taking immediate rating action on the three companies, as the Supreme Court of India allowed the companies to withdraw their clarification applications on February 14, 2020, and resolve their dispute with Department of Telecom outside the court.

This is in stark contrast to the court’s decision to demand immediate payments from the telecom companies that are also involved in the dispute, Fitch added.

“We expect the three companies to eventually resolve the dispute, although resolution timing is uncertain. A speedy solution is important to prevent disrupting the companies’ investment plans and damaging their performance. The three companies are considering an appeal against the demand notices. We understand that they have the option to resolve the matter through alternate dispute-resolution mechanisms available to state-owned enterprises. This is in addition to the legal options available to telecom license holders in general,” it said.

The Department of Telecom has issued demand notices to GAIL, OIL and POWERGRID for Rs 1,831 billion, Rs 480 billion and Rs 220 billion, respectively.

The notices include license fees on non-telecom revenue and additional interest and penalties on the license fees. However, the three companies’ telecom-related revenue is insignificant, at around Rs 0.5 billion, Rs 0.01 billion and Rs 23 billion, respectively, for the same time period as the demand notices.

The three companies have created telecom infrastructure for internal use and have obtained national long distance and Internet service provider licenses to rent out spare capacity. They maintain that their licenses differ from the unified access licenses held by telecom companies, hence, the court’s decision on adjusted gross revenue for telecom companies does not apply to them.

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Kanpur tanneries asked to shut down again

Aftab Alam, a leather exporter, said the closure order would not only damage the business image of tanneries but would affect leather export too.

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UP tanneries Business

Kanpur, Feb 17 : The Regional Pollution Control Board of Uttar Pradesh has ordered 248 tanneries in Jajmau area of Kanpur to stop their operations from February 19 till further orders, without assigning any reason.

The tanneries, which remained closed for a period of 13 months on the charge of polluting Ganga, were allowed to start production on December 20 for two months only.

S.B. Franklin, regional pollution control board officer, said the time limit of two months is expiring on February 19.

Feroz Alam of Small Tanners’ Association said that on December 20 last year, the government, while granting permission to run the units with half capacity, had also stated that the tanners would be allowed to run their units till next year if they followed the necessary norms and standards fixed by the pollution control board.

He said, “During the last two months, not a single notice was issued to any tannery by the regional pollution control board because the tanneries did not flout the norms set by it.”

He said that the UP Pollution Control Board (UPPCB) had not given any reason for the closure order now.

Aftab Alam, a leather exporter, said the closure order would not only damage the business image of tanneries but would affect leather export too.

He said the tanneries which have got orders from foreign companies would suffer if they failed to supply the goods in time.

The tanners would also face problems in getting new orders in future, he added.

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