India Market Strategy : Agri 101 - Cereals—advantage exports :: Credit Suisse

● Cereals matter less than widely believed. Of all agri. items, cereals
are impacted most by MSPs and are also most analysed. But they
were just 21% of FY05 agri. output, and likely lower now. They also
matter less for inflation, which is currently all about fruits & vegetables
and meat (and these are as important as cereals). Full report.
● Per capita consumption of cereals has been falling in India for
decades, as automation reduces need for calories. The decline
now exceeds population growth implying flat cereal demand. But
production is still rising with improving yields, creating surpluses.
Cereal inventory is at record levels despite surge in exports.
● A slowdown in Monsoons from mid-Aug has reduced the YoY
increase in acreage sown. Further, cereals, pulses, oilseeds,
fibres and sugar form 40% of agri GDP (only ~5.2% of total GDP)
● But the broader agricultural story remains robust. Rising yields for
laggard states will continue to push avg. yields up. Rising cereal
surpluses should aid exports; improving oilseeds/pulses acreage
should help cut imports. But for inflation to fall, fruits & vegetables
prices need to fall (and these are not as impacted by monsoons).

Morgan Stanley - Game of Loans US vs Europe

http://www.docstoc.com/docs/161333065/Morgan-Stanley----Game-of-Loans-US-vs-Europe

Morgan stanley - Global Debates Playbook

http://www.docstoc.com/docs/161333285/Morgan-stanley---Global-Debates-Playbook

HDFC Capital Protection Oriented Series: A safe bet :: Business Line

These schemes have a lock-in period of three years.

The yields on government securities (G-Sec) have been increasing over the last few months. When the Reserve Bank of India (RBI) further increased interest rates earlier this month, it was clear that a stricter regime was in the offing.

The 10 year G-Sec’s yield has risen by almost 1.5 percentage points in the last four months. With interest rates likely to head up in the short term, it may be an opportune time to invest a portion of your surplus in long-term debt schemes offered by mutual funds.

This will help you lock into higher interest rates prevailing in the debt markets.

In this light it may be worthwhile, considering HDFC has launched its Capital Protection Oriented Fund – Series I - September 2013.

The fund is open for subscription till the end of this month.

Morgan Stanley -Investing to Limit Downside

http://www.docstoc.com/docs/161333378/Morgan-Stanley--Investing-to-Limit-Downside

Morgan stanley -Diversified Natural Gas Playbook

http://www.docstoc.com/docs/161333372/Morgan-stanley--Diversified-Natural-Gas-Playbook

Morgan Stanley -Is Iron Ore Telling Us ?

http://www.docstoc.com/docs/161333420/Morgan-Stanley--Is-Iron-Ore-Telling-Us

Bring e-commerce into the tax net:: Business Line

As the Internet crosses boundaries, the challenge is in developing a rational tax policy for online transactions.

E-commerce has become a way of life. The technical definition of e-commerce is any transaction completed over a computer-mediated network that involves the transfer of ownership or rights to use goods or services.

It is more than the purchase of goods online and includes a disparate set of loosely defined activities such as shopping, browsing the net for goods, gathering information about items to purchase and completing the transaction like any other sustained business activity.

NET’S PECULIARITIES

Many of the e-commerce websites are operated by entities incorporated outside India. One among the many questions faced by nations is how to tax the income of such entities.

The taxability of incomes of non-resident entities arising in developing countries are subject to tax based on the source rule.

Business profits arising from India are ordinarily taxed only if the overseas entity creates a Permanent Establishment (PE) in terms of the tax treaty between the source and the home country.

Generically speaking, PE is defined to mean a fixed place of business through which the overseas entity carries on its business in the source country (India).

As the Internet crosses boundaries, the main challenge is how to develop a rational tax policy for bringing e-commerce transactions into the tax net. For development of a rational tax policy, one should understand the nature of the industry.

The Internet is a network of networks and it cannot be controlled or owned by one person and is capable of rapidly transmitting packets from one computer to another.

No human involvement is necessary to transmit data from one computer to another across all geographical locations.

Keeping these unique qualities of the Internet in mind, one should try to visualise the issues concerning the taxes on the e-commerce transactions.

A website fails the traditional ‘place of business’ test. Website is a combination of software and electronic data not constituting a tangible property.

In the absence of any location constituting ‘place of business’ — such as premises or machinery or equipment, namely, server — a website per se cannot qualify as a PE.

INDIA ON E-COMMERCE

But the International Tax commentary issued by Organisation for Economic Cooperation and Development , clearly states that a non-resident enterprise with an Internet website alone would not be regarded as having PE in the country in which the website is located.

The Government of India had set up the High Powered Committee (HPC) to analyse and recommend issues relating to e-commerce.

This panel emphasised the need for neutrality between taxation of e-commerce and the business carried on in a traditional manner and opined that a differential tax treatment would offer an easy tax-avoidance mechanism.

It is tempting to argue that business function will simply and suddenly disappear into cyberspace and that virtual companies will be able to operate with little presence anywhere except a site hosted by an Internet service provider in a tax-free jurisdiction.

All of this may become much easier with location being quite irrelevant in the borderless world.

The need of the hour is to give shape to the guidelines with appropriate inputs from all the stakeholders to avoid unwarranted litigation and, at the same time, protect interests of the revenue.

(The author is a Managing Partner, Nangia & Co, a tax consulting firm. With inputs from Ashutosh Jain.)