For Andh-Bhakt of BJP & Namo (Kindly Share this post amongst Andh-Bhakt of BJP and NaMo) ------ Issue of Foreign companies in Coal mining . Decision of SoMoKe = Sonia, NaMo, AK to allow foreign companies in coal mining business can create a huge hole in forex repatriation business. Coal mining is highly profitable. Now consider following scneraio . mining cost , including ALL costs = say Rs 1200 per tonne . royalty = say Rs 400 per tonne . sale price in market = Rs 2000 per tonne . final net profits before tax = Rs 400 per tonne . tax = 40% to 0% !! = Rs 120 to Rs 0 per tonne . profit after tax = Rs 280 to Rs 400 per tonne . Now a foreign company has option to pay 40% tax and demand repatriation of remaining Rs 280 in dollar !! IOW, a company digs coal inside India, sells coal inside India, and GoI is bound to pay dollars for its profits !! Further, is the company is from Mauritius or Singapore, then it can get away with even this 40% tax and demand repatriation of full Rs 400 of profits it made !! Mauritius/Singapore companies are exempt from tax on capital gains, bit operating profits. But there are ways to convert operating profits into short term capital gains and thus get away from taxes on whole of Rs 400 of profit. Now some say that profits in coal mining arent just 25% of final wholesale prices, but much much higher !!! In such case, repatriation burden can be much higher. . Now since GoI is always short of dollars, GoI often agrees to give tax exemption if profits are kept in India for say 5-10 years. So in such case, the repatriation crisis problem gets postponed for 5-10 years but hits with extra 40% saved taxes after that 5-10 years duration. And during these 5-10 years, the foreign company enjoys zero tax. So local company faces 35% corporate taxes, while foreign company will face zero tax rate . So after 3-4 years, the foreign company will have much higher capital and work with higher scale. With higher scale, by making contractual agreements with buyers to buy huge amounts from them, they can push out other sellers and eventually force them for takeover. So a big part of coal business may land up with foreign companies aka MNC-owners in my lingo. . That aside, there is big hole in information voters and even politically active activists have about repatriation issue. They voters and activists havent considered the fact that every dollar that comes into India via FDI can create burden of repatriation of one dollar plus profits plus capital gains minus taxes, and sometimes taxes can be zero if company is from Singapore or Mauritius. Apparently, SoMoKe and other leaders seem to have made no attempt of educating voters and activists about possibility of repatriation crisis and sovereign defaults , and its effects. . Whats makes things worse is that Sonia, AK both too have supported giving away coal mines to MNC-owners. AAP has 4 MPs in Loksabha. And none has proposed law-draft as private members bill to oppose entry of foreigners into coal mining. And so CoBhApSwaRa-workers are all going door to door asking voters to support the decision of giving away coal mines to foreign companies. . Those who wish to lessen the mess should order their MPs via SMS with URL to WOIC draft, and proposed law to allow only WOIC = wholly owned companies by Indians (search for WOIC in rahulmehta /301.htm ),. I havent posted WOIC draft on FB and I dont have URL. So some activist can post such draft and obtain a URL and send that MP as order via SMS . And then ask more and more voters to send orders to MPs via SMS . . And those who wish to reduce the mess should also stop wasting time with CoBhApSwaRa-workers and SoMoKe-andhbhagats. And focus on order your MO via SMS with URL with law-drafts needed for India campaign. These CoBhApSwaRa-workers and SoMoKe-andhbhagats are shamelessly supporting entry of foreign companies in coal mining business and so IMO they are all good for thing except slogan shouting and adding noise pollution.
Posted on: Tue, 04 Nov 2014 07:25:04 +0000