Jain Investments

The turmoil in Reliance shares suggests that the followers of Lord Mahavir continue to have a big influence on the valuation of stocks even in a more global Indian market. Not only do these investors shun companies dealing in non-vegetarian food, but orthodox Jains refuse to touch stocks of hotels, restaurants, leather product companies and often even pharmaceuticals (animal testing), shipping/transport (animal cargo), cosmetics (for use of tallow and testing), silk-woollen textiles and those that “produce materials for violence”. In fact, restaurants in India's commercial capital, Mumbai, have learnt that being vegetarian gives them a better chance of success. In certain precincts, community pressure has forced even international food company outlets like McDonald’s to turn vegetarian.

Double taxation

In the rush to improve tax collections, the government seems set to make service taxes as messy and complicated as the tax on manufactured goods. Since the tax threshold is a low Rs 4 lakh, the Excise Department, which has little experience of dealing with tiny consultancies or individual service providers, is forced to collect from them. The result is hardship to small tax payers and anger about government harassment. Here is an example. A research-consultant in Mumbai spent three days trying to find service tax challans which have to be submitted in triplicate (no single forms here). They were neither available with the Excise office in Bandra nor the banks authorised to collect the tax. But small consultants are not the only ones complaining. The Excise Department has made a massive service tax demand on all stock exchanges claiming they are rendering a service to investors and market intermediaries. The Department's attention was probably attracted by the high profitability of top Indian bourses and depositories. For instance the National Stock Exchange has recently declared a 40 per cent profit margin almost Rs 200 crore net profit. High profitability makes all Indian stock exchanges, depositories and other utility-like services an attractive investment opportunity, but the costs are loaded on to intermediaries and ultimately the smaller investors who have no bargaining position. This is another factor driving retail investors to all-cash dabba markets (bucket shops).

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