The Empowered Committee of State Finance Ministers will further deliberate on the controversial one percentage point additional tax sought to be imposed under the GST framework to provide comfort to the producing States, its Chairman KM Mani has said. “We will further discuss this.. There are views for (by producing States) the tax and against it,” Mani told BusinessLine on the sidelines of a national conference on GST organised by the CA Institute here. Industry is also opposed to the planned 1 percentage point additional tax to be imposed by States on all inter-State sales, as per the current GST framework. This tax is being seen as an effort of the policymakers to provide comfort to the producer States. This issue will also come up during a presentation that Mani will make to the select panel of the Rajya Sabha on June 16. Earlier, in his address at the national conference, Mani explained that GST is a means of achieving simple indirect tax structure which will transform India into a single common market.
A step forward
He said that having gone through the process of moving from disjointed Sales tax regime to much better form of taxation i.e. Value Added Tax, GST is the next step to make the indirect tax system much more smooth and non-cascading. Mani elaborated that GST will enable voluntary tax compliance, facilitate simple and transparent tax administration, reduce scope for ethical hazard as well as tax load on the ultimate customer. CA Institute President Manoj Fadnis later told BusinessLine that ICAI would provide suggestions to the Finance Ministry so to ensure that rules for GST are framed in a harmonious manner, without any inter-State differences.
SOURCE: The Hindu Business line
In order to make the 12 major ports in the country self sufficient in terms of power requirements, the Union Ministry of Shipping has drawn up a plan for producing 150 MW of electricity from solar, offshore and onshore wind mills, tidal waves and other non-conventional sources of energy. The project cost is likely to be about Rs. 1,000 crore. Union Minister for Shipping Nitin Gadkari told mediapersons on the sidelines of an industry event that a plan is being formulated in which roof tops of large warehouses would be used for producing solar and wind power, he said. “Jawaharlal Nehru Port Trust (JNPT) requires 25 MW of electricity and they pay Rs. 13 per unit therefore I have asked them to explore solar and wind sources for producing power. A consultant has been appointed for studying the potential of setting up offshore windmills, which could even supply power to Mumbai city,” Gadkari claimed. On the funding requirements for the project, the Minister said that the money was not in short supply as the profit earned by JNPT last fiscal was over Rs. 1,000 crore. Other ports are also doing well and plus they can raise low cost loans, he said. Next month, Gadkari is travelling to Japan for technological demonstrations of producing electricity from multiple sources at one site.
On upgrading ports
Gadkari said that the port employees are not keen on working in a corporate structure as stated in the Union Budget of 2015. Therefore attempts are being made find alternatives to accommodate them outside the purview of the Companies Act as announced in the Budget for 2015-16. However, Gadkari refused to elaborate on the alternatives planned for the port employees, despite repeated queries by the media. In the Budget, Finance Minister Arun Jaitley had announced the government’s intention to corporatise ports, saying, “ports need to attract investments as well as leverage the huge land resource lying unused with them and to enable us to do so, ports in the public sector will be encouraged to corporatise and become companies under the Company’s Act.” Managements of major ports, including the largest container port JNPT, have welcomed the move. However, employee unions are opposed to the move and threatened to go on an indefinite strike, which was cancelled following interventions by labour commissioners and a specially constituted panel.
SOURCE: The Hindu Business Line
India appears to be facing fewer dumping threats. The World Trade Organisation in a review said India initiated about 80 anti-dumping investigations against 23 trading partners in the past four years, but did not impose any anti-dumping measures on any of them. In contrast, India imposed 207 anti-dumping measures during the previous four-year review period between 2007 and 2011. In the 2007-2011 periods, India also initiated a higher number of 209 anti-dumping investigations against 34 trading partners. In its sixth and the latest review of India’s policy actions on the international trade front, WTO said India remained one of the most active users of anti-dumping measures among its members. However, the WTO data suggested a gradual fall in India’s anti-dumping actions. The sixth review of India’s trade policies and practices is currently under way (from June 2 to 4). The basis for the review is a report by the WTO Secretariat and a report by the Government of India. During 2011-2015, India made significant changes in its anti-dumping legislation including new rules defining situations that are considered to represent the circumvention of anti-dumping duties, and providing for anti-circumvention investigations.
Countervailing probe
India initiated one countervailing investigation during the period between 2011 and 2015. Since its last review, India has also initiated 18 safeguard investigations, the WTO noted in its latest review report.
Average MFN rate up
India’s simple average tariff rate for most favoured nations (MFN status allowed to all WTO members) rose to 13 per cent in 2014-15, up from 12 per cent in 2010-11. “This reflects a rise in tariffs in agriculture, particularly for cereals and preparations, oilseeds and fats, and sugars and confectionary”, WTO noted.
SOURCE: The Hindu Business Line
Australian High Commissioner Patrick Suckling today said the proposed Comprehensive Economic Cooperation Agreement (CECA) with India would boost trade ties between the two countries. "Bilateral trade volume with India is Aus$ 15 billion at present, that with China is Aus$ 160 billion. There is considerable scope for increasing that through the CECA," Suckling said at a news conference here. CECA with Australia was proposed five years ago. "We hope that the agreement is going to be signed by the end of this year," he said. Now with the study for the proposed pact completed, it is expected that the trade agreement would aim at maximising the economic relationship between the two countries. The agreement would cover goods, services and investment, he said adding maintaining zero or very low tariff levels would help India in fostering trading partnership with Australia. Australia, he said, was also keen on India opening the door of its agriculture sector by both allowing investments and agri-commodities to enter this country. Other areas of cooperation from Australia were energy and mining among others. Australia had earlier inked such pacts with China, South Korea and Japan, he said.
SOURCE: The Economic Times
When Prime Minister Narendra Modi visits Dhaka on June 6-7, for stitching a stronger political relationship with the strategically positioned neighbouring country, bold moves are expected to take the mutual economic relations much beyond the thread of cotton and textiles industry which dominates the bilateral trade, an ASSOCHAM paper has pointed out. Composition of India's export and import basket related to Bangladesh shows growing intra industry trade in cotton textiles sector. For instance, raw cotton is the single largest item of export to Bangladesh accounting for a share of more than a quarter in India's total exports to Bangladesh. Also Bangladesh is sourcing dyeing materials and a variety of filament yarns for its textile industry from India',' the ASSOCHAM paper on BIMSTEC said. The paper has analysed India's economic engagement with each of the BIMSTEC members including Bangladesh, Mynamar, Sri Lanka, Bhutan, Nepal and Thailand.
With Bangladesh, the second largest member of the BIMSTEC in terms of number of people, India's trade is governed by SAFTA framework. India-Bangladesh trade has increased over the years but the share of Bangladesh in India's total imports remains miniscule. Share of Bangladesh in India's exports has remained around 2% in recent years India has consistently maintained a trade surplus with Bangladesh. With such a huge trade surplus in our favour, India can afford to be much more liberal towards its neighbor in granting market access. In fact, while a fair competition is welcome, India and Bangladesh can get together in jointly tapping the global textiles market with advantage of cost effective Bangladeshi workforce, while India can provide support in technology, branding, scale etc ASSOCHAM President Mr Rana Kapoor said.
Of the total bilateral trade of USD 6.65 billion , India's exports comprised USD 6.16 billion while imports were less than USD 500 million, leaving a large trade surplus of USD 5.68 billion . As much as 14% of India's total exports to Bangladesh consisting of machinery and capital goods with close to U.S. 500 million of exports of transport equipment consisting of automobiles and auto parts., India's imports from Bangladesh consist of primary products, viz, betel nuts, jute fibre/yarn, oil cakes, fish etc. Also India is importing increasing volumes of cotton apparel and accessories as India has granted duty free access to a range of cotton made up articles
On a holistic level, as India, Thailand or Sri Lanka climb up the ladder of their dynamic comparative advantage, more labor-intensive industries can potentially move to lower wage countries such as Bangladesh and Myanmar. These developments have already started in the textile and garments sector, in particular in Bangladesh. Increasing economic interdependence with India creates opportunities to expand BIMSTEC's markets for goods and services and improve economic and financial stability through diversification of risk outside traditional economic partners such as the United States and the European Union. BIMSTEC can be seen as a model of integration between large and relatively small economies in producing a win-win situation, the ASSOCHAM paper noted.
SOURCE: The Business Standard
Jawaharlal Nehru Port Trust (JNPT) and the Maharashtra Maritime Board (MMB), on behalf of the government of Maharashtra, entered into a memorandum of understanding (MoU) to develop a new major port of close to Rs 6,000 crore in Dahanu taluka, off Wadhwan point in Maharashtra.The port would be established as a corporate port under the Companies Act, 2013 on the lines of Kamarajar Port, Ennore. JNPT would have an equity share not exceeding 74% and the Maharashtra government would have an equity share of 26% in the new port company.The new port could be developed as a landlord port with the basic port infrastructure being developed by the port company and the berths, terminals and associated facilities being developed with private participation on the public-private partnership (PPP) model. The development of this port assumes significance as after the commissioning of the fourth container terminal at JNPT, the port would be fully saturated and possibilities of further capacity addition would not be possible. So, to meet the growing requirements of EXIM trade, the ministry of shipping along with chairmen of major port trusts, decided in July to establish a satellite port with good natural draft on the Maharashtra coast.
According to a press statement issued by the ministry on Friday, the area off Wadhawan was found most suitable as it was clear of fishing activity, has deep water contour of more than 20 metres, is only 4.5 nautical miles away from the coast and 2.5 nautical miles away from the rocky patches. The area also has good rail and road connectivity and will also not require large land acquisition.
Port pact
JNPT, Maharashtra Maritime Board enter into an MoU to develop a new major port of close to Rs 6,000 crore off Wadhwan point in Maharashtra. The new port could be developed with basic port infrastructure being developed by port company and berths, terminals, associated facilities being developed on PPP model. The area has good rail and road connectivity and will not require large land acquisition.
SOURCE: The Financial Express
Dutch companies are keen to invest in India, particularly in sectors like water management, waste management, agriculture, infrastructure, smart cities, banking and pension funds, Netherlands' Prime Minister Mark Rutte said today. "We have ample opportunities to grow but today we are particularly focused on smart cities, water management, waste management, agriculture, infrastructure, he told reporters here. He added: "We have pension funds with 1.5 trillion euros investments and they want to find business opportunities in India." Accompanied by two ministers and a large trade delegation comprising representatives from over a 100 Dutch companies, Rutte is currently on a two-day business visit to India. Earlier in the day, he also met Prime Minister Narendra Modi. "We are going to Mumbai tomorrow and there are some very big infrastructure projects where we want to participate, also fighting the rising sea levels, so many possibilities," he said. "I do believe that while the Indian economy is now the fastest growing economy in the world... you have overtaken China, whilst at the same time, facing various specific challenges that raise a lot of scope for Dutch companies to work here and for Indian companies to work in the Netherlands," he said. Asked whether the 'Make in India' campaign figured in his talks with Modi, Rutt said: "Absolutely. Constantly, because the fact that the Modi government has very clearly stated its vision in terms of 'Make in India', Clean India, what they are doing to clean the Ganga river, Digital India, 100 smart cities, all these programmes".
The trade volume between India and the Netherlands has increased over the last couple of years to almost 6 billion euros. "We are one of India's top 5 trading partners in Europe. Our trade with India has accumulated to 6 billion euros and is rising. "At this moment, we have 180-200 Dutch companies operating in India and over 60 branches of Indian companies in the Netherlands," Rutte said. He added that with the Modi government in power in India, Netherlands' interest in the country had "accelerated". "The fact that he (Modi) came to power as Prime Minister, and is a rockstar all over the world, and the same time having a very clear vision on how to grow the economy means that in Netherlands, India is high on the list again. "We were interested in India before. But let's say in the last 12 months this has accelerated because of the new government and the fact that this new government is so much focusing on these particular programmes where you can easily add value from a fresh perspective by bringing our expertise, knowledge and companies," he said.
SOURCE: The Economic Times
As a frequent visitor to Vietnam, I have seen the rapid strides the country has been making when it comes to economic development and poverty alleviation. Unlike the chaotic development we see in Indian metros, Ho Chi Minh City is growing in a more organized manner, and one can even see the trickling down of economic growth to rural Vietnam. When it comes to trade with Russia, the Southeast Asian nation is surging ahead. Last week, it became the first country to sign a free trade agreement with the Eurasian Union, which comprises of Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan. Under this agreement, tariffs are cut on 90 percent of the goods traded between the union and Vietnam. Two years ago, Russia suggested that the best way to increase bilateral trade with India would be to sign a similar free trade agreement with the union. Unfortunately, there has not much been much progress in this direction. At the last Indo-Russian annual summit, the countries agreed to set up a working group to explore an agreement.
Legislative coordination needed to raise intra-BRICS trade
There’s no reason why the Eurasian Economic Union and India cannot have a free trade agreement. The bloc of former Soviet states is not a competitor for India in any way and their economies have a degree of complementarity. Sources from the Russian side say some of the Central Asian countries are apprehensive about signing a comprehensive economic partnership agreement (CEPA) with India, since the latter will (justifiably) insist that services should be included in the deal. India’s northern state of Kashmir is geographically closer to several Central Asian cities than it is to Kerala and Tamil Nadu. Opening up some of the former Soviet republics to a free movement of goods, service and people, would benefit both India and the republics that depend heavily on the health of the Russian economy. The greatest beneficiary of a CEPA between India and the Eurasian Economic Union would actually be Russia.
Sources close to the Russian side say Moscow has been trying to ease fears in Central Asia of a services agreement with India. Note, no matter how close Russia becomes to China, there is no way Moscow can even think of a FTA or CEPA with Beijing, considering the genuine concerns in the Central Asian ‘stans.’ Unfortunately, both the Indian government and the Indian business community tend to drag their feet when it comes to trade with Russia. There is always some excuse or the other. In the early part of this century, Indian businessmen complained about so-called dubious letters of credit for Russian banks, while Western companies seemed to have no problems and closed in on the lucrative market. This decade, the complaint was the difficulty in obtaining a Russian business visa, and even when the Russian government simplified the procedures, the excuses piled up. The common complaint now is about the bureaucracy and red tape in the country. On the contrary, over the last few years, Russia has surged up the global ranks of ease in doing business. India’s competitors have taken due advantage of the easier business environment. Vietnam recently managed to pull off something that India should have thought of years ago. A deal was signed last month to establish a Vietnamese industrial corridor in the Moscow region. Under this deal, Vietnamese companies will process seafood, manufacture garments and set up other small scale units in the cluster and Russia will provide land, infrastructure, incentives and work permits. This is truly a win-win situation for both countries. Vietnamese investment in Russia could touch $4 billion this year. All India can really boast about when it comes to investment in Russia is the Sakhalin-1 project, something that dates back to 2001!
Silver lining
It’s only when there is an increase in two-way traffic between nations that trade will get a boost. Now, we have three airlines operating direct flights between New Delhi and Moscow, although it is cringe-worthy to note that Mumbai still has no direct air connections with the Russian capital. There is a much greater interest in Russia among Indian travellers and tourists and this is reflected in the unprecedented rush for Russian visas this year. In fact, this year, India made the list of top 10 sources of tourist arrivals to Russia. Business travellers among them will no doubt see that there are very good opportunities to invest in Russia. The Indian government and business community, however, need to wake up from their slumber and move in on Russia while the opportunity presents itself. Vietnam quietly made its moves and is bound to reap the benefits over the medium to long term. Hanoi believes that bilateral trade between Vietnam and the Eurasian Economic Union could reach $20 billion from the present $4 billion, in a matter of ten years. No prizes for guessing in whose favour the balance of trade would be.
SOURCE: The Russia & India Report
The large-scale textile manufacturers on Friday rejected the budget for fiscal year 2015-16 as disappointing, saying that it did not contain any measure to help them reduce their cost of doing business and become competitive in the global markets. Speaking at a news conference, All Pakistan Textile Manufacturers Association (APTMA) Chairman S.M. Tanveer said that it wasn’t a pro-industry budget. “With one-third capacity already closed and one million jobs lost our industry is fighting for its survival. We expected the finance minister to take steps for the revival of the closed capacity but he didn’t,” he said. He was critical of the government for not restoring zero-rating for the textile industry, saying that the increase in sales tax from 2 per cent to 3pc on the factories’ sales to unregistered buyers would only increase liquidity problems for the manufacturers. The total financial burden of the local duties and taxes on exports amounts to over 10pc of the sales, he said. “Already, the government hasn’t cleared the previous export refunds of Rs110 billion in spite of its commitment in the last budget to pay off the claims by September 2014. How would we know if the government is serious about returning the exporters’ money this year?” he asked. He said that Rs64bn textile package was nothing more than peanuts for the $14bn industry, when compared to the incentives offered by India, Bangladesh and China to their textile industry. “Moreover, the package isn’t for the entire textile chain. Ginners, spinners and weavers have been excluded from it.”
Grower, ginner and spinner Seth Mohammad Akber said that the tax and other incentives announced in the budget may stimulate investment in construction industry but not in manufacturing. “The textile industry fetches more than half of export revenues and it has been totally ignored by the government. How will anyone make new investment when their existing investments are in jeopardy?” he wondered. “Who is going to invest in this country where exports are massively taxed and imports are given incentives?” Pakistan Textile Exporters Association (PTEA) Chairman Sohail Pasha wondered. Lahore Chamber of Commerce and Industry (LCCI) President Ijaz A Mumtaz termed the budget “balanced in the existing circumstances”. He said that withdrawal of FBR powers to exempt the business from duties/taxes and interest-free loans for solar tube-wells were good steps taken by the government. Allocations for water sector would ensure early completion of these projects but said the money set aside for these projects was not enough, he said. The cut in interest rate on loans for exporters would encourage and have a positive impact on export-oriented industry, he added. He was happy to note that the budget has made an attempt to revive the dying railways and improve economic infrastructure in the country.
SOURCE: The Dawn
The Bangladesh government has raised the tax at source on export proceeds of readymade garments to one per cent from existing 0.30 per cent to consider this tax deduction at source as final tax liability for the sector, the Bangladeshi media has reported. Finance minister Abul Maal Abdul Muhith made the announcement on June 4 while presenting national budget for the 2015-16 financial year. The readymade garment exporters have been quick to oppose the tax hike saying that the increase in the tax at source at the rate of one per cent would be disastrous for the sector. In his budget speech, the finance minister proposed to impose one per cent tax on all export items including RMG and non-RMG. Muhith said that considering special circumstances before presenting the finance bill last year, the tax rates on export proceeds of readymade garments and all other export items were reduced to 0.30 per cent and 0.60 per cent respectively and the benefits were allowed for one year. “I therefore propose to withdraw the existing facilities and as such impose one per cent tax on all export items including garments, terry towel, carton and accessories, jute and jute goods, frozen foods. I would also propose to consider this tax deduction at source (TDS) as final tax liability for all export sectors,” Muhith said.
Muhith exempted custom duty in excess of 5 per cent and full of VAT on the imports of fire extinguishing equipment, energy efficient electrical items for the readymade garment sector. The finance minister proposed to include the imports of Busbar Trunking System in the capital machinery SRO for a concessionary duty rate and exempt all duties on flax fibre for the textile industries. Md Shafiul Islam, former president of the Bangladesh Garment Manufacturers and Exporters Association, told the media that the proposal of increasing tax at source would not be congenial to the industry. “We still remain behind the export target due to the political turmoil and the depreciation of the euro. At the same time entrepreneurs have invested huge amount of money to make their units compliant. Under the circumstances, it will not be wise to increase the tax at source,” Islam said. “If the government increases tax at source at the rate of one per cent, it will mount heavy pressure on the sector’s large number of small and medium entrepreneurs who could be bankrupt,” said Mohammad Hatem, former vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association. He said that the proposal would be ruinous for the sector as the RMG industry had been facing challenges for global economic meltdown and political instability at home.
SOURCE: Fibrefashion
Malaysia and the Gulf Cooperation Council (GCC) will resume talks on a free trade agreement this year, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed. He said previous negotiations on the FTA had stalled due to the political unrest in the Arab region."Later this year, I hope it (the negotiations) will start again. I plan to visit the headquarters of the GCC in Riyadh to follow up on the status of the agreement," he told reporters after officiating the Arab Malaysian Chamber of Commerce annual general meeting here on Thursday. Malaysia-GCC FTA talks started in 2011 following the signing of a framework agreement to boost economic, commercial, investment and technical cooperation between the two parties.
Mustapa said the Arab market was an important destination for Malaysia and the market had grown threefold in the past decade to RM61.94 billion last year from RM27.12 billion in 2004. Last year, he said Malaysia's trade with the Arab league countries grew 8.5%, driven by expansion in import. He said imports from Arab league countries were valued at RM37.39 billion while exports stood at RM24.54 billion with major exports including petroleum products, palm oil and electronic and electrical products. However, he said Malaysia's trade with the Arab world declined 19.8% in the first quarter this year due to the turmoil in the Middle East and North Africa. He added that as ASEAN became more integrated as a single economic community, Malaysia was poised to attract more foreign businessmen, including from Arab nations, to do business in the country and thus forge closer ties between the Arab world and Malaysia.
On trade performance, Mustapa hinted that Malaysia's first four months trade performance was affected by the drop in commodity prices and sluggish economic development in the country's major trading partners. However, he said the manufacturing sector's performance continued to do well while the electrical and electronics sector recorded modest performance. Earlier, Mustapa also witnessed the signing of a Memorandum of Agreement between MIT Services Sdn Bhd and Halliburton Energy Services Inc for joint development framework of intellectual properties and new technology for downhole tools in oil and gas industry. The agreement is also for the rental of Intelligent Circulation While Drilling tools (iCWD) developed by MIT in Malaysia, initially to Halliburton's operations in the United States before being expanded to other countries globally.
SOURCE: The Star
China and South Korea formally signed a bilateral free trade agreement (FTA) on Monday. The FTA, the largest for China so far in terms of trade volume and the areas it covers, was signed by China's Commerce Minister Gao Hucheng and his South Korean counterpart Yoon Sang-jick in Seoul, three years after the two sides started talks in 2012. In a congratulatory letter to South Korean President Park Geun-hye, Chinese President Xi Jinping said that the FTA marks a "milestone" event - it will not only lead to new leaps in bilateral trade and economic ties and bring tangible benefits to the two peoples, but also allow them to make a greater contribution to regional integration in East Asia and the Asia-Pacific and global economic development. Gao Hucheng wrote in People's Daily that the China and South Korea free trade area, is a key free trade area in Northeast Asian region, marking a big stride in the building of free trade area in the Asia-Pacific. It will help finalize a trilateral FTA linking China, South Korea and Japan and promote the negotiations on the Regional Comprehensive Economic Partnership(RCEP) and Free Trade Agreement of the Asia Pacific.
China has signed 13 FTAs with 21 nations and regions. Till date, China has signed FTAs with ASEAN, New Zealand, Singapore, Pakistan, Chile, Peru, Costa Rica, Iceland, Swiss, South Korea. In addition, the Chinese mainland has signed the Closer Economic Partnership Arrangement with Hong Kong and Macau and completed the Economic Cooperation Framework Agreement with Taiwan. China is now involved in negotiations on eight FTAs covering 23 countries. These include the Gulf Cooperation Council, Australia, Sri Lanka, Norway, ASEAN and Pakistan, a trilateral FTA linking China, South Korea and Japan, and negotiations on the RCEP.
SOURCE: The ECNS
