India is likely to post current account surplus in the current financial year, Chief Economic Advisor KV Subramanian said on Monday.
Current account surplus means more earning in dollar than expenditure. Surplus will be possible as there is moderation in import due to under heating of the economy triggered by the Covid-19 crisis.
Taper tantrum phenomenon refers to the 2013 collective reactionary response that triggered a spike in US treasury yields, after investors learned that the US Fed was slowly putting brakes on its quantitative easing (QE) programme. This led to a surge in inflation to high double digits emerging economies.
In contrast, he said, the Covid crisis is different and India identified the nature of this crisis and treated it differently from other economic crises of the past.
Noting that the Covid crisis is primarily a negative shock to demand, Subramanian said India’s response was suitably crafted to deal with that.
“And that is in fact if you can see is reflected in the fact that, this year we may be having a current account surplus. We had almost $20-billion current account surplus in Q1... $19.8 billion to be precise. Even if let’s say subsequent quarters do not see that kind of performance, we still will likely have a current account surplus...,” he said.
SOURCE: The Hindu Business Line
The government is thinking of creating a mechanism to prevent tax issues from ballooning into disputes and settle disagreements on a “real-time basis”.
“There should be a simultaneous tracking of disputes and if possible prevent tax matters from becoming disputes or if there are indeed disputes then settle them through a real-time kind mechanism,” Finance Minister Nirmala Sitharaman said while replying to a question on tax matters.
She was addressing National MNC’s Conference 2020, organised by the Confederation of Indian Industry (CII).
Citing the two schemes on resolving tax disputes launched by the government, the finance minister said: “We have made our intent clear, that’s why we came up with two schemes — one was Sabka Vishwas (for cases pertaining to indirect taxes) and second is Vivad se Vishwas (for direct tax-related matters). But I understand that we need to have robust mechanisms, so as we go along, disputes can be resolved rather than wait for a day when we announce a scheme and say come back with pending litigation.”
The concept, if it becomes effective, will allow taxpayers an opportunity to settle issues by paying the tax due instead of going in for litigation.
This could be done through mediation, where once the tax demand is finalised, assessees can be given an option to settle the matter and in exchange they may get an incentive like immunity from penalty and a waiver of interest on tax dues, said a tax expert.
The Direct Tax Vivad se Vishwas Act, 2020, was enacted earlier this year with the government saying it aimed to reduce pending income tax litigation. The government has collected Rs 72,480 crore so far under the scheme, with over a month to go for the deadline.
A total of 45,855 individual declarations have been filed as of November 17 and declarations amounted to Rs 31,734 crore.
It’s estimated that nearly 500,000 such cases are pending in different forums, including commissioners of appeal, tribunals, high courts, and the Supreme Court.
The Centre’s rough estimate shows about Rs 10 trillion of tax revenue could be stuck in these judicial and other bodies.
Apart from this, Sitharaman also talked about the alternative dispute resolution mechanism — advance pricing agreements (APAs).
She said APAs were taking too long and should be expedited because it was creating a huge burden on multinationals’ books.
“APAs can be expedited. Otherwise it defeats the very purpose and five years is definitely not acceptable,” she said.
The APA scheme envisages an alternative dispute resolution on transfer pricing. The scheme helps in specifying the methods of pricing and setting prices of international transactions in advance.
However, the problem for companies is that applications on APAs are pending for too long.
The finance minister assured India Inc that the momentum of economic reforms would continue to make India a hot spot of global investment.
India has turned the crisis created by the pandemic into an opportunity to push economic reforms, which remained pending for decades, she said.
She said not just the MNCs but industry and the economy were undergoing a reset.
“We will have to make sure that policies are right to make India an attractive investment destination,” she said.
The financial sector is being professionalised and the government will continue with disinvestment and privatisation, the minister added.
Furthering its reforms agenda, the government is setting up dedicated special manufacturing zones for pharma, medical devices, and active pharmaceutical ingredients in six states. An effective unified single window mechanism is part of these zones.
On reforms in taxation, the minister said the use of technology, such as faceless assessment, had eased tax filing and removed the scope for discretion. This will be the only way in which tax assessees will engage with the authorities, she said.
She added this faceless concept was gradually moving towards indirect taxation also.
SOURCE: The Business Standard
MNCs look at India favourably when it comes to investments across the globe. India is in fact their first choice, according to a survey of key decision-makers of those MNCs, conducted by CII and EY.
The finance ministry is learnt to have turned down a proposal of the department for the promotion of industry and internal trade (DPIIT) to extend the cutoff date for the incorporation of start-ups to be eligible for the income tax holiday by five years from April 2021. This has dashed hopes of industry executives who were eyeing extended tax relief to help proliferation of start-ups. Currently, start-ups that are incorporated between April 1, 2016, and March 31, 2021, are allowed to apply for the I-T relief and the eligible ones get it for a block of three out of the first 10 years.
The revenue department believes that in sync with the government’s policy objectives in recent years, the myriad exemptions need to be phased out and tax rates rationalised so that a much simpler and more efficient tax regime can be ushered in. Already, the cutoff date was once extended by two years through March 2021. In its proposal for the FY22 Budget, the DPIIT, however, wanted the relaxation to continue for another five years to enable a wider pool of start-ups to get the benefits, especially in the light of the Covid-19 pandemic.
Meanwhile, industry executives complain that only about a very tiny section of the start-ups has so far got the tax benefit, thanks to a “rigid” approval process. Usually, an inter-ministerial board (IMB) headed by a senior DPIIT official vets the applications and issues the eligibility certificates. Upon its clearance, start-ups get the benefits under Section 80-IAC of the I-T Act.
Siddarth Pai, founding partner at 3one4 Capital, said: “Recognising the damaging impact of the Covid-19 on fresh investments, the DPIIT had recommended an extension of the cutoff date. The income tax holiday of 80IAC, due to the nature of approvals, has seen limited coverage of India’s startups, with around 2-2.5% of India’s 60,000+ start-ups being granted the IMB certification.”
Pai argued that the government should consider granting the relief to all the start-ups incorporated during the specified period, instead of only those that are certified by the inter-ministerial board on the basis of innovation & such criteria, which is, in any case, a subjective matter.
As for the relief, the I-T Act provides for a deduction of an amount equal to 100% of the profits and gains derived from an eligible business by an eligible start-up. The turnover of the start-ups must not exceed Rs 100 crore in the previous year relevant to the assessment year for which deduction under this section is claimed.
“We await the Budget for FY22 and just hope that the rejection of the DPIIT proposal is not going to signal an unwinding of the start-up India program, for which the Indian Prime Minister is the biggest ambassador,” Pai added.
Sachin Taparia, founder and chairman of LocalCircles, said the government should also consider extending the I-T relief to those incorporated before 2016 if indeed it wants the country to have a robust start-up ecosystem.
Given the fact that start-ups hardly make any profits in initial years and most of them even fail to survive, they have been pitching for a more liberalised taxation regime.
SOURCE: The Financial Express
Bangladeshi readymade garment (RMG) manufacturers have requested the bond authorities to increase the amount of waste acceptable while making RMG from imported duty-free items under bonded warehouse benefit.
Recently, RMG manufacturers and exporters in a meeting with the Customs Bond Commissionerate (CBC), Dhaka demanded a rise in the percentage of waste permitted in making export-oriented garment items to 25 or 30%. CBC Dhaka is a field office under the National Board of Revenue (NBR).
Representatives from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) participated in the meeting with the bond commissioner.
At present, apparel manufacturers are permitted to waste 7% to 9% of the mandatory materials while making export-oriented clothing items. It is 7% during the dyeing process and 9% in case of processed knitted fabrics.
In numerous cases, RMG manufacturers and exporters cannot keep the commerce ministry’s fixed 7% and 9% waste allowances in making high-end garment items.
With local apparel makers entering more high-end market, the percentage of waste has risen in parallel.
Consequently, the bond office and customs offices from time to time cause delays in freeing goods from ports because of a disparity in the amount of fabrics imported and its consumption for making finished apparel goods for export under bond licenses.
Apparel makers say that a good amount of fabrics is wasted for several reasons in manufacturing. For example, during fabric cut, processing or sewing fabrics.
They also voiced that high-value-added apparel items produce more waste compared to the production of basic apparel products.
To become more competitive in the international market, local garment manufacturers started making diversified garment items like fancy, semi value-added and high value-added garment items.
Also, new suppliers like Myanmar and Ethiopia are producing cheap basic garments, making the price of “Made in Bangladesh” garment items for export declined by 1.79% over the last 5 years but the cost of production rose 30%.
Clean manufacturing leader Genomatica signed a first-of-its-kind deal with Aquafil to build a demonstration scale facility to produce the largest quantity of 100% renewable nylon-6 ever available. Responding to surging consumer interest in sustainable products, the material will go to leading global brands eager to explore and develop renewable products, create showcase goods and test feedback with customers. The deal is a 50-fold expansion over previous production levels and represents significant acceleration toward commercializing renewably-sourced nylon-6 — a material that is poised to reshape a $960 billion textile industry that touches millions of lives every day, from the carpet we walk on to the clothes we wear.
Genomatica is harnessing synthetic biology to remake the world of everyday products and materials through the power of clean manufacturing. The company is developing more sustainable, higher-performance key ingredients for everyday products, using plants and waste rather than fossil fuels or other non-sustainable sources like palm oil. Genomatica has already commercialized products to make better plastics, spandex and cosmetics, and is working on nylon, household cleaners and more.
This multi-year agreement provides the foundation for a more sustainable nylon value chain by expanding a longstanding Genomatica partnership with major European nylon producer Aquafil. The two companies teamed up in January 2020 to produce the world’s first ton of bio-nylon-6 precursor at pilot scale. Relying on their expertise in scaling up renewably-sourced chemicals, Genomatica and Aquafil are moving directly to a larger-than-typical demonstration scale to support initial commercial applications by committed brand partners. The first production runs are slated to create 50 tons of bio-nylon for pre-commercial use by Genomatica’s brand partners, with the demonstration plant to continue supporting product needs until commercial scale plants are in operation. “Bio-nylon is positioned to replace a material that’s used in millions of applications every day,” said Christophe Schilling, Genomatica CEO. “Our research shows that despite health and economic turmoil, 56% of Americans still want brands to prioritize sustainability. With this scale, Genomatica is offering our brand partners a key way to meet their sustainability objectives, differentiate themselves, and meet surging consumer demand.”
Genomatica and Aquafil will work together to implement and refine their respective technology contributions through this demonstration program and create large quantities of bio-nylon. Aquafil will build and operate the downstream operations of this large-scale demonstration plant at its facility in Slovenia, where it will convert Genomatica’s bio-based precursor to commercial-quality bio-nylon-6 yarns, films and engineered plastics. The produced material will be used to develop renewably-sourced products, replacing traditional nylon that generates upwards of 60 million tons of greenhouse gas emissions annually. Under this agreement, initial volumes of bio-nylon ingredients will be available in the latter half of 2021.Genomatica has a proven track record of successfully scaling technology from idea to commercialization stage for multiple renewably-made products: Genomatica teamed with bioplastics leader Novamont to open the world’s first commercial plant for bio-based BDO, with a capacity of 30,000 tons annually, which reduces greenhouse gas emissions by 50% compared to petroleum-based, and is used widely in products ranging from compostable shopping bags to Lavazza coffee capsules.
Genomatica also produces large quantities of Brontide™ natural butylene glycol, which has been evaluated by more than 250 formulators, slashes greenhouse gas emissions by 51% compared to traditional production, and is an active ingredient in dozens of cosmetics and consumer care products on the market today including in brands like Farmacy and Kinfield. Genomatica’s technology to make bio-nylon precursor was recognized in TIME’s Best Inventions for 2019 and the company’s technologies have won the prestigious EPA Green Chemistry Challenge Award three times.
SOURCE: Textile Focus
“Superbrands Bangladesh”, a global arbitrator for brands for the current situation, was released on Thursday, 19 November 2020-21 through a grand virtual awards ceremony. Salman Fazlur Rahman, MP and Advisor to the Prime Minister, Private Sector and Investment, was the Chief Guest of the ceremony.
Superbrands honored a total of 40 well-known brands in Bangladesh. The awards ceremony honored 3 of the top textile group industries DBL Group, Epyllion Group and Pride Ltd as well as 37 of the most prestigious and valuable brands. Addressing the program, Salman Fazlur Rahman said, “This is a recognition that reflects the hard work of all employees.”
Participation in superbrands is by invitation only and in their case is given to the most outstanding brand. Superbrands are selected through a process that involves individual and voluntary panels of experts from different backgrounds known as “Brand Councils”.
Shariful Islam, Managing Director, Superbrands Bangladesh, said, “Over time, a quality brand that is delivered from both product and service perspectives builds confidence. A trust built over a continuous period builds a superbrand.”
Nazia Andaleeb Preema, Director and Creative Editor of “Bangladesh Brands Forum” has designed a cover for Superbrands Bangladesh 2020-21 publication called “Visual Dialogue” which shares the story of each superbrand in Bangladesh.
Bangladesh and India are likely to sign four memorandum of understandings (MoUs) during the upcoming virtual meeting of Prime Minister Sheikh Hasina with her Indian counterpart Narendra Modi next month.
“It is likely as many as four MoUs are to be signed during the virtual meet…but the MoUs are yet to be finalised,” Foreign Minister Dr AK Abdul Momen said on Monday, reports BSS.
The foreign minister said that after the virtual talks the two premiers may also inaugurate some projects those have already been completed under the Indian Line of Credit (LoC).
The summit meeting between prime ministers of the two neighbouring countries will take place in the third week of December, either on 16 or 17.
Dr Momen said Foreign Secretary Masud Bin Momen will visit New Delhi before the talks for finalising the agendas of the forthcoming meeting.
“We are thankful to India that their premier will talk to our honourable Prime Minister during our victory month as our victory is India’s victory as well,” he said.
Prime Minister Sheikh Hasina and Indian Premier Modi held last bilateral talks in New Delhi on October 5 last year.
The Indian premier was scheduled to visit this year to join birth centenary celebration of Father of the Nation Bangabandhu Sheikh Mujibur Rahman but the trip was cancelled due to COVID-19 pandemic.
The foreign minister said Dhaka had invited Narendra Modi to visit here in person on March 26 to join the nation’s celebration of the 50 years of the independence.
“We’ve invited him (Narendra Modi) and they accepted the invitation in principle,” he said as Bangladesh and India will celebrate Bangladesh’s 50 years of independence together next year.
Earlier, newly-appointed Indian High Commissioner to Bangladesh Vikram Doraiswami assured that the virtual Hasina-Modi summit in December is not being seen as a substitute for in person visit by the Indian Prime Minister here.
On November 5, a Memorandum of Understanding (MoU) was signed between Serum Institute of India and Beximco Pharma of Bangladesh for priority delivery of 30 million doses of COVID-19 vaccine to Bangladesh.
The two countries also established air connectivity under ‘air bubble arrangement’ amid the pandemic.
SOURCE: The Financial Express,
The shift towards digitalisation and knowledge-based economies highlights the increasing importance of innovation and technology to economic growth, observed the World Trade Organization (WTO) in its latest world trade report.
The ‘World Trade Report 2020: Government policies to promote innovation in the digital age,’ released by the WTO this (Monday) evening (Bangladesh time), argued that in the context of ‘new industrial policies' and related policies geared towards innovation, and the transition towards the digital economy, some of these strategies can have spill-overs for other countries.
The positive spill-overs are growth generation, new market creation and encouragement of technology diffusion. The negative spill-overs are, however, trade distortion, investment diversion or promotion of unfair competition.
The report also said that domestic economic fallout linked to the Covid-19 pandemic is leading countries to strengthen the policies aimed at boosting growth through innovation and technological upgrading.
Referring to governments’ direct funding and indirect financial support to stimulate demand for and use of Information and Communication Technology (ICT), the report mentioned that between 2014 and 2016, eight Least Developed Countries (LDCs) reduced taxes on ICT services.
These are specific Value Added Tax (VAT) on SMS, data or calls, connection tax, or SIM card tax and the countries are Angola, Bangladesh, the Democratic Republic of the Congo, Mauritania, Nepal, Niger, Senegal and Uganda.
The report deeply discusses: (i) innovation-oriented government policies and their evolution in the digital age; (ii) innovation policy, trade and the digital challenge; (iii) innovation policy, trade and the digital challenge; and (iv) international cooperation on innovation policies in the digital age.
It is the 18th version of the world trade report, one of the WTO’s annual flagship publications. The first world trade report was published in 2003 focusing on ‘trade and development.’
The world trade report of the multilateral trade body ‘aims to deepen understanding about trends in trade, trade policy issues and the multilateral trading system.’
SOURCE: The Financial Express, Bangladesh