สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 19 กันยายน 2556

'We'll trade you yoga for Thai massage': India proposes duty-free services deal with Thailand

If everything goes well, Thai massage parlours and spas will soon make a foray into India.  A yoga-for-massage barter proposal which is doing the rounds in the Commerce Ministry and the Ministry of External Affairs may break the logjam with Thailand over the free trade agreements (FTAs).As per the FTAs, Thai massage parlours and spas will be able to provide duty-free services in India. At a time when the government officials privy to the negotiations say that the money earned by Thai operators can be repatriated without any tax deductions, the external affairs ministry wants a compromise formula from Bangkok: yoga parlours in Thailand. Earlier, South Block had asked the Ministry of Commerce to reexamine some of the key free trade agreements (FTAs) that India had signed with Singapore, Japan, South Korea and the Association of Southeast Asian Nations (ASEAN). According to it, India had failed to achieve the main objective of leveraging the services trade with those countries. Officials, however, hope to clinch the deal with Thailand. India is also looking to expand cooperation with Bangkok with the increasing activities of anti- India groups in that country and Indian mafia dons in South East Asia. India has been in talks over FTAs with Thailand since 2004 when both the sides launched the Early Harvest Scheme, under which duties on the import of 82 items were abolished. The government, which is yet to take a decision on Thai massage parlours, may come under fire from moral policing groups and Ayurveda massage parlours that may have to see their business eroding. Sources say while the government will come up with several safeguards to ensure that only genuine Thai spas and massage parlours would come in, the move will also boost the tourism industry in India. At the same time, critics suspect whether Indian yoga parlours would be able to make it big in the Thai market. As part of its economic diplomacy, India had gone on an overdrive and signed a number of agreements but failed miserably in augmenting its exports.  The issue of a services agreement was also flagged during Prime Minister Manmohan Singh's meet with his Thailand counterpart Yingluck Shinawatra who stressed on a comprehensive free trade. The second protocol to amend the framework agreement for establishing FTA between Thailand and India was signed during the Thai PM's visit to India in January 2012. Also, the India-ASEAN agreement on trade in goods was signed in Bangkok in August 2009 by Commerce & Industry Minister Anand Sharma. It was operationalised on January 1, 2010. The services and investment chapters of the India-ASEAN FTA were concluded in December 2012. Bilateral trade between India and Thailand has multiplied eight times since 2000 to reach $8.68billion in 2012.

(Source: Mail Today, India Today)

New transfer pricing rules to lessen tax disputes, attract investment; IT, auto companies to gain

India unveiled a new set of rules on Wednesday to rein in transfer pricing disputes involving multinationals, in line with Finance Minister P Chidambaram's budget pledge and as part of moves to revive overseas investor confidence. Under the so-called safe harbour rules, income-tax authorities will not question the pricing of transactions between multinational companies and their subsidiaries under certain situations, which will benefit a host of sectors such as IT and ITES (Information Technology Enabled Services), pharmaceuticals and automobiles. The new rules will be applicable for five years beginning assessment year 2013-14, instead of the two years specified in the draft. Transfer pricing refers to what related entities charge each other in cross-border transfers of goods and intangibles such as brands or services. There has been a surge in tax disputes related to the practice in past few years as the country sought to maximise revenues. This had the unintended consequence of India coming across as a combative tax administration, discouraging overseas investors.

(Source: Economic Times)

India soon to be export base for Suzuki's Swift

To take advantage of the inexpensive labour force and currently unutilised capacity at its local subsidiary, Japan’s Suzuki Motor Corporation is shifting the export base of its popular premium hatchback Swift to India. Sources said that Maruti Suzuki has, since last month, begun manufacturing the vehicle at its Manesar plant for the West Asian, African and Latin American markets. Earlier, vehicles for these markets were being made in Japan as they were meant for left-hand drive (LHD) traffic. Maruti did not have the capability to manufacture LHD Swift till now.Suzuki’s plant in Japan will now produce Swifts for the home market and small export volumes for developed markets that require a bigger, 1.4-litre petrol engine. In India, the Swift is fitted with 1.2-litre petrol and 1.3-litre diesel engines. Maruti's Swift is the largest-selling car in India after the Alto, clocking monthly volumes of close to 14,000 units. However, this is lower than the manufacturing capacity of over 17,000 units a month that Maruti is not able to fully utilise due to sluggish demand in the domestic market. This excess capacity is thus being used for exports. At present, the Swift is mostly exported as completely knocked-down (CKD) kits to markets like Thailand and Malaysia, with Vietnam to be added by next month. The plan is to now ship completely built-up units.

(Source: Financial Express)

Should the land acquisition law worry India Inc?

Industry captains are disappointed with the passage of the Land Acquisition, Resettlement and Rehabilitation Bill. They feel the new legislation would raise land prices 100-150 per cent. Concerns have also been raised about further delays in land acquisition because of the mandatory 70-80 per cent consent clause. The Bill mandates if the government acquires land for private companies, it has to secure the consent from 80 per cent landowners. In the case of public-private partnership projects, the consent of 70 per cent landowners would be required. The main issue raised by three leading consultancy firms was the same: delay in acquiring land was the real culprit, not the cost of acquiring it. Does the new legislation address this concern? The initial reaction has been one of disappointment. But a careful study of the Bill indicates endless delay in acquiring land for important projects is unlikely. Experts say the new legislation has left a lot to state governments. For instance, states would have the power to veto the findings of social assessment impact studies. These could also decide the type of land to be acquired for various projects and exempt private projects from the (Resettlement and Rehabilitation) R&R clause if these so wish. Given the competition among states to attract investors, this might not be bad news for the industry.

(Source: Business Standard)

Economic Section

Royal Thai Embassy