สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 19 พฤศจิกายน 2556

To stop misuse of free trade agreements, finance ministry plans text review

The finance ministry is pushing for a review of the model text for free trade agreements (FTAs) after recent misuse of bilateral pacts exposed many loopholes in the pacts India has entered into with its trading partners. The North Block wants the agreements to provide more teeth to revenue authorities such as powers of automatic suspension of trade in a particular good if gross misuse of the provisions of agreement is discovered. It has asked the commerce department to review the draft. For example, in the absence of such a provision in the India-Thai early harvest scheme, New Delhi had to alert its Customs ports to disallow jewellery imports. India had disallowed gold jewellery from Thailand under the FTA after revenue authorities raised an alarm over the violation of rules of origin that mandated 20% value addition in Thailand. Gold jewellery was allegedly being imported via Thailand to take advantage of the lower duty available under the bilateral trade agreement with India. An explicit suspension provision should have been invoked easily after gross misuse of the agreement was detected by revenue authorities, the official said.Some trade pacts also do not have specific provisions to deal with situations when a partner does not carry out a requested investigation or verification in agreed time frame.For example, in the case of India-Thailand, the latter is yet to respond to New Delhi's request of verification of rules of origin certificates.

(Source: Economic Times)

Dispute over fuel, alcohol inclusion in GST hits talks

Talks between the Centre and state governments over the proposed Goods & Services Tax (GST) almost collapsed here on Monday. States unanimously refused to subsume petroleum and alcohol in the proposed tax regime, cautioning the Centre to take no move affecting their fiscal autonomy. With this, the possibility of a Constitution Amendment Bill on the GST changes coming up in Parliament in the current tenure of the UPA government appears to have become remote. The Goods and Services Tax (GST) was originally scheduled to be introduced from April 1, 2010. However, differences between the Centre and states over the proposed Constitution amendment Bill has led to persistent missing of the deadlines. The new tax regime might not come even on April 1, 2014 owing to the upcoming Lok Sabha elections. Currently, the Centre imposes excise duty and service tax, while the states impose VAT and in some cases sales tax. All these, more or less, would be subsumed in GST. This would make India a kind of common market for taxation purposes. However, the earlier proposal to have a common rate with states and the Centre might undergo a change, as the states are insisting on a band of taxes to give them flexibility. Customs duty will be out of GST.

(Source: Business Standard)

FDI in pharma doubled to $1 bn during Apr-Aug

Foreign direct investment in the pharma sector has more than doubled to $1.07 billion during April-August period amid concerns over increasing acquisitions of domestic firms by multinationals. FDI in drugs and pharmaceuticals was $487 million during April-August 2012, according to the latest data of the Department of Industrial Policy and Promotion (DIPP).Faced with rush of multinationals to acquire Indian pharma firms, the commerce and industry ministry is proposing to tighten the FDI policy for the sector by incorporating conditions like mandatory investment in R&D and non-compete clause in the shareholders pact. Over 96% of the total FDI in the sector between April 2012 and April 2013 has come into brownfield pharma.

(Source: Financial Express)

Remove competition barriers to attract investments: Arvind Mayaram

Barriers restricting fair play in markets need to be removed to attract more investments in developing countries such as India, economic affairs secretary Arvind Mayaram said on Monday. On the significance of competition to the developing world, Mayaram said: “Removing barriers to competition is crucial for attracting investments in key sectors of an economy — especially in developing countries. Noting that many developing countries have started to recognize competition laws as a tool for catalyzing inclusive and sustainable development, he said that various government policy processes in India have pointed towards the urgent need for a “National Competition Policy” to “kick-start the second generation of economic reforms in the country”. One of such key issues is the need to regulate state owned enterprises, especially by integrating the principle of “competitive neutrality” in the policy and enforcement process, he said.

(Source: Live Mint)

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