Daily News - Thursday, 20 February 2025
Investment treaties and free trade deals may be separated (mint)
India is considering separating bilateral investment treaties (BITs) from free trade agreements (FTAs) to prevent trading partners from using them as bargaining tools for trade concessions, a shift that will impact ongoing negotiations with the UK, the EU, and the Eurasian Economic Union (EAEU). Since investment protection clauses often conflict with sovereign functions like taxation, the finance ministry is now developing a new investor-friendly BIT model, as highlighted in the Union Budget on February 1. This policy change ensures that while the commerce ministry negotiates FTAs, BITs will be handled independently by the finance ministry, marking a strategic shift in India’s trade and investment framework.
New Solar Projects to Have 2-hr Energy Storage Systems(The Economic Times)
India has mandated that all future solar project tenders include at least two hours of energy storage, equivalent to 10% of installed capacity, to enhance grid stability and address solar power intermittency. This policy, issued by the Central Electricity Authority on February 18, is expected to enable 14 GW/28 GWh of storage-backed solar projects by 2030, supporting the country’s broader goal of achieving 500 GW of renewable energy capacity. With battery prices declining, this move will not only accelerate energy storage adoption but also lower power purchase costs during non-solar hours, benefiting state utilities and distribution companies.
Smokey Affair: GST on Cigarettes, Tobacco Products may be Raised (The Economic Times)
India is considering raising the Goods and Services Tax (GST) on cigarettes and other tobacco products from 28% to the highest permissible 40% while introducing an additional excise duty to compensate for the removal of the compensation cess after March 31, 2026. Despite the current total indirect tax burden of 53%, which includes GST, cess, and other levies, this remains below the World Health Organization’s recommended 75% tax rate on tobacco products; in 2022-23, these products generated ₹72,788 crore in tax revenue. While some states have suggested replacing the compensation cess with a health cess, the Centre is not in favor of introducing a new cess, and the GST Council will finalize the taxation framework based on recommendations from the Group of Ministers (GoM) and fitment committees.
Power Sector will Need ₹6.4L crore Investment until FY35: Moody’s (The Economic Times)
India’s power sector will require an investment of ₹4.5-₹6.4 lakh crore until FY35, amounting to 2% of real GDP annually, and ₹6-9 lakh crore per year from FY26 to FY51, which is 1.5-2% of GDP, surpassing China and Australia’s proportional investments, according to Moody’s Ratings. The funding will come from public and private sectors, foreign and domestic capital, with conventional bank lending and debt markets playing a crucial role, while long-term low-cost foreign capital remains essential to bridge the gap. With power demand expected to grow at a 6% CAGR and 450 GW of renewable capacity additions falling short, coal-based power generation is projected to expand by 35% to 295 GW over the next decade.
India, Argentina Ink Pact for Lithium Exploration, Mining (The Economic Times)
India and Argentina have signed an agreement to expand cooperation in lithium exploration and mining, with state-run Mineral Exploration and Consultancy Ltd inking an MoU with Argentina’s Catamarca province to accelerate resource development. The partnership aims to enhance India’s lithium security by increasing Indian companies’ participation in Argentina’s mining sector, alongside ongoing exploration efforts by Khanij Bidesh India Ltd and Greenko. Both nations also discussed investment opportunities, long-term supply agreements, regulatory frameworks, and sustainable mining practices to strengthen bilateral collaboration in critical minerals.
