Trade battle between the US -world’s largest economy and India world’s fastest growing economy is on an uptrend and WTO battles have increased in recent years. the latest incident is the US’s follow up compensation demand out of its poultry trade dispute victory at WTO’s DSB(Dispute Settlement Body). In the latest development, the US has requested WTO to initiate compensation from India for the poultry trade restrictions against US imports. Earlier, the US had won a case against India’s import restrictions against US imports including poultry, egg and live pigs at WTO’s DSB. The DSB in June 2015, ruled that Indian ban on import of poultry meat,
Finance Ministry has finalized a model agreement between the Centre and states for the effective implementation of bilateral investment protection agreements (BIPAs or BITs) between India and other countries. The model agreement ensures states commitments to protect the interest of foreign investors. BIPA is signed between the central government and other countries for providing protection to foreign investment. Bilateral Investment Promotion and Protection Agreements (BIPAs) are agreements between governments of two Countries for the reciprocal promotion and protection of investments in each other's territories by individuals and companies situated in either State. They provide t
In its effort to check black money’s mobility across borders and to reap more revenues, the government has modified DTAA (Double Taxation Avoidance Agreement with Cyprus on the Mauritius line. Capital gains from share sale will be subjected to source based taxation as per the modification made to the India- Cyprus DTAA. Cyprus is a major tax haven. The change implies that if a foreign investor from Cyprus makes profit through investment in Indian shares, he should pay the capital gains tax in India. Modalities of the modifications were finalized between the officials of the two countries. According to official sources, the agreement will go for Cabinet approval soon. Rewor
Major FDI liberalization drive in food processing, pharma and defence: The government has announced major reform measures by removing existing notable restrictions in critical sectors. These include relaxation in three sectors – the sensitive and high growth food product sector, strategic sector -defense and competitive sector -pharma. Announcing the decision, Prime Minister described that India is the most open economy in the world now. The announcement also helped the government to calm markets that started to react violently to Raghuram Rajan’s exit decision. A remarkable outcome of the new policy is that upto 100% FDI is allowed under defence and civil aviation s
India’s current account deficit has registered its smallest deficit figure in the last seven years. Declining trade deficit amidst the global recession has helped to narrow down the trade deficit. According to the RBI's quraterly estimate about trade data for the quarter, other developments for the quarter include fall in services exports which is a matter of concern in the context of sharp decline in exports of goods. The current account deficit for the fourth quarter of the last financial year (2015-16) was just $300 million which is around 0.1% of GDP. This is significantly lower than US$ 7.1 billion (1.3 per cent of GDP) in Q3 of 2015-16 and marginally lower than US$ 0
Civilizational giants -India and Iran agreed to build the much anticipated gateway to central Asia- Chabahar port. On the finance side of the port development, PM Modi declared that India will open $500 mn line of credit. Iran’s reentry into mainstream world after the US ban removal has facilitated the deal. Already, India has expanded import of crude from Iran. The port is situated just little away from the Pakistan border and is expected to fuel India’s effort to get a transit route into Central Asia. Connecting the port, a corridor will be completed through Afghanistan. It is expected that the two sides will complete the detailed financial side of the project soon.
Apple’s visiting CEO, Tim Cook has announced a software development center in Bengaluru as India has emerged as the fastest growing market for the US based company. Through opening of some development facilities in India, Apple expect some policy leverage in its favor from the government for the company’s Indian plans. Cook has reached India after a Chinese visit where the California based company has announced $1bn investment in car hail app firm Didi. Being a high priced brand, Apple is facing a big hurdle in the Indian market because of competition from rookie smart phone manufactures. Already, other players from Korea and China are occupying the smart phone market
In a major agreement that may redirect capital flows into India, the government has modified Double Taxation Avoidance Agreement (DTAA) with Mauritius. Both countries have made the amendment thirty-three years into the running of the DTAA which was signed in 1983. As per the modification, capital gains made by a Mauritius registered company on share selling in India will be taxed in India. The tax becomes source based (tax should be paid at the source of tax (e.g. India) rather than residence based (e.g. Mauritius) of the entity that makes the income). This change will help India to reduce the DTAA misuses of round tripping and treaty shopping. Majority of the FDI coming from Mau
The government is not in favour of brining a retrospective sunset policy in the SEZ review, hinted commerce Minister Nirmala Sitharaman at the Loksabha. The commerce Minister added that government will not hurt the industry by imposing a retrospective withdrawal of an already declared tax concession like the sunrise clause. India’s SEZs are slow performers on export front compared to similar industrial and export agglomerations abroad. In a recent statement in the Parliament, the Minister stated that ‘special economic zones (SEZs) have seen a slowdown in terms of exports, increased number of applications for denotification, slower operationalisation and fewer n
The Commerce Ministry’s initial estimate of trade data for the disappointing year of 2015-16 shows that exports have dipped by 15.8% to $261 billion. Imports also declined for the year, registering a fall of 15.2%. imports for the year was $ 379 bn as against $ 448 billion during the previous year. This is the lowest export figure in five years. The previous low was 2010-11, where export figure was $ 242bn. Over the last one and a half year, India was registering monthly decline in exports. Exports figures have declined during the last fifteen months continuously. The major downward pulling factor for exports was the global slow down. According to the Ministry’s press
Dictionary on Indian Economy
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- Japan’s first trade deficit in 30 years is part of the Global Shift
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