Trade 12 Aug 2016 by Tojo Jose

RCEP: Officials to meet on tariff structure today; India to fight zero tariff formula

RCEP: Officials to meet on tariff structure today; India to fight zero tariff formula

The crucial meeting of the officials of the proposed RCEP is meeting in Vietnam. Meeting of the officials will negotiate on future tariff structure within the RCEP which has 16 members including ASEAN countries, India China, Japan, South Korea, Australia and New Zealand. The RCEP is an Asian alternative to the US led TPP where China is not a member. From the Indian angle, the proposed FTA discussion is very important as the country is the least prepared for the aggressive tariff cut suggested by others especially China. Beijing aims a zero tariff structure for bulk of the manufacturing commodities given its advantage in the sector. ASEAN is also not opposed to such a tariff struc

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Trade 10 Jul 2016 by Tojo Jose

India to resist RCEP’s zero tax regime

India to resist RCEP’s zero tax regime

Discussions for the proposed Free Trade Platform comprising the major Asian countries - the RCEP (Regional Comprehensive Economic Partnership), is entering into a tough round with India resisting zero tax regime advocated by major partners. Commerce Ministry officials have indicated that eliminating import duty on majority of tradable goods will be disastrous for India. Existing data indicate that India’s FTAs with ASEAN and bilateral ones with several other countries have bought only trade deficits. Most of the arrangements caused flooding of goods into the Indian market. East Asia’s’ developed industrial sector and early established advantage in FTA formations

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Trade 09 Jul 2016 by Tojo Jose

US demands compensation from Indiafor Poultry import restrictions

US demands compensation from Indiafor Poultry import restrictions

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,

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Foreign Investment 05 Jul 2016 by Tojo Jose

Centre designs model agreement for state participation in BIPA implementation

Centre designs model agreement for state participation in BIPA implementation

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

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Foreign Investment 02 Jul 2016 by Tojo Jose

India to bring capital gains under source based taxation with Cyprus

India to bring capital gains under source based taxation with Cyprus

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

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Foreign Investment 20 Jun 2016 by Tojo Jose

Government launches sweeping reforms in the FDI front

Government launches sweeping reforms in the FDI front

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

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Trade 17 Jun 2016 by Tojo Jose

Current account deficit comes down but remittances and service exports fall amidst declining trade: trade data

Current account deficit comes down but remittances and service exports fall amidst declining trade: trade data

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

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Trade 23 May 2016 by Tojo Jose

India and Iran finalizes he historical Chabahar port deal

India and Iran finalizes he historical Chabahar port deal

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.

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Foreign Investment 19 May 2016 by Tojo Jose

Apple announces software development center in Bengaluru to push up its India marketing campaign

Apple announces software development center in Bengaluru to push up its India marketing campaign

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

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Foreign Investment 11 May 2016 by Tojo Jose

India and Mauritius modifies the DTAA; Capital gains tax becomes source based

India and Mauritius modifies the DTAA; Capital gains tax becomes source based

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

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