COVID-19 vaccination: Patent waiver isn’t a big deal

The US has agreed to go along with Indian and South African plea for a patent waiver at the WTO discussions whereas the European Union has diplomatically but quite rightly parried the issue by saying that even if the vaccines invented in the EU become available as a generic medicine, it would be a long haul despite the legendary Indian reputation for its generic medicine prowess.

European Commission President Ursula von der Leyen rightly harped on scaling up production and fair distribution as the more pressing issue and the need of the hour. She was guarded in not using the term vaccine equity as that would most certainly offend the US, Canada, UK, and Israel which stockpiled vaccines by preordering from whatever sources possible. Small wonder the US is able to give India 60 million doses of AstraZeneca vaccine from out of its what in hindsight turned out to be a needless stockpile given its faith in its own Pfizer and Moderna vaccines. Enlightened self-interest is the subtle message emanating from the US and EU. Be that as it may.

Kiran Mazumdar Shaw the founder of the Indian biotech firm Biocon is also of the firm view that the Indian government would do well to prevail upon the US to lift the ban on the export of raw materials and consumables it had put under its Defence Act. She goes on to add that patent waiver is not as much a big deal as the US agreeing to make raw materials available.

Indeed vaccine production can require more than 200 individual components, which are often manufactured in different countries. These include glass vials, filters, and resin, tubing and disposable bags. If any critical item falls short, then it can disrupt the entire process. Therefore, it is necessary to understand that vaccine manufacturers cannot produce without the supply chain of components firing on all four cylinders which unfortunately is not happening.

Shortage of components is already holding up production in few production centers. This points to the need for not viewing the production of vaccines in isolation but holistically. And this is the point Biocon’s Shaw is making tellingly. Serum Institute which is hopeful of ramping up its production to 100 million doses a month badly needs all these 200 or so raw materials which were freely available to it when the current pandemic had not broken out thus making it the vaccine hub of the world. But the pandemic has made the manufacturers in the supply chain cringe and look inward.

The emphasis must be on quickly vaccinating as many people as possible. Israel has the envious record of vaccinating 56 percent of its population whereas only 16 crore Indians have so far got the first dose. At this rate even by the end of 2022 India would have vaccinated only 50 percent of its population. Herd immunity in the Indian context with its dense population would presumably require that at least 75 percent of the population is fully vaccinated.

Even if Pfizer’s vaccine becomes generic, Indian generic manufacturers would take a couple of years to roll out the vaccine which incidentally requires -70 degrees Celsius cold storage chain along the route to factory to the vaccination centers.

Patent waiver thus has relevance only in the long run but in the ongoing crisis what we need is stepping up of domestic production as well as imports both of the vaccine and raw materials. The former Prime Minister Manmohan Singh’s exhortation to the Modi government to invoke the compulsory licensing dispensation under the Indian Patent Act alas is a tad confrontationist for a man known for his mild manners and consensus-building efforts.

Under compulsory licensing, if a patent holder is sitting on his invention i.e. not producing vaccines in sufficient quantities he can be asked to enter into a licensing arrangement with Indian manufacturers for a royalty mandated by the Indian government. That could leave a bad taste in the mouths of the inventors.

What the Indian government must do is to replicate Sputnik-Dr Reddy’s Lab model on a wider front so that all vaccine inventors enter into collaboration agreements with Indian pharma firms on a war-footing to halt the rampaging virus in its tracks.

S. Murlidharan is a CA by qualification and writes on economic issues, fiscal and commercial laws. The views expressed in the article are his own

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London Eye: Between EU and the UK

Just recent days have brought a promising India summit with the European Union, and another promising agreement with the UK. India is already working on a free trade agreement with the UK, and it has agreed to resume talks for one now with the EU. Talks earlier on an FTA with the EU went nowhere when the UK was a part of it. The reopened question now is what could be agreed with the UK and the EU minus the UK now that could not be agreed when the two negotiated as one.

The India summits with the UK and the EU have remarkably parallel overtones, primarily and predictably over COVID-19. At his meeting with British Prime Minister Boris Johnson, and later at the EU summit, Prime Minister Modi pledged more active cooperation on fighting coronavirus through and past the present crisis. EU leaders were particularly warm in appreciating Indian support before it got engulfed in its present crisis.

To further that, the two “agreed to cooperate on resilient medical supply chains, vaccines and the Active Pharmaceutical Ingredients (APIs), and on the application of international good manufacturing standards to ensure high quality and safety of products.” The agreement with the UK was broadly similar.

Other parallels emerged. Britain has made the Indo-Pacific region a foreign policy priority, but so have leading EU countries such as France, and the EU itself as a bloc. The agreement was expressed over common strategies to fight climate change. But it is the apparently common goal of reaching free trade agreements with both that will prove the trickiest area to progress in.

Consider for a moment, cars and Scotch whisky. Through years of FTA negotiations between 2007 and 2013, Britain as then member of the EU pushed for lower Indian tariffs and reduced Indian limits on cars and Scotch whisky imported from Britain. That is not a demand India met then, and not one for India to meet now. India always has an election round the corner, and it’s hard to see Prime Minister Modi seeking the popular vote citing any lower duties on Scotch whisky as an achievement of the government.

If through the course of the talks India does make concessions here, the related question is what India may get in return. One of India’s strongest talking points here is a curious one—it is the easier movement for Indian professionals to Britain, or to the EU as the case may be. The Indian ‘demand’ is for European countries to take away some of its brightest and best in ‘exchange’ for giving them greater access to the Indian market. This may do something for a few among an Indian elite; it’s less clear what it can do for India and its economy.

Unequal markets

For Indian exporters, the two markets are far from equal. Concessions for Indian goods coming into the EU could bring an expansion of exports at a time when Indian manufacturers need to step up exports. The EU is already the largest buyer of exported Indian goods. The decision to resume talks on an FTA is clearly the most significant outcome of the EU summit. The declared aim is a “balanced, ambitious, comprehensive and mutually beneficial trade agreement.” The two agreed to find solutions to “long-standing market access issues” and to improve investment opportunities. All this, easier said of course than done.

On investments from India, Britain has had a huge and hugely disproportionate advantage over the EU. A report produced by the firm Grant Thornton alongside the Confederation of Indian Industries (CII) shows 842 Indian firms operating in the UK, that created 110,793 jobs in the UK last year, 6,000 more than over the year before. This was when it was well known that Britain is due to exit the EU at the end of 2020. Britain’s position as a stand-alone country outside of the EU, far from deterring investors, appears to have become more attractive.

Britain’s promise to cut the red tape of the EU kind and prospects of eased regulation could in fact attract yet more Indian capital, and signs of that have been emerging this year already. Britain may be less equal in the size of its consumer market but emerge as unequally more attractive for investment. Governments can only go that far in setting up a framework. Money and business can move largely independent of that.

London Eye is a weekly column by CNBC-TV18’s Sanjay Suri, which gives a peek at business-as-unusual from London and around.

Read his other columns here

COVID-19 pandemic: What can we do to help?

I have received dozens of messages of concerned inquiry as to how things are for my family and my country and to reply to those who ask “What can we do to help?” here my take on the COVID-19 situation in India and my answer to their questions.

What is the situation in India really like? Is it true?

This afternoon a friend called, dismayed and angry at both the situation itself and the denial of it. Being asked to help and not being able to be of service is a terrible thing.

People dying in the streets, babies in the neonatal section of a Delhi hospital with less than an hour of oxygen, and the once-free press of democratic India being threatened into silence.

The following are some of the heartbreaking stories that were shared with me in the past week.

An old man dies alone in a hospital because borders are closed and his children living in the US are unable to get back home in time. A family friend goes to pick up his personal effects at the hospital where he passed.

A professional journalist at a loss for words as he watches in disarray the wailing desperation of people in front of a hospital that is turning away the sick because it is already past saturation.

The “Airpocalypse” in a great nation’s capital is made worse by the hundreds of open-air funeral pyres in the middle of Delhi that burn non-stop. A tragic and lasting image that will be forever etched in the minds of our people and the world.

How did it come to this?

The double mutant variant was discovered in October 2020 but nothing was done. Religious festivals and pilgrimages including the Kumbh Mela, a fair that brings together millions of people were allowed to carry on—becoming the epicenter of the second wave.

In February, there were less than 10,000 declared cases in India and in a country of 1.4 billion that was an exploit that led to the premature declaration of a false victory. A classic case of counting your chickens before they hatch. A victory call that agreed with the government’s narrative and political convenience in terms of their intention to uphold the schedule of the upcoming elections. Elections were maintained and encouraged by the Modi government.

Elections, where masses of people with no social distancing, and few masks were to be found. Fast forward a couple of months later and there are almost 400000 cases per day with a ratio of 1 in 4 Covid cases worldwide. What could have been the Indian government’s moment to show the world and more importantly its people that it was a mature and capable country has turned into a heartbreaking fiasco.

Power corrupts they say and the more power you have the more absolute the corruption. Is this what led to the belief that elections and pilgrimages are more important than human lives?

The government had its chance to use its considerable ability to mobilize and put to good use its logistical prowess to help its own. It was a prime occasion to show a real sense of responsibility to the citizens of India. Despite the many challenges we face because of the sheer numbers of the population of India, the government of India which has been declaring itself a soon-to-be super-power could have also shown the world how ready it was to claim that title.

A Government fails but as a people, we rise.

For the sake of clarity—this failure is primarily a governmental one. The people of India are out on the streets doing what they can to help in a terrible situation. Their resilience, humanity, and courage are visible, but the display is not their objective. In the interviews, we hear first-hand accounts from people giving and receiving help not just to and from their immediate family members, but also neighbors and even strangers. I am both touched and humbled by the close-knit community spirit that persists and rises to the occasion in this time of crisis. Here lies the true super-power of India—the resilience of its people.

Sikh temples where oxygen is being provided for the needy—unbiased by caste or religion. Our leaders could take a page out of the book of these people. Instead for too long now, they have used communal history to revive old pains and cause new suffering. Instead of letting old mistakes die as all that is not useful from the past should, they stir their witch’s brew of division and indulge in self-serving rhetoric.

How did the home of a people that discovered Ayurveda centuries before modern medicine produce such ignorance?

Since the start of this second wave, the current government’s agenda seems to be focused on controlling the narrative and the international “reputation” of India. Efforts are made to silence or sully the reputations of those journalists who are still trying to do the job by reporting what they see. Shaming tactics in calling them sell-outs to the west, putting them on ice, and shutting them out of discussions, as well as threats, are used to get them to comply.

If it is a foreign journalist, they will say some variation of “Ah west does and will always criticise us.” If an Indian makes the argument, whenever they live in India or abroad, they are shamed and called an ignorant, occidental lacky.

What if for a moment we could imagine an Indian government that did not need validation from the West?

What if in trying to do right by their citizens they had made mistakes by overreaching?

Would they have been criticised? Probably.

Would that be worse than the situation we are now facing? Certainly not.

What if for just a moment we could pause to think about doing “right actions with no thought for the result or the reward?” Is that not what Krishna said to Arjun in the Bhagavat Gita when explaining his call to duty? A lesson that the pro-Hindu Modi government seems to have completely forgotten?

There will be few governments in the world that will escape unscathed by criticism of their handling of the crisis. We watched in sorrowful frustration as masks in the United States became a divisive political statement.

In France, the hospitals in the northeastern regions were not ready at the start of the crisis to take on the numbers and doctors had to make tough calls about which patients to treat immediately and which ones to transport despite the risk to them? It goes against the logic of being a doctor to have to choose one patient over another. In this crisis, there will be no winners and losers but we can make sure there are lessons learned.

I am just an Indian living abroad…what can I do besides worry?

The now 18 million strong Indian diaspora are often shamed into not saying anything because “We do not understand the Indian reality.” I refuse to be shamed into silence by this all-encompassing negation of my capacity to reflect or by a false sense of patriotism. It is because I love my country and its people that I write this today.

As a community we are far more powerful than we imagine and what is needed a collective call for non-communal reforms for the poor without identifying them by caste or creed. Reforms in the political system, the healthcare system, the equivocal separation of judiciary and religion, a renewed protection of the free press, and the modernisation of the education system are all desperately needed if we are to become the super-power instead of waiting and hoping to become one.

If this tragedy serves as a midwife to these reforms, then we might be able to say that thousands did not die in vain. There is a saying in India “Jaan hai to jahaan hai.” Roughly translated it means “If there is life, we can have the world.” Life is precious. Together by spreading the word and supporting change, we can try to make sure that this remains true.

—Nandita Sood Perret is a communications consultant and leadership coach at CTD Cultural Insights, where she helps people and companies break through old patterns, to develop new perspectives and innovative solutions for collaboration and growth. 

Read Nandita Sood Perret’s columns here. 

Tapping into the waste heat for greener future

regenerative thermal oxidizer process, waste heat, cement sector, energy

Today as we stand together facing the second wave of the global pandemic, the economic recovery forecast remains more or less intact. Earlier this week, global financial services groups like Nomura and JP Morgan had trimmed India’s growth forecast for 2021-22 to 12.6 percent and 11 percent from 13.5 percent and 13 percent projected earlier. The double-digit GDP growth forecast for the current financial year also means that the core sectors will lead the country’s much-awaited economic recovery.

The massive public and private investment, particularly in the infrastructure and housing sectors will be offering unprecedented growth opportunities for India’s cement sector. As the world’s second-largest cement producing country, the new opportunities must be handled with great responsibility by continuing to invest in a sustainable manufacturing ecosystem.

According to Cement Sustainability Initiative (CSI), a global consortium of over 100 cement manufacturers from 25-odd countries, the potential savings in CO2 emission from the sector by 2030 can be as much as 1 giga tonne a year or roughly a third of the annual CO2 emission of a country like India.

Over the last decade or so, large cement producers in India have committed substantial investments in reducing their carbon footprint by paying attention to managing their energy consumption with great efficiency.

Given that energy accounts for around 25-30 percent of the operating costs of cement manufacturing it also makes economic sense. Thus, economic interest will continue to drive investments in green technologies. This will ensure that new growth opportunities will remain sustainable. To this end, investment in captive renewable energy generating capacities and Waste Heat Recovery System (WHRS) will be the centerpiece of India’s sustainable cement sector.

Simply put, WHRS converts the waste heat available during clinker production into a cheap source of power, thus helping in reducing the overall operating cost for manufacturers. The unit cost of energy from WHRS can be as low as 50-70 paise against Rs 6-8 per unit cost of grid power.

While the benefits of investing in WHRS is compelling from an operating cost and an environment point of view, the initial cash outflow can be quite substantial. A one-megawatt capacity WHRS can cost as much as Rs. 12 crore against Rs. 4-5 crore for coal or gas-fired power plant.

Further, the heat recovery process in a typical cement plant allows only a third of its power needs to be met from WHRS. However, despite these financial and technical challenges the long-term environmental gains and huge savings in overall operating costs continue to push large cement companies in India to commit precious capital in WHRS.

—Neeraj Akhoury is CEO at India LafargeHolcim and CEO and MD at Ambuja Cements. The views expressed are personal

London Eye: Good reasons for SII to step into UK

The sudden flight of Serum Institute of India (SII) CEO Adar Poonawalla to Britain last week sent shock waves through India, given particularly the context he declared to the media on arrival. That was of coming under immense pressure from some of the “most powerful” in India for more and more vaccines that the SII produces but could of course not magically produce.

It seemed that he had not taken a flight—but that he had taken flight. And with him, the SII, and India’s reputation as the ‘Pharmacy of the World’, of which SII is the flagship producer. Sure enough, within days of arrival, he announced plans for a 240 million pound investment in the UK.

That decision though seems neither abrupt nor emotive. It rides a huge and growing flow of Indian pharmaceutical companies into Britain. The SII is in fact a late arrival on that flight path.

“Indian pharma companies have been growing and expanding in a big way in the UK,” Chandru Iyer, head of business development for South Asia with the company Grant Thornton tells CNBC-TV18. Of the 49 fastest-growing Indian companies in the UK that the firm tracked, the growth was fastest among pharma companies.

This year’s report shows that pharma companies were close to 30 percent of the fastest-growing companies, almost double the number the previous year. The firm produces an annual tracker report that profiles the presence of Indian companies in Britain.

Much of this growth is along expected lines. “They have been bringing generic drugs to the UK market, so, if you take anything off a supermarket shelf, a Paracetamol or an Ibuprofen, or an antibiotic from the pharmacy, more often than not this will be made with drugs coming in from India licensed from Indian companies operating here in the UK,” says Iyer. “But a lot of them also have a strong R&D (research and development) focus primarily because of access to technology and access to resources.”

Resources for R&D

Extensive UK government support for R&D is proving a major draw for Indian pharma companies. “The UK government promotes R&D in a big way,” says Iyer. “One of the things that companies do is accessing very generous R&D tax credits. For an SME that can be to the extent of 130 percent, which means that for every 100 pounds you invest in R&D work, you get 130 pounds tax relief which is very generous.”

For a larger company such as SII, there is an R&D expenditure credit scheme which offers a 13 percent tax credit on R&D expenses. “And this can be R&D work done by the country and also sub-contracted out,” says Iyer. “So some good savings there, and after all that a project can always give rise to a new product developed.”

Serum Institue has not sketched out its investment plans in any detail, but it has pointed to research in developing vaccines with its partners AstraZeneca and the University of Oxford. That makes the UK an obvious destination to launch research that could lead to new products. The development of a nasal spray as protection against COVID-19 has been announced as a priority.

“I’m not privy to any insider information on the SII plans, but one factor clearly would be proximity with their partners AstraZeneca, and working more closely with Oxford University as new products are developed,” says Iyer. “Given new mutants, a vaccine will need to evolve continually. But of course, it will be tempting to use the UK as an R&D hub and use the tax credit facility here. The UK is a fantastic place to develop a new product. There will be advantages also to positioning SII as a global player supplying out of here.”

Threats or promise

Poonawala has faced rather different choices between India and Britain. On the one hand, threats after the SII has done all it could and more to produce vaccines at speed and on a scale. And threats, Poonawala said, was an understatement. “The level of expectation and aggression is really unprecedented,” he told The Times. “It’s overwhelming. Everyone feels they should get the vaccine. They can’t understand why anyone else should get it before them.”

As the world’s largest pharma company based in India, there would be a strong case for the Indian government to offer it incentives for research, and encouraging support for increased production. At the least, some understanding of the difficulties the company has been negotiating. From the Indian government, SII has found quite the opposite.

The SII is still not abandoning India – far from it. Poonawala did take a flight, he did not take flight. But if the government is unhappy over the SII stepping partly out of India, it has only itself to blame.

London Eye is a weekly column by CNBC-TV18’s Sanjay Suri, which gives a peek at business-as-unusual from London and around.

Read his other columns here

Mapping the rise of live streaming driven creator economy in India

For many decades, “big media” ran the world of entertainment and news. Media and editors had the power to decide if, how, and where your content could be shared. To be a part of this industry, one had to be employed by one of these media conglomerates, or at the very least, be significant enough to feature in the stories they told. From watching scheduled television programs, waiting for our favorite show on the radio, reading books and magazines from large publishers, we never realised the gap until the ‘internet’ happened.

The decentralisation of media took place after 2000, it was a slow, almost insidious process, but over time, it happened with the internet reaching each and every household of the country. Anyone, based on interest and capabilities could put anything online, and everyone did! This is how content-sharing platforms emerged. Now people are happily consuming content made by creators and distributed without the need for the traditional companies. This is the era of the creator economy, and it is markedly different from what went before.

Creator economy’s leap growth in tier 2/3 cities

The Creator Economy doesn’t totally coincide with the invention of the internet; however, it took a while before people discovered the internet’s true potential. Undoubtedly, the creator economy is a trend that lets people perform their dream jobs. People across different corners of India are earning a living from sitting in the comfort of their homes, cooking their best recipes, teaching English, giving makeup tutorials, playing computer games, or just making money from creating funny videos.

This is not restricted to urban areas, language first social media has long provided a platform for content creators residing in Tier-2, Tier-3 towns willing to channelise their passion and talent into quick value add for others and be able to earn through it. But content monetisation for a broader set of content creators has always been a challenge. Passion economy platforms have successfully managed to fill this gap.

Growth with new innovative tools and financial gratification

The internet has generated many opportunities for creative people to make money online. Writers, musicians, filmmakers, and other content creators can all share their creative visions with an appreciative audience. One of the newer niches of the Creator Economy is live streaming which provides an ultimate way for talented people to express themselves to a broad audience. Platforms supporting multiplayer games which comes with integrated real-time gamification driven by microtransactions led gifting option have successfully glued masses in a very short span of time.

Creator economy is nothing but a group of businesses centered around independent content creators, curators, and community builders including influencers, bloggers, and videographers, along with the tools needed to help them grow and monetise. A creators’ journey is explained in five broad stages: create exciting content- get a sticky response- own the audience- start monetising your content- manage the business.

By providing content creators a platform, emerging brands in the passion economy space have also come up with measures to hand-hold and make aspiring content creators capable of running an independent business. Live streaming apps provide mentorship and guidance to the early-stage content creators to be able to trigger financial gratification at multiple touchpoints within the product while interacting with their audience. Thus, playing a Y-Combinator role for Bharat’s creators by hunting them at an early stage, enabling them to monetise from the first day and emerge as gatekeeper influencers for anyone who wishes to use social media platforms to be able to reach out to paying users of tier 2 to 4 cities of India.

The way forward

The advent of talented content creators has spawned a whole new economy, one that is at a nascent stage in India but is expected to only grow. The Creator Economy has led people to innovate, from entertainment to lifestyle to life habits to offering real-time interactive personalised online services through social streaming platforms, there is nothing that creators can’t do. It will be exciting to watch the next 500 million internet users carving out a new journey using social platforms for them, not just for entertainment but for a primary source of income as well.

—The author, Varun Saxena is CEO & Founder—Bolo Indya. The views expressed in the article are his own

US tax proposals: What’s in it for companies operating in India

In his pre-election promises, US President Joe Biden had proposed to introduce fresh tax proposals to incentivise make in America and discourage profit shifting to tax havens.

After taking charge of the administration, the Biden Government has contended that the 2017 tax law brought in by the Trump Government had significantly reduced US corporate taxes without an increase in economic growth or corporate investment. In this context, the US Government issued a fact sheet on March 31, 2021 wherein it has cited several studies to highlight that the present corporate tax system in the US incentivises the shifting of profits and investments outside the US.

As per one of the studies quoted in the fact sheet, it was found that 91 Fortune 500 companies paid no federal corporate taxes on US income in 2018. Further, as per the analysis conducted by the US Joint Committee on Taxation, as quoted in the fact sheet, the average rate that US corporations paid as the tax was less than 8 percent in 2018.

In March 2021, President Biden announced ‘the American Jobs Plan’ which would employ an ambitious US$2 trillion-plus to boost investment in infrastructure, broadband and R&D in the US over the next eight years. Alongside the American Jobs Plan, the US Government also laid out the ‘Made in America Tax Plan’ with the objective of increasing the competitiveness of US companies and workers. The US Government believes that the new proposals would lead to job creation and investment in the US, stop profit shifting to tax havens, and make large corporations pay their fair share.

While the specific details of the tax proposals are likely to be included in the FY 2022 budget plan, which is expected to be released later this month, some of the key changes expected as per the ‘Made in America Tax Plan’ are as follows:

  • Increase in the corporate tax rate from 21 percent to 28 percent.
  • Increase in the global intangible low-tax income (‘GILTI’) minimum tax rate to 21 percent which would be calculated on a per-country basis.
  • Denial of deductions for the offshoring of production and restrictions on corporate inversions.
  • Introduction of Stopping Harmful Inversions and Ending Low-tax Developments (‘SHIELD’), to replace the Base Erosion and Anti-Abuse Tax (‘BEAT’). SHIELD would deny multinational companies tax deductions of payments made to related parties that are subject to a low effective rate of tax. SHIELD would also provide for high penalties for transferring profits into tax havens.
  • Introduction of a minimum tax of 15 percent on book income which a US company generally reports to its investors.
  • These corporate tax changes are expected to finance the ‘American Jobs Plan’ over a 15-year period.

It is also interesting to note that earlier in the month of March 2021, two bills were introduced in the US Congress i.e. ‘the No Tax Breaks for Outsourcing Act’ and ‘the Stop Tax Haven Abuse Act’. Both the bills contain several proposals which deal with international tax such as repealing the check-the-box regulations, introducing a management and control residency test, providing an additional limitation on interest expense deductibility, applying the foreign tax credit regime on a per-country basis, etc.

In addition to the above proposals, the Senate Budget Committee Chairman Bernie Sanders introduced the Corporate Tax Dodging Prevention Act on 25 March 2021. Senate Finance Committee Chairman Ron Wyden and Senators Sherrod Brown and Mark Warner have also released a proposal to overhaul international taxation: A framework to invest in the American people by ensuring multinational corporations pay their fair share which focuses on changes to the 2017 Tax Cuts and Jobs Act’s (TCJA) international provisions.

Further, on April 28, 2021, President Biden unveiled the ‘American Families Plan’. As per the plan, the top marginal income tax rate would be raised from 37 percent to 39.6 percent.

The American Families Plan would also change the taxation of investment income. The plan proposes to raise the top tax rate on long-term capital gains to 39.6 percent for taxpayers earning over US$ 1 million. Further, appreciation in the value of unsold assets or unrealised gains of more than US$ 1 million would be subject to capital gains tax on the death of the owner of the unsold assets.

Although it is unlikely that the above proposals would move forward in their current form, they provide an insight into the areas of change that could make their way into law. Even if legislation does not proceed in the current form of the bills/releases, the concepts may be considered as part of wider legislation.

Some of the proposals by the US Government would have a significant tax impact on companies operating in India. The key proposal that would impact the companies is the denial of the deduction of payments made to related parties that are subject to a low effective rate of tax. It would be important to watch out for this particular change as it would be relevant for the companies which have set up manufacturing facilities in India and are eligible for the lower corporate income-tax rate of 15 percent. It would also be pertinent for companies operating in the IT / ITES sector, the largest contributor towards exports from India, to track this change as the US accounts for more than 56 percent of its total export market.

There is some apprehension that the companies not paying 28 percent tax in India would be required to pay additional tax in the US. However, one would need to analyse the exact provisions to see how the new proposal would be enacted and whether any credit for the Indian taxes paid would be available.

The proposal to incentivise companies creating jobs in the US would also be relevant for Indian companies which have set up business operations in the US. In addition, the plan to repeal foreign-derived intangible income (‘FDII’) and incentivizing R&D activities in the United States could have a bearing on the R&D activities outsourced to India.

Given the significant impact that the US tax proposals would have on the companies operating in India, it would be imperative all business groups track how these proposals are enacted especially keeping in perspective the market and talent pool that India offers.

—Ravi Mahajan is Tax Partner, EY India. The views expressed are personal

Jignesh Shah, Senior Manager – Tax, EY also contributed to the article

COVID-19 vaccine shortage puts spanner on India’s adult immunisation programme

A massive shortage of vaccine doses is hampering the country’s ambitious plan for adult immunisation. Phase-3 of the Covid-19 vaccination programme for people above 18 years that kicked off on May 1, has been hamstrung with chaos with states confirming that they were not in a position to keep pace with the demand due to shortage of supply.

On April 28, India opened up registrations for anyone above 18 years of age for the roll-out of the nationwide drive on May 1. However, most of the states delayed the onset of the third phase because of a shortage in the supply of doses. Vaccination outlets in Mumbai remained closed for some time. The introduction of the third phase has also marred the vaccination of those over 45 years because of the shortage.

Vaccine crisis

The country boasts of having charted a vibrant vaccination graph. But the numbers are a small figure considering the mammoth population of India. There is an urgent need to open more vaccination points, increase their efficiency, ensure uninterrupted supply and spruce the communication programme to remove the vaccine hesitancy.

If the country was not having enough doses of vaccine why did it accelerate phase 3 of the vaccination drive?

Only around 12 of the 36 states and Union territories had enough doses to roll out the third phase and that too in a limited way. Since the beginning of the phased vaccination drive on 16 January 2021, a total of around 17,96,19,697 people have registered themselves on the Indian government’s online registration platform. This includes 5,27,80,480 in the age bracket 18-44 years.

Serum Institute of India Chief Executive Officer Adar Poonawalla has said in an interview with Financial Times that India’s Covid-19 vaccine shortage would continue through July. He said that the production of the vaccines is expected to increase from 60-70 million doses (6-7 crore) to 100 million (10 crore) by then. Experts also feel that the vaccine production

In a statement, the SII said that vaccine manufacturing is a specialized process. “It is therefore not possible to ramp up production overnight. We also need to understand that the population of India is huge and to produce enough doses for all adults is not an easy task.”

The statement issued on May 3 said that as of today the company has received a total order of 26 crore doses of which more than 15 crore doses has been supplied.

Data-driven

According to the latest update made by the Health Ministry on May 4 more than 2,29 lakh beneficiaries of age group 18-44 were vaccinated in the last 24 hours. Besides, the government said that more than 6 lakh total vaccine doses have been administered to the 18-44 age group till now. The ministry said that as on May 5, the government had so far provided more than 17.02 crore vaccine doses to States/UTs free of cost. More than 94.47 lakh doses are still available with the States/UTs to be administered. Over 36 lakh doses, in addition, will be received by the States/UTs in the next 3 days.

As on May 5 at 8 am, the total number of confirmed cases stood at 2,06,65,148 while the recovered cases were 1,69,51,731 (82 percent). The number of active cases pegged at 34,87,229 and there were 2,26,188 (1.09 percent) deaths.

Experts maintain that the only way to defeat the pandemic is vaccination. While there were initial issues of vaccine hesitancy when the country rolled out the adult immunisation programme on January 16, but gradually the hesitancy declined and people over 45 years started registering. They were however grappled with delays, failures in registrations and uncertainty on getting the vaccine.

Experts have also criticised the government for starting the vaccination of those in the 18-44 years of age when the percentage of those vaccinated above 45 years—the age bracket that needs it most—was still dismally low. They argue that the government should have mapped a clear deadline for the vaccination drive—as to how many would be vaccinated by when. In the absence of a clear strategy and timetable, the entire immunisation drive has been thrown into chaos.

Lessons learnt

The happenings in the last few weeks reflecting on the utter lack of coordination between both the Center and the States. The government should understand that this is not the time for slapping blames. The foremost task should be to take on the responsibility for safeguarding the health of people. Infrastructure hiccups, logistics constraints, manpower shortage—all these challenges need to tackled urgently to prevent this kind of grim situation from surfacing again.

The second Covid wave has also brought to the fore the total lack of preparation of the government at all levels. The political landscape has been mired with mudslinging and apathy. Besides, the government must make a firm effort to build a pool of health data and statistics with continuous updates. The data should be made transparent. This requires a consistent motivation of all the scientists working in this area. More than 200 scientists who have been working to combat the coronavirus pandemic have urged Prime Minister Narendra Modi for broader access to the testing data that is being collated by the Indian Council of Medical Research(ICMR).

The common man, health workers have emerged as the real saviours. Social media has been inundated will message seeking help for oxygen, hospital beds and ventilators. The most important lesson that this pandemic has taught us is the importance of humanity. Help and assistance in so many forms have poured in from the common man. The government need to be tutored for tackling the menace.

—Vanita Srivastava is an independent health and science journalist and is currently working as a Senior Project Scientist at IIT Delhi. The views expressed are personal.

Read her columns here

RBI move on restructuring MSME loans inadequate, feels Pronob Sen

Former Chief Statistician Pronob Sen on Wednesday that the measures announced by the RBI with regard to the restructuring of loans for individuals and small businesses were inadequate.

“There is a certain optimism built into RBI’s views,” he said in an interview with CNBC-TV18. “There are others who are more pessimistic at least for the next couple of months,” he said.

Sen said that a moratorium was a clean way of giving relief to borrowers.

“Now what they are saying is no more moratorium, but you are allowed to roll over the loans, in a sense you are permitting banks to roll over the loans.

Also, the measures are discretionary, so when something is discretionary, who are the ones who will benefit. The numbers are not large, if you are using this measure as a substitute for the moratorium, then the numbers are very small. So there is going to be a triage in the banking sector. We do not know who is going to fall by the wayside,” he said.

Sen also felt the RBI was being optimistic in its projection that a good monsoon and consequently a good harvest should keep inflation in check.

“What is different now from last year is that last year rural India was unaffected. This time rural India has been affected, the fear factor is high, and we don’t know what is going to be the activity levels. It was the rural activity that kept the economy going for much of last fiscal. This time we are not sure if there will be enough transactions for urban prices to hold up,” he said.

Sen said that in the past too, despite good production, supply chain and logistic issues had led to prices shooting up. However, he said that RBI was unlikely to raise rates to tackle the situation as it would only suppress economic activity further.

HIGHLIGHTS: Mamata takes oath in Bengal; DMK chief Stalin oath ceremony on May 7

Election Results 2021

Govt formation HIGHLIGHTS: TMC supremo Mamata Banerjee was Wednesday sworn-in as the chief minister of West Bengal for the third consecutive term after a massive win in the state assembly elections. Governor Jagdeep Dhankhar administered her the oath of office and secrecy at a low-key ceremony at Raj Bhawan held amid the raging COVID pandemic.

Banerjee took the oath in the Bengali language. Apart from senior TMC leaders like Partha Chatterjee and Subrata Mukherjee, poll strategist Prashant Kishor, who played a key role in TMC’s victory, and Banerjee MP nephew Abhishek Banerjee were present.

Banerjee has said her first priority after resuming office will be to tackle the COVID-19 situation.

Here are the highlights from Mamata Banerjee’s Oath Ceremony and government formation in the states of Tamil Nadu, Kerala, Assam and Puducherry as well:

  • Stalin calls on TN Guv, stakes claim to form govt: DMK president M K Stalin on Wednesday called on Governor Banwarilal Purohit at the Raj Bhavan here and staked claim to form the government, a day after he was unanimously elected leader of the legislature party. Stalin, along with party veteran and general secretary Duraimurugan called on Purohit and gave him a letter on his
    election as leader of the DMK legislature party and staked claim to form the government, a party release said. DMK treasurer T R Baalu, principal secretary K N Nehru and organisation secretary R S Bharathi accompanied Stalin.

  • The DMK chief is set to assume office as Tamil Nadu Chief Minister on May 7 and he would be sworn in as CM in a simple function to be held at the Raj Bhavan. Stalin was elected leader of the DMK legislature party here on Tuesday.
  • The DMK won 133 seats in the Assembly polls and along with allies including Congress garnered a total of 159 constituencies in the 234-member  assembly. The AIADMK won 66 segments and its partners BJP and PMK
    four and five seats respectively.
  • Bengal’s administrative machinery was under Election Commission, now we will tackle disturbances: Mamata on political violence.
  • Our first priority is to end horrendous post-poll violence in the state: Governor Jagdeep Dhankhar at Mamata’s oath-taking ceremony.
  • West Bengal Governor: “I congratulate Mamata Ji on her third term. Our priority is that we must bring an end to this senseless violence that has affected society at large. I have every hope that the CM on an urgent basis will take all steps to restore rule of law.”
  • Prime Minister Narendra Modi: “Congratulations to Mamata Didi on taking oath as West Bengal’s Chief Minister,” he tweeted.

  • Mamata Banerjee takes oath as the Chief Minister of West Bengal for a third consecutive term. She was administered the oath by Governor Jagdeep Dhankhar.

  • The swearing-in of Trinamool Congress supremo Mamata Banerjee as chief minister at Raj Bhavan on Wednesday morning will be a low-key programme given the ongoing COVID-19 pandemic, a government official said.
  • Invitations for the programme have been sent to her predecessor Buddhadeb  Bhattacharjee, leader of Opposition of the outgoing House Abdul Mannan and CPI(M) veteran leader Biman Bose, the official said on Tuesday.
  • Chief ministers of other states and leaders of other political parties have not been invited for the programme keeping in mind the current COVID-19 situation in the country, he said. “It has been decided to keep the oath-taking ceremony of Mamata Banerjee a very simple one because of the COVID-19  pandemic. Banerjee will be the only leader who will be taking oath tomorrow. The programme will be a very brief one,” he said.
  • Trinamool Congress MP Abhishek Banerjee, poll strategist Prashant Kishor and party leader Firhad Hakim are likely to be present at the ceremony scheduled to be held at the Raj Bhavan at around 10.45 a m on May 5, TMC sources said.
  • BCCI president Sourav Ganguly has also been invited for the ceremony, the official said. Soon after taking oath, Banerjee will go to the state secretariat ‘Nabanna’ where she will be given ‘guard of honour’ by Kolkata Police, sources said.