Author: Rituparna Bhuyan

India under pressure to cut tariffs in RCEP talks as China factor looms

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

India is under pressure to commit massive duty cuts in the ongoing negotiations of a 16 nation mega free trade agreement (FTA), in which China is also a member.

The Regional Comprehensive Economic Partnership (RCEP) agreement is a proposed trade pact that seeks to rival the Trans Atlantic Partnership (TPP)agreement.

Other members of RCEP include Australia, Japan New Zealand and ASEAN nations.

Sources in the know told CNBC-TV18 that RCEP members have upped the ante on negotiations and will seek to exchange specific proposals on tariff cuts in two meetings scheduled in June and July.

The first meeting, scheduled in mid June at Tokyo, Japan, will be followed up by a meeting of trade ministers of RCEP nations in the same city on July 1.

“There are several bilateral meetings scheduled between Indian negotiators and other RCEP nations, including China, where there will be pressure to commit to elimination of duty in large number of products” said a source in the know.

Till now, India has tactically stayed clear of committing to duty cuts in RCEP talks.

Meanwhile, several government departments have also raised red flags on RCEP trade talks.

“Niti Ayog, Steel Ministry and several other departments have advised Commerce Ministry to be cautious while negotiating RCEP,” the source added.

“Many see RCEP FTA as threat because China is a member of the group,” source said.

Several Indian companies from the steel and metal sectors have also warned Indian trade negotiators to stay away from agreeing to any duty cuts in the RCEP FTA talks.

RCEP nay sayers in India point out that the trade deficit of the country with RCEP members stand at a staggering $105 billion, which is two thirds of the total trade deficit in FY18.

China tops the list, with India having a massive trade deficit of $61 billion in the last fiscal.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Four years of the Modi government: Make In India, launched with much pomp, is now struggling

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

On August 15, 2014, Prime Minister Narendra Modi announced from the ramparts of the Red Fort his flagship ‘Make in India’ initiative.

Make in India aims to invite global companies to invest in India’s manufacturing sector and create millions of jobs and boost growth

When the initiative was announced, it caught the imagination of investors, businessmen and analysts in India for its timeliness and boldness.

At the time of Modi’s ascent to power, growth in foreign direct investment (FDI) had trickled to just just 8% by the end of 2013-14.

India is known for anything but its manufacturing chops and finally some solution was in sight by taking foreign help.

Ergo, Make In India was seen as the answer to jump-start foreign investments and awaken the animal spirits in India’s industrial sector.

Four years later, has Make in India achieved its objectives? We’ll come to that in a moment.

Soon after the announcement, the government hit the ground running. Within a month and a half, Modi inaugurated the Make In India campaign by targeting 25 sectors for specific interventions. The campaign was supplemented by reforms on the FDI front.

In the defence sector, for example, a foreign company was allowed to invest in wholly-owned subsidiaries if they bring in modern technology (two years ago, the government allowed up to 100% FDI in defence and removed the requirement of “state of the art” technology for cases of above 49% foreign investment).

FDI in brownfield pharmaceutical was allowed up to 100% through the approval route and foreign investors could set up factories to make medical devices.

The government also shut down Foreign Investment Promotion Board (FIPB), its FDI gatekeeper.

Good Start

Results were palpable almost immediately. As much as $156.64 billion poured into India from abroad between April 2014 and February 2018.

In 2014-15, FDI inflows rose 27% to $30.91 billion and in 2015-16, foreign investment grew 29% to hit a record $40 billion.

Was this uptick in FDI thanks to Make In India? The government initially said so. But it started taking a different stand subsequently.

In 2016-17, FDI equity inflows again broke records and touched $43.47 billion – but the pace had slowed to 9%.

In the period between April and February of 2017-18, FDI grew a meagre 0.23% at $42.24 billion. It is clear that there will be a less than 1% growth in FDI in 2017-18 – a first since 2012-13.

In January, the government provided the Lok Sabha details of investments under the Make in India campaign.

Junior Commerce and Industry Minister CR Chaudhary said the percentage of industrial production is not available linking it with the Make in India initiative.

“Make in India is not a programme but an initiative launched in 2014, which aims at promoting India as an important investment destination and a global hub in manufacturing, design and innovation,” he said.

Given that the government was reluctant to provide answers, we did some digging on our own. We looked at how much did manufacturing contribute to the overall FDI inflows by examining the data by Department of Industrial Policy and Promotion (DIPP) of the top 10 FDI receiving sectors between 2014-15 and February, 2017-18.

What Went Wrong?

At $22.97 billion, the share of FDI in manufacturing sectors such as automobile, power, drugs, chemicals and metallurgical sectors was just 14.66%.

In contrast, the share of FDI in non-manufacturing sectors such as banking, BPO, construction, telecom, computer software and hardware was 46.37% at $72.64 billion.

What exactly is wrong with Make in India?

Sudden changes in policy, such as the u-turn the government took last year over a locomotive deal with General Electric (GE) and its push to buy weapons directly from foreign companies instead of looking to make them in India have not helped.

GE won a $2.6 billion contract in 2015 to supply 1,000 diesel locomotives but the union railways ministry said in September last year that it wouldn’t need diesel because it was looking to save on fuel and maintenance costs. The ministry said GE might want to make electric engines instead.

The GE contract was the biggest direct investment in India by a US company and the first deal awarded to a foreign company after the government allowed 100% foreign investment in railways.

These developments point to the hemming and hawing that have gripped the Make in India initiative.

The government soon accepted that it was time to recalibrate the Make In India campaign. In mid-2017, the list of Make In India-focussed sectors was pruned to 21 from 25.

CNBC-TV18 has sought details of the targets that were set for these sectors through an Right to Information (RTI), but DIPP is yet to reply to our queries.

In January, the government said in its the economic survey that it is looking at Make In India 2.0.

This time, the government wants to focus on capital goods, auto, defence, pharmaceutical, renewable energy, chemicals, electronic system design and manufacturing, leather, textiles, food processing, gems and jewellery, construction, shipping and railways.

The pruning of sectors by more than half might help. But Make in India needs more efforts from the government to truly make an impact in India’s manufacturing scene.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US seeks greater access to India’s agriculture market

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Two top officials of the Trump administration have sought greater market access and transparency in India’s farm sector, after the US complained to the World Trade Organisation on India’s  Minimum Support Price (MSP) regime on wheat and rice.

“India represents a massive market, and we want greater access for US products, but India must be transparent about their practices.  For trade to be free and fair, all parties must abide by their WTO commitments,” US secretary of agriculture, Sonny Perdue said in a statement.

On May 4, the US approached the Committee of Agriculture of the WTO, alleging that India has been under reporting its MSP on wheat and rice to the multilateral body.

All WTO members need to notify agricultural subsidies and price support to the Geneva-based global trade monitoring body.

This is the first time that the US has approached the WTO on the issue of domestic farm price support offered by its one of its trade partners.

“The United States expects our trading partners to comply with the reporting requirements they agreed to when joining the WTO,” said United States trade representative Robert Lighthizer.

The office of the United States Trade Representative (USTR) is a body that directly reports to the US president on key trade issues.

“Accurate reporting and improved transparency of these programs is an important step in ensuring that our trading partners are living up to their WTO commitments and helps achieve more market-based outcomes through the multilateral trading system,” he added.

Issues raised by the US in its WTO submission on India’s MSP regime include quantity of production used in market price support calculations and exclusion of state-level bonuses from calculations of applied administered prices.

The US has also alleged that India does not report the total value of production of wheat and rice in its WTO submissions.

Agricultural subsidies have been a contentious issue between the US and India at the WTO.

India has led a developing country offensive against US farm subsidies, which is one of the key issues in the Doha Round of world trade talks.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Commerce Minister bats for national retail trade policy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Union Commerce and Industry Minister Suresh Prabhu has called for a national policy on retail trade.

Prabhu has discussed the proposal with Union Food and Consumer Affairs Minister Ram Vilas Paswan, said people familiar with the matter.

As a first step towards formulating the policy, Prabhu has proposed a task force under Department of Consumer Affairs, which has administrative control over issues related to retail trade.

The consumer affairs ministry is the nodal agency for regulating internal trade.

The proposal comes at a time when the commerce ministry has initiated the process to formulate a national policy on e-commerce.

A task force under commerce secretary Rita Teaotia has already been constituted to discuss issues related to retail trade.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government sets up panel to frame national policy on e-commerce

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The Ministry of Commerce and Industry on Tuesday decided to set up a task force on e-commerce that will submit recommendations on several issues related to the sector within five to six months.

The decision to set up the task force, under Union Commerce Secretary Rita Teaotia, was taken in the first meeting of the think tank on e-commerce that met under the chairmanship of Union Commerce and Industry Minister Suresh Prabhu.

Officials from various government departments will be part of the task force.

“There will be several sub groups within the task force that will deal with a host of issues, including taxation, physical and digital infrastructure, FDI,” Teaotia said.

“The basic objective of today’s meeting was to formulate a pan India e-commerce policy. Several companies felt that the sector is not doing well without a national policy on e-commerce,” Teaotia added. ​

E-commerce companies including PayTM, Ola, Snapdeal, as well as industry body Nasscom participated in the meeting.

Regulators including Competition Commission of India (CCI) and
Telecom Regulatory Authority of India (Trai) attended the meeting, along with Department of Economic Affairs Secretary Subhas Garg.

“Shared views on data protection and the need to protect interest of consumers. India has done good work on data connectivity. We need good fixed line connectivity under schemes like BharatNet,” Trai chairman R S Sharma said after the meeting.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sharp differences surface in meeting to discuss FDI ban in tobacco

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The sharp differences between Indian companies and farmers over allowing foreign investment in the $11 billion tobacco industry came to the fore in a meeting called by a government body on Wednesday.

The Department of Industrial Policy and Promotion (DIPP), the nodal agency for the decisions related to foreign direct investment (FDI), had called a meeting of all stakeholders, including farmer associations, private companies and government departments, to discuss issues related to FDI in the sector.

India banned foreign investment in cigarette manufacturing in 2010. But tobacco companies can invest through technology collaboration and licensing agreements or by forming a trading company.

No Dearth of Interest

A bunch of foreign tobacco companies such as Philip Morris have been pumping capital in the sector through this route. To plug this loophole, DIPP had initiated a Cabinet proposal in 2016 to completely ban FDI in the sector. But the proposal came to nought after intense lobbying by some companies and farmer organisations.

The government has in recent months been examining whether to stop such forms of investments as it looks to safeguard public health.

At Wednesday’s meeting, ITC, the biggest player in the sector, called for a complete ban on FDI, said people familiar with the matter. The company was supported by a few farmer organisations from Karnataka, they said, requesting anonymity.

But other Indian companies such as Modi Enterprises asked DIPP not to consider any further FDI restrictions in the sector.

“We demanded a level playing field for the tobacco industry in India,” said KK Modi, chairman, Modi Enterprises. “Most large tobacco companies are already in India … banning FDI in tobacco won’t change anything.”

Modi said foreign investments in the sector are already low because no new industrial licences have been given. Banning it completely will promote monopoly, according to him.

Divided They Stand

Even farmer organisations were divided over the issue. Some supported restricting foreign investments in the sector while others rooted for infusion of foreign capital. “There are limited players in tobacco industry. FDI in tobacco should not be banned,” said Yashwant KC of Peridepi Tobacco Farmers Society.  “FDI in tobacco sector leads to better technology.”

Around 24 stakeholders, including representatives of Modi Enterprises, Godfrey Phillips India Ltd, Phillip Morris International and ITC, among others, attended the meeting. Members of the Confederation of Indian Industry (CII) and US-India Business Council (USIBC) were also present in the meeting along with several farmers organisations such as Andhra-based Peridepi Tobacco Farmers Society, Musi Bank Tobacco growers association, as well as Federation of All India Farmers Association.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Mamta’s West Bengal leads Ease of Doing Business ranking in the first phase

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Reforms initiated by the Mamata Banerjee-led West Bengal government in the Ease of Doing Business arena has catapulted the state to the numero uno position in the first phase of the rankings. The state now shares the first position with Chattisgarh.

Initial results show that the east Indian state, which was notorious for its slow bureaucracy and archaic rules has, scored 99.73% in the initial phase of the rankings.

The final scores of this much coveted rankings will not be out till six more weeks as the final results will have feedback of the industry as well.

In the first phase, states reported on 372 business reform action points mandated by the Department of Industrial Policy & Promotion (DIPP).

As many as 17 states have carried out more than 90% of these reforms.

Sources told CNBC-TV18 that the World Bank is taking feedback from the industry on 78 reforms initiated by the states. Score from this feedback will be combined with the phase one results to determine the final rankings.

The current rankings are expected to undergo changes once the user experience data is merged with the score of the initial phase.

Going by the current status, the second position is shared by Jharkhand, MP and Haryana with a score of 99.46%, while in third position, Rajasthan and Gujarat scored 99.19%z

Last year’s top rankers were Andhra Pradesh and Telangana who are in the fifth and sixth position currently.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow