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1. The US has decided to review India’s eligibility to enjoy duty-free access for certain products in the American market under a tax benefit scheme.
2. As many as 3,500 Indian products from sectors such as chemicals and engineering get duty-free access to the US market under the Generalised System of Preferences (GSP), introduced in 1976.
3. According to the US Trade Representative (USTR), the GSP is a trade preference programme designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries. The review can impact exports of those 3,500 Indian products to the US market as removal of duty benefits would make those items uncompetitive.
4. The Office of the US Trade Representative on Friday announced that it is reviewing the eligibility of India, Indonesia, and Kazakhstan in the GSP based on concerns about the countries’ compliance with the programme.
5. The reviews are based on the Trump administration’s new GSP country eligibility assessment process as well as GSP country eligibility petitions.
6. For India, the GSP country eligibility review is based on concerns related to its compliance with the GSP market access criterion, the USTR said in a statement.
7. “GSP provides an important tool to help enforce the Trump administration’s key principles of free and fair trade across the globe. The President is committed to ensuring that those countries who receive GSP benefits uphold their end of the bargain by continuing to meet the eligibility criteria outlined by Congress,” Deputy U S Trade Representative Jeffrey Gerrish said.
8. “We hope that India, Indonesia, and Kazakhstan will work with us to address the concerns that led to these new reviews,” he added.
9. Congress last month had voted to renew the GSP through 2020.
10. It also said that the petitions filed by the US dairy and medical device industries requested a review of India’s GSP benefits, given Indian trade barriers affecting American exports in those sectors.
11. India has implemented a wide array of trade barriers that create serious negative effects on US commerce, it has alleged.
“The acceptance of these petitions and the GSP self-initiated review will result in one overall review of India’s compliance with the GSP market access criterion,” it added.
According to the USTR, the total US imports under GSP in 2017 was USD 21.2 billion, of which India was the biggest beneficiary with USD 5.6 billion, followed by Thailand (USD4.2 billion) and Brazil (USD 2.5 billion).
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The rupee plunged over eleven percent against the dollar in the last months. Following this currency devaluation, the impact assessment of the devaluation on different sectors of economy, and whether it will be able to achieve its desired results of boosting the exporting sectors, is currently being debated.
Exporters have welcomed the move with caution, since this will also increase the already surging cost of doing business by increasing the prices of energy, raw materials and transportation. However, for raw material producers, like cotton farmers, the devaluation is God-sent. They will benefit from both the devaluation of currency and the rise in international price of cotton, as payment for domestic cotton is directly linked to internationally prevailing prices.
Textiles, the country’s largest exporting sector, will be impacted by the devaluation by a small increase in export volume as well as by the negative impacts of doing business at an increased cost. In the form of higher energy prices, the Reclassified Liquefied Natural Gas has become unaffordable, whereas the cost of raw materials has also increased. Where the latter accounts for 70 percent of the finished product, the former constitutes almost 15 percent.
For sustainable growth in the textile sector, free availability of quality raw material is required. Being the major raw material in textiles, cotton has gradually deteriorated both in quality and in quantity over the last decade. The government now plans, as reported by several newspapers, to halt cotton imports or impose duties during crop harvest in an effort to ensure farmers get an attractive price and are encouraged to plant more in the next season. However, this appears to be untrue since the country already faces a shortfall of three to four million bales a year to maintain its current production level, let alone meet the increased requirement of rising exports.
According to a report submitted to the cabinet by a special committee on cotton, production has faced virtual stagnation since 1991-92, fluctuating within the range of 10 to 12 million bales. In 2015-16, the output dropped even below 10 million bales – 9.9 million. Pakistan’s annual consumption needs are estimated at 15 million bales, turning the country into a net importer of cotton. If we put a ban on cotton imports or impose import duties our textile sector will starve and any textile production will not remain competitive. Therefore, the industry which has recently shown growth will start declining once again.
Pakistan’s cost of manufacturing is already highest in the region. So if raw material price is further increased by 10 percent, as compared to the global price, there is no chance for the cotton spinning sector to survive. We have already lost one-third of our spinning capacity in the last four years due to a high cost of business. If duties are imposed on cotton imports now, we will likely lose another one-third of our spinning capacity. Pakistan’s industry already gets cotton at a price almost five percent higher than India due to crop shortage. The rate of cotton in India today is around Rs7,200 per bale, compared to Rs7,900 per bale in Pakistan.
Internationally, the price of cotton was around 68 cents per pound at the start of the cotton season. Now it has currently risen to more than 82 cents per pound, and is expected to further increase. There has been a hike in the international cotton prices. A dollar was worth Rs105 during the last cotton season and is equivalent to Rs115 now; it will probably be more than Rs120, at least, during the next season. So phutti (cotton) rates will automatically be much higher the following year.
Cotton prices in Pakistan are fixed in accordance with New York’s prices. So the devaluation of currency will already be getting farmers a much higher price for their cotton. With the devaluation and a higher international price there is certainly no requirement to impose any duty on cotton this season, as the farmers would reap substantially higher financial returns from the cotton crop.
In the early 2000s, when the Argentinian currency lost its value, the agricultural produce became the country’s most precious currency. Grains were considered more reliable and more welcomed than cash because they are priced in dollars. They were traded for new vehicles, homes and watches. Even the Ford Motor Company, General Motors Corporation and Toyota Motors started country-wide sales pitches and taught their employees how to swap vehicles for grains.
Restricting cotton import by imposing duty as a policy response to the declining cotton production is not the solution to the problem. We need imported cotton to meet our consumption and expansion requirements, especially if exports are to grow.
Policymakers should focus on increasing the cotton cultivation area and production, especially as the issue of water scarcity intensifies. Among all Kharif crops, cotton requires the minimum amount of water, hence, special attention should be paid to increase its growing area this season.
If the textile industry stagnates due to paucity of raw materials, cotton farmers will suffer and will have to export raw cotton instead, as in the case of sugar farmers. They will have to sell their produce at prices lower than the domestic price. On the other hand, the textiles export sector will also shrink, creating with an even greater trade deficit, which would be dangerous for the country’s economic security.
Shahid Sattar is a former member of the Planning Commission. Hira Tanveer is a policy analyst.
Some states have asked their tax departments to step up vigilance on electronic way bills to clamp down on evasion, according to people with knowledge of the matter, raising the prospect of increased roadside inspections of trucks.
The move comes as states such as Maharashtra have seen lower-than-expected generation of e-way bills by transporters, which the authorities fear could be a sign of evasion.
Maharashtra has issued instructions that tax authorities should start taking strict action against those found to be transporting goods without e-way bills. Maharashtra generated 100,938 bills compared with Gujarat’s 175,851 on March 3 though it had 2,669 enrolments against Gujarat’s 1,980. There is an apprehension that transporters or businesses are not generating e-way bills,” said a government official.
An e-way bill is required for movement of goods worth more than Rs 50,000 across state borders. Eway bill trials began on January 16 and the system was formally implemented on April 1. E-way bills for intra-state transport, which involve movement of goods beyond 10 km, will start on April 15 in Andhra Pradesh, Gujarat, Kerala, Telangana and Uttar Pradesh, the government said on Tuesday. Trucks caught without e-way bills can be levied a penalty of up to Rs 10,000 besides which the cargo can be inspected to ascertain tax evasion
A penalty to the tune of 100% of the tax being evaded can be levied along with the tax itself. Both the vehicle and the goods can be impounded as well. The e-way bill mechanism is an integral part of the goods and services tax (GST) regime that’s aimed at plugging evasion.
Evasion was one of the reasons cited by the government for the fall in GST revenue in the past few months. GST collections hit a high of Rs 95,132 crore in October before declining to Rs 85,931 crore in December 2017. They have since recovered to Rs 89,264 in February but are still below the peak. Tax experts said businesses need to ensure that they don’t slip up on e-way bill generation through error or ignorance of the law. “Businesses may face more scrutiny going forward as clearly there seems to be an apprehension based on the data that many dispatches are being made without generation of eway bills,” said Anita Rastogi, partner, GST and indirect tax, at PwC. “They need to put focus on this area.”
The industry seems to be struggling to make profits post GST, with about 26% saying they saw a decline in profits by more than 30%. More than 55% respondents are unsure or believe that GST is not good for their businesses in the long run.
Nine months after the goods and services tax (GST) was launched in the country, most businesses are still struggling to understand the new indirect tax regime, a survey conducted by the online wholesale marketplace Wydr has revealed. According to the survey, 57% of the respondents representing manufacturers, wholesalers and retailers said they are yet to fully understand the working of GST, while nearly 19% (one in five) said they still do not understand GST at all. A total of 130 businesses across India were surveyed on how the GST regime has impacted their business.
“The scale of implementation for the GST is unprecedented anywhere in the world, which naturally leads to some challenges and teething troubles in the first few months. The survey’s results demonstrate that even though significant progress has been made in GST rollout, the administration needs to enhance its focus on educating small and medium business owners across India,” said Devesh Rai, founder and CEO, Wydr. Wydr is a B2B app-based marketplace for retailers and wholesalers to buy directly from distributors and manufacturers.
As per Wydr’s survey, over 53% of the respondents admitted to having experienced a decline in their sales and revenues post the introduction of GST, while only 25% said the impact on sales was positive.
The industry seems to be struggling to make profits post GST, with about 26% saying they saw a decline in profits by more than 30%. More than 55% respondents are unsure or believe that GST is not good for their businesses in the long run.
“Those businesses whose annual sales cross a threshold of Rs 1.5 crore and fall under the GST are liable to remit GST and are eligible to deduct input tax credit. This increases the complexity. Also, firms don’t just need to apply the correct rate, but also have to match invoices of their outputs and inputs in order to be eligible for full input tax credit, which increases compliance costs further. However, the government is working towards minimising the issues. It has not even been a year since the tax system has been implemented and considering the scale of implementation, I think we are much better off,” Rai said.
The government is set to import 500 megawatt more electricity on a short- and long-term basis from India to meet the growing demand for power in the country. The proposal to import electricity from two Indian companies for Tk 4.7148 to Tk 6.5474 kW/h has already been approved by the cabinet committee on purchase yesterday.
The short-term would be from June 2018 to December 31, 2019. Bangladesh will purchase 300MW of electricity from NTPC Vidyut Vyapar Nigam (NVVN) for Tk 4.7148 kW/h ($0.0566) and 200MW from PTC India for Tk 4.8647 kW/h ($0.0584).
The same companies will also provide power over the long-term: from January 1, 2020 to May 31, 2033.
Indian company NVVN will supply 300MW at a cost of Tk 6.4891 kW/h ($0.0779) and PTC India Ltd will supply 200MW power at a cost of Tk 6.5474 kW/h ($0.0786). Bangladesh has been importing 500MW of electricity from the neighbouring country through the inter-connection grid line from 2013. The tenure for the arrangement will end in June.
Another 100MW of electricity is being imported from Tripura from March 2016. mBangladesh has plans to import more power from India, said a power division official. Also at yesterday’s meeting, the cabinet committee on purchase approved a proposal to appoint Indian Texmaco Rail and Engineering for constructing dual gauge rail line from Akhaura to Agartala for Bangladesh Railway for Tk 241 crore. The project, the total cost for which would be Tk 478 crore, has been taken up with a view to expanding trade between Bangladesh and India through the railway.
For the implementation of the project, India will give a grant of Tk 420 crore, said an official of the railways ministry.
The cabinet committee on economic affairs held a meeting before the meeting of the purchase committee. The economic affairs committee approved the draft policy for the National API (active pharmaceutical ingredients) and Laboratory Reagents Manufacturing and Exports. The government plans to offer a host of incentives to encourage local manufacturing of raw materials for the pharmaceutical sector in a bid to boost exports and lower the cost for domestic consumers.
Bangladesh largely relies on imports for raw materials in the absence of local API: about 95 percent of the Tk 5,000 crore worth of raw materials needed by the pharmaceutical sector are brought in from abroad. Besides, the raw materials, which are mostly imported from China, South Korea and India, are not always of the requisite quality. As per the proposal, the government will give unconditional tax-holiday to all API and laboratory reagents producers, both local and joint ventures, for five years from fiscal 2016-17 to fiscal 2021-22. The committee also approved the import of liquefied natural gas from Oman on a government-to-government basis. Besides, the Bangladesh Textile Mills Corporation under the textiles and jute ministry has proposed to hand over 1.18 acres of land to the directorate of police at the negotiated price.
MCX Cotton futures is trading on positive note since the start of April and jumped almost 2.2% or Rs. 440 per bale on reports of lower acreage, increase in export demand from China and increase in mill consumption. Prices have been supportive as Cotton production for the country revised downwards for the fourth consecutive month by Cotton Association of India (CAI) to 360 lakh bales from 375 lakh bales estimated in December last year.
Since the start of the season cotton futures surged more than 11% from Rs. 18,530 per bales to Rs. 20,630 levels. However, cotton futures falls more than 6.2% from its high in January on higher arrivals in the physical market coupled with reports that cotton yarn exports may remained under pressure due to sluggish demand from China. However, in February, cotton futures surged 3.6% on reports that the cotton production in Maharashtra and Telangana may be lower due to pest infestations and exports from the country improved due to weak rupee and good demand from the Asian countries.
Last year, cotton prices were higher during February and March compared to this year on restricted arrivals from the Farmers due to demonetization but this year the arrivals have been good. In the current season 2017-18, the arrivals have been 287 lakh bales, up by 4.5% as on 31st March compared to 275 lakh bales last year. Cotton arrivals in Gujarat recorded highest at 76 lakh bales (Vs 64 lakh bales last year) followed by Maharashtra at 66.75 lakh bales (Vs 74 lakh bales) and Telangana at 46 lakh bales (Vs 43 lakh bales). In North India, cotton arrivals increase to 47.8 lakh bales compared to 43 lakh bales last year.
Due to vulnerability of cotton to pink boll worm and spurious cotton seeds sold in the market, traders are expecting a reduction in acreage under cotton by 10-15% in the coming kharif season. Cotton farmers are likely to shifting towards oilseed and pulses in hope of better returns. Last year, Pink Bollworm infestation damage crops in in Maharashtra and Telangana had dent farmer incomes.
Moreover, CAI in its latest press release has raised its estimate for India’s export for cotton to 65 lakh tonnes in 2017-18 (Oct-Sep) from 55 lakh tonnes projected in start of the season. Last year, country exported about 58.2 lakh bales of cotton. For CY2017/18 (Oct-Sep) consumption is forecast at 324 lakh bales, up by 5.5% from last year’s consumption of 307 lakh bales. Cotton consumption is expected to improve over last year due to various government schemes and incentives to boost garment and apparel exports will renew mill activity.
Outlook: We expect cotton to trade on positive note towards Rs. 21,500 per bale (CMP: 20,620) in next one month on expectation of improved exports demand and reports of reduction in cotton acreage in coming kharif season. However, if India’s exports during the recent month surge due trade war between the US and China, cotton acreage may increase, supported by near normal monsoon forecast by private weather forecasting company – Skymet. During current season, China is the fourth largest market for Indian cotton after Bangladesh, Vietnam and Pakistan. However, India is hoping to export three times more cotton ie. About 27-30 lakh bales to China next year as it looks to restock cotton and also going to impose a 25% import tax on US cotton. Moreover, cotton prices may also increase if government declare Minimum Support price (MSP) 1.5 times the cost of cultivation.”
In his opening address, the Prime Minister observed the increasing energy demands of the world and the economies’ gradual shift to green energy and energy efficiency in accordance with the climate change agenda based on the COP21 agreement. Prime Minister Narendra Modi inaugurated the 16th edition of International Energy Forum (IEF) Ministerial on Wednesday, which is being hosted by India and co-hosted by China and South Korea.
In his opening address, the Prime Minister observed the increasing energy demands of the world and the economies’ gradual shift to green energy and energy efficiency in accordance with the climate change agenda based on the COP21 agreement.
The Prime Minister also observed India’s growing energy needs due to the rapid economic growth, “I came across an energy forecast prepared by an agency according to which India will be the key driver of the global energy demands in the next 25 years. India’s energy consumption will grow by 4.2 percent a year for the next 25 years.”
“Currently India is the fastest growing large economy in the world. All leading agencies are estimating India to grow at 7 to 8 percent in the future,” he said, adding, “Our govt is boosting local manufacturing through Make in India and filling of youth in industries such as textile, petrochemical, engineering, etc. This in turn is also increasing out energy needs further.” Sharing his views on the hydrocarbon sector, Prime Minister Modi called for moving responsible oil prices that balance the interests of both the consumers and the producers.
He also stressed on moving to transparent market for both oil and gas, vith the view to serve the energy needs of humanity in an optimal manner.
The Prime Minister also shed some light on the India’s endeavour to achieve energy security.
“People must have universal access to clean, affordable, sustainable and equitable supply of energy,” he said, and added, “My vision for India’s energy future has four pillars- energy access, energy efficiency, energy sustainability and energy security. Energy in general and hydrocarbons in particular are important parts of my vision for India’s future. India needs energy which is accessible and affordable to the poor.”
Prime Minister Modi also listed down various ways in which the country is addressing the energy demands of the country, maintaining a balance between the economic growth and the needs of the poor. Our government has encouraged private participation across entire oil and gas value chain. Our government believes in an integrated approach to energy planning and our energy agenda in India is inclusive, market-based and climate-sensitive,” he said. The three-day forum with 92 participating countries will discuss the future of global energy.
The Delhi High Court today dismissed US-based agro major Monsanto Technology’s plea to enforce the patent for its BT cotton seeds in India.
A bench of Justices S Ravindra Bhat and Yogesh Khanna partially allowed the counter-claims of three Indian seed companies that Monsanto does not have a patent for its BT cotton seeds, a genetically modified variant which resists bollworms.
The court also upheld the decision of a single judge on the issue of trait fee payable to Monsanto by the three Indian companies — Nuziveedu Seeds Ltd, Prabhat Agri Biotech Ltd and Pravardhan Seeds Private Ltd — under the sub-licence with them.
The single judge had said that the Indian companies would pay trait fees to Monsanto according to government-set rates.
Monsanto wanted to charge a higher rate of trait fee under the sub-licence given to Indian companies to use its seed technology.
Both sides had challenged the single judge’s order before the division bench.
Monsanto had challenged the single judge’s decision reinstating a sub-licence between it and the three Indian seed companies, which the foreign entity had terminated.
The Indian companies in their appeal had challenged the rejection of their claim by the single judge that the US-based agro major Monsanto was incorrectly granted patent for BT cotton seeds.
After the verdict was pronounced, Monsanto sought that the decision be kept in abeyance for a few weeks so that it can file an appeal in the Supreme Court.
The high court declined to keep the operation of its decision in bench, but granted the US company a certificate of fitness to file an appeal in the apex court.
50 Task Force teams set up last month conducted raids in districts from March 29 to April 9
The Task Force teams comprising officials from the agriculture and police departments and seed certification and development agencies have seized over seven tonnes of spurious and illegal hybrid cotton seed with herbicide tolerant trait worth ?13.15 crore during the raids conducted in districts from March 29 to April 9.
In all, the 50 Task Force teams set up last month have conducted raids/inspections on 1,860 seed shops besides seed processing plants and godowns.
The reports submitted by the teams were reviewed at a meeting held here on Tuesday by Principal Secretary (Agriculture) C. Parthasarathi and Inspector General of Police Y. Nagi Reddy.
According to officials, the teams have arrested 31 persons for and registered cases under Section 420 of the Indian Penal Code against 6 persons following the detection of spurious seed during the raids. In all, they have seized 4,283 kg of expired herbicide tolerant (HT) cotton seed worth ?3.32 crore and over 2,842 kg (6,317 packets of 450 grams each) of spurious HT cotton seed worth ?9.83 crore.
Besides, the Task Force teams have also issued show cause notices to Narmadasagar, Karthiyan Agri-Genetics, Kohinoor Seeds and Vibha Agro-tech seed companies.
Speaking at the meeting, Mr. Nagi Reddy said cases under the provisions of the IPC and Prevention of Dangerous Activities Act would be registered against those indulging in spurious and illegal seed to minimise loss to the farming community.
Commissioner of Agriculture M. Jaganmohan, Director of Telangana State Seed and Organic Certification Authority K. Keshavulu, Director of Horticulture L. Venkatram Reddy and others also participated in the review.
Cotton trading remained moderate and buyers made deals on slightly higher price amid firm physical prices.
Forward deals for a month period also changed hands that pushed physical prices in green zone. The Karachi Cotton Association (KCA)’s spot rate stood at Rs 7,500 per maund. Buyers made deals for all grades besides deals for better and second grade of lint for blending purpose remained firm and deals changed hands at around Rs 6,975 per maund to Rs 7,675 per maund during the trading session. Mills consolidated their long positions and made deals for second grade on paying premium price for it.
The shrinking fine lint put general price in firm zone and buyers also made forward deals on slightly higher price at around Rs 7,750 per maund in Sindh and Punjab stations. The private exporters consolidated their long positions through buying from old stocks while market remained in steady tones. The buyers remained selective on grade and consolidated their future positions with fresh fine lots, he added.
According to KCA, 200 bales of Multan changed hands at Rs 7,150 per maund, 200 bales of Sanghar at Rs 7,450 per maund, 200 bales of upper Sindh at Rs 6,925 per maund and 200 bales of southern Punjab at Rs 7,200 per maund. In domestic market buyers remained eager for quality lint on the back of growing demand of end products. The ginners of Punjab offered cotton of all grades to the buyers around Rs 5,975 per maund to Rs 7,775 per maund while ginners of Sindh offered low-grade of lint to the buyers around Rs 5,975 per maund.
New York Cotton May Futures 2018 contract closed at 84.18 cents per pound, July Futures 2018 contract at 84.36 cents per pound and Cotlook A Index was hovering at 90 cents per pound. The US currency edged higher in value versus rupee in interbank and open market, treasurers said. The greenback remained firm at Rs 115.40 for buying and closed at Rs 115.60 for selling in interbank. It gained 20 paisas. It was traded at a day high of Rs 115.41 and a low of Rs 115.59. A treasurer at a local bank said the oil payments remained the major factor for rupee’s dull trend. The euro remained firm to close at Rs 142.66 for buying and Rs 142.86 for selling with a gain of 80 paisas. The pound sterling stood firm to close at Rs 163.62 and Rs 163.82 for buying and selling respectively. It gained 84 paisas.
Kerb Market: The dollar remained firm in value owing to improved demand by umrah going pilgrims. The dollar closed at Rs 116.60 for buying and Rs 116.80 for selling. It gained 15 paisas. It was trading a day low at 116.59 in the open market. The demand of dollar in the open currency market from the corporate and private sector buyers has now become firm, thus putting some pressure on rupee.
The pound sterling closed at Rs 164 for buying and Rs 164.20 for selling, it gained 50 paisas versus rupee. The euro closed at Rs 142.25 for buying and Rs 142.45 for selling. It gained 50 paisas in the open market. The gold price in global and domestic market withered any possible descending phase on improved Gold Future speculations on general prices however less volume were traded. Meanwhile business activity remained Gold Future speculative on basis of gold manipulation by leading traders and output outlook during the trading session.
The gold price would be remained under leading hands in half of 2018. Gold closed at $1,350 an ounce with $12 upward variation in value as compared to previous trading session and domestic bullion price witnessed same trend. Gold in tola term up by Rs 520 a tola to close at Rs 58,483 per tola while in grammage value, gold remained firm by Rs 446 per ten grams to Rs 50,193 per ten grams. The manipulators in India, Pakistan and other major gold buying countries remained in driving seat for controlling Gold Futures. They remained busy influencing current prices and Futures on speculations. The potential buyers in India and Pakistan remained busy in hedging. The gold hedgers made some cautious deals. The general buyers remained on sidelines anticipating easing in price in coming days on dollar-rupee parity. Buyers made deals according to their immediate needs. Local trading in gold remained dull on back of insignificant buying and less liquidity in the market.
