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Ficci termed the slowing down of the industrial output in May to 3.2% and the inching up of the retail inflation in June to 5% as short-term challenges
India’s growth story remains intact with the GDP expected to grow around 7.5% in the current financial year and improve further in the coming years, Ficci said on Thursday.
It termed the slowing down of the industrial output in May to 3.2% and the inching up of the retail inflation in June to 5% as short-term challenges.
They are being pro-actively tackled by the government and the RBI, it said, observing that these indicators should not be seen as hurting the signs of revival in the economy significantly.
“While the industrial output growth is expected to rebound in the next few months; the rise in inflation is being watched by the RBI closely, and the apex bank and the government will certainly take necessary measures to keep it at the manageable levels,” said Rashesh Shah, president, Ficci in a statement.
“The Goods and Services Tax (GST) will play the role of a catalyst in this. While the GST collection trends clearly indicate towards a positive sentiment in the economy, the national integrated indirect tax structure will also bring down inflation, going ahead,” he added.
According to him, with the GST Council and the central government open to taking measures for rationalising the GST rate structure, bringing in the excluded items and simplifying the tax administration, GST is all set to boost the GDP growth further.
“Equally important is the fact that GST has shown that industry, and the country on the whole, is ready for adopting big-bang reforms”, he said, adding, “there is no doubt now that larger economic reforms involving both the Centre and the states are here to stay”.
Along with this, the reform measures like Insolvency and Bankruptcy Code and Real Estate (Regulation and Development) Act, 2016, which have already started yielding good results, will help in strengthening the revival of animal spirits and take the GDP growth beyond 8 per cent, Shah said.
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India faces the possibility of losing in the trade disputes with the US on its challenge to export subsidies, but the government is working on schemes to make them WTO compliant, an official said today.
“We have a whole lot of challenges in World Trade Organization (WTO)… we respond strongly (but) there is a real possibility that we will lose this dispute because India has crossed the income threshold to be able to give direct export linked subsidies,” Union Commerce and Industry Secretary Rita Teaotia said while responding to a query on the US challenging India”s export subsidies in the WTO.
“What we are now trying to do is WTO compliant,” she said at an event organised by the Indian Chamber of Commerce.
Ms Teaotia said that anything which entails a refund of statutory levy is legitimate for the purpose of exports in trade rules while incentive given only for exports is not legitimate.
“Right now, we have an expert group studying to see what are the WTO compliant support and what are the global practices in a transparent way. This exercise is almost complete. In fact, we are having the first round of presentation next week.
“Hopefully, we would have a draft set of schemes for the discussion in a month or so,” she said.
The Centre is looking to support for regulatory compliance, she added
At a time when sowing in Gujarat is already lagging by 36% as compared to last year, recent heavy rains have raised the spectre of heavy losses to farmers in kharif crops such as groundnut, cotton and paddy.
At a time when sowing in Gujarat is already lagging by 36% as compared to last year, recent heavy rains have raised the spectre of heavy losses to farmers in kharif crops such as groundnut, cotton and paddy. Farmers and agriculture experts fear that waterlogging situation in many parts of Saurashtra and excess rain in south Gujarat may damage the growing plants of kharif crops.
Saurashtra, Junagadh, Somnath, Bhavnagar, Amreli, Rajkot and Jamnagar districts received heavy rains in past two weeks and because of this several places have water logging situation which, according to farmers, is not good for kharif sowing.
“Due to constant rains since last two weeks, groundnut plants have been already damaged and as the water logging in many farms, possibility for re-sowing is nominal. We can not afford more rains at this stage and sunlight is required immediately for the survival of the crops,” said Hareshbhai Kamariya, a farmer from Nani Dhanej village of Maliya (Hatina) taluka in Junagadh district.
According to current estimates, nearly 70% of the groundnut crop has been destroyed in the recent spell of rains in Junagadh district only. Similarly for cotton, the plants have been broken at several places. To add to farmers’ woes, heavy land erosion has also taken place in many parts of Gujarat and as a result, re-sowing may not be possible. Agriculture experts also believe that disease and pest infestation are possible in re-plantation because of soil erosion.
AR Pathak, vice chancellor of Junagadh Agriculture University said, “Present monsoon condition may damage the cotton and groundnut crops most in the state, mainly in Saurashtra area which is cotton and groundnut growing belt.
Moreover, pest and disease possibility cannot be denied in the case of re-sowing due to water logging and land erosion.”
According to data released by the Gujarat agriculture department, as on July 16, total Kharif sowing has been done on 3.87 million hectares this year which was 6.06 million hectare in the corresponding period last year.
The area under groundnut has decreased by 41.47% to 8.77 lakh hectare as against 1.49 million hectares. Similarly, in cotton, sowing has declined to 1.72 million hectares this year as against 2.44 million hectares last year. Sowing of paddy has reached 1.97 lakh hectare so far which was 3.03 lakh hectare last year at this time. The data suggest that plantation of pulses fell by 44.58% to 2.11 lakh hectare as against 3.82 lakh hectare. Area under vegetables has also gone down to 94,244 hectare as against 1.15 lakh hectare.
A revival of the proposed Free Trade Agreement (FTA) between India and the European Union, negotiations for which have been stalled since 2013, was expected to begin this year. However, a report in The Times of India has said that both sides are on the verge of giving up on the FTA, and in a few days, might even formally state the end of the FTA talks. The report said that India wrote to the European Union, following which the latter sought two weeks to decide if they will go back to the negotiating table at all. However, it quoted sources as saying resumption of negotiations may be a fruitless exercise and it’s something both sides have come to realise.
Commerce Minister Suresh Prabhu had said in March this year that New Delhi was still hopeful that negotiations on the long-stalled talks would resume shortly. “We have started working on an India-EU FTA again. We have invited them and are looking at it,” he had said at a Confederation of Indian Industry (CII) event in New Delhi.
Prabhu rued that even after 16 rounds of talks, the negotiations hadn’t moved further. Negotiations have been held up since May 2013, as both sides are yet to bridge substantial gaps on crucial issues. The two sides tried in 2017 to restart negotiations at the India-EU summit in October, but it amounted to nothing.
The key differences arise over the movement of professionals. Besides demanding significant duty cuts in automobiles, the EU also wanted tax reduction on wines, spirits and dairy products, and a strong intellectual property regime.
On the other hand, India was seeking data secure nation status by the EU. The country is currently not among the nations considered data secure by the EU. The matter is particularly crucial as it will have a bearing on Indian IT companies wanting market access.
Two-way trade between India and the EU dipped to $88.4 billion in 2015-16 from $98.5 billion in the previous fiscal. Talking about the growing protectionism globally, Prabhu said that countries are reviewing and re-strategising their positions, but India has decided to engage positively with its trading partners.
However, things have clearly changed since then. The EU signed a massive free trade deal with Japan earlier this week that has slashed tariffs on a lot of items. The deal, as reported by CNN, covers 600 million people and almost a third of the global economy. Donald Tusk, European Union president, was quoted in the report as hailing the agreement as the ‘largest bilateral trade deal ever.’
And unlike Japan, European Union officials have lamented, India has not showed enough flexibility in negotiations. India, on the other hand, has accused the EU of being too rigid in giving access to services. In fact, The Times of India report said, the EU officials had told India in 2015-16 that they were too busy negotiating a TTIP with the US to have time available for New Delhi.
All of this has meant the India-EU trade relationship has hit a rocky patch. The Times of Indiareport quoted Indian negotiators as saying New Delhi might be better off waiting for Brexit to formally conclude before looking at ties with both UK and EU. With signs seemingly suggesting that Britain would be keen on working out a deal with India, New Delhi believes UK’s departure might make FTA talks with EU easier, the report added.
US President Donald Trump says he is ready to intensify his trade war with China by slapping tariffs on all $500bn of imports from the country.
“I’m ready to go to 500,” he said in an interview with the CNBC channel.
Mr Trump’s comments come before the most recent round of US tariffs has had time to take effect.
Last week, Washington listed $200bn (£150bn) worth of additional Chinese products it intends to place tariffs on as soon as September.
The list named more than 6,000 items including food products, minerals and consumer goods such as handbags, to be subject to a 10% tariff.
It is still under public consultation, to last until the end of August.
US ‘penalized’
The President has also been complaining that a strengthening dollar has been hurting US business.
In a series of tweets he blamed the higher dollar on currency “manipulation” by China and the European Union.
Mr Trump also criticised the US Federal Reserve for raising interest rates.
“The United States should not be penalized because we are doing so well. Tightening now hurts all we have done,” he said in a tweet.
The US and China have already imposed tit-for-tat tariffs of $34bn on each other’s goods. The President’s threat to raise that to $500bn represents a major escalation.
“We’re down a tremendous amount,” Mr Trump told CNBC, reiterating his view that China’s trade surplus with the US amounts to unfair trading practices.
When asked if the move might cause a stock market sell-off, he responded: “Well, if it does, it does. Look, I’m not doing this for politics. I’m doing this to do this right thing for our country.”
The US also wants China to stop practices that allegedly encourage transfer of intellectual property – design and product ideas – to Chinese companies, such as requirements that foreign firms share ownership with local partners to access the Chinese market.
Mr Trump has previously hinted at such an escalation, telling reporters two weeks ago that there was “$300bn in abeyance” after the $200bn of goods covered by the latest list, but this is his most explicit threat yet.
Many companies in the US are opposed to the administration’s use of tariffs against China, saying they risk hurting business and the economy without being likely to change behaviour.
European stock markets fell after the interview was broadcast, with the FTSE 100 down 0.4% in afternoon trade.
“It’s proof, if it were needed, that the president is prepared to go all the way in the trade war to exact concessions from China, which simply cannot match the US firepower,” said Neil Wilson, chief market analyst for Markets.com.
“In light of the EU and others saying they are ready to respond to tariffs on cars, the stakes are rising fast. Whether we get to the point where there is a full-blown trade war remains debatable, but the odds are shortening by the day.”
Warmer weather attributable to climate change is posing a threat to China’s massive cotton industry – by allowing a little bug to thrive, an international group of scientists has found.
In a study published in the Proceedings of the National Academy of Sciences in the United States on Monday, researchers found that higher early-summer temperatures had helped boost the population of the mirid bug – a major pest to the cotton plant – in China.
And not only does the bug pose a greater threat to other plants than the other cotton-eating insects it is supplanting, the surprise growth of its population may add a new complicating factor to the ongoing US-China trade war.
The observations on the mirid bug came as part of a massive study that was undertaken to assess the long-term impact of different factors – among them, landscape complexity, insecticides and weather – on pest control in the Chinese cotton industry.
The study, financed by British and Chinese grants, examined three major cotton pests for 51 counties in China from 1991 to 2015, the largest database collected so far. It found that the number of mirid bugs in those areas was generally higher in years with higher May temperatures.
“One of the policy implications is that weather is an important driver of the system, and the projected climate warming could heighten pest outbreak risks,” said Wei Zhang, the lead researcher of the study and a research fellow with the Washington-based International Food Policy Research Institute (IFPRI), one of the centres operated by the Consultative Group for International Agricultural Research (CGIAR).
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The study found that the population of mirid bugs has risen sharply in the past two decades while those of the other two major pests – the cotton aphid and cotton bollworm – declined steadily, making the mirid the biggest infestation threat to cotton production.
The once-minor pest, which sucks sap out of the cotton flower, benefited after Chinese farmers reduced the spraying of insecticide in cotton fields and started planting a genetically modified type of cotton – Bacillus thuringiensis, or Bt cotton – that gave better yields and was resistant to bollworms.
The study confirmed findings from an earlier paper, published in Science in 2010, by scientists at the Chinese Academy of Agricultural Sciences which also attributed a rising incidence of mirid bugs to China’s adoption of Bt cotton and the associated reduction in insecticide use.
China’s farmers started growing Bt cotton in 1997, with all eight provinces represented in the study achieving full adoption of the GM crop by 2015.
“The results are alarming because unlike cotton bollworm, mirid bugs exploit a wide variety of crops, including fruit trees and more than 200 other host species,” Zhang said.
The mirid also thrives in warming weather conditions, and over the 24 years of the study, China’s monthly average temperature in May rose 7.08 per cent, from 12.99 degrees Celsius (55.38 degrees Fahrenheit) in 1991 to 13.91 Celsius (57.03 Fahrenheit) in 2015, according to data from Climate Change Knowledge Portal provided by the World Bank.
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Between 2020 and 2029, the World Bank projects, May’s average temperature could rise further, to 14.11 Celsius (57.39 Fahrenheit).
“Weather is gaining its momentum as an important threat [to cotton production in China],” said Zhang. “Policymakers need to consider the impact of climate change on pest management.”
As researchers noted, the study highlighted how changes in an environment carries the potential for unexpected consequences. One that could not be anticipated is what the mirid bug might mean as China’s trade war with the US increases the drive for competition.
Cotton is China’s prime cash crop and the country is one of the world’s biggest cotton producers, a close second only to India, according to US Department of Agriculture statistics.
China’s cotton production is forecast to be 6 million tonnes in the current crop year of 2017/2018, accounting for 21.75 per cent of the world’s total production, according to USDA estimates. The figure for India is 6.2 million tonnes, accounting for more than 22 per cent (22.47 per cent) of total production.
Moreover, the industry is a leading employer in China, with around 300 million people involved in cotton production in 24 out of 31 provinces, according to a 2015 United Nations report.
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As the US-China trade war develops, Beijing is planning to impose a 25 per cent tariff on more than 100 US goods – including cotton.
The United States is the world’s top cotton exporter and China’s top overseas supplier. It shipped more than 500,000 tonnes to China in 2017, USDA and China Textile Information Centre statistics showed.
Tariffs on US cotton would drive up its price and mean less is imported into China, putting even more pressure on the domestic industry to produce – and making the mirid bug threat an even greater concern.
Import duties had been increased for an even broader set of products and goods in the textile categories back in October 2017
India on Monday raised the import duties on a large number of textile apparels, fibres and related products such as carpets by up to 20 per cent.
Spread across 37 broad tariff areas, the import duties, however, target products for which India’s imports are low.
This includes textile apparels and accessories, hosiery item and certain types of vegetable based textile fibres, among others.
Effective duty rate for most of these items have been doubled.
Import duties had been increased for an even broader set of products and goods in the textile categories back in October 2017.
Interestingly, the export of apparels, the largest chunk of exports within the textile segment, has been contracting since the same month.
Export of ready-made garments continued to drop in June, contracting by 12.34 per cent, albeit lower than the 16.62 per cent fall seen in May.
Commerce and Industry Minister Suresh Prabhu highlighted several steps taken by the government to promote an investment-friendly environment with a view to attracting investments from Oman, an official release said. During the India-Oman Joint Commission Meeting here, the minister invited Omani companies to build on their success in India and make investments to benefit from Make in India which are aimed to encourage manufacturing, the commerce ministry said in a statement.
“India has launched several investment friendly programmes like Make in India with a trillion dollar business opportunity in the country,” it said. Both the sides increase cooperation in areas including energy, health, finance, infrastructure, tourism, space, renewable energy, start-up, SMEs, food security and services sector. The bilateral tarde between India and Oman has increased to USD 6.7 billion 2017-18 from USD 4.13 billion in 2014-15. Indian financial institutions such as State Bank of India, Bank of Baroda, HDFC Ltd and ICICI Securities and public sector undertakings including Air India, Life Insurance Corporation, Telecommunications Consultants India, Engineers India and National Building Construction Company (NBCC) have presence in Oman.
Domestic firms have invested in Oman in sectors like iron and steel, cement, fertilisers, textile, cables, chemicals and automotive, especially in Sohar and Salalah. “India-Oman Joint Investment Fund, a joint venture between State Bank of India and State General Reserve Fund of Oman, a special purpose vehicle to invest in India, has been operational and the initial corpus of USD 100 million has been fully utilized,” it said. The fund has raised another USD 220 million for the second tranche which is being invested.
The Central Board of Indirect Taxes and Customs (CBIC) will organise third refund fortnight from July 16 to July 30 to clear pending GST refunds.
“In order to liquidate pendency further, and to handhold/guide the trade for applying for the refund claims in a proper manner, it has been decided to observe another refund fortnight from 16th July 2018 to 30th July 2018,” a statement issued by CBIC read.
“Dedicated refund cells and helpdesks will be provided for exporters to get their refund claims processed, in each Commissionerate,” the statement added.
The CBIC further asked the exporters and export organizations to take benefit of this opportunity to get their pending refund claims processed.
In the first refund fortnight, Rs 4,265 crore IGST refunds and Rs 1,136 crore ITC refunds were sanctioned by field formations of CBIC.
Similarly, during the second refund fortnight, Rs 6,087 crore IGST refunds and Rs 1,548 crore ITC refunds were sanctioned.
In case of IGST refunds for goods exported out of India, the percentage of the amount of refund claims disposed of by CBIC is already more than 90 percent.
The GST amendments will be tabled in the upcoming monsoon session of Parliament beginning 18 July
The government is likely to retrospectively amend laws governing the goods and services tax (GST) to deny transitional credit to taxpayers against cesses levied in the earlier indirect tax regime.
If it goes through with its plan, the Narendra Modi government will be going back on its promise of not making retrospective amendments to tax laws that have an adverse impact on taxpayers.
The proposed amendment to the GST law seeks to explicitly exclude cesses levied in a pre-GST regime from allowable transitional credit that can be claimed by companies. Under the transitional credit provision, companies were allowed to claim tax credit against levies such as value added tax and service tax on stock purchased before implementation of GST for a limited period.
Many companies availed the transitional credit facility seeking input tax credit also for cesses such as the Krishi Kalyan cess paid in the pre-GST regime through the TRAN-1 form.
However, the central government doesn’t want to give credit against the cesses. Mint could not ascertain the exact amount of transitional credit claimed against cesses.
It accordingly proposes to specifically amend the transitional provision in the GST law to only allow input tax credit against eligible duties and insert an explanation excluding cesses from the list of eligible duties.
The amendments will be tabled in the upcoming monsoon session of Parliament beginning 18 July.
“Excluding cesses from transitional credit will be the only amendment that will be retrospective as the transitional claims have already been filed through the TRAN-1 form. None of the other amendments proposed to the GST laws are retrospective,” said a government official, who did not want to be named.
Companies had claimed nearly ?65,000 crore in transitional credit by mid-September, prompting the Central Board of Indirect Taxes and Customs (CBIC) to review the claims. CBIC asked taxpayers to file revised claim forms by 27 December or face action for what they believe are exaggerated claims. It has started the process of phase-wise examination of some of the highest transitional credit claims.
CBIC also warned taxpayers not to utilize disputed transitional credit against GST liability and said that it will recover the amount with interest and penalty.
“Such an amendment will have a financial impact on the business as the tax liability will increase. Industry expected that the cesses that were creditable in the pre-GST regime will be creditable in the GST regime as well. We could see advance rulings or the companies approaching courts,” said Suresh Rohira, Partner, Grant Thornton India LLP.
