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SAARC Development Fund (SDF), the cross-border umbrella financing institution for SAARC member states, is in the process of developing an e-commerce platform to enable seamless trade of goods and services across SAARC member states, a top official said.
It would also fund start-ups, giving a boost to budding entrepreneurs in the region, said Sunil Motiwal, Chief Executive Officer, SDF.
“A proposal to develop a cross-border e-commerce platform, along with a SAARC money card for the common people across the region, is under finalisation,” said Motiwal. The plastic SAARC money card can have denominations of all the currencies in the region.
Summarising the outcome of the recent two-day SAARC Development Fund Partnership Conclave, Motiwal said that the common e-commerce platform has a great potential for enhancing intra-SAARC trade and services. For instance, consumers of Bangladesh textile – located anywhere in the region – can place orders on the e-commerce platform. Likewise, a range of commodities, including fruits and vegetables grown in Bhutan, Pakistan and India, can be sold and bought online, which will immensely help the producers and consumers, he said
Currently, only 4 per cent of the total trade of SAARC member states takes place within the region. This can be increased significantly by initiatives such as e-commerce, a booming business across the world, according to Motiwal.
Motiwal said initiatives such as the e-commerce platform, along with the funding of start-ups, found instant support among the international funding organisations.
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Ministers’ group also recommends provision relating to reverse charge mechanism be deleted
A Group of States’ Finance Ministers on Sunday reached a consensus on putting off a GST discount on digital payments for the time being. It also decided to suggest empowering the GST Council to finalise goods for applicability of the Reverse Charge Mechanism (RCM).
“In principle, we support a GST discount in digital payment. However, considering the current revenue situation, it would be better to wait for some more time. Accordingly, we have proposed to defer this proposal,” Sushil Kumar Modi, Chairman of the State Finance Ministers’ Group and Deputy Chief Minister of Bihar, told reporters here.
The proposal could be considered after one more year of revenue collection under GST, he added. Modi said one important reason for deferring the proposal is revenue implication of ?14,000-15,000 crore.
These two recommendations — deferment of the GST discount on digital payment and RCM — will be placed before the 28th meeting of the GST Council, scheduled for July 21.
The proposal for a GST discount on digital payment envisages providing “a concession of 2 per cent in the GST rate on B2C (Business to Consumer) supplies, for which payment is made through digital mode [1 per cent each from the applicable CGST and SGST rates, if the applicable GST rate is 3 per cent or more] subject to a ceiling of ?100 per transaction.” The scheme, however, will not be available to registered persons paying tax under the composition scheme.
With the incentive, the consumer will be offered two prices: one with normal GST rates for purchases made through cash payment and the other with a rate 2 per cent lower for digital payments. As a result, the consumer will see visible benefits of making payments through the digital mode.
For example, if the GST rate applicable to supply particular goods/services is 18 per cent, and if payment is made through digital means, then the applicable GST rate will be 16 per cent.
Reverse charge mechanism
Earlier in the day, the Group finalised deleting sub-section (4) of section 9 of the CGST Act, 2017, and sub-section (4) of section 5 of the IGST Act, 2017, which prescribe a Reverse Charge Mechanism. “We have recommended omitting the present Section 9(4) and introducing a new Section 9(4), which will permit the government, on the recommendations of the GST Council, to notify a specific class of registered persons and goods who would be covered under the RCM provision,” Modi said, adding that the conditions and the date for levying of RCM will be decided by the council.
RCM is a mechanism where the buyer of the goods or service will have to pay GST, which is otherwise paid by the seller.
The charge is applicable on a registered dealer, if he buys goods from a dealer not registered under GST. However, the receiver of the goods is eligible for input tax credit, while the unregistered dealer is not.
Since introduction of GST, this scheme has generated a lot of debate because of which it was decided in the 22nd meeting of the GST Council, held on October 6, to defer it till March 31, 2018.
It was also decided that the scheme would be reviewed by a committee of experts.
The date for suspension has been extended twice and the new date that has now been fixed is September 30, 2018.
Given the recent pest attacks and reduction in crop acreage, MSP hike will work well to keep farmers committed to cotton cultivation, in spite of adversities
The steep hike of 28% and 26% in the minimum support price (MSP) on medium-staple and long-staple fibre cotton respectively has come as a surprise, for two reasons. One, the MSP hike comes after five consecutive years of only single-digit MSP increases. The last such hefty one was 29% and 22% respectively in 2013. Two, the cotton prices currently are higher than the proposed MSP, because of the deficit in global and domestic supply.
Is higher MSP for cotton redundant then? Yes, in the short term. However, given the recent pest attacks and reduction in crop acreage, MSPs will work well to keep farmers committed to cotton cultivation, in spite of adversities.
The proposed MSP ensures a 50-60% return over the cost of production. Given that India is now the largest producer of cotton after it overtook US and China in 2015-2016, it pays to support farmers in cotton growing. Besides, MSPs mitigate the risk of price volatility too.
But, in the longer term, a steep rise in Indian MSPs will set the stage for a high floor price in both domestic and global markets.
This could puncture the fortunes of spinning mills. Note that the large integrated mills fared well in the last three to four quarters. Ebitda (Earnings before interest, tax, depreciation and amortization) margin had improved by 100-150 basis points (bps) year-on-year for the March quarter.
A report by Icra Ltd says that the MSP revision may elevate working capital requirements for mills. This, in turn, would warrant a calibration of the end product pricing, to accommodate the upward shift in cost trajectory. Larger mills that stocked up low price cotton may not feel the impact in the near term, but smaller ones would bear the brunt of high raw material cost.
In such a scenario, the key to spinning mills’ profits is high demand for yarn and the ability to pass on cost pressures.
Besides MSP, another development at the global level is China’s retaliatory imposition of 25% duty on yarn imported from the US. This could indirectly foster cotton yarn exports from India.
With the festive season ahead, demand for yarn in home markets should be stable too. So demand for cotton should stay strong.
To sum up, while high MSPs would engage farmers in cotton growing, the higher floor price could impact profit margins of spinning mills if demand slows down.
The two leaders will visit Samsung’s manufacturing site which will be producing 10 million units of mobile phones per month by 2020.
Minister of External affairs, Sushma Swaraj on Monday called on visiting President of Republic of Korea, Moon Jae-in and held discussions with him.
The South Korean President is currently on a three-day visit to India, having arrived in New Delhi on Sunday evening. He and his wife, Kim Jung-sook, were received by Minister of State (MoS) for External Affairs General (retd) VK Singh.
President Moon then visited the Gandhi Smriti with Prime Minister Narendra Modi, from where the two leaders will travel to a Samsung plant in Noida. Moon is also scheduled to attend the India-Korea Business Forum later in the day.
On July 10, he will be accorded a ceremonial reception at the Rashtrapati Bhawan.
Union Industries Minister Suresh Prabhu and South Korean Trade Minister Kim Hyun-Chong signed agreements on trade and commerce.
“Trade and commerce will play their own roles in taking bilateral relations between both the countries forward. We are going to take this relationship to a new level. We had a fruitful and forward looking discussion, some ideas have come to forward while some will work in progress,” Prabhu told the media in New Delhi.
Earlier on Monday, both the ministers began their meeting with breakfast, after which the agreements were discussed and signed.
Meanwhile, Hyun-Chong highlighted on the Samsung plant in Noida and said that the site would produce almost 10 million units of mobile phones in the coming years.
“Keeping with Prime Minister Narendra Modi’s ‘Make in India’ policy, the first step was taken today, both the leaders (South Korean President and Prime Minister Modi) will visit Samsung’s manufacturing site which will be producing 10 million units of mobile phones per month by 2020,” Hyun-Chong told media.
South Korean President Moon Jae-in and Prime Minister Narendra Modi later took the Delhi metro to travel to the inauguration of the mobile factory of Samsung in Noida, Uttar Pradesh.
There is a dire need to make sincere efforts to upgrade textile industry on modern lines, promote value-addition in textile sector, besides providing level playing field to the businessmen engaged with textile sector.
This was stated by Caretaker Provincial Minister for Industry and Commerce Punjab Mian Anjum Nisar and Caretaker Provincial Minister for Labour and Transport Punjab Mian Nouman Kabir while addressing the participants of an interaction session held at PRGMEA House here on Monday. The session was organised under the supervision of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA). Central Chairman PRGMEA Ejaz A. Khokhar presided over the event.
Addressing the participants, Mian Anjum Nisar highly hailed the pivotal role of Sialkot exporters in strengthening the national exports by earning precious foreign exchange to the tune of $2 billion annually. He said the government was actively considering several proposals to give maximum relief to textile sector in the country for its upgradation on modern lines by motivating the textile exporters towards the promotion of value addition. He said the government was well-aware of the perturbing problems of the country’s textile sector and was making hectic efforts to boom up textile sector as well.
Speaking on the occasion, Mian Nouman Kabir hailed the services of Sialkot exporters for providing better health, education and residential facilities to more than 40,000 registered industrial workers and their dependents, saying that Social Security Department was spending Rs 700 million annually for providing advanced medical and health facilities to the registered industrial workers and their dependents (total number 175,000) in Sialkot annually as well.
Central chairman PRGMEA Ejaz A Khokhar said that proper government patronage for the textile sector was also needed to flourish this sector, besides giving maximum relief to abolish the unnecessary taxes from this sector. Later, both of the ministers visited several leading industrial units and witnessed the international standard craftsmanship of Sialkot artisans.
South Korean President Moon Jae-in on Monday called for efforts to further expand cooperation between his country and India.
“India and South Korea are the world’s seventh and 11th largest economies. However, trade between the two countries came to US$20 billion last year, which is not small but far short of our expectations,” President Moon said during a South Korea-India business forum attended by some 400 top business leaders from both countries.
The South Korean president arrived here Sunday for a four-day state visit.
Moon said the countries share many common values while both their governments pushed for what he called the “3Ps” — people-oriented peace and prosperity. “First of all, I wish to propose to India a ‘3P Plus’ by adding future-oriented cooperation to our existing 3P policy,” he told the forum.
The business forum was held one day before the South Korean president was set to hold a bilateral summit with Indian Prime Minister Narendra Modi. Moon said his country will seek to actively support the Indian leader’s Make in India policy, noting some 500 South Korean companies are already doing business in India.
“They have mostly been centered around automobile, electronics and textile companies so far, but the country will expand its business cooperation to various other areas, including shipbuilding, medical equipment and food processing,” the president said.
The president also expressed hope for South Korean companies to take part in major infrastructure projects in India, such as the move to build 100 smart cities and industrial corridors between major cities here.
“South Korea has been accumulating advanced technology and vast experience in developing infrastructure and new cities throughout its own industrialization process. The vast network of expressways and spider web-like subway systems are the symbol of such achievement. I am confident South Korea is the best partner for India,” he said.
Moon insisted technology cooperation between the two countries will also create new opportunities for both countries while also preparing the two for the fourth industrial revolution.
“When India’s world-class software technology is combined with South Korea’s strong applied technology and hardwares, the two countries may be able to spearhead the era of the fourth industrial revolution,” the president said.
He also asked Indian companies to invest in South Korea, saying the ongoing rapprochement between his country and North Korea may lead to new opportunities.
“South Korea is currently facing a historic transition. We have opened a way to the establishment of peace through the South-North Korea summit and North Korea-U.S. summit. Once peace is established, investment conditions in South Korea will improve and many new business opportunities may be created,” the president said.
Uztuqimachiliksanoat” (Uzbekistan Textile Industry) Association hosted a meeting with the delegation of the Japanese company YKK led by the head of the Central Asian office of the company Y.Yamashita, the UzDaily portal quoted the press-service of the Association as saying.
At the meeting, the sides discussed prospects for establishing bilateral cooperation of domestic manufacturers of textile industry with a global brand.
The importance of the decree No. 5285 of the President of the country dated December 14, 2017 “On measures to accelerate the development of textile and garment-knitting industry” was emphasized at the meeting, in particular the exports of finished textile products of the country increased dramatically as a result of the reforms in the field of textile industry.
Yamashita noted that the company specializes in production of textile accessories and is a leader in this field. It operates in more than 70 countries around the world, and production facilities are located in 6 countries in Europe and Central Asia.
The constructive exchange of views took place during the meeting. The sides emphasized that cooperation will have a fruitful influence in development of both sides.
The Japanese side noted the impressive dynamics of changes in the economic and political life of the Republic of Uzbekistan, emphasizing that Uzbekistan is a priority state for development of international cooperation.
Following the meeting, the sides discussed the possibility of opening an office of YKK in Uzbekistan, as well as creation of a joint venture of textile accessories and fittings.
Also, the negotiations with manufacturers of sewing and knitted products of Namangan region are planned to be held during the visit of the Japanese delegation.
A delay in FPI inflows till, say December, may drive the rupee beyond 70 against the dollar and RBI may issue NRI bonds to arrest the fall, says a BofAML report A strengthening US dollar, lack of foreign investment and concerns over rising crude oil prices are likely to keep the rupee under pressure this week and may push it past the 70/Dollar mark, say bankers. The Reserve Bank of India (RBI) will certainly not be comfortable with that expensive a rupee and would strongly defend the currency, they said. According to bankers, 69.30 remains a crucial level for the rupee.
The rupee had touched an all-time low of 69.10 against the dollar on 28 June. It closed at a lifetime low 68.95 on Thursday. “Concerns over widening current account deficit due to higher crude oil prices and demand for dollar from oil companies and general importers is impacting the rupee. It may briefly touch the 70 mark this week but would not remain there,” said a senior bank official.
Those companies who have to repay their external commercial borrowing (ECB) are also stocking up the US currency, a bank treasurer said. “The RBI won’t allow the rupee to fall below 69.30. If it breaches this level, the rupee will touch the 70 level in no time,” said another banker. The central bank has always stated that it does not target any level of the domestic currency, but intervenes in the foreign exchange (forex) market to check its volatility.
India’s forex reserves stood at $ 406.058 billion on 29 June.
According to analysts, the US-China trade war is putting pressure of all Asian currencies, but rupee is the worst hit so far. Inflow of foreign portfolio investments (FPIs) into the domestic equity market has also come down due to the US-China trade war, said another banker.
According to a report by Bank of America Merrill Lynch (BofAML), RBI rate hikes often hurt the rupee. The rupee has depreciated 1.9% since the repo rate hike on 6 June. A delay in FPI flows till, say December, may drive the rupee beyond 70 against the dollar and RBI may issue NRI bonds to arrest the fall. “We think RBI may issue NRI bonds to raise $ 30-35 billion to comfort the forex market, if FPI flows do not revive by the December quarter,” BofAML said in the report. If lack of FPI flows force RBI to sell $20 billion, it would have to do open market operations (OMOs) worth $50 billion to contain lending rate hikes, the report had said.
Oil prices rose on Monday as investors focused on tight market conditions after data late last week showed U.S. crude inventories fell to their lowest in more than three years.
Global benchmark Brent rose 37 cents, or 0.5 percent, to $77.48 a barrel by 0305 GMT. U.S. crude futures added 29 cents, or 0.4 percent, to $74.09.
Official data that came out on Thursday, a day later than normal due to the July 4 public holiday, showed inventories at Cushing, the delivery point for U.S. crude futures, fell to their lowest in 3-1/2 years.
“Cushing is clearly screaming out for crude, with the prompt few months more than $2 backwardated,” said Virendra Chauhan, an analyst at Energy Aspects in Singapore.
Backwardation refers to a market situation that suggests tightness as prices for immediate delivery are higher than those for later dispatch.
Investors are also focusing on how much exports from Saudi Arabia and other Gulf states will rise, Chauhan said.
The Organization of the Petroleum Exporting Countries and other countries agreed earlier this month to a modest increase in output to dampen a rally in oil prices, which recently hit a 3-1/2 year high.
An increase in supply will reverse some of the output cuts that OPEC and other major producers put in place in early 2017 to end several years of supply glut.
The tightness at Cushing and the potential increase in Gulf exports “both have implications for how quickly the prompt overhang in the market can clear, and thus provide some direction for prices,” Chauhan said.
U.S. producers are continuing to bring more rigs into oilfields already producing at record levels. The U.S. rig count, an early indicator of future output, was up by five in the week to July 6, according to General Electric Co’s Baker Hughes energy services firm.
That brings the total count to 863, up 100 from last year.
Concerns that oil prices will be weighed down by a trade conflict between the U.S. and China have faded to some extent, analysts said.
The United States and China exchanged the first salvos in what could become a protracted trade war on Friday, slapping tariffs on $34 billion worth of each others’ goods and giving no sign of willingness to start talks aimed at a reaching a truce.
Alternative fuels are cleaner and cheaper, the Union minister for road transport and highways said.
Union minister Nitin Gadkari is betting big on alternative fuels that will not only cut India’s burgeoning crude oil import bills but also create additional sources of income for farmers, who comprise more than 50 percent of the country’s population.
Alternative fuels are cleaner and cheaper, the Union minister for road transport and highways said.
Speaking to PTI, Gadkari said the use of ethanol, methanol, bio-compressed natural gas, dimethyl ether and electricity should be increased as alternatives to crude oil, 70 percent of which has to be imported.
“The benefit of these alternative fuels is that its raw material is available in the country and can be sourced in large quantities from the agricultural sector. It will help farmers increase their income too,” Gadkari said
Speaking about the financial strain crude oil imports place on the country, Gadkari said: “We spend Rs 7 lakh crore annually to import crude oil. The economy is facing challenges – one of which is the heavy crude import bill. The fall in the value of rupee against US dollar is also related to this.”
He said increasing production of oil within the country has its limitations, adding that imports comprise 70 percent of crude oil demands while domestic generation stood at only 30 percent.
“At present, ethanol is received from sugar mills and we mix 5 percent of it to petrol. This mix can be raised up to 22 percent but we do not produce ethanol in large quantity. Currently, we get about 4 percent ethanol after crushing one tonne of sugarcane,” Gadkari said.
He said the government has allowed the use of B-heavy molasses for ethanol production to increase its production.
“Once ethanol availability goes up, we can blend more of it with petrol,” Gadkari said. He, however, is not satisfied with these small steps. He said he has decided to go for vehicles which are capable of running on 100 percent ethanol or methanol.
“The US and Canada make flex-engines (dual fuel engines) for buses and other transport vehicles. We can use 100 per cent petrol or ethanol in the same engine. The policy is ready for it. Its implementation will start in a few months,” he said. He cited Nagpur as an example where 35 public transport buses are powered by ethanol.
The minister said private transport vehicle manufacturer Bajaj Auto was set to launch its vehicles that will have flex-engines. Listing his plans to increase the production of ethanol, Gadkari said the government has decided to make ethanol from cotton straws, rice, bagasse, bamboo and municipal waste.
“Once we remove metal, glass and plastic, the rest is biomass, which can be used for ethanol. We have made a policy for it as well,” he said, adding that one of the reasons for Delhi’s air pollution was the burning of straw by farmers.
“Once we start making ethanol out of it, no farmer will burn it. And this will decrease air pollution as well,” he said.
The minister’s second choice for an alternative fuel is methanol, a product that can be obtained from coal. “We have coal fields and we can produce methanol in abundance. We can sell it at Rs 22 per litre. In China, methanol sells at Rs 13 per litre,” he said, adding that companies such as Deepak Fertiliser, state-run RCF and Assam Petroleum produce methanol.
“Mercedes and Volvo have decided to give 10 buses each for Guwahati and Mumbai as part of a pilot project and these will run on 100 per cent methanol,” he said. He added that both ethanol and methanol cause less pollution when compared to petrol and diesel. “While producing methanol, DME (dimethyl ether) gas is also obtained and this can be mixed with LPG and used as a cooking fuel. In the US, 20 percent DME is mixed with LPG. If we do the same here, we can bring down prices by Rs 50 to Rs 60 per cylinder,” Gadkari said.
“You have a methanol economy in China and Israel. Why not in India?”
Electricity was another option, he said and added that his ministry is in favour of running electric buses.
Talking about the mathematics behind the move to go in for alternative fuels, Gadkari said: “Diesel today costs around Rs 60 (per litre), petrol around Rs 80, ethanol is at Rs 47 and methanol at Rs 22. The per unit cost of electricity is Rs 10. The equation is simple and clear.” These alternative fuels, he said, were cleaner and would also bring savings to people.
