India’s concerns slowing RCEP talks

Image: India's concerns slowing RCEP talks
Image Source: asean.org

India’s reservations regarding the potential adverse impact of eliminating duties on its local manufacturing and job creation is understood to be slowing down the Regional Comprehensive Economic Partnership (RCEP) negotiations.

The RCEP is a proposed mega Free Trade Agreement (FTA) involving 16 Asia Pacific nations including India and China, and aims, among other things to liberalise investment norms in the region, besides boosting trade by dismantling most tariff and non-tariff barriers.

Many economists and scholars have pointed that the growth potential of Asia Pacific region is immense and if we remove or reduce barriers in trade, we can reap its full potential. However, the pace at which RCEP (which seeks to remove such trade barriers) negotiations are going, it is not expected to see the light of day any soon.

Also read: Forum concerned at ‘secret’ RCEP talks

Also read: Zero duty to hit Indian dairy industry:Amul

On Indian side, Indian companies and trade bodies, including CII, are pointing out their concerns. They are of the opinion that the RCEP will lead to low or no import duties which would hit the Indian industries and eventually render people jobless. They also opine that it will hit Indian manufacturing industries and eventually ‘Make in India’ initiative would be affected.

About Regional Comprehensive Economic Partnership (RCEP):

To know in detail about the organisation, read this International Organisation: Regional Comprehensive Economic Corridor

Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) b/w the ten member states of the Association of Southeast Asian Nations (ASEAN), viz. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and the six states with which ASEAN has existing free trade agreements, viz. Australia, China, India, Japan, South Korea and New Zealand.

Image: RCEP member countries infographics

RCEP will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues.

Reference(s):

The Hindu (You can download ‘The Hindu’ newspaper for free from a link given on this FB page – UPSC Aspirants Forum)

 

ZERO DUTY TO HIT INDIAN DAIRY INDUSTRY: AMUL

Image: Zero duty to hit Indian dairy industry amul
Image Source: verka.coop

The Indian dairy sector, providing livelihood to 15 crore farmers, would be severely hit if import duties on milk and milk products were eliminated under any Free Trade Agreement (FTA) including the Regional Comprehensive Economic Partnership (RCEP), according to the local dairy cooperative Amul.

Separately, farmers’ organisations have threatened to hold nationwide protests if the dairy sector is opened up under the RCEP – the proposed mega-regional FTA involving 16 Asia-Pacific nations including India – or any other FTA including those proposed separately with Australia or New Zealand.

Also read: Forum concerned at ‘secret’ RCEP talks

Zero duty or reduced import duty under any FTA will risk the indigenous dairy industry due to influx of cheaper dairy products, particularly from RCEP members like Australia and New Zealand. Currently, the duty on milk and milk products ranges from 40% to 60%, which gives the local industry enough protection to build its competitiveness.

Australia and New Zealand control more than 35% of the global dairy trade and more than 50% of the intra-RCEP trade.

About Regional Comprehensive Economic Partnership (RCEP):

To read in detail about RCEP and its pros and cons for our country, read this: About RCEP.

RCEP is a proposed free-trade FTA b/w the ten member states of the Association of South East Asian Nations (ASEAN) and the six states with which ASEAN has existing free trade agreements.

Image: RCEP member countries infographics

RCEP was set up in November 2012 in Cambodia.

Cumulatively, the grouping of 16 nations include more than 3 billion people and has a combined GDP of $17 trillion. It accounts for about 40% of world trade.

 

Reference(s):

The Hindu Newspaper (You can download it for free from a link given on this FB page – UPSC Aspirants Forum)

 

Forum concerned at ‘secret’ RCEP talks

Image:

Civil society organisations and trade experts on Sunday raised concern over the negotiations regarding a proposed mega-regional Free Trade Agreement (FTA) involving 16 Asia-Pacific nations, including India and China.

Technical level talks of the proposed FTA, officially known as the Regional Comprehensive Economic Partnership (RCEP), are being held at the Hyderabad International Convention Centre from July 18 to 28. The RCEP, inter alia, aims to liberalise investment norms as well as boost trade by eliminating/drastically reducing import duties on goods and bringing down ‘barriers’ in the services sector.

After a day-long meeting, the People’s Resistance Forum against FTAs and RCEP, an umbrella body representing farmers, industrial workers and service sector employees, street vendors, HIV-positive persons, tribal people, environmental activists and women’s organisations, among others, said in a statement that the RCEP would have wide-ranging impact on agriculture, services, access to medicines, investment and e-commerce.

About Regional Comprehensive Economic Partnership (RCEP):

To read in detail about the organisation, click here.

Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) b/w the ten member states of the Association of Southeast Asian Nations (ASEAN), viz. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and the six states with which ASEAN has existing free trade agreements, viz. Australia, China, India, Japan, South Korea and New Zealand.

Image: RCEP member countries infographics

RCEP will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues.

 

Reference(s):

The Hindu (You can download ‘The Hindu’ newspaper for free from UPSC Aspirants Forum – a facebook page)

IFCI violated norms in sanctioning loans

Image: CAG
Source: ToI

A CAG report has found that a majority of loans given by IFCI during 2012-16 were either not in line with the General Lending Policy, or were given out without due diligence having been performed. This has led to a 78% increase in non-performing assets (NPAs) over the last three years.

The audit on IFCI was carried out due to the high level of NPAs, which amounted to Rs. 3,544.54 crore as of March 31, 2016, or 13.05% of total outstanding loans.

As per the CAG report, 78% of the above NPAs originated during the last three years.

About Non-Performing Assets (NPAs):

Image: Non-Performing Assets
Image Source: Kalyan City

A non-performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days or more in context of commercial loans while for a period of 180 days or more in context of consumer loans.

Banks are further required to classify NPAs further into Substandard, Doubtful and Loss Assets.

  1. Substandard Assets: Assets which have remained NPA for a period less than or equal to 12 months.
  2. Doubtful Assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
  3. Loss Assets: As per RBI, “Loss assets are considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage (meaning no. 44) or recovery value”.

About IFCI:

IFCI, previously Industrial Finance Corporation of India, is an Indian government owned development bank to cater to the long-term finance needs of the industrial sector. It was the first development finance institution established by the Indian government after independence.

Until the establishment of ICICI in 1991, IFCI remained solely responsible for implementation of the government’s industrial policy initiatives.

In 1993 it was reconstituted as a company to impart higher degree of operational flexibility. IFCI was allowed to access the capital markets directly.

 

Reference(s):

The Hindu Newspaper (You can download for free ‘The Hindu’ newspaper from a facebook page – UPSC Aspirants Forum).

https://en.wikipedia.org/wiki/IFCI_Ltd

 

 

WCO LAUDS INDIA’S TRADE FACILITATION PLAN

Image: WCO Logo

India’s National Trade Facilitation Action Plan (NTFAP), which aims to cut cargo release time for exports and imports as part of measures to boost goods trade, has been described by the World Customs Organisation (WCO) as a ‘best practice’ other nations can adopt.

The WCO was impressed by the fact that as many as 51 of the 76 activities mentioned in the NTFAP “go beyond” the implementation requirements of the WTO’s Trade Facilitation Agreement (TFA). They (51 activities of the NTFAP) have been termed as “TFA Plus” activities.

About NTFAP:

Image: WCO lauds India's trade facilitation plan
Image Source: BusinessToday

 

Finance Minister Arun Jaitley on Thursday (20/07/2017) released the National Trade Facilitation Action Plan (NTFAP).

The Action Plan aims to:

  • transform cross-border clearance ecosystem;
  • to achieve improvement in ease of doing business by reducing cargo release time and cost;
  • promote paperless regulatory environment;
  • promote transparent and predictable legal regime; and
  • improve investment climate through better infrastructure.

With the release of this Action Plan, India looks forward to ensure compliance with the WTO’s Trade Facilitation Agreement (TFA). The Action Plan gives a time bound map, not only for implementing TFA, but also for India’s initiatives for trade facilitation and Ease of Doing Business which goes beyond TFA.

All actions covered under the plan have been categorized by prioritizing the activities into short term, midterm and long term. The National Plan would be monitored by the Steering Committee (the operational arm of the National Committee on Trade Facilitation) chaired by the Revenue Secretary and the Commerce Secretary.

The NTFAP, which is to be implemented b/w 2017 and 2020, is a part of India’s efforts to improve its ease of doing business ranking. While India’s overall rank in the World Bank’s Doing Business Report is 130, it ranks 144 out of 190 nations in the ‘Trade Across Borders’ category.

Continue reading “WCO LAUDS INDIA’S TRADE FACILITATION PLAN”

NSE FILES CONSENT PLEA IN CO-LOCATION CASE

 

National Stock Exchange ImageThe National Stock Exchange (NSE) has filed a consent application with the Securities and Exchange Board of India (SEBI) to settle the co-location matter that has been under regulatory probe for more than two years.

Consent mechanism refers to a settlement procedure wherein entities are directed to pay an amount without admission or denial of any wrongdoing. NSE has used this mechanism to end the more than two-year long co-location matter.

What is this co-location case?

To read in detail about the case, read this: National Stock Exchange’s Co-location Case.

Co-location refers to the facility where brokerages can house their servers inside the exchange to get better speed for trade execution. Since the broker’s server is placed closed to that of exchange, the latency is reduced.

NSE started this facility in February 2010.

In 2015, the SEBI received three complaints against the exchange alleging that certain brokers with co-location servers were getting access to market data before others who also had such facilities within the NSE. The complaint also alleged that the employees of the NSE were also involved in the irregularities.

Since then, the watchdog – SEBI – is investigating the case.

Recently, the watchdog’s chairman – Ajay Tyagi – termed the co-location case as “a serious matter” and said that the NSE may have to refile papers for its Rs. 10,000 crore IPO after addressing issues related to alleged preferential access given to some brokers. The exchange had, in December, filed its draft paper with SEBI for Rs. 10,000 crore IPO and was awaiting approval.

 

Reference(s):

The Hindu Newspaper [You can download ‘The Hindu’ newspaper for free from this facebook page UPSC Aspirants Forum]

USIBC PLANS TO BREAK FREE FROM CHAMBER

Image showing Indian and USA flag
Image Source: The Economic Times

The U.S. India Business Council (USIBC), a forum of companies that seek to promote business cooperation b/w the two countries, has decided to delink from the U.S. Chamber of Commerce and function as an autonomous entity.

The board of the Council made this decision after it found the Chamber’s attempt to control its activities unacceptable.

The Chamber considers the USIBC a “programme” under its umbrella, a view that the board of the USIBC found unacceptable.

The 400-member USIBC is the fastest growing segment of the U.S. Chamber, adding nearly 150 members in the last three years. Master Card, Pepsi, Lockheed Martin, Boeing and Federal Express are on the Board that decided that the USIBC must maintain its policy and financial autonomy in the face of Chamber of Commerce interference.

The U.S. Chamber houses bilateral councils for several other countries, but the USIBC and the US-China Council are the most prominent.

About the US Chamber of Commerce:

Image showing US Chamber of Commerce logo

The US Chamber of Commerce is a business-oriented American lobbying group. It is not an agency of the United States government.

It is the largest lobbying group in the US, spending more money than any other lobbying organisation on a yearly basis.

They lobby for the pro-business policy and advance the business community’s interests.

About the U.S.-India Business Council:

US-India Business Council Logo

The U.S.-India Business Council, formed in 1975, is a business advocacy organisation that enlightens and encourages private sector of both the countries, viz. India and the US to enhance investment flows. It aims to promote bilateral trade relations b/w India and the US through pro-growth policies.

The U.S.-India Business Council serves as a direct link b/w business and government leaders.

 

References:

The Hindu Newspaper

https://en.wikipedia.org/wiki/United_States_Chamber_of_Commerce

https://en.wikipedia.org/wiki/U.S.-India_Business_Council

http://www.usibc.com/about-us