TAXATION UPDATES 10.05.2019

FINANCE MINISTRY PREPARING FULL BUDGET PRESENTATION IN JULY

The Union Finance Ministry has started preparations for the presentation of the full Budget 2019-20 by a new government in July, even as the country is in the midst of the ongoing seven-phased general elections. The Ministry has sent out communications to various industry bodies and other stakeholders inviting their suggestions on direct and indirect taxes related to various sectors. Industry leaders said they expect changes in custom rates and direct taxes as the Goods and Services Tax (GST) has removed most indirect taxes from the purview of the Budget. We expect a lot of changes on direct tax front. If the current government comes back they would bring changes as they have certain things in their mind from previous years. In case a new government comes, they would unlikely go for any major change given that they would have very little time. From November, preparations will need to start for next fiscal's Budget, a senior industry executive said. The Finance Ministry has sought industry comments from by May 10, 2019.

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GST COUNCIL EXTENDS DEADLINE FOR REALTY FIRMS TO OPT FOR OLD GST RATE TILL MAY 20

The GST Council Thursday extended by 10 days till May 20 the deadline for realtors to opt for old GST rates with input tax credit for ongoing projects or shift to new lower tax rates. The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, had in March allowed real estate players to shift to 5 percent GST rate for residential units and 1 percent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019. For the ongoing projects, builders have been given the option to either continue in 12 percent Goods and Services Tax (GST) slab with ITC (8 percent for affordable housing), or opt for 5 percent GST rate (1 percent for affordable housing) without ITC and communicate to their respective jurisdictional officers the same by May 10. The date for exercising the option for residential real estate project to either stay at old GST rate (8 percent or 12 percent with ITC) or to avail new GST rate (1 percent or 5 percent without ITC) is being extended to May 20, 2019 from May 10, 2019, the GST Council said in a tweet. The Central Board of Indirect Taxes and Customs (CBIC) has given the real estate companies a one-time option to choose either of the tax rates and once a realty developer chooses a particular tax rate for ongoing projects he would not be able to modify it. In case, realtors do not exercise the option by May 20, they will be covered under the lower tax rate of 5 percent and 1 percent with effect from April 1, 2019, and will not be entitled to avail tax credit on inputs.

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FMCG DISTRIBUTORS FACE GST SCRUTINY FOR POST-SALE DISCOUNTS

Coca-Cola India’s bottling partner Hindustan Coca-Cola Beverages (HCCB) and distributors of FMCG and consumer durable firms have come under the lens of the goods and services tax (GST) authorities over so-called post-sale discounts offered by manufacturers, said a person familiar with the matter. The authorities have asked why GST was not paid on these discounts, treating them as services by distributors. In some cases, authorities have sought sales details for the past five years from distributors. That’s stumped the industry for which such discounts are commonly used to promote sales, prompting it to lobby the government for relief. A spokesperson for HCCB, which accounts for two-thirds of Coca-Cola India’s volumes, said the company operates in full compliance with regulations. It is critical to note that none of the past assessments, nor the judicial precedents on this issue, have treated the said expenses as being in the nature of any ‘service’ rendered by the distributors to the company, an HCCB spokesperson said in an email. HCCB continued to do business on the same basis, and hence continued to treat discount schemes, deductible from the value on which GST is leviable, as a supply of goods, the spokesperson said. The company has met Directorate General of Revenue Intelligence officials and presented its arguments on the subject, he said. We are standing by for any further clarifications and discussions that may be required, the spokesperson said. As regards the contention of the Directorate General of Goods and Services Tax, HCCB offers to its distributors various types of discounts, price-offs, rate rebates and promotions under various schemes and nomenclatures to promote the sale of products (referred to as discount schemes). These take the form of additional margins, allowances and redistribution margins related to volumes. They are separately given as credit notes, on which GST is not paid. Tax authorities have questioned the discounts, calling them subsidies. Their contention is that this becomes a part of the consideration in the hands of distributors, requiring them to pay tax on a higher amount. Tax experts disagree with this contention. Fundamentally, the nature of discount doesn’t change basis the GST adjustment and where the transactions happen on a principal to principal basis, there is hardly any scope for services provided by the dealer to the manufacturer, said Pratik Jain. In any case, even if GST is levied, it would largely be revenue neutral as the manufacturers will be entitled for input credit, Jain added. The industry has told the government that post-sale discounts should not be treated as a consideration for services provided by distributors to manufacturers. They also want the inclusion of post-sale discounts in any amount paid by the manufacturers to distributors or retailers for reduction in the price of products, in line with the schemes offered by the manufacturer to promote sales. Ideally, the amounts passed on to dealers and distributors are nothing but post-sale discounts which are clearly covered under the credit note provisions. The allegation that these amounts represent a service seems untenable, said Rashmi Deshpande, partner, Khaitan & Co. These price-offs extended to distributors on account of reduction in prices of products are purely in the nature of post-sale discounts and treatment of such discounts as a ‘subsidy’ is not in consonance with the provision of law.

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CAR DEALERS ON TAXMAN’S RADAR OVER DISCOUNTS & FREEBIES TO CUSTOMERS

The indirect tax department is scrutinising discounts and freebies offered to customers by major car dealers across the country on suspicion that they may have availed input tax credit on those freebies without paying GST leading to revenue leakage for the exchequer. The department has issued preliminary notices to some of the top car dealerships, seeking details of discounts offered by them including freebies, people with direct knowledge of the matter told. Based on the information sought by the tax department in the preliminary notices, tax experts said the investigation is around taxes paid and input tax credit claimed during transition from old tax framework to the goods and services tax (GST) regime. Under transitional credit, at the time of paying GST a company can claim credit on taxes such as excise duty already paid on inputs under the previous tax regime. The focus of the investigation seems to be on whether there is a revenue leakage for the department in the way dealers paid GST and availed input tax credit on the freebies and discounts offered to customers, said Suresh Nandlal Rohira. Discounts were offered on cars just before GST was rolled out and the tax department is seeking information regarding discounts offered, credit availed, GST paid and what were the tran 1 (transitional credit form) submissions, said Rohir.

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GOVT LIKELY TO ORDER SFIO PROBE INTO JET OVER FUND DIVERSION ALLEGATIONS

The Ministry of Corporate Affairs (MCA) is likely to ask Serious Fraud Investigation Office (SFIO) to probe the alleged fund diversion and writing off of investments by Jet Airways. The fresh investigation follows recommendation given by MCA's Mumbai regional office after inspecting the airline's books. In Jet Airways' preliminary probe, Registrar of Companies RoC (Mumbai) told the MCA that it has found violation of Companies Act and unaccounted investments, official sources said, adding the natural way forward is an SFIO probe. ANS had reported on Wednesday that the RoC Mumbai had submitted a report and that appropriate action would be taken after its examination. The SFIO will now look into Jet's written-off investments in various subsidiary companies and try to source where they have landed. The SFIO will also start the process for seeking personal appearance of the company's then top management in an attempt to find out why the company suddenly posted loss in the fiscal year 2018 after a string of profits. The company had received fund infusion in the form of Etihad 's investments twice during the period. In his complaint, whistleblower Arvind Gupta had alleged that Jet Airways' promoters were trying to siphon Rs 5,125 crore from the airline's books. The RoC Mumbai has completed the books' inspection of Jet Airways as part of its prelimnary investigation before turning to SFIO for a full-fledged investigation.

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CENTRAL GST UNION DEMANDS GOVT TO FILL UP 38,581 VACANT POSTS

A large number of posts are lying vacant in the Central Board of Indirect Taxes and Customs (CBIC) across the country. These posts need to be urgently filled up to increase the revenue collections and streamline operations. Existing employees are heavily overburdened with increasing workload leading to inefficiency, said union in Nagpur. According to the data given by Directorate General of Human Resource Development (DGHRD), Central Board of Indirect Taxes and Customs, the total sanctioned strength in the department was at 91,729 posts whereas the working strength in the department was only 53,148 posts as on January 1, 2019. This has resulted in 38,581 posts lying vacant in the department. The vacancies are around 42 per cent of the sanctioned strength. Most surprisingly is the fact that compared to last years figures the number of vacant posts have shot up significantly. As per DGHRD data as on January 1, 2018, total sanctioned posts were at 84,866 whereas the working strength was at 51,137 posts, resulting in 33,729 posts lying vacant. The vacancy was about 40 per cent last year which has shot up to 42 per cent this year. The data does not include strength of Cost Recovery posts. In such situation, the Government is requested to start special recruitment drive to fill up these vacant posts in the interest of the nation, said Sanjay Thul. Furthermore, a letter in this regard has been sent to the Prime Minister’s Office (PMO) in New Delhi on May 7, requesting to intervene at the earliest and solve the issue. Similarly, in Central GST Nagpur Zone, more than 100 posts are lying vacant at various levels. From the past one year, the senior posts like Commissioner of Customs and Commissioner of Audit are being managed by employees holding additional charge. Similarly, a large number of posts of inspectors, superintendents and various other levels are also lying vacant which need to be filled up at the earliest, Thul said. The officers and staff working in the department are overburdened due to insufficient workforce, resulting in huge amount of work pending at various levels in the department. Revenue collections could also be hampered due to lack of adequate workforce. Government should start recruitment immediately so that work vacant positions can be utilised. It will reduce workload of employees. Recruitment drive will give opportunity to the army of unemployed youths in the country, Thul added.

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RBI MUST FACILITATE EASY, LESS EXPENSIVE LOANS: EEPC INDIA

With US-China trade tensions leaving the global financial markets and trade in a state of anxiety, it is time Indian exporters are enabled to stay competitive by the Reserve Bank of India which should facilitate an easy and less expensive bank loans more so for the MSME exporters, the engineering exporters' apex body, EEPC India has said. We are in the midst very anxious global economic environment marked by ever-rising US-China trade tensions, instability in the crude oil prices which tend to leave forex market highly volatile. In this trading landscape, the Indian exporters, particularly the small enterprises in the engineering sector, are facing severe cost and other challenges. We have made a comprehensive presentation to the RBI for carving out an exporter-friendly interest rate structure and expect the central bank to advise banks accordingly and notify the changes, where required, EEPC India chairman Mr Ravi Sehgal said. The EEPC India has suggested to the RBI that the Interest Equalisation Scheme for the exporters become horizontal in nature by covering the entire MSME sector, so that the linkage with exports goes away and does not fall foul of the WTO’s norms as well. At present, the scheme is for Rupee Export Credit with two variants.A 5% interest equalization is for the MSME Rupee export credit while there is a 3% interest equalization for 416 tariff lines and Merchant Exporters who export items falling under these specific tariff lines. However, as the Interest Equalization Scheme is export specific, it is WTO non-compliant and should accordingly be re-aligned. In its presentation to the RBI, the EEPC India also suggested that the banks should not ask for external credit rating as they are doing internal rating. and banks be advised not to charge loan application processing and credit Limit renewal fee. Besides, when export bills are purchased/discounted under ECGC policy, in case of non- realisation on the due date, banks should not recover the money by debiting the exporter’s account. Rather they should wait for payment beyond due date otherwise they should wait for claim to be settled by ECGC. RBI should ask banks not to insist for discounting of Usance Export Bills.

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CBIC ORGANISES MEETING OF REGIONAL HEADS OF CUSTOMS

Central Board of Indirect Taxes and Customs (CBIC) is organising a meeting of the Regional Heads of Customs Administration of Asia Pacific Region of the World Customs Organisation (WCO) in Kochi from 08th to 10th May, 2019. India is hosting this meeting in its capacity as Vice Chair of the Asia Pacific region that it assumed on 1st July, 2018 for a two-year period. The meeting will take stock of the progress being made in carrying forward the programmes and initiatives of WCO to promote, facilitate and secure the cross-border trade in the region and the capacity building and technical assistance required to achieve this goal. Reflecting the importance of the meeting, Customs delegations from more than twenty countries of the Asia Pacific region are participating, along with senior officials of the WCO and its regional bodies, i.e. Regional Office for Capacity Building (ROCB) and Regional Intelligence Liaoning Office (RILO). Chairman, CBIC reiterated the strategic principles guiding India, in its role as the Vice Chair of the Asia Pacific region, which are –

·       Greater communication and connectivity within the region,

·       Harness technology advancements,

·       Inclusive approach, and

·       Consensus on core issues.

Mr Das highlighted the key focus areas on which considerable emphasis should be placed, such as implementation of trade facilitation measures, cross-border e-commerce transactions, building capacity of small island economies and the on-going review of the Revised Kyoto Convention (RKC).

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BUILDERS TO REFUND GST ON CANCELLATION OF FLATS BOOKED IN FY19

Builders will have to refund GST paid by home buyers in case he cancels the flat booked in the last fiscal and will be allowed to avail credit adjustment for such refunds, the tax department has said. This clarification forms part of the FAQ released by the Central Board of Indirect Taxes and Customs (CBIC) on real estate sector. The FAQ has been issued to clear the air over the migration provision, which permits the real estate players to shift to 5 per cent GST rate for residential units and 1 per cent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019. For the ongoing projects, builders have been given the option to either continue in 12 per cent Goods and Services Tax (GST) slab with ITC (8 per cent for affordable housing), or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC. The FAQ said developer will be able to issue a ‘Credit Note’ to the buyer as per provisions of Section 34 in case of change in price or cancellation of booking. Developer shall be able to take adjustment of tax paid in respect of the amount of such Credit Note, the FAQ said. Giving example, it said that a developer who paid GST of Rs 1.20 lakh at the rate of 12 per cent in respect of a gross amount of booking of Rs 10 lakh before April 1, 2019, shall be entitled to take adjustment of tax of Rs 1.20 lakh upon cancellation of the said booking on or after April 1, 2019, against other liability of GST. The FAQ further said that once a real estate developer opts for the either old GST taxation regime or the new one for ongoing projects manually with the jurisdictional Commissioner, he will not be permitted to modify it. With regard to purchase of land from owner by the developer commonly termed as Transfer of Development Right (TDR), the FAQ said GST would not apply on agreements entered into on or after April 1, 2019. However, for TDR agreements entered into prior to April 1, 2019, the developer will not be able to claim credit for the GST already paid. TDRs were taxed at 18 per cent in the GST regime. Tieing in the liability to pay tax on TDR’s based on agreements entered before April 1, 2019, irrespective of the fact that projects have been initiated under new tax regime without any tax credit, would result in a huge tax cost for already ailing reality sector, Mohan said. The FAQ further said that all towers registered as different projects under RERA will be treated as distinct projects, for which the builder will have to maintain separate books of accounts. In case a real estate developer has collected 12 per cent GST from home buyers beginning April 1, 2019, but later opted for 5 per cent rate, the builder will have to refund the extra tax (7 per cent) collected to the buyer. The FAQ, however, did not clearly spell out whether the 7 per cent tax refunded by the builder will be adjusted against his GST liability. Real estate firms have time till May 10 to communicate to their respective jurisdictional officers whether they want to continue with the old GST rates with input tax credit, failing which they will be deemed to have migrated to new tax rates.

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GOVT MAY REWRITE STARTUP ESOP FRAMEWORK

The Department for Promotion of Industry and Internal Trade (DPIIT) has begun discussions with the finance ministry on taxing shares granted by startups under their employee stock option plan only at the time of sale as part of a package aimed at making the country a hub for startups. At present, Esops are taxed, as income, when employees exercise their options and convert them to shares. We have recommended that Esops be taxed when the actual sale happens, a senior government official told. The finance ministry will examine the matter when it looks at proposals for the next budget. The government already has a special carve-out in the tax regime for recognised startups, which could be useful in making specific changes to their stock option framework. The government has in the past four months unveiled several measures to shield startups from the so-called ‘angel tax’. In case of listed companies, an individual can sell shares on the stock exchange and raise resources to pay tax on conversion of stock options into shares. However, in the case of startups, there is no ready market or buyer to whom such shares can be sold. Esop holders also face other issues, such as restrictions on the period of holding of shares or on entry in case of a new investor. This limits their capability to arrange funds and pay tax on the perquisite value of shares. Industry wants tax to be levied only when shares are ultimately sold, when the company lists or when employees sell to an incoming investor. The issue of Esops being taxed at the point of exercise is very important for the startup community as it prevents startups from issuing share certificates to its employees, who as per existing rules, become liable immediately to pay taxes based on a valuation that is mostly on paper and could get revised downwards, said Sachin Taparia.

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DELHI HIGH COURT PAVES WAY TO UNTANGLE GST KNOT FOR SOLAR FIRMS

Solar power developers are hopeful of relief in GST rates after the Delhi High Court's order directing authorities to redress their grievances. The court last week directed Central Board of Indirect Taxes and Customs (CBIC), Ministry of New & Renewable Energy and GST Council to look into their concerns. As per the court order, on a petition being filed by the Solar Power Developers Association (SPDA), a consultative meeting will be held with CBIC within the next four weeks for the solar power producers to put forward their grievances. Ministry of New & Renewable Energy may also take part in the meeting. Post the deliberations, a report will be placed before GST Council for consideration upon those points. Currently, solar power producers are subject to GST in the ratio of 70:30, that is 70% is considered as goods and attracts 5% tax rate, while 30% is accounted as services, which is taxed at 18%. Hence, the effective tax rate works out to be 8.9%. An SPDA spokesperson said, We are thankful to GST Council for bringing necessary clarity on the taxability of various types of contracts for supply of goods and services in the solar power generating system. But with the 70:30 ratio of supply of good and services, the industry is ending up paying a higher effective tax rate of 8.9%, which is impacting the financial viability of solar projects. We welcome the decision of Hon'ble High Court of Delhi and as directed, we shall bring relevant facts and figures to the table before CBIC and hope to reach an amicable and fair settlement on the issue.

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BUILDER’S CALL WILL DECIDE YOUR GST RATE

Your GST liability will only come down to 5% on the remaining instalments of your under-construction apartment, if your builder decides to move to the new mechanism. Under the revised regime, the GST Council has lowered the levy from 12% to 5% (and from 8% to 1% for affordable housing) but taken away the benefit of tax credit on inputs such as cement, paints and steel as builders were seen to be pocketing it and charging 12% flat GST. In a set of FAQs, the government has clarified that you can hope to move to a 5% or 1% rate for the remaining portion of the under-construction flat. So, if you had paid 40% of the value of the flat up to March 31 and your builder decides to move to the new regime, you can opt for the new rate. But in case the builder sticks to the one with ITC (input tax credit), make sure that the benefits of tax credit accrue, which will mean a lower than the 12% rate. The government also said that a one-time option has been given to builders to move to the revamped structure but those who do not submit their option by Friday, will automatically move to the 5% rate without ITC, and 1% for affordable homes. It has also reiterated that 80% of the value of goods and services have to be sourced from registered suppliers. For calculating this threshold, the value of services by way of grant of development rights, long term lease of land, floor space index, or the value of electricity, high speed diesel, motor spirit and natural gas used in construction of residential apartments in a project shall be excluded, the 16-page FAQs said.

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RAHUL PROMISES TO BRING PETROL, DIESEL UNDER GST

Rahul Gandhi said on Wednesday that key petroleum products will be brought under the ambit of Goods and Services Tax (GST) to lower inflation if the party came to power after the Lok Sabha elections. We are aware that the common man is distressed due to rising prices. In order to provide relief to them, Congress will bring petrol and diesel under GST, which will help in checking rising inflation, Gandhi said in a Facebook post.

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CBDT EXTEND TENURE OF NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL AND ECONOMIC WELFARE

Whereas in exercise of the powers conferred by section 35AC of the Income-tax Act, 1961 (43 of 1961) read with rule 11G of the Income Tax Rules, 1962, the Central Government constituted the National Committee for Promotion of Social and Economic Welfare vide notification of the Government of India, Ministry of Finance (Department of Revenue) number S.O. 5(E) dated the 2nd January, 1992 published in the Gazette of India Extraordinary Part II Section 3, Sub-Section (ii) as amended by notification numbers S.O. 926(E) dated the 22nd December, 1994, notification number S.O. 892(E) dated the 23rd December, 1997; notification number S.O. 444(E) dated the 21st May, 2001; notification number S.O. 1258(E) dated the 9th November, 2004; notification number 227(E) dated 1st February, 2008; notification number S.O. 218(E) dated the 1st February, 2011; notification number S.O. 654(E) dated the 4th March, 2014 and notification number S.O. 1021(E) dated the 31st March, 2017. And whereas, in terms of sub-rule (1) of Rule 11G of the Income Tax Rules, 1962, by the aforesaid notification, fourteen persons were appointed by the Central Government as Chairman and members of the said Committee; And whereas, the term of the Chairman and members of the aforesaid Committee ended on 30th March, 2018. And whereas, the term of the Chairman and members of the aforesaid Committee was extended for a further period of six months i.e. upto 30th September, 2018 vide notification number S.O. 1658(E) dated the 17th April, 2018. And whereas, the term of the Chairman and members of the aforesaid Committee was further extended for a further period of six months i.e. upto 31st March, 2019 vide notification number S.O. 5160(E) dated the 5th October, 2019. Now, therefore, in exercise of the powers conferred by section 35AC of the Income Tax Act, 1961 (43 of 1961) read with sub-rule (1) and (3) of rule 11G of the Income Tax Rules, 1962, the Central Government hereby extend the tenure of persons as Chairman and members of the National Committee for Promotion of Social and Economic Welfare for a further period of six months w.e.f. 1st April, 2019 i.e. till 30th September, 2019.

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EXTEND DEADLINE FOR REALTORS WITH ONGOING PROJECTS: TAX PRACTITIONERS

Extend the deadline for declaration of ongoing real estate projects for GST rates, demanded tax practitioners of the state. They have also asked apex body for Goods and Services Tax (GST) to allow manual filing since online utility is not available. The deadline for registration is expiring on May 10. GST Council in March this year had announced 1 per cent GST for real estate projects under the affordable housing category and 5 per cent GST for rest of the real estate projects. For this, realtors need to register their projects with the GST Council by May 10. With just two days left, no online utility is available on the GST network. Tax Advocates Association of Gujarat has written a letter to GST Council, Commissioner of Central GST (CGST) and Commissioner of State GST (SGST) that since there is no way that the projects can be registered, deadline for application should be extended and tax authorities should also allow manual applications said Sunil Keswani. There are two categories under affordable housing — those up to 60 square meters and those up to 90 square metres. They are charged 1 per cent GST without the tax credit. The rest are under general category and are charged 12 per cent GST without the tax credit. Vijay Shah, said that non-compliance in GST will also affect compliance in other aspects like Real Estate Regulation Act (RERA). If there is a delay because of registration with GST, there would be a delay in the project, which will violate RERA guidelines and the realtor will have to pay penalty. Why would realtors pay for the fault of the government? If the government can integrate GST with income tax, why can't it integrate GST with RERA so that faults in GST does not attract penal actions in RERA, asked Shah.

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NOW, OWNERS MAY HAVE TO PAY DIFFERENT GST FOR IDENTICAL FLATS

The taxman has asked builders to choose before May 10 the new goods & services tax (GST) rate for ongoing realty projects. The concessional rate, which came into effect April 1, was set at 1% for affordable houses and 5% for others, from the earlier 8% and 12%, respectively. Developers of under-construction projects could opt for the new or previous rate, but now they have been asked to exercise this option before Friday in the prescribed format. This means, two people buying identical flats in the same apartment complex but in different buildings or towers, could technically end up paying different GST rates. If the developer does not choose the rates before May 10, then the new GST rates will kick in automatically, the Central Board of Indirect Taxes and Customs said. The rules of the concessional scheme, including transitional ones, will apply, it said. In the case of projects that begin on or after April 1, no such option is available, and these residential apartments will compulsorily have to pay the new 1% and 5% rates. Developers need to carefully evaluate as to which scheme is more efficient and clearly communicate to the customers accordingly, said Siddharth Mehta. The builder, not the buyer, gets to choose the new rate regime. In effect, the tax component of buyers could vary from building to building even if they opt for flats in the same apartment complex, experts say. Buyers would now face situations where buildings under construction in the same complex could be subjected to differing rates of GST as builders could exercise the option of availing input tax credits on some buildings and foregoing the credits on others, said M S Mani. If flats are booked before April 1but cancelled, the tax paid can be adjusted against any other GST liability, including the 1% or 5% rates outgo. However, if the cancelled flats are resold after April 1, the credit availed earlier on procurements will be reversed. In projects where one building is registered under RERA but construction, booking and occupancy of buildings vary then the rate will be determined for the project as a whole, Deduction of land would be onethird and not on the actual land value, the CBIC said.

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DEMONETISATION AND GST-HIT DATAWIND SHUTS HYDERABAD FACILITY

DataWind, maker of the world’s cheapest Android-based tablet Aakash, has closed down its two manufacturing facilities in India, after business shrank due to demonetisation in 2016, Goods and Service Tax (GST)-related issues, besides the country’s duty structure, leading to a loss of some 1,000 jobs. Suneet Singh Tuli told that the twin challenges had derailed the $35-Aakash tablet computer maker’s strategy to Make in India for the rest of the world, using the country’s human resource and cost-effective operations. Our target segment -- those at the bottom of the pyramid -- was severely impacted after demonetisation and has continued to suffer since then, Tuli said. While people familiar with the matter say both facilities -- at Hyderabad and Amritsar -- have been shut down, Tuli said that the Amritsar plant is still operating, but at far lower capacities. In 2017, the British-Canadian company had already halved its production at its Hyderabad unit, where production has completely halted now. These people said that DataWind has been forced to hold up vendor payments as well as to those employees who have parted ways, while its debt has mounted to Rs 250 crore. Tuli, however, said that the Rs 250-crore debt on its books was inter-company, and that was the investment that has been made from the Canadian parent company into India operations. He further said that the company was fighting a slew of court cases to recover its dues. Subsequent to demonetization, India Post stole and misappropriated over 30,000 units for which court cases are still pending and recovery is awaited, Tuli said. Once booming India’s tablet market has been reduced to a third, impacted by demonetisation of currency, and existing levies on components and higher GST slab, said Tuli. GST of 18% tablets versus 12% on smartphones created a disincentive for customers to buy a 7-inch tablet versus a 6-inch smartphone, Tuli explained. The refunds associated with GST, he said, were still pending and the company was forced to approach the courts to make recoveries.

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AMIT SHAH COULD BE HOME MINISTER, THINK BEFORE VOTING: WARNS KEJRIWAL

Arvind Kejriwal on Friday said that if the BJP comes back to power then the current party president, Amit Shah, would be the Union home minister. He tweeted that people should think what will happen to a country that has Shah as its home minister. Please think about that before voting, he tweeted. With his tweet, he also tagged a post of a polling agency tracking Indian electoral trends which claimed Amit Shah is positioning himself for the role of home minister if Modi returns to power. The agency tweet further stated that ex Chief Economic Advisor Arvind Virmani and former RBI Governor Bimal Jalan can make a good finance minister.

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NYAY IS LIKE GIVING MONEY FOR NO WORK: RAGHUVANSH PRASAD SINGH

Raghuvansh Prasad Singh has raised doubts on the minimum income scheme (Nyay) proposed by the Congress although both the parties are contesting the ongoing Lok Sabha polls in Bihar as part of an opposition alliance. Singh, who is contesting the election from Vaishali, told that there is no match between Nyay and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) implemented when he was rural development minister in the Congress-led UPA government. MGNREGA is extension of food for work scheme. It is based on purushartha (object of human pursuit) while Nyay talks of giving money free without any work. Nyay is like minting money as per wish and distributing it, Singh told. The five-term MP said, A famous British economist has argued that nothing should be given for free. The basic idea of MGNREGA was work. Giving freebies is not in the interest of the country; other parties may propose some more freebies. MGNREGA addressed the problem of unemployment to a great extent. In its manifesto for the ongoing Lok Sabha polls, the Congress has promised to give Rs 6,000 a month to 50 million poorest of the poor families in the country under Nyay. Singh, who is a professor and Phd in mathematics, said, RJD and Congress-led Mahagatbandhan (grand alliance) will corner SC votes. In five phases of polls, we have seen SC voters have not voted for JDU-BJP alliance in the state. In this election, the BJP-JDU led alliance will be wiped out and we will get highest number of seats. Singh further said, BJP and JDU have nothing to talk about their work. They are seeking votes in the name of Prime Minister Narendra Modi. If you talk about a constituency, they will say Modi will do it. Tell me - Is Modi fighting from Vaishali? The RJD leader said the government in Bihar claims that its liquor prohibition law has done wonders, but the reality is that in the name of prohibition common people are harassed. As many as 250,000 people were put in jail in last three years, smuggling of liquor rose manifold and there is police raj in the state, he said. Liquor is freely available and prohibition law is just a mockery. Chief minister Nitish Kumar is claiming that a large number of voters will vote for him due to prohibition law. However, you will see it will not fetch him even five votes, said Singh.

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NITI AAYOG 'REJECTS' CHARGES THAT IT HELPED PM MODI IN POLL CAMPAIGNING

Government think tank the Niti Aayog is learnt to have rejected allegations made by the Congress and Aam Aadmi Party that it helped provide write ups to the Prime Minister's Office in advance about places Narendra Modi was set to campaign. Responding to an Election Commission communication, the body is learnt to have said the allegations are unfounded, sources aware of the development said Thursday. The EC had written to Niti Aayog CEO Amitabh Kant on May 4 flagging the allegations made by the two parties. The think tank's reply, received Wednesday, has been placed before the full commission for a decision. The poll panel wants to make it clear whether the model code of conduct, that prohibits use of government machinery for electioneering purposes, was violated. Only the prime minister is exempted from the provision that bars ministers from combining official visits with electioneering.

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ED PROBES JET AIRWAYS' FREQUENT FLYER LOYALTY PROGRAMME DEAL WITH ETIHAD

The Enforcement Directorate (ED) is investigating whether Jet Airways violated the foreign exchange regulations while signing a $150-million (over Rs 900 crore) deal with its strategic partner Etihad Airways in 2014 for a loyalty programme business. The probe agency rounded up senior executives, including the airline’s chief financial officer, earlier this week to check the nuances of the more than five-year-old transaction under the provisions of the Foreign Exchange Management Act (Fema), sources in the know said. In 2014, the Gulf carrier had picked up a 50.1 per cent stake in Jet’s frequent flyer programme. The board of Jet Privilege Private Limited (JPPL) had allotted 50.1 per cent shares to Etihad and the remainder to Jet. We have sought information from Jet about the deal and the foreign investment it received for its loyalty business, said an ED official privy to the development. According to him, the investment was made without an approval from the government and Reserve Bank of India (RBI). Any foreign investment beyond 49 per cent requires such a nod.

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NIRAV MODI DENIED BAIL FOR A THIRD TIME, TO REMAIN IN 'UNLIVEABLE' UK JAIL

Fugitive diamond merchant Nirav Modi was denied bail by a UK court on Wednesday for the third time in his extradition case to India to face charges in the Punjab National Bank fraud & money laundering case amounting to up to USD 2 billion and will continue to be lodged in a London jail described by his lawyers as unliveable. His bail, which had already been rejected twice before by Westminster Magistrates' Court in London, came up for a third attempt before Chief Magistrate Emma Arbuthnot, who ruled that while the doubling of security offered by Modi's lawyers did amount to a change in circumstances in order for her to hear the renewed bail plea, she still had similar concerns as before that he would fail to surrender before the court. This is a large fraud and the doubling of security to 2 million pounds is not sufficient to cover a combination of concerns that he would fail to surrender (if bail is granted), said Judge Arbuthnot. The next hearing in the case will now take place on May 30, the previously scheduled date for a case management hearing in Modi's extradition case.

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SUPREME COURT SEEKS SENIOR LAWYER’S RESPONSE ON FOREIGN FUNDS RECEIPT AS ASG

The Supreme Court on Wednesday sought the Centre's response to a PIL seeking a SIT probe into alleged receipt of foreign funds by senior advocate Indira Jaising when she was holding the sensitive post of additional solicitor general during the UPA regime from 2009 to 2014. Responding to the developments in court, NGO Lawyers' Collective, in a release signed by Jaising, said the petition was intended to victimise her for taking up the case of a dismissed woman employee of the SC who has levelled allegations of sexual harassment against the CJI. The case was obvious victimisation of her as she has taken up the issue of procedure adopted in relation to the allegation of sexual harassment against the CJI, the release said. Appearing for Lawyers' Voice, the petitioner against Jaising, senior advocate Purushendra Kaurav cited the home ministry's orders of May 31, 2016, and November 27, 2016, and told the court, Jaising and Anand Grover (secretary and president of NGO Lawyers Collective) in violation of Foreign Contribution Regulation Act (FCRA) have indulged in influencing the democratic process of the country in political arena by unauthorisedly lobbying with MPs and media for passing certain legislations and to influence policy decisions. The petition said this was done while Jaising was occupying the office of the additional solicitor general of India which can play a role in changing the policy of the government through binding legal opinions. The petitioner accused the Centre of failing to take the probe, on since 2016, into FCRA violation by the NGO and its office-bearers to its logical conclusion. A bench of Chief Justice Ranjan Gogoi and Justice Deepak Gupta issued notices to the Centre, Jaising, Grover and Lawyers Collective and sought their responses in six weeks. The bench also said pendency of the petition in the SC was no bar for investigating agencies to act in accordance with law. The Lawyers' Collective statement said Jaising had taken up the issue of alleged procedural irregularities in dealing with the sexual harassment complaint against the CJI in her capacity as a concerned citizen, a senior member of the bar and women's rights advocate, without commenting on the merits of the allegations. Considering that Jaising has been publicly vocal on the issue of due process of law in relation to the conduct of the in-house inquiry, the CJI ought to have recused himself from hearing the matter, the NGO said. Jaising has been arguing many matters successfully before the CJI-led bench even when she was publicly critical of procedural lapses by both the CJI and the in-house panel. A few days ago, senior advocate AM Singhvi had argued on behalf of former Kolkata police commissioner Rajeev Kumar challenging CBI's application seeking his custodial interrogation. After an elaborate argument by Singhvi, Jaising stood up before the CJI-led bench to argue for the cop. When the bench said only one counsel could argue for one litigant, Jaising said while Singhvi argued for the ex-police commissioner, she would argue for Rajeev Kumar as an individual. The CJI-led bench bent procedure and allowed Jaising to argue much to the chagrin of CBI, which wondered how Rajeev Kumar would have two identities - one as ex-police commissioner and the other as an individual - when it came to his alleged role in the investigations conducted by the SIT he headed in the chit fund scam cases. The PIL alleged that from orders passed by the Centre in 2016, it could not be ruled out that Jaising abused her official position as an ASG and accepted such foreign contribution as a reward for forbearing any official act and/or official function or to favour or disfavour any person rendering any services to the state or to influence a public servant and/or pass binding direction in form of legal opinion to any government department favouring and furthering the goals of the foreign donors. It accused Lawyers Collective of using foreign contributions to bear the expenses of dharnas, rallies and campaigning to influence policy decisions. The PIL said foreign funds were received by Jaising, Grover and their NGO predominantly from Ford Foundation and Open Society Foundation. It is a matter of public knowledge that Ford Foundation acts as a frontal organisation of the premier international investigating agency of a country of its origin. The said association has been known for playing ostensible roles in destabilising the economics and political establishments of other countries through participative process and/or by influencing public servants and public opinion of the targeted country, it said. The PIL said Jaising could also fall foul of Prevention of Corruption Act for receiving foreign funds while being an ASG for the Union government from July 2009 till May 2014, during which she received a remuneration of Rs 96.60 lakh from the government. It is impermissible in law for a law officer of the country to remain on the rolls of a private entity being paid out of foreign contributions for undisclosed purposes. She also travelled abroad and her travel expenses were borne from the contributions received by Lawyers Collective from foreign sources, the PIL alleged. Lawyers' Collective, through Jaising, strongly disputed mis-utilisation of foreign funds and pointed out the hurry with which the registry bend the standard operating procedure for listing of petitions to get this particular PIL listed within days of defects getting cured. It said, Though the (PIL) petitioner's advocate did not orally seek any interim orders, the court has passed an order to the effect that pendency of the petition will not come in the way of government agencies proceeding in the matter.

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SC: CORPORATES SEEM TO HAVE PENETRATED JUDICIARY TO MANIPULATE COURT ORDERS

In yet another instance of court orders being altered, a direction to six suppliers of controversial builder Amrapali to appear before Supreme Court-appointed forensic auditor Pavan Aggarwal was changed to ask the firms to present themselves to another auditor. A bench led by Justice Arun Mishra expressed shock at how the order was changed and said it indicated that some influential corporate houses had managed to penetrate the judiciary to manipulate court staff. Interestingly, Justice Mishra's bench has already ordered a probe into allegations that fixers and middlemen tried to manipulate judicial proceedings. The judge found on Wednesday that his order too was being manipulated. The court said this had happened earlier also when an order passed by another bench headed by Justice RF Nariman in industrialist Anil Ambani's contempt case was changed, leading to two court staffers being sacked and a criminal case being lodged. It has been done in the most mischievous manner. It is very unfortunate. What is happening here? They are trying to manipulate our order sheet. Very serious things are happening in court. Some more people have to go and removing 2-3 persons is not sufficient. It is destroying the judiciary and it cannot be allowed. We come and go but the institution will remain, Justice Mishra said.

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USE OF SMUGGLED GOLD IN LS POLLS IN DELHI? CUSTOMS, I-T DEPT ON HIGH ALERT

Fearing use of gold and cash in Lok Sabha elections in Delhi, the Customs department has increased vigil and started sharing details of seizures with Income Tax and poll authorities, officials said Wednesday. The Customs department is keeping a hawkeye especially on passengers coming from the Gulf sector -- infamous for gold smuggling cases-- to check for any suspicious gold and cash movement the officials said. The cases of smuggling of foreign currencies are also under the scanner of the Customs, an official said. Delhi's Indira Gandhi International (IGI) airport witnesses a large number of gold smuggling cases. Gold worth over Rs 110 crore was seized from smugglers by Customs officials at the IGI airport during 2018, according to official data. Customs officials are maintaining a strict vigil at the airport to check such movement, the official said. The Customs department is also sharing data on seizure of gold weighing 1 kg or more with the Income Tax department and poll authorities, he said. It shall also submit a report of such cases to Delhi poll authorities, it said. A total of 340 cases of gold smuggling, an increase of 58 per cent as compared to the cases filed in 2017, were registered by the Customs department at the Delhi airport in 2018. In these, 402.48 kg of gold, valued at Rs 113.83 crore, were seized and 262 persons were arrested. There were 57 cases of smuggling of foreign currencies during the year, in which foreign currencies worth Rs 22.27 crore were seized. A total of 38 persons were arrested in these cases.

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IT RAID AT MAHARSHI PRODUCER DIL RAJU’S OFFICE

Ahead of the release of Mahesh Babu starrer Maharshi, Income Tax department raided producer Dil Raju’s office in Hyderabad on Wednesday. The IT officials visited Dil Raju’s office based on the news in the media about Maharshi’s staggering business. According to reports, the Vamshi Paidipally directorial did over Rs 130 crore theatrical and non-theatrical business. As of now, the officials are examining the records related to the respective movie business.

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BENGALURU AUTO DRIVER WITH RS 1.6-CRORE VILLA GOT MONEY AS CHARITY, SAYS IT DEPT

A Bengaluru-based auto driver, who purchased a Rs 1.6 crore villa in an elite gated society in Whitefield, got the money to purchase the house as charity, the Income Tax Department has confirmed. Nalluralli Subramani, 37, had been under the scanner of the I-T Department who suspected that the auto driver had political links. Subramani, however, had attributed his good life to the largess of one of his passengers. An investigation began after Subramani was served with a notice under the Prohibition of Benami Property Transactions Act, 1988. I-T officials had also questioned the developer of the colony at Jatti Dwarakamai in Mahadevapura. Mahadevapura MLA Arvind Limbavali, who is also BJP’s Karnataka general secretary, was also under the scanner after possible links between him and Subramani were examined during the investigation.

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COMMERCE MINISTRY INTERACTS WITH INDIAN BUSINESS COMMUNITY IN AFRICA TO BOOST TRADE TIES

To build an effective engagement with the Indian Diaspora in Africa to further deepen and strengthen India-Africa trade ties, the Commerce Ministry and Indian High Commissions along with the Embassies of eleven African countries arranged an interaction over Digital Video Conference (DVC) over two days, with the Indian business community in Africa. Africa has a huge demand for new business models for market entry, stable market access, entrepreneurship and investments in transport, telecom, tourism, financial services, real estate and construction, said Commerce Ministry in an official release. This initiative of the Commerce Ministry emphasizes the need for a multipronged strategy for further enhancing trade and investment ties between the two regions.

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HC REFUSES TO GRANT BAIL TO PETER MUKERJEA, ALLOWS HIM POST-OP THERAPY

The Bombay High Court Wednesday said it cannot grant bail to former media baron Peter Mukerjea, an accused in the killing of his step-daughter Sheena Bora, but directed jail authorities to take him for his post-operation cardiac rehabilitation sessions. A vacation bench of Justice Riyaz Chagla said it was not inclined to order the release of Mukerjea at the Asian Heart Institute, where he underwent a bypass surgery, submitted in a report to a special CBI court last month that he has recovered from the operation. I am, however, inclined to grant limited protection to the applicant (Mukerjea). It will be appropriate to permit the applicant to undergo post-operation cardiac rehabilitation sessions and physiotherapy at the Asian Heart Institute, Justice Chagla said in the order. The applicant shall be taken to the hospital under police escort for 26 sessions, as prescribed by the Asian Heart Institute, the court said. Without the post-operation cardiac rehabilitation sessions and physiotherapy, he (Mukerjea) will die. Jail is not a proper place to be kept in after undergoing bypass surgery, he argued on Wednesday. The jail authorities shall take him (Mukerjea) to the hospital for the post-operation cardiac sessions. He need not be released on bail for this purpose, Khan argued.

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SC AGREES TO HEAR ESSAR POWER MP PLEA ON SURRENDERING JHARKHAND COAL MINE

The Supreme Court on Wednesday agreed to hear Essar Power MP’s plea against the government decision to invoke its bank guarantee worth Rs 200 crore but said would not call upon the Centre to return the guarantee while the hearing was on. The top court will also hear the company’s plea to return the Tokisud North coal mine in Jharkhand. The Ministry of Coal had issued notices to Essar Power and GMR Energy to confiscate their bank guarantees worth up to Rs 900 crore following a judgment by the Delhi High Court rejecting the companies’ petition to surrender their coal blocks. The ministry had then decided that if the two companies moved Supreme Court in the designated time, they would withdraw the notice or else implement it. Essar Power MP had on Wednesday moved the court alleging that the said bank guarantee had been invoked by the government and the same should be returned to them during the pendency of the case. Ranjan Gogoi said that though they would not interfere with the decision of the government to invoke the bank guarantee, they would hear Essar Power MP’s plea to surrender the coal mine. The Rs 900-crore bank guarantees are for the two blocks of GMR and one of Essar. While Essar won in Jharkhand, GMR had placed winning bids for Talabira-I coal mine in Odisha and Ganeshpur mine in Jharkhand. The CERC’s directive was done to ensure low power rates from the units associated with the blocks after the power companies had won the said coal blocks by quoting extremely low rates during the reverse bidding. The directive restricted higher energy charge by coal block winners and allowed only downward revision of tariff. This had hit the power companies, who could have benefited by escalating the other component of the tariff, to compensate the low rates quoted for the block.

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EXPORTS OF CERTAIN COMMODITIES TO MALDIVES EXEMPTED FROM RESTRICTIONS IN 2019-20

Exports of specified quantity of essential commodities to Maldives have been exempted from any kind of domestic restrictions or prohibition in the current fiscal, according to an official notification issued Tuesday. Export of potatoes, onion, rice, wheat flour, sugar, dal and eggs has been permitted to Maldives under bilateral trade agreement between India and Maldives during the period 2019-20 with effect from April, directorate general of foreign trade said. It said that the export of these items to Maldives will be exempted from any existing or future restrictions/prohibition.

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PAK ARRESTS 34 INDIAN FISHERMEN DAYS AFTER RELEASING 55 AS GOODWILL GESTURE

Pakistan has arrested 34 Indian fishermen for allegedly violating the country's territorial waters, nearly 10 days after releasing 60 prisoners from India as a goodwill gesture, officials said Wednesday. The fishermen, arrested on Tuesday, have been handed over to the police, a Pakistan Maritime Security Agency spokesman said. They will appear before a judicial magistrate who will decide on their judicial remand, he said. According to the list of prisoners exchanged by India and Pakistan in January, there are 347 Pakistani prisoners in Indian jails, 249 of whom are described as civilians and 98 fishermen, the report said.

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Gujarat cops must follow SC directive on dealing with arrestees: High Court

Acting on a public interest litigation (PIL) questioning multiple incidents of the police parading accused in handcuffs, in contravention of Supreme Court guidelines the Gujarat High Court on Tuesday directed the state police to ensure proper compliance with the directions laid down by the apex court in the case of DK Basu versus State of West Bengal on how police should deal with an arrestee. The directions came from the division bench of Acting Chief Justice AS Dave and Justice Biren Vaishnav, which also ordered the state government to issue a circular within a week for all police personnel, so that they are aware on how they should behave and deal with arrested-accused. Notably, the PIL filed in July 2018 had pointed out 10 separate incidents from the state whereby the accused were tied with rope, paraded, made to do sit-ups, crawl on the ground and seek public apology. The petitioner had submitted to the court that the action of police personnel involved in all the 10 cases was in contravention of the apex court guidelines and violates the human rights of the arrested-accused. The incidents were reported from Vadodara, Rajkot, Mehsana, Ahmedabad, and Bhavnagar. The court, after issuing the directions, disposed of the matter on Tuesday after the state government filed a detailed affidavit assuring the court that it has initiated proceedings against police personnel involved in all the 10 incidents mentioned in the PIL. The affidavit submitted by additional director general of police (law and order) Sanjay Srivastava also provides that all the 10 incidents are being probed by high-ranking officials and also updated the court about the latest status of the probes in all the 10 cases. The affidavit also provides that the director general of police has proposed actions to take care of the problem. These includes issuing an exhaustive circular mandating the guidelines issued by the apex court at the stage of arrest and also during investigation; training module on directions issued by Supreme Court for newly-recruited armed and unarmed police officers; and narrating the apex court guidelines to police personnel of all concerned police stations during the first week of every quarter while conducting the roll call.

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Want economic slowdown to end? Go shop

That Indians haven't been spending on big-ticket items like houses or cars or bikes has been known for some time. That they are not flying as much as they should be is also not new. But now it seems Indians have started saving on their soap and shampoo budgets too. Consumption is sputtering across a range of products, with sales volumes dropping to multi-quarter lows.

Wanted shoppers

Passenger car volumes have dropped in nine of the past 10 months. Growth was down to 2% in the last fiscal year, the lowest in five. Two-wheeler volume growth fell to the lowest since demonetisation in November 2016. Volume growth at leading fast-moving consumer goods (FMCG) companies that derive more than a third of sales from rural areas has dropped to a six-seven-quarter low. Indian airlines carried 11.6 million passengers in March, a mere 0.1 percentage point higher than a year earlier, representing the slowest increase since June 2013.

Shopping and economy Consumption has been one of the engines that has been driving the economy in the absence of private investment and exports. And the postponed purchases and penny-pinching is showing on India’s economic health. It may show up in your financial health too if you work for companies in the affected sectors when you get your appraisal letters.

Why is India not spending? Experts cite three key factors. Farm income growth has been weak for over two years with prices having stayed low, as reflected in the marginal rise in agricultural inflation. The growth in nominal gross domestic product (GDP) for agriculture was 2% in the October-December 2018 period, the slowest in any quarter since April-June 2012. Second, the benefit of price reduction due to the reduction in goods and services tax (GST) has run its course. The third reason is the liquidity crunch sparked by the Infrastructure Leasing & Financial Services (IL&FS) default in September last year.

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INDIA, CHINA OFFICIALS TO DISCUSS TRADE RELATED ISSUES ON THURSDAY

Senior officials of India and China will meet on Thursday in New Delhi to discuss trade-related issues particularly matters concerning the agriculture sector, an official said. The meeting assumes significance as India is seeking greater market access for its manufactured and agricultural products in the Chinese market to bridge the widening trade deficit. Recently, India has identified and shared with China a list of 380 products, including horticulture, textiles, chemicals and pharmaceuticals products, as their shipments hold huge export potential. Increasing exports of these products will help India narrow the widening trade deficit with China, which stood at $50.12 billion during April-February 2018-19.

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US MAY HOLD MOVE TO WITHDRAW GSP TILL NEW INDIA GOVT TAKES OVER

The US has indicated that it could hold its proposed withdrawal of incentives on annual Indian exports of $5.6 billion under the so-called generalised system of preference (GSP) until the formation of the new government here, a source told. The rollback of the export incentives worth $190 million a year was to kick in from around mid-May. Wilbur Ross on Tuesday asked India to remove both tariff and non-tariff barriers for American companies and eliminate data localisation restrictions that weaken data security and increase the cost of doing business. Ross, who is on a visit to India, echoed President Donald Trump’s charge of India being a tariff king. India’s average applied tariff rate of 13.8%, and that remains the highest of any major world economy. The very highest, Ross said. He claimed that India imposed a 60% tariff on automobiles, 50% on motorcycles and 150% on alcoholic beverages. Its bound tariff rates (the highest rate it can charge under the WTO framework) on farm products averaged 113.5%, with some as high as 300%, he added. India’s import duty on ICT products such as network routers and switches and parts of cellular phones are as high as 20%, while the US rate for these same products is zero. These are not justified percentages. They are way too high, he rued. Without mentioning the new FDI rules in e-commerce, notified by New Delhi, that have caused unease among American companies such as Amazon and Walmart, Ross said: currently, US businesses face significant market access barriers in India. These include both tariff and non-tariff barriers, as well as multiple practices and regulations that disadvantage foreign companies. Countering the US allegation, analysts have said even the US imposes very high import duties on several products, including 350% on tobacco and 164% on peanuts. Even countries like Japan impose up to a 736% duty on select products and Korea up to 807%. Importantly, India’s average tariff of 13.8% is much lower than the average bound rate of 48.5% it is allowed to charge under the WTO framework. Developing countries, as such, require better tariff protection than the developed ones, and the WTO acknowledged this need as well, they added. As for the claim of high Indian tariff on farm items, a paper submitted by India, China and some others at the WTO points out that the domestic support per farmer in the US was $60,586 in 2016, a massive 267 times of India’s ($227). Huge subsidies have led to huge competitive advantage of farm products of developed countries in the global market, which has forced developing ones (like India) to offer limited tariff protection to their farmers from the onslaught of heavily-subsidised imports. While the secretary acknowledged that US’ exports of goods to India last year jumped by $7.4 billion, or an impressive 29%, to $33 billion, New Delhi’s exports to Washington, too, rose 12% to $54 billion, representing a trade deficit in goods of $21 billion. For its part, India wants the US to acknowledge that it was one of the few countries (unlike China) with which Washington’s trade deficit actually shrank for a second straight year in 2018. Also, India remains the world’s fastest-growing major economy, which will continue to generate enormous.

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EACH WORD OF TRUMP’S TARIFF TWEETS WIPED $13 BILLION OFF GLOBAL STOCKS

It was a total of 102 words that erased about $1.36 trillion from global stocks this week. Equity markets across the world were roiled by President Donald Trumps tweets on Sunday that he would boost tariffs on Chines goods. Not only did they spark losses, but volatility came roaring back with a vengeance, with the Cboe Volatility Index rising 50 percent in two days to breach 20 for the first time since January. Risks surrounding U.S.-China trade relations -- which were not on investors radar as late as last week -- came flooding back. Markets had been lulled into a state of complacency in recent weeks as confidence grew the trade discussions were going well, major central banks were dovish and U.S. corporate earnings were coming in better-than-expected. The latest shift adds a new dimension of uncertainty to what most market participants were assuming was a done deal, said Eleanor Creagh. Something shifted over the weekend, and it could be wishful thinking to keep drinking from the glass half full. The pull back in markets was due given how hard global equities had rallied and investors may have been looking for an excuse to take some profits, he said.

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FINANCE COMMISSION MEETS EMINENT ECONOMISTS IN MUMBAI

The economists put forth a diverse array of issues for the consideration of the Commission; the salient issues are the following:

·       There is a need to adopt a total view on the borrowing requirements of the consolidated public sector. This should encompass off-budget transactions, borrowings of the public sector undertakings and contingent liabilities of both the Union and State Governments. This is important from many angles, including debt sustainability, fiscal transparency and proper coordination of fiscal and monetary policies.

·       It should be carefully examined whether the increased tax devolution by the 14th Finance Commission has led to improvements in the social spending of State Governments.

·       There is possibly a mismatch between the demand and supply of state development loans, which can affect the cost of borrowings of state governments in the next five years. Given the maturity profile of state loans, there can also be repayment pressure on these loans during the period of the 15th FC.

·       Indications are that the fiscal deficit to GSDP ratio of the States taken as a whole is gradually declining, after the spike seen in 2015-16 and 2016-17.

·       However, states are at vastly different stages of debt consolidation. Reaching the FRBM targets would involve an extremely difficult adjustment path for a few states. However, it is important that the Union Government, and State Governments as a whole, consolidate their debt position. According to some economists, expenditure adjustments alone cannot bring about the required adjustment; fresh revenue-raising efforts should also be made. Proceeds from auctioning of mines could be a potential source of revenue.

·       The quality of budgeting needs to improve. Governments should not budget for a low fiscal deficit, knowing fully well that it cannot be achieved. Projections of revenues from GST is tricky, but not impossible if one can work with the available data.

·       Economists also made suggestions regarding the formula for horizontal devolution of Central taxes among States and the provision of grant-in-aid to the State Governments. These suggestions related to weight of income distance in the devolution formula, the need to consider the quality of forests in addition to its quantity and the need to consider and incentivise human development through a system of grants or tax devolution. A few economists also urged that intra-state inequality is another aspect that begs for the consideration of the Finance Commission.

·       Given the shift from the use of 1971 population to 2001 population, some economists pointed towards the need for instituting an incentive structure in devolution. The composition of population in terms of proportion of elderly in population is becoming significantly different across States.

·       Some economists urged Finance Commission to consider reinstating the system of specific-purpose grants to ensure development of social sectors and other sectors that require handholding. Finance Commission may also consider the need for achieving comparable service delivery standards across the country as its guiding principle.

·       A suggestion was raised for Finance Commission to consider giving priority to the development of a very robust statistical system in the country in its recommendations.

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INDIA’S DUTIES LOWER THAN WTO PROMISES

Wilbur Ross may have chosen against giving the full picture while pointing to India’s high import duties, when governments over the years have lowered customs duties that are significantly below India’s commitments to the World Trade Organization (WTO) and in line with several other developing countries. While Ross, like his boss Donald Trump, chose to highlight the import duty on alcoholic drinks and automobiles, he remained silent on his government’s own track record on products such as tobacco, peanuts and footwear (see graphic), said trade experts and former negotiators. Every country maintains high tariffs on certain products to protect its farmers or to promote manufacturing. India is no different, said a source, pointing to Korea’s over 800% duty on products such as sweet potato, quinoa and some cereals. As indicated by the government during negotiations, some of the duties, such as those on electronics goods, cannot be lowered as third countries such as China would benefit since the share of American companies was estimated at $415 million, out of total shipments of $20 billion into the country. Similarly, the criticism that data localisation is a barrier to American companies is seen to be flawed as financial services players have already adjusted to rules mandated by the RBI, while e-commerce players such as Amazon, Uber and Google are thriving in India. Most of these companies have a negligible or no presence in China and promptly comply with regulations in the EU and Russia but they always try to browbeat Indian officials using American government pressure, said a former negotiator. Under Trump, the US government has been putting pressure on India and China to lower tariffs to allow more exports of Indian goods, while simultaneously tightening visa rules that make it tougher for Indian professionals to seek jobs.

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BALAKOT BIGGEST ANTI-TERROR OPERATION IN INDIA'S HISTORY: RAJNATH SINGH

The Balakot air strikes on the Jaish-e-Muhammed terror training camp in Pakistan was the biggest anti-terrorist operation in the history of India, Union Home minister Rajnath Singh said. The senior BJP leader also slammed the Aam Aadmi Party (AAP) government in Delhi alleging that it did not fulfil its promises made to the people after coming to power in 2015. Singh lambasted the opposition parties for seeking to know the exact number of terrorists killed in the Indian Air Force strikes, days after the Pulwama attack in south Kashmir which claimed the loves of 40 CRPF personnel. They (opposition parties) say the air force should have counted the bodies. Being the home minister and having solid intelligence input, I can say with full conviction that the Balakot air strikes was the biggest anti-terrorist operation in the history of India, Singh claimed. He also asserted the air strikes was the biggest anti-terror operation in the world. India under Prime Minister Narendra Modi has stopped sending dossiers to Pakistan after terror attacks and now responds directly. The days of sending dossiers are gone, now we will ensure action against the terrorists, he told the rally in Badarpur area. Hitting out at the ruling AAP in Delhi, he said: There would be no crisis of water, electricity, schools and colleges, if it (AAP) had fulfilled its promises made to the people before coming to power. Delhi will develop only after the AAP is finished in the next Assembly elections in the national capital, Singh said.

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EX-CIC REJECTS PM MODI'S CLAIM THAT RAJIV GANDHI USED INS VIRAAT FOR VACATION

 Wajahat Habibullah Thursday dismissed the claims of Prime Minister Narendra Modi that Rajiv Gandhi used INS Viraat as a personal taxi for a holiday with his friends and family and said the aircraft carrier was stationed in Lakshwadeep for security reasons. Habibullah, who was administrator of Lakshwadeep from August 1987, recalled that the then prime minister Rajiv Gandhi had come to Kavaratti to attend a meeting of the Island Development Authority where the Island Development Council was to be inaugurated and no family member was present with him except his wife Sonia Gandhi. After the inauguration, the Council had to meet members of the Union Cabinet in connection with setting up of panchayati raj institutions in the islands, Habibullah told PTI. Two things have been confused. There was a meeting of Island Development Authority in Kavaratti, which is the headquarters of Lakshwadeep. Second, after the official program, there was a holiday of Prime Minister Rajiv Gandhi, his family and friends in Bangaram which is a separate island, he said. The controversy erupted after Prime Minister Modi, at a rally here on Wednesday, accused the Gandhi family of using warship INS Viraat as its personal taxi for a holiday when Rajiv Gandhi was at the helm. No other family member or friend of the Prime Minister were aboard that helicopter. I have photographs of the visit to substantiate that. While I was with the Prime Minister, my wife was giving company to Sonia Gandhi, he said. INS Viraat or any other naval ship had nothing to do with that but naval presence was there because of security reasons as the prime minister was present. Whether it was INS Viraat or any other ship, I cannot remember, he said. When asked about the recent comments of Prime Minister Narendra Modi on the issue, Habibullah said, He (Modi) should check facts before making such a statement. The Navy was made to host the Gandhi family and Rajiv Gandhi's in-laws, and a helicopter was also deployed in their service, he claimed, adding that when a family becomes supreme, the country's security is at stake.

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UK FIRM OFFERS BID FOR GROUNDED JET AIRWAYS, KEEN TO PARTNER ETIHAD

London-based investment firm Adi Partners on Wednesday formally placed its bid for the cash-starved Jet Airways, a day before the bid deadline ends. The company, which is led by Sanjay Viswanathan, former chief executive officer of Bangalore-based mid-cap information technology (IT) firm Sonata Software, said it was willing to tie up with Abu-Dhabi-based Etihad Airways for the bid. Etihad makes a great partner because we need a strong airline to turn around Jet. I think Etihad will also be interested because they also need a growing market like India, Vishwanathan said over telephone. According to Vishwanathan, the firm has bid for 24 per cent stake in Jet as it wants to avoid an open offer. Primarily, we will be bidding for 24 per cent stake because we don’t want to trigger an open offer as it will cause a big-value leakage. The 24 per cent stake will be good enough to run the company if we get a right partner, he said. Sources involved in the bidding process confirmed that the entity had submitted a bid but expressed doubt over its acceptance. Yes, a bid from the entity has reached us but the firm was not shortlisted during the expression of interest (EoI) process. But considering that there is no other formal bid tomorrow, lenders may take a legal view to see if the bid can be considered, the person said. According to him, there is a possibility that a fresh bid will be called. If there is no formal bid by tomorrow, it is possible that the lenders will call a fresh bid with new terms and conditions, he added. However, Vishwanathan said his entity had submitted the EoI as an individual entity and there was some misunderstanding which saw Adi Partner’s proposal being ruled out. Unfortunately, there were some miscommunications that we were aligned with Goyal. That queered the pitch for us, with the lenders and we were disqualified. We reached out to SBI Caps and clarified our position. It speaks volume of our expertise that despite not being in the EoI process we were able to submit a binding bid. I am very confident that it will be accepted as ours’ would be the well thought out and most attractive bid, he said. After getting shortlisted the four bidders — Etihad Airways, TPG Capital, Indigo Partners and NIIF — developed cold feet citing that they see no value in the company as Jet’s slots and aircraft have been given away to other carriers. But Vishwanathan said he was not perturbed by this, instead it gives a fresh chance to restructure the airline’s network. Jet needs a revamp of their operations and network. What we now have is an opportunity to rebuild the network with a clean balance sheet, he said.

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TRUMP'S TARIFFS ON $200-BN CHINESE GOODS TAKE EFFECT; CHINA TO STRIKE BACK

US President Donald Trump's tariff increase to 25 percent on $200 billion worth of Chinese goods took effect on Friday, and Beijing said it would strike back, ratcheting up tensions as the two sides pursue last-ditch talks to try salvaging a trade deal. China's Commerce Ministry said it deeply regrets the US decision, adding that it would take necessary countermeasures, without elaborating. The hike comes in the midst of two days of talks between top US and Chinese negotiators to try to rescue a faltering deal aimed at ending a 10-month trade war between the world's two largest economies. Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume talks on Friday. The Commerce Ministry said that negotiations were continuing and that it hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation. With no action from the Trump administration to reverse the increase as negotiations moved into a second day, US Customs and Border Protection imposed the new 25 percent duty on affected US-bound cargoes leaving China after 12:01 a.m. EDT (0401 GMT) on Friday. Goods in the more than 5,700 affected product categories that left Chinese ports and airports before midnight will be subject to the original 10 percent duty rate, a CBP spokeswoman said. The grace period was not applied to three previous rounds of tariffs imposed last year on Chinese goods, which had much longer notice periods of at least three weeks before the duties took effect. This creates an unofficial window, potentially lasting a couple of weeks, in which negotiations can continue and generates a 'soft' deadline to reach a deal, investment bank Goldman Sachs wrote in a note. Given this detail, downside to sentiment might be slightly more muted than if the tariff increase came with a 'hard' deadline. This also leaves an opportunity for the two sides to reach an agreement in the next couple of weeks, though challenges remain. Trump gave US importers less than five days notice about his decision to increase the rate on the $200 billion category of goods to 25 percent, which now matches the rate on a prior $50 billion category of Chinese machinery and technology goods. The biggest Chinese import sector affected by the rate hike is a $20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $12 billion worth of printed circuit boards used in a vast array of US-made products.

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THERESA MAY REPEATS DEEP REGRET OVER JALLIANWALA BAGH, BUT NO APOLOGY

Prime Minister Theresa May has repeated the UK government's deep regret over the Jallianwala Bagh massacre to mark the 100th anniversary of the British colonial era attack in Amritsar on Vaisakhi. The massacre took place at Jallianwala Bagh in Amritsar (undivided Punjab) during the Vaisakhi festival on April 13, 1919, when troops of the British Indian Army under the command of Colonel Reginald Dyer opened fire at a crowd of people holding a pro-independence demonstration, leaving scores dead. Prime Minister May repeated words from her House of Commons statement last month as she referred to the shameful scar on British Indian history. We deeply regret what happened and the pain inflicted on so many people, she told a gathering of the Indian diaspora. She said: No one who has heard the accounts of what happened that day can fail to be deeply moved. No one can truly imagine what the visitors to those gardens went through that day one hundred years ago. It was, as the former prime minister H H Asquith described it at the time,'one of the worst outrages in the whole of our history'. She added: But although I haven't yet been to one of these parades I have been lucky enough to be a frequent guest at gurdwaras in my constituency and across the UK and can not only imagine the warm Punjabi welcome at this time of year but just how good the food must be. This of course is a particularly important year for the whole of the Sikh community, 2019 marks the 550th anniversary of the birth of Guru Nanak, the first Sikh guru, in 1469. And I am sure we will see many events to celebrate this later in the year.

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WE WERE CLOSE TO A DEAL WITH CHINA BUT BEIJING BEGAN RENEGOTIATING: TRUMP

The US and China were getting very close to a deal but Beijing began renegotiations, President Donald Trump has said even as the world's two largest economies seem nowhere near an agreement to end their bruising trade war. The Trump administration on Friday increased tariffs on $200 billion worth of Chinese products from 10 per cent to 25 per cent despite China threatening to retaliate. Trump on Thursday told reporters that such a move is necessary to hold China to previous commitments. The US and China are locked in a trade war since Trump imposed heavy tariffs on imported steel and aluminium items from China in March last year, a move that sparked fears of a global trade war. In response, China imposed tit-for-tat tariffs on billions of dollars worth of American imports. The US President said: We were getting very close to a deal, then they started to renegotiate the deal. We can't have that. Trump appeared to be fine with the situation wherein the US does not enter into a trade deal with China.

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PICHAI GIVES HIS WORD OF HONOUR: GOOGLE WILL NEVER SELL DATA TO 3RD PARTIES

Google will never sell any personal information of its users to third parties, CEO Sundar Pichai has said, amidst growing global concern over the misuse of personal data by some social media giants. In an opinion piece in The New York Times published on Tuesday, he also said that privacy cannot be a luxury good that is only available to people who can afford to buy premium products and services. The 46-year-old Indian-origin CEO of Google said he believed that privacy was one of the most important topics of our time. People today are rightly concerned about how their information is used and shared, yet they all define privacy in their own ways, he said. To make privacy real, we give you clear, meaningful choices around your data. All while staying true to two unequivocal policies: that Google will never sell any personal information to third parties; and that you get to decide how your information is used, Pichai said. Pichai said he has seen this first-hand as he talked to people in different parts of the world. To the families using the internet through a shared device, privacy might mean privacy from one another. To the small-business owner who wants to start accepting credit card payments, privacy means keeping customer data secure. To the teenager sharing selfies, privacy could mean the ability to delete that data in the future, Pichai said. He noted that privacy was personal, which makes it even more vital for companies to give people clear, individual choices around how their data is used. He said legislation will help companies like Google to work toward ensuring that privacy protections are available to more people around the world. But we're not waiting for it. We have a responsibility to lead. And we'll do so in the same spirit we always have, by offering products that make privacy a reality for everyone, Pichai said. Ideally, privacy legislation would require all businesses to accept responsibility for the impact of their data processing in a way that creates consistent and universal protections for individuals and society as a whole, he said. He said Google has worked hard to continually earn people's trust by providing accurate answers and keeping their questions private. We've stayed focused on the products and features that make privacy a reality for everyone, he said in the opinion piece. For everyone is a core philosophy for Google; it's built into our mission to create products that are universally accessible and useful. That's why Search works the same for everyone, whether you're a professor at Harvard or a student in rural Indonesia, he said. Our mission compels us to take the same approach to privacy. For us, that means privacy cannot be a luxury good offered only to people who can afford to buy premium products and services. Privacy must be equally available to everyone in the world, Pichai underlined. He noted that even in cases where Google offered a paid product like YouTube Premium, which includes an ads-free experience, the regular version of YouTube has plenty of privacy controls built in.

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CHINA’S INVESTMENT IN US DROPS 83 PER CENT AMID GROWING MISTRUST

Chinese direct investment in the United States dropped 83 per cent last year, pushed down by growing mistrust between the world’s two biggest economies. In a report out Wednesday, the Rhodium Group research firm said that China sank USD 5 billion last year into direct investments in America, down from USD 29 billion in 2017 and a record USD 46 billion in 2016. The numbers fell partly because Beijing sought to rein in deeply indebted investors and partly because the U.S. regulators have stepped up scrutiny of Chinese investments. Rhodium estimates that China dropped deals worth USD 2.5 billion last year because they wouldn’t pass muster with the Committee on Foreign Investment in the United States, which reviews foreign investments with national security implications. Chinese investment in the U.S. information and communications technology industry plunged to USD 200 million last year from USD 2.5 billion in 2017. US direct investment in China, meanwhile, dipped to USD 13 billion from USD 14 billion in 2017. US investment in the Chinese information and technology industry dropped to USD 2.1 billion last year from USD 4.1 billion in 2017 and USD 4.3 billion in 2016.

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TRUMP SAYS CHINA 'BROKE TRADE DEAL', VOWS NOT TO BACK DOWN ON NEW TARIFFS

Donald Trump said on Wednesday that China broke the deal it had reached in trade talks with the United States, and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing stops cheating our workers. The US Trade Representative's office announced that tariffs on $200 billion worth of Chinese goods would increase to 25 percent from 10 percent at 12:01 a.m. (0401) GMT on Friday, right in the middle of two days of meetings between Chinese Vice Premier Liu He and Trump's top trade officials in Washington. The Chinese side deeply regrets that if the US tariff measures are implemented, China will have to take necessary countermeasures, China's Commerce Ministry said on its website, without elaborating. The world's two largest economies have been embroiled in a tit-for-tat tariff war since July 2018 over U.S. demands that the Asian powerhouse adopt policy changes that would, among other things, better protect American intellectual property and make China's market more accessible to US companies. Expectations were recently riding high that a deal could be reached, but a deep rift over the language of the proposed agreement opened up last weekend. Reuters, citing US government and private-sector sources, reported on Wednesday that China had backtracked on almost all aspects of a draft trade agreement, threatening to blow up the negotiations and prompting Trump to order the tariff increase.

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MOST AUSTRALIANS SEE CLIMATE CHANGE AS BIGGER THREAT THAN TERRORISM: STUDY

Majority of Australians rate climate change as a bigger threat to the country's interest compared to global terrorism, a study has found. Almost 64% of Australians have called climate change as 'a critical threat' - an increase of six points from 2018 and 18 points since 2014, according to a poll by Lowy Insititute on Australian attitudes on Climate change. Six in 10 Australians have said that 'global warming is a serious and pressing problem and we should begin taking steps now even if this involves significant costs,' continuing the dramatic reversal of attitudes since 2012, researchers said. Climate change topped the chart of a dozen possible threats to Australia's vital interests in the next ten years. Other issues were Cyberattacks from other countries with 62 per cent seeing it as a threat apart from international terrorism (61 per cent) and North Korea's nuclear programme (60 per cent). The poll also confirmed Australians were more concerned about climate change this election than at any time. The poll was conducted for four days from March 12, both over the phone and online, and drew the results from a sample of 2,130 Australian adults. Only 28 per cent of people said climate change should be dealt with gradually, and 10 per cent said we should not act on climate change until we are sure it's a problem- the lowest numbers since 2006 and 2008, respectively. 




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CS Meetesh Shiroya