Finance minister Arun Jaitley has said the BJP was “never” in favour of allowing foreign direct investment (FDI) in multi-brand retail and a recent government notification only published the extant policy on it. “Let’s be very clear. What the DIPP (department of industrial policy and promotion) did was publish the existing policy and so far what was decided by the UPA is continuing, the fact that the BJP was never in favour of this decision is publicly known,” Jaitley told PTI in an exclusive interview. He was replying to a question on the DIPP in its FDI policy compendium stating that 51% foreign direct investment was permitted in the multi-brand retail sector. “If somebody asked me what is your view, I said BJP is never in favour of this,” he said. Asked that what is stopping the government to reverse the decision of the UPA government on the sector, he said: “Leave something for the government also.” On 12 May, the DIPP retained the previous UPA government’s decision allowing foreign retailers to open multi-brand stores with 51% ownership, in its consolidated FDI policy released. Although the previous government had allowed FDI in multi—brand retail, only one investment proposal of the UK—based Tesco was cleared. The BJP manifesto had said, “Barring the multi—brand retail sector, FDI will be allowed in sectors wherever needed for job and asset creation, infrastructure and acquisition of niche technology and specialised expertise.” Jaitley also evaded giving a direct reply to a question on what the government’s response will be if a retailer was to submit an FDI proposal. “When it will come, I will (respond),” he said. “I have replied what I have said, the DIPP circular has reproduced what is the existing policy. At the same time if somebody asked me what is your view, I would say the BJP is never in favour of this,” he added. (PTI)
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Seeking to mobilise gold held by households and institutions, government today came out with a draft scheme under which a person or entity can earn interest by depositing the metal with banks. As per the draft guidelines, minimum gold deposit is proposed at 30 gms and the interest earned on it would be exempt from income tax as well as capital gains tax. A person or institution holding surplus gold can get it valued from BIS-approved hallmarking centres, open a Gold Savings Account in banks for a minimum period of one year and earn interest in either cash or gold units, the draft said. The Finance Ministry has sought comments from stakeholders on the draft gold monetisation scheme by June 2. The gold monetisation scheme, which is proposed to be initially introduced only in selected cities, was announced in the Budget this year by Finance Minister Arun Jaitley. "The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks/other dealers would also be able to monetise this gold," Jaitley had said. India is one of the largest consumers of gold in the world and imports as much as 800-1,000 tonnes of the metal each year. The stock of gold in India that is neither traded nor monetised is estimated to be over 20,000 tonnes. The scheme is aimed at mobilising idle gold held by households and institutions, provide a fillip to the gems and jewellery sector and reduce reliance on import of gold over time to meet the domestic demand. Under the proposed scheme, the bank interest to the customers will be payable after 30/60 days of opening of the Gold Savings Account. "The amount of interest rate to be given is proposed to be left to the banks to decide. Both principal and interest to be paid to the depositors of gold, will be 'valued' in gold," the draft norms said. It added, as example, that if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms. With regard to redemption, the guidelines said that customers will have the option of getting it back either in cash or in gold, which will have to be exercised in the beginning itself that is, at the time of making the deposit. The tenure of the scheme has been proposed at a minimum 1 year and with a roll out option in multiples of one year, it said, adding that it would be like a fixed deposit, breaking of lock-in period will be allowed. "To incentivise banks, it is proposed that they may be permitted to deposit the mobilised gold as part of their CRR/SLR requirements with RBI. This aspect is still under examination," it said. Cash Reserve Ratio and statutory liquidity ratio are mandatory requirement which banks have to follow as per RBI directive. Elaborating other benefits of the scheme, the guidelines said, banks may sell the gold to generate foreign currency. The foreign currency thus generated can then be used for onward lending to exporters or importers. Bank may convert mobilised gold into coins for onward sale to their customers and can be used for lending to jewellers, it said. The government is also planning to commence work on developing an Indian Gold Coin, which will carry the Ashok Chakra on its face. Such a coin is expected to help reduce the demand for coins minted outside India and help recycle the gold available within the country. As far as lending to jewellers is concerned, a Gold Loan Account has to be opened on the basis of the terms and conditions of the banks. "When a gold loan is sanctioned, the jewellers will receive physical delivery of gold from the refiners. The banks will in turn make the requisite entry in the jewellers’ Gold Loan Account," the draft guidelines said. They also said that banks will enter into a tripartite MoU with refiners and purity testing centres, that are selected by them to be their partners in the scheme. The MoU will be required to clearly lay down the details regarding payment of fee, services to be provided, standards of service and the details of the arrangements between the banks, refiners and purity testing centres, it said. (PTI)
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The Finance Ministry could have sidestepped a damaging multibillion-dollar tax row with foreign investors if it had acted on regular warning letters that officials had been sending since as long ago as September. The warnings went unheeded, according to senior sources in the tax department and finance ministry, until the dispute with overseas investors over the imposition of the minimum alternate tax (MAT), which had not previously been applied to them, hammered the country's stock and bond markets and dented the business-friendly image of Prime Minister Narendra Modi. Investor lobbies and tax lawyers estimate the bill for international funds and banks could be as high as $8 billion. Modi's government has been scrambling to contain the fallout since foreign funds started publicising their fight against MAT in mid-April, but it could have headed off the row if it had acted on the cautionary letters from its tax officials. One official's letter seen by Reuters, sent in November, asked for direction and warned that once tax notices were issued there could be "large ramifications". "They were sitting on a powder keg waiting for it to explode," said a senior official at the tax department. The finance ministry last week asked officials to stop issuing new MAT notices, but that is some eight months after the first letter and roughly six weeks after a storm sparked by the sending of almost 70 initial claims totalling Rs 6oo crore. A spokeswoman for the Central Board of Direct Taxes said it was "totally incorrect to say that the Finance Ministry did not appear to realise the seriousness of the issue" and denied that the ministry's response was slow. She said the issue was brought to the notice of the government as it prepared its annual budget for 2015-16, with Finance Minister Arun Jaitley announcing that MAT would no longer apply to foreign investors from April 2015. But Jaitley, whom a senior government source said was aware of the issue from January, left open the question of liabilities for past years, citing an outstanding court ruling. Last week, more than two months after the budget was announced, the government announced a temporary freeze on MAT notices pending a review. "COMPLETE MESS" Foreign investors have long been critical of India's tax bureaucracy, citing aggressive claims that have led to damaging rows with companies including Vodafone and, more recently, Cairn India. Foreign funds are drawn to India in part because taxes on market investments can be lower than in Asian emerging market rivals. Before the MAT dispute, funds paid 15 percent on short-term listed equity gains, 5 percent on gains from bonds, and nothing on long-term gains. Taxes can be even lower if the investor is based in countries with tax exemption treaties with India. The MAT claims so far have been small - Aberdeen Asset Management (ADN.L) has, for example, received a claim of less than $50,000 - but investors complain the unpredictability unsettles them and the market. The current controversy stems from a 2012 ruling over Mauritius-based Castleton Investment Ltd, an affiliate of pharmaceutical giant GlaxoSmithKline plc (GSK.L). Contradicting previous decisions that had restricted MAT to domestic companies, a tax court ruled on a theoretical question that Castleton would be liable to MAT if it transferred shares in GSK's India unit to a Singapore arm. Tax officials were initially reluctant to pursue the ramifications of the ruling for other foreign companies, but were prompted to do so by India's Comptroller and Auditor General (CAG) in 2013. "We were in a position where you're damned if you do and you're damned if you don't," said the senior tax official. As the tax officials got no substantive response to their letters from the finance ministry, they sent notices to investors, then claims, in late March. The issue will be decided by the Supreme Court in August. "This is just one of those cases where the government and the bureaucracy have created a complete mess of what was not such a complicated issue," said a London-based fund manager. "Now they are trying to pacify investors, but all of this just leaves a very bad after-taste." (Reuters)
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After just making a slew of amendments to the 'complicated' Companies Act, government will constitute an expert committee next week to suggest further changes to make it easier to do business. "There were about 50 odd provisions (in the Companies Act, 2013) which were very hurting...I will be constituting a committee...may be in the course of next week," Finance Minister Arun Jaitley told in an interview. He said the government might go in for "another round" of amendments depending on the suggestions received from the committee, which will interact with stakeholders on further easing of rules. The Companies Act, 2013 has more than 450 clauses and several of them had complicated doing of business, he said, adding "you are feeling the pinch after its being implemented." The government earlier this week effected 16 amendments in the Companies Act with a view to streamline procedures and remove some of the provisions with regard to denial of bail for violations of those provisions. He said that there was one provision in this Act, which had similar conditions for bail in a corporate crime as in the now-defunct Prevention of Terrorism Act (POTA). Under POTA, bail was virtually impossible unless the public prosecutor concedes that there is no case or the judge comes to the conclusion that there is no case made, he said. While POTA was replaced by Unlawful Activities Prevention Act with harsh bail provision dropped, the same was brought in the Companies Act, he said. Bail provision "considered too harsh for an anti-terrorism law, word for word, full-stop for full-stop was brought into the Companies Act," he said, adding Jaitley said, the worst offence in a corporate setup could be extreme fraud like the Satyam scam. There are several other offences where you pay penalty and get out, but you have "a bail provision in which you will never get bail".(PTI)
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India is perhaps one of the few major economies in the world, where economic policies are formulated by ‘Empowered Committees’ of politicians and bureaucrats. The Empowered Committee of State Finance Ministers is a case in point. This Committee has been closely involved in preparing the Goods and Services Tax (GST) framework along with the Central Government. There is little doubt that there are few subjects less political than those that impact the revenue collections of State Governments. Equally, there are few subjects less well understood by State Governments than the impacts of the proposed tax reform, despite a representative committee. This merits some introspection. Does the country need to look towards a fresh set of policy formulation processes for regulating the economy? Given the emergent need for regulating new, technologically intensive sectors such as ecommerce, a case can be made for reimagining regulations in the days ahead. Most bureaucrats are inherently defensive about the gaps in the government’s capacity to regulate the economy. When confronted with the inadequacy of extant policies, such as the absence of objective and transparent principles for auctioning natural resources, a common response is that policies should be critiqued keeping in mindthe temporal context within which they were formed. Indeed policies tend to respond to static questions rather than future scenarios – think bank nationalisation or Agricultural Produce Market Committees. To hedge for the unknown future, there seems there is no policy making tool more useful than the thesaurus – Indian policymakers have seldom felt the need for definitional certainties. This is a challenge for the ecommerce sector, which is poised to cross US$ 6 billion in revenues (ex. Tourism and Ticketing) in by 2015. As yet, there is no government department which has taken on the onus of proposing comprehensive policies for the sector. Instead authorities are simply relying on synonyms for circumscribing ecommerce. This sector is hampered by the lack of a nodal authority such as the Civil Aviation Ministry for the airline industry, which by its very existence is purposed to regulate the sector. At a stakeholder consultation meeting hosted by the Department of Consumer Affairs in September 2014, a proposition was placed on the table that “entirely new subjects of ecommerce and direct selling” should be brought under the purview of the Consumer Protection Act, 1986. The minutes of the meeting are publicly available, and indicate that ecommerce is not well understood. Similar discussions have been initiated by tax departments of various State Governments, currently mulling how best to extract revenues from the sector. Given that the sector occupies a large share of advertising, and has managed to appropriate precious media reporting space, tax departments are keenly observing developments in the sector. The Department of Industrial Policy and Promotion has played an inadvertently critical role in the evolution of existing ecommerce business models, through a preventive FDI policy. Earlier this year, the Department of Consumer Affairs tried to suggest that nine nodal authorities take charge of regulating the sector. Where else in the world would such a fragmented regulatory framework be proposed? It is the equivalent of suggesting that the ubiquitous kirana stores, on account of having bank accounts, telephone lines and home delivery options, should be regulated by the Central Bank, the Department of Telecommunications and the Ministry of Home Affairs. What is admittedly daunting about ecommerce is that it will force authorities to think deeply about some hardquestions. What really is consumer protection – can it be defined objectively? Does the consumer protection policy framework dilute competitiveness concerns of SMEs? Can consumption grow in an economy which does not create new jobs through innovation? Does the lack of clarity in existing regulations, aid discretion of enforcement officials? How can businesses be protected from regulatory harassment? Are the existing means to recourse available to them – primarily through the complex judicial system, viable? What principles of ease of business does the country have to strive towards – do these necessarily entail a slew of compliance procedures that penalise businesses that do not have the capacity for paying legal and tax teams? It is unlikely that any Empowered Committee will be able to answer the above. Even if successful in doing so, a number of domain specific issues will remain unaddressed unless stakeholders are consulted continuously (and not just by soliciting comments on draft policies through online portals). A good example is a recent stakeholder consultation in Bangalore, hosted by the Retailers Association of India, in the run up to formulation of additional rules for packaged commodities. In this robust discussion between legal metrology officials andthe private sector, it was pointed out that certain Food Safety and Standards Authority of India’s regulations overlap with regulations under the Legal Metrology (packaged Commodities) Rules, 2011. As a result, dealers of packaged food items, some of them ecommerce companies, are not sure which rules to follow, which flying squads of enforcement officials to pay obeisance to. Such concerns of regulatory overlaps and consequent confusion are not uncommon – and cannot be addressed by a single government department alone.A systemic recalibration of how this country regulates is required – across all departments. The departments not only need to talk to the private sector, they need to talk to each other! In the absence of defining regulations for the ecommerce sector, the government must use the inherent technological capacities of ecommerce companies for mutual benefit. For instance, ecommerce companies acting as online marketplaces aggregating buyers and sellers – can easily give detailed reports on the sellers on their platforms to tax, metrology and other officials. Indeed ecommerce companies should themselves realise that ease of administration can be facilitated through inexpensive technological solutions. Given that existing regulations such as Value Added Tax Rules are not black and white with respect to ecommerce,businesses must hedge against hurdles by volunteering all relevant supply chain details, to various concerned authorities. In an increasingly integrated global supply chain paradigm, technology should become a friend to regulators rather than remain a foe. It is incumbent upon the private sector, to use incremental technological innovations at justifiable marginal costs to enable this. And the government should play its part in embracing and harnessing the positives of technological change, rather than burying its head in the sand and pretending its the 20th century. The suthor, Vivan Sharan, is Partner, Koan Advisory Group
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The controversial new income tax return forms, which had been put on hold, will be "far more simplified", Finance Minister Arun Jaitley said today, but kept the suspense on if the requirement of disclosing all bank accounts and foreign travels will be retained. He said after having public consultations, he has asked the income tax department to come up with the simplest form, which is available. "They (CBDT) are coming out with a proposal. Now that I am free from Parliament, they will put up before me," he told in an interview when asked whether the number of pages of the forms will be cut down from thirteen and a half. Asked whether the queries on foreign travel and bank accounts, considered by many as intrusive, would be dropped in the revised form, the Minister said: "You wait, but I can only tell you it will be far more simplified". He seemed to suggest that the questions about foreign travel and all bank accounts would be limited to a section of tax assessees. "... As far as 8 or 9 out of 10 tax payers are involved, their form has to be very simple...There are various kinds of details, which are to be filled up may be absolutely redundant for them," Jaitley said in reply to a question on the queries in the forms that triggered a controversy. (PTI)
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The hike, which comes on the back of Rs 3.96 per litre increase in petrol and Rs 2.37 a litre raise in diesel from May 1, will be effective from midnight tonight. Prices of petrol in Delhi will be Rs 66.29 a litre from tomorrow as against the current Rs 63.16; while diesel will cost Rs 52.28 per litre as against Rs 49.57, Indian Oil Corp (IOC), the nation's largest oil company, said.The two consecutive hikes have wiped away more than one-third of the gains that had accrued to consumers when global rates began to fall in August last year. "Since last price change (effective May 1), there has been a steep increase in international prices of both petrol and diesel. Rupee-US dollar exchange rate has also depreciated quite significantly during this period. "Combined impact of both these factors warrant an upward revision in prices, the impact of which is being passed on to consumers with this price increase," IOC said in a statement. State-owned fuel retailers IOC, Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) revise petrol and diesel prices on 1st and 16th of every month based on average imported cost and rupee-dollar exchange rate in the previous fortnight. Petrol prices had been cumulatively cut by Rs 17.11 a litre in 10 reductions between August and February and diesel by Rs 12.96 a litre in 6 cuts between October and February. After two rates hikes (0.82 a litre in petrol and Rs 0.61 per litre in diesel on February 16, and Rs 3.18 per litre in petrol and Rs 3.09 a litre in diesel on March 1) rates were again cut on April 2 (49 paisa a litre in petrol and Rs 1.21 in diesel) and on April 16 (80 paise per litre on petrol and Rs 1.30 a litre on diesel). "The movement of prices in international oil market and rupee-USD exchange rate shall continue to be closely monitored and developing trends of the market will be reflected in future price changes," IOC said. (PTI)
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In a confidence building measure, Prime Minister Narendra Modi on Friday announced that India will grant e-visas to Chinese tourists. “We have decided to extend electronic tourist visas to Chinese nationals,” Modi said addressing students and faculty at the prestigious Tsinghua University here. Hours before the Prime Minister’s announcement, Foreign Secretary S Jaishankar had said “no decision has been taken yet” on granting e-visas to Chinese tourists. When asked about extending the e-visa facility to Chinese tourists, Jaishankar said this morning: “We are expanding it bit-by-bit. With regard to China, no decision has been taken yet.” Addressing the gathering at the university, Modi said: “About 33 per cent of the world’s population is either Indian or Chinese. Yet, our people know very little of each other.’’ “We must seek inspiration from the pilgrims of the ancient times, who braved the unknown in search of knowledge, and enriched us both,” he said. “So, we have decided to extend electronic tourist visas to Chinese nationals. We are celebrating the Year of India in China in 2015,” he added. Surprisingly Modi chose to announce this significant initiative which Chinese officials have been calling for in his address to the university not during his joint appearance for the press with Premier Li Keqiang. The announcement came in the teeth of strong opposition from the Home Ministry and security agencies over security concerns of its misuse, while the External Affairs Ministry and Ministry of Tourism pressed for it. Ahead of his China visit which began yesterday, the decision to grant e-visas was left to Modi to decide. ‘Visit India Year’ India this year has announced ‘Visit India Year’ in China to attract more tourists in order to boost tourism revenues. While less than two lakh Chinese visit India, more Chinese travellers are visiting Nepal, Sri Lanka and Maldives enhancing their tourism revenues. Last year 1.4 lakh Chinese had visited Nepal, an increase of 70 per cent, while over four lakh Chinese visited Maldives, 1.3 lakh visited Sri Lanka, and increase of 130 per cent. India is organising Visit India Year this year to entice a chunk of about 100 million Chinese tourists who visited abroad last year spending billions of dollars on shopping. China has proposed Buddhist circuit connecting China, Nepal and Sri Lanka to attract more tourists. China has large Buddhist population. They are keen to visit Buddhist sites in India like Nalanda. (PTI)
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December 25th2014, I heard our Prime Minister Narendra Modi say: “The richest of the rich and the poorest of the poor wants good education for his child. The world today needs good teachers and India, with its immense youth power, can export teachers to the world”. Export teachers to the world. Did I hear that right? And did I hear that from a politician. Most people possibly ignored this vision, but there was a ring of nostalgia around it for me. It took me back to 1990, 25 years ago, when I joined a fledgling IT company called Infosys. Infosys was less than 100 people, and maybe a few thousand people made a living off computers those days. In one generation, this industry has grown to revenues of more than $100 billion, employs more than 3 million people and has a 55% Global sourcing share. Cities like Bangalore, Hyderabad and Gurgaon have been built around this proposition. I see the same potential in this idea mooted by our Prime Minister. To give you a perspective of the size of the market, the World has 900 million students currently in K-12 grades. With a student to teacher ratio of 1:25, this adds up to a global requirement of 36million pre-primary and primary teachers. At an average global wage of 20,000USD pa, teachers earn $720 billion annually. Can India aspire for a 10 per cent of the global market? Can we provide additional employment to 3.6 million Indians (the IT industry hires only 3.1 million people currently) and contribute $72 billion to GDP. There are 3 reasons why India can quickly become successful as a teaching super power - Firstly, the teaching industry in India is very mature. India has adopted many novel teaching methods from Montessori to International Baccalaureate. We also have our own home spun schooling systems like CBSE and ICSE systems that have been successful in creating generations of successful students and managers. These systems have tremendous credibility amongst Indians globally and are also gaining traction amongst people of other nationalities. Whereas, the IT industry had no domestic market, and had to build all its skills internationally. This made it significantly difficult for them in the initial years. Secondly, India is a hot bed of educational innovation. Innovations like Hey Math are being used as a standard in Singapore, while Planet Read’s ground breaking work on same language subtitling to improve literacy skills won Brij Kothari the Schwab Social Entrepreneur of the Year award in 2009. We have companies like EduSports that are pioneering sports education. There are numerous stories of Innovation in education in India that have the potential to change the world. Our innovation maturity is very high. Thirdly, success of initiatives like TEACH for INDIA demonstrates that young people in India are intrigued by education and looking for careers in primary education. The establishment and success of the Azim Premji University, a university focusing purely on primary education, is another indicator of the trend amongst the young and educated to work in education. Our youth are ready for the teaching revolution. To make India the Teaching Capital of the world, I have the following recommendations – The Government will need to ensure that they do not relegate teacher education to a degree and limit teaching to people who have the degree. The current approach to introduce a 5 year program after 12th or such experiments assumes that people with degrees are the only ones who are capable of teaching. If everybody hired by an IT company needed to have a computer science degree, our growth would have been much slower.To ensure quality of teachers, they will need to introduce standard Teacher Eligibility Tests. Performance in TETs should be the criteria for a person to become a teacher. The TETs can be developed on the model of the GATE or the IAS exams with subject specializations being tested for. The TETs should also be fungible across states, just like the AIEEE examinations.We need to encourage English language training and adopt a global standard as a measure of quality in English teaching. All teachers teaching in English schools need to be certified in this test.The National Skill Development programme of the Government should support organisations that skill people to pass the English tests and the TET exams creating a larger pool of capable teachers in India. I believe that implementation of these 4 recommendations earnestly and rapidly am essential to change the teaching landscape, create more competent teachers and enable us to teach the world within a decade. The author, Umesh Malhotra, is Founder CEO, Hippocampus Learning Centres
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The Child Labour law has been revamped, and major changes have been cleared. The age restrictions for working, the penalties for violations and the industries deemed fit for working have all been overhauled. According to the Union Cabinet which was chaired by the Prime Minister, these changes have been made considering the social fabric of the country. The definition of adolescence has also been changed to incorporate the age group of 14 to 18. The child activists and many NGOs working for the development of children and eradication of child labour in the country are not very happy with the changes that have been proposed. Critics are very vocal in pointing out that enough loopholes have been left in the current provisions that can exploited and will impede the eradication of child labour. Activists who are working at the grassroot level and are closely associated with the menace believe that these exceptions will only push children to work in industries that are not deemed ‘hazardous’, like carpet manufacturing, or working in paper mill, and which in turn will slow down the entire process of eradication of child labour. Also the clause of ‘Business run by the family’ has enough soft points to be taken undue advantage of, as in almost all the cases of violations previously, the children who were employed had the consent of their family, and there is no hesitation in the employer to address the parents as his family, or the business as a ‘family enterprise’ and in many occasions due to lack of any identity proof, the rampant violations do take place. According to the recent proposal the children can work during vacations, or after their school or classes, and many child activities question how such a clause will be regulated, and that this will only lead to an increase in drop-outs. However, the punishments for violations have been made more stringent, ranging from hefty fines to even jail terms, but the question of regulation of all the above statements is a primary issue that needs serious attention, if the evils of Child Labour is to eliminated from the society.
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