OPINION, P8 COMPANIES, P6 ANOTHER HIGH-PROFILE EXIT Trump gives India a long-overdue wake-up call Urjit Patel overdoes defence of RBI but right on need for PSU bank reforms SPY POISONING Tata Sons’ chief ethics officer Mukund Rajan quits EDITORIAL INTERNATIONAL, P16 Putin set to hit back at May for expulsion of 23 diplomats NEW DELHI, FRIDAY, MARCH 16, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 12, 26 PAGES, `5.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 33,685.54 ▼ 150.20 NIFTY: 10,360.15 ▼ 50.75 NIKKEI 225: 21,803.95 ▲ 26.66 HANG SENG: 31,541.10 ▲ 106.09 `/$: 64.93 ▼ 0.09 `/€: 80.23 ▲ 0.02 BRENT: $65.14 ▲ $0.25 GOLD: `30,320.00 ▼ `55.00 USTR THREAT TO MOVE WTO Quicker rejig of schemes likely COST OF INDIA'S EXPORT SCHEMES EOU/EHT/STP SEZ Focus Market/ Product Scheme Service Export Incentive Scheme IN THE NEWS LS passes 2 Bills without debate PROCEEDINGS IN BOTH the Houses of Parliament was disrupted again, but two Bills — Payment of Gratuity (Amendment) Bill and Specific Relief (Amendment) Bill — were passed without debate, reports PTI. THE MOST DEFINITIVE RANKING OF INDIA’S TOP 1000 COMPANIES READ TO LEAD March 2018 WITH TODAY’S ISSUE PRESENTED BY Others 772 3,861 9,073 29,339 9,850 Advance Licence Scheme 9,877 EPCG 1,462 MEIS FE BUREAU New Delhi, March 15 WITHANAGGRESSIVELYprotectionist United States challenging India’s“export subsidy programmes” at the World TradeOrganisation(WTO),New Delhi will have to fast-track an ongoingplantophaseoutsome of these sops that are WTOincompatibleandrejigothersin orderto put in a place a durable set of successor tax-neutralisation schemes that are multilaterallylegitimate. Forthe record,however,the Indian government reacted to the US move with gentle firmness: “As a developing country we deserve special and differ- Potential cost higher (` crore, 2016-17) 12,746 SWITZERLAND ‘Have assumed 8-year window’: commerce secretary Teaotia; design WTOcompliant schemes, say experts Total: 76,980 ential treatment... We have assumed a window of eight years would be available to us (to phase out the subsidies),” commercesecretaryRitaTeaotia said onThursday. Experts,however,wondered whether the WTO rules under the Agreement on Subsidies and Countervailing Measures (ACSM)allowedsuchareprieve onceacountrybreachedaspecifiedper-capitaincomethresh- SEZs, industry and IT parks are a global norm. Even India's MEIS scheme is not a direct subsidy but a promotional scheme. The US keeps subsidies to industry indirectly and has a history of TRIMS violations. old. India surpassed that threshold in 2013 and as per the rules, should have terminated the subsidies in 2015. However, the country, which was facing a slump in exports, hasdithered,althoughsomeof theactionablesmallerschemes have latelybeen discontinued. Now that the US has taken this up, India can use a WTO window to open consultations with that country for a phase- When it (ASCM) came into force, the developing countries above $1,000 (per capita GNI) were given 8 years to bring down their export subsidies. We have assumed that the same period of 8 years is available to (other) countries as and when they reach the threshold. — RAM UPENDRA DAS, head of Centre for Regional Trade, commerce & industry ministry As per commerce ministry estimate, MEIS’ potential annual cost is around `23,000 crore; in December, the trade policy expanded scope of MEIS & SEIS by another `8,450 crore a year; as per exporters body FIEO, actual cost of all export schemes was `88,270 crore in FY17 out schedule but it is possible that this might fail in the face of an obstinateWashington.In that case, a final outcome might emanate from the appellate tier of the world body’s dispute settlement setupwithin ayear,as the mechanism is now more agile than earlier. Such an eventuality might affect a cross-section of India’s manufactured-goods exporters pretty badly, as they It is difficult to maintain schemes such as MEIS, SEIS, EPCG, etc, as we had crossed the per-capita GNI threshold of $1,000 (in 2013). The industry will have to adjust (to scrapping of the subsidies). We should actively engage with the US for a phase-out schedule. — AJAY SAHAI, director general & CEO, Federation of Indian Exports Organisation — RITA TEAOTIA, commerce secretary Motobahn P15 Field survey New Mercedes-Benz S-Class: Palace on wheels operate on thin margins. It isn’t easy for them to quickly regain the cost competitiveness without the sops, given that the relatively high transportation costs, residual red tape, infrastructure bottlenecks like high turnaround time at ports and rigid labour laws jack up their costs. Under a more immediate threat of being deprived of the subsidies is India’s labourintensive textile and clothing industry, as it crossed the sector-wise threshold (3.25% of globaltrade)asearlyas2010.An eight-year window to end the subsidies (linked to export obligation) in the sector will expire in December2018. Most trade experts feel that India is vulnerable to the US threat as many of its export schemes like MEIS, SEIS and EPCG, are contingent on export obligations and won’t actuallystand the scrutinyof a built-in obligation to actually consume the indirect taxexempt inputs in the production process. Continued on Page 2 Subsidies contingent on export performance are WTOincompatible. It is very clear that India is highly vulnerable on its export incentives — ANWARUL HODA, former special secretary in commerce ministry, and former deputy-DG, WTO LOAN DEFAULTERS Govt mulls travel ban on 91 people List is said to include owners, directors of wilful defaulters Redrawn bankruptcy law India’s new law is designed to cut the time it takes to wind up the average dying company India Brazil Russia France Italy China S Korea Germany UK US Canada Japan Years to resolve insolvencies 0 1 2 3 Source: World Bank 2017 data Recovery rate, as cents to the dollar 4 BLOOMBERG New Delhi/Mumbai, March 15 THE GOVERNMENT HAS compiled a list of 91 people it is considering barring from leaving the countrybecause of their involvement with companies that have defaulted on loans,apersonwithknowledge of the matter said. The people were selected because of their roles as directorsorownersofIndiancompanieswhichhavebeenidentified as so-called wilful defaulters, firms which refuse to repay loans despite having the means to do so,the person said,asking nottobeidentifiedastheinformation is private. Some 400 Indian companies have been classified aswilful defaulters. In addition to identifying those executives,Prime Minister Narendra Modi’s administration has asked Indian banks to provide passport details of a QuickPicks Exports in February rose 4.5% to $25.8 bn, imports up too CONTINUING THE positive growth path, India's exports grew by 4.5% in February to $25.8 billion, commerce secretary Rita Teaotia said on Thursday, reports PTI. Imports too rose by 10.4% to $37.8 billion during the last month, leaving a trade deficit of $12 billion. The country's merchandise exports are showing continuous positive growth, Teaotia said. In April-February of FY18, exports logged a growth of 11% to $273.7 billion, while imports grew by 21% to $416.87 billion. Aircraft grounding: IndiGo cancels 488 flights, GoAir 138 PASSENGERS ARE likely to face harrowing times with IndiGo and GoAir deciding to cancel more than 600 flights this month, of which 488 are by IndiGo alone, following grounding of 11 A320neo planes with faulty Pratt & Whitney engines, reports PTI. The cancellations by the two budget carriers, which operate more than 1,200 flights daily on average, may significantly disrupt the summer schedule. There was no immediate clarity about the way possible compensation and alternative choices would be made available to the passengers. PAGE 6 Competition Commission to probe HMSI for unfair practices FAIR TRADE regulator CCI has ordered a probe against Honda Motorcycle and Scooter India (HMSI) for various anti-competitive provisions, reports PTI. It was alleged that HMSI had perpetuated tie-in arrangements, imposed resale price maintenance and maintained a discount control mechanism through the standard form of dealership agreement. After finding prima facie evidence of competition norm violations, CCI has decided to carry out a detailed probe against HMSI. PAGE 3 FE BUREAU Non-priority sector Agriculture % of total NPAs Private banks 21 18 79 82 85.7 82.2 All banks 24.8 23.3 0 20 40 60 80 100 Tunnel vision Journalists outside an under-construction tunnel during a media visit to ColabaBandra Seepz metro corridor in Mumbai on Thursday Source: RBI ON THE CARDS In a digital drive, India Post will now send PoS-man home SHRITAMA BOSE Mumbai, March 15 WITH THE DEPARTMENT of post or India Post planning to equip postmen with point of sale (PoS) machines, you may soon be able to pay for a parcel with your debit card. In what seems like a furtherpush to the government’s digitisation agenda, as well as the Indian postal service's own ambitions of becoming a bank, all postmen will be equipped to accept digital payments over the next three years. However, the project is expected to be rolled out within a matterofweeks,early in the new financial year. Having postmen carry PoS terminals ties in well with the postal department's plan to roll out a full-service payments bank; it completes the arc that began when postmen were given micro-ATMs. India Post Payments Bank (IPPB) went live on January 30, 2017, with two branches in Raipur and Ranchi. ILLUSTRATION: ROHNIT PHORE larger group of individuals who have signed applications or stood as guarantors for soured credits of more than `50 crore ($7.7 million), the person said, declining to elaborate. Some individuals from that group may also be barred from leaving the country if they are found to have committedfraudorengagedinwilful defaults,the person added. Public anger against Modi’s administration is mounting after two prominent jewellers leftthecountryjustbeforetheir alleged involvement in the nation’s biggest bank fraud cametolight.Lessthanamonth afterfirst details emerged,lawmakers introduced a Bill that will give authorities power to impound the assets of fugitive offenders — people who have fled the country after committing an economic offence involving `100 crore ormore. Continued on Page 2 Continued on Page 2 5,66,200 7,28,500 *Includes IDBI Bank and Bharatiya Mahila Bank 100 Continued on Page 2 5,02,100 6,41,100 75.2 76.7 FY16 FY17 80 of RuPay cards issued to these account-holders adds up to 236 million. The local arm of French payments company Lyra Networks India has been given the mandate to develop and connect the network of machines. Christophe Mariette, chairman, Lyra Networks, told FE, “This averybig project as itwill entail a PoS machine for every postman. We are going to ensure the connectivity for these machines.This project is veryimportant fordigitisation because noweverybodywill be able to paywith a card.” 15,800 13,600 Foreign banks FY16 14.3 FY17 17.8 60 THE GOODS AND services tax (GST) regime in India, which wasrolledoutinJulylastyear,is relatively more complex compared with similar taxes on value added across other countries, the World Bank has observed. The complexity of India's GST, it said in a report, wasdueto“highertaxratesand largenumberoftaxslabs”compared with similar systems in othercountries. GSThasmultipletaxratesof 0, 5, 12, 18, and 28% while several items are exempted and exports are zero-rated (exporterscanclaimrefundsfor taxespaidoninputsthatgointo production process).This,however, compares unfavourably with other regimes across the world as most countries have a single rate of GST.For example, the report said, India’s highest slabof28%isthesecond-highest among 115 sampled countries and the highest inAsia. The report said that 49 countries use a single rate, 28 use two rates, and only five including India use four rates. The countries that use four or moreratesofGSTincludeItaly, Luxembourg, Pakistan and Ghana.Thus,India has among the highest number of different GST rates in the world. The GST subsumed over a dozentaxesleviedbystatesand the Centre in the previous indirect tax regime.While the GST Council—thedecision-making bodyforGST—hadputwellover 200itemsinthehighestbracket of28%atthetimeofroll-out,it has since reduced the items underthe slab to around 60. 48,400 73,800 FY16 FY17 40 FE BUREAU New Delhi, March 15 Total NPAs (` crore) 74.5 75.9 20 India’s GST complex: World Bank Amid concerns of a rise in bad agri-loans, RBI data show the sector's contribution to the total pool of bad loans has fallen by 30 basis points (bps) to 8.3% in FY17, compared to FY16, versus a 140-bps rise in the non-priority sector's share of non-performing assets. Public sector banks* FY16 25.5 FY17 24.1 0 ● MULTIPLE RATES Bad farm loans actually fell The S-Class is opulence at its best on four wheels; it’s a chariot fit for the king. It comes packed with almost all creature comforts you’d expect on four wheels, and its elegant cabin helps set it apart from the competition 5 Communications minister Manoj Sinha told Parliament recently IPPB will roll out 650 branches by April 2018. What the project acknowledges is that although millions in the hinterland have opened bank accounts and have been given debit cards — most of them under the RuPay brand — there is littlescopeforusingthese to make payments. As on March, 7, there wereasmanyas313million no-frills Jan Dhan accounts with total deposits of `76,117 crore. The number
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.