India – internal
World’s biggest exercise in democracy, election of members to the 17thLokSabha, is now complete. The general election in India was held in seven phases from 11 April to 19 May 2019 and counting of votes took place on 23 May, and on the same day the results were declared. About 911 million people (more than the combined population of Europe and America) were eligible to vote and the overall turnout was over 67.11 per cent – the highest ever as well as the highest participation by women voters.The Election Commission deployed a total of 1.74 million voter-verified paper audit trail (VVPAT) units and 3.96 million electronic voting machines (EVMs) in 1,035,918 polling stations. It also counted VVPAT slips of 20,625 EVMs before it certified the final election results
The ruling Bharatiya Janata Party won 303 seats, further increasing its substantial majority and the BJP-led National Democratic Alliance won 353 seats. Major economic achievements of the incumbent NDA government for the general public inter-alia included an inflation rate less than 4 per cent, the GST reforms, the Insolvency and Bankruptcy Code, its programs in recent years that have positively touched many among the Indian masses, programs such as the Jan Dhan Yojana, rural cooking gas, toilets and electricity for homes.
At a glittering ceremony, the President of India on 30th May 2019, administered the oath of office and installed a new government under the premiership of Shri Narendra Damodar Modi. The oath taking ceremony was organized at the forecourt of the Rashtrapati Bhavan with the attendance of 8,000 guests from all walks of life. The Heads of State/Government from BIMSTEC countries and of Kyrgyzstan and Mauritius were the special invited guests.
(Prime Minister Narendra Modi with foreign dignitaries in a group photograph after the oath-taking ceremony at Rashtrapati Bhavan in New Delhi) (Courtesy : PTI)
The dust of electioneering has settled down. The Prime Minister announced that the new government would work for the development of 1.3 bn people of India. He also promised that his government would do its best to win the confidence of every single person. He enriched his earlier slogan by announcing “Sabka Sath, Sabka Vikas, Sabka Vishwas”.
As promised in its manifesto sub-titled Sankalpit Bharat, Sashakt Bharat (Resolute India, Empowered India), thenew government must fulfill its basic promises to:
•double farmer incomes by 2022 by completing all major and micro-irrigation infrastructure projects, opening adequate markets and modern farm produce storage centers, implement minimum price supports for farmer produce, farmer loans and all-weather rural roads. Introduce a pension bill for small and marginal farmers to provide social security after 60 years of age;
•Ensure a pucca house, safe potable water, toilet, LPG gas cylinder, electricity and banking account for every family. Reduce the percentage of families living under the poverty line to a single digit by 2024;
•Double the length of national highways. Scale renewable energy capacity to 175 GW
•Electrify and convert to broad gauge all railway tracks.
•Establish 150,000 health and wellness centers. Start 75 new medical colleges. Raise doctor-to-population ratio to 1:1400. Triple childcare facilities. Achieve 100 per cent immunization of all babies.
•Raise India's ranking further in "ease of doing business". Double exports, introduce single-window compliance procedures for all businesses.
•Reduce air pollution by eliminating all crop residues burning.
•Digitise paperwork and proceedings, modernise the courts.
•Launch and promote a National Digital Library with e-books and leading journals to provide free knowledge accessible to all students. Launch a "Study in India" program to bring foreign students to institutes of higher education.
•Zero tolerance for terrorism, fund resources to strengthen national security, guarantee veterans and soldier welfare, modernise police forces.
The Indian economy is the fastest growing major economy and is projected to grow faster in the coming years. However, India’s economy appears to have slowed down slightly in 2018-19. The proximate factors responsible for this slowdown include declining growth of private consumption, tepid increase in fixed investment, and muted exports. On the supply side, the challenge is to reverse the slowdown in growth of agriculture sector and sustain the growth in industry. On the external front, current account deficit as ratio to GDP is set to fall in Q4 of 2018-19, which will limit the leakage of growth impulse from the economy. The fiscal deficit of the central government has been gliding down to the FRBM target. Monetary policy has attempted to provide a fillip to the growth impulse through cuts in repo rate and easing of bank liquidity. The room for this monetary easing has been created by low inflation in 2018-19, although it has started to inch up in last few months of the year. The real effective exchange rate has appreciated in Q4 of 2018-19 and could pose challenges to the revival of exports in the near future. Increase in foreign exchange reserves in Q4 of 2018-19 on account of improvement in trade balance has increased the import cover for the economy.
The new government must immediately initiate actions to address the issues of unemployment, agrarian and rural distress, national security & terrorism, social media abuses & fake news, expansion of tax base, quick resolution of tax disputes and a stable tax regime. It is time for urgent administrative, judicial, police and electoral reforms to infuse greater efficiency and efficacy. While we will see the performance of the previous government in the Economic Survey, we will see the vision & intention of the new government in the budget proposal to be presented on 5th July 2019. We are waiting.
The Directorate General of GST Intelligences (DGGSTI) has issued notices to a number of ancillary manufacturers of leading automobile companies seeking information of arrangements regarding the design, drawing charges and specifications of components that are shared with their vendors. Tax officials suspect that vendors are evading taxes as value of some of these elements were not being included by the component manufacturers while calculating the excise duty. Also, with the role of auditors coming under cloud, India is set to strengthen audit reporting standards. As reported, the Ministry of Corporate Affairs plans to propose changes to the ‘Companies Auditors Report Order’. The move comes at a time when questions have been raised on the role of auditors in several of the recent financial scams, particularly in the loan repayment of Infrastructure Leasing and Financial Services that are being investigated.
India – bilateral
At the invitation of the Vice-President of Vietnam, Shri Venkaiah Naidu, Vice-President paid an official visit to Vietnam during on May 9-10, 2019. During his talks with Vice President Dang Thi Ngoc Thinh, the Indian VP agreed to further strengthen our bilateral cooperation in defence and security, peaceful uses of atomic energy and outer space, science and technology, oil and gas, renewable energy, infrastructure development, agriculture and innovation-based sectors. The bilateral defence and security cooperation is robust and India is committed to further strengthen it. India is providing extensive and sustained training support to Vietnamese Armed Forces and the implementation of the Line of Credit of US Dollars 100 million for building high speed patrol vessels for Vietnamese Border Guards is progressing satisfactorily. The two leaders also reviewed the implementation of the Line of Credit of US Dollars 500 million for defence industry cooperation announced during the visit of Prime Minister Modi in 2016.
Our bilateral economic engagement during the last few years has immensely strengthened and the two leaders discussed means of facilitating our business and industry to harness the growing opportunities in our countries and in the region. Our bilateral trade stood at nearly US Dollars 14 billion last year having nearly doubled from US Dollars 7.8 billion three years ago. VP Naidu expressed confidence that we will achieve our bilateral trade target of US Dollars 15 billion by 2020. India looks forward to direct air connectivity between our two countries and to the Indian civil aviation carrier Indigo starting direct flights between India and Vietnam later this year. This step would go a long way in boosting bilateral trade and tourism exchanges.
The bilateral defence and security cooperation is robust and we are committed to further strengthen it. India is providing extensive and sustained training support to Vietnamese Armed Forces and the implementation of the Line of Credit of US Dollars 100 million for building high speed patrol vessels for Vietnamese Border Guards is progressing satisfactorily. The VPs also reviewed the implementation of the Line of Credit of US Dollars 500 million for defence industry cooperation announced during the visit of Prime MinisterModiin2016.
It has been reported that the US government has removed India from its monitoring list for currency manipulation, clearing doubts over India’s foreign exchange policies including undervaluation of currencies to gain export advantage. While we welcome this US decision, it is doubtful whether this would set the tone for further trade negotiations between the two countries.
US companies have found a large and generally unfettered market for their good in India as companies like Coca-Cola, Proctor & Gamble, Johnson & Johnson, Dupont, Whirlpool, Honeywell etc have become household names.India is also a thriving market for US services and e-commerce companies like Amazon, Uber, Google and Facebook with billions of dollars of revenue. On the other side, India has purchased defence and aerospace products worth several billions from the US in the past decade, and has opened up new avenues for US exporters in crude oil and shale gas. Through such dedicated efforts and responding to a major demand by the current US government, India managed to reduce its trade surplus with US by about 7%.
The issue of Indian tariffs being high has been raised from time to time. It is pertinent that India’s tariffs are within its bound rates under WTO commitments, and are on the average well below these bound rates.On developmental considerations, there may be a few tariff peaks, which is true for almost all economies. India was agreeable to a meaningful mutually acceptable package on the above lines to be agreed to at this time, while keeping remaining issues under discussion in the future. However, the US has on31st May formally terminated India’s eligibility for a duty-free import scheme for developing countries. It said India has not given assurances that it would provide equitable and reasonable access to its markets to US companies. Senior US officials had left the door open for putting India back on the Generalized System of Preferences (GSP) programme and restore its duty free benefits if Indiacomplied with American demand or greater market access to its dairy products and medical devices sectors. According to our Ministry of Commerce, India, like the US and other nations shall always uphold its national interest in these matters. India will continue to seek to build strong economic ties with the US.
India-Kyrgyzstan relations are on an upward swing since 2011, but saw anacceleration after the visit of our Prime Minister in 2015. The President of Kyrgyzstan was a special invitee at the swearing-in ceremony of PM Modi on 30th May. PM Modi is expected to attend the SCO Summit at the Kyrgyz capital during 13-14th June and to have a bilateral meeting with the host President.The Central Asian Republic is likely to take the strategic relationship to a greater height by procuring defence equipment from India and looking for Indian assistance in establishment of a joint mountain warfare training center in Kyrgyzstan. A Kyrgyz military team visited several private sector companies in India to identify an equipment list that includes land-based systems upgrades by L&T. The list of equipments includes products made by Zen Technologies of Hyderabad. A formal request to take the acquisition process ahead is under consideration by the authorities. India is likely to extend a credit line of 100 million US dollars.
India – multilateral
Foreign Ministers of Shanghai Cooperation Council (SCO) met at Bishkek on 22 May 2019. The then External Affairs Minister Smt Sushma Swaraj announced at the meeting that our Ministry of Tourism website would have a Russian interface by the end of next month and a 24x7 tourist helpline in Russian language for the ease of tourists from SCO countries. Our e-tourist visa services are available for most of the SCO countries. The EAM also reiterated India’s commitment to regional connectivity and said that this was evident from our involvement in the(i) International North-South Transport Corridor;(ii) Chabahar Port; (iii) Ashgabat Agreement; and(iv) India-Myanmar-Thailand Trilateral Highway. She added that India has also operationalized air freight corridors between Kabul & Kandahar and New Delhi and Mumbai in2017. India welcomes regional connectivity initiatives, that are inclusive, sustainable, transparent and respect the principles of sovereignty and territorial integrity. She further added that India is ready to share her expertise with other SCO Members in such fields as (i) agriculture; (ii) Medicine; (iii) Information Technology; (iv) Space; (v) Finance; and (vi) renewable energy. Prime Minister Modi is expected to attend the SCO Summit at Bishkek during 13-14th June, 2019.
MIICCIA Chamber’s activities
At the invitation of AIDIA to be the Chief Guest and speak on “Understanding the Oil and Middle East Geo-politics and its Impact in South Asia”, I visited Kathmandu from 30th May to 2nd June, 2019. During my visit there, I took the opportunity to formally sign, on behalf of MIICCIA, two Cooperation Agreements (MoU) with the Nepal Chamber of Commerce (NCC) and the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). The host chambers made the signing ceremonies elaborate and impressive. We will take forward these new associations for the enhancement of Indo-Nepal economic and commercial relations for the benefit of the business communities of both the countries. I also extended the invitation to Nepalese companies and cooperatives to participate in the first ever India International Cooperatives Trade fair (www.iictf.in) from October 11-13, 2019 at Pragati Maidan New Delhi for a mutually beneficial collaborative partnership.
(at the Federation of Nepalese Chambers of Commerce and Industry with Ms Bhawani Rana, President and other members of the Executive Committee)
(at the Nepal Chamber of Commerce with Mr. Rajesh Shrestha, President and other members of the Executive Committee)
The Nepal Furniture and Furnishing Association is organizing the 7th edition of “Furnex 2019) in Kathmandu from 11th to 15th September, 2019. The Furnex Expo is designed for the exhibition of different furniture and furnishing items. This is an international exhibition and as in the past, many companies from foreign countries are expected to participate in this Expo. Indian companies may consider participating in this Fair.
As a part of our initiative titled “Ambassadors’ Speak”, the Chamber is working on organizing a Business Meet entitled “ India ‘s cooperation with Central Asiaand Beyond” that will include Ambassadors and Trade Commissioners from CIS Countries, Russia , Iran and Turkey on 17th July, 2019 in New Delhi. All businesses interested to explore business opportunities are invited to register at www.miiccia.com.
I wish all of you success, prosperity and peace.
I extend my Greetings on the New Year 2019. I wish great success to our Members, the Indian Industry, Business Houses and Investors.
The New Year seems to be an encouraging one for the Indian Industry, Business and Exporting community. Economic indicators are healthy. Growth of GDP for the first half of 2018-19 was 7.6%. Current account deficit as percentage of GDP was 2.7% in the same period. Value of merchandise exports and imports increased by 11.6% and 14.7% respectively in US Dollar terms during April-November 2018.Foreign Exchange Reserves stood at US$ 393.7 billion at end November 2018. CPI inflation declined to 2.3% in November 2018 from 3.4% in the preceding month. WPI inflation was 4.6% in November 2018, as compared to 5.3% in October 2018. The growth of Index of Industrial Production (IIP) during April-October 2018 was 5.6%, as compared to 2.5% recorded during corresponding period a year ago.Though there was a slight negative growth (0.87%) in export of Services, trade balance in Services was US$ 6.57 billion in end November 2018. Therefore, the New Year starts with a positive note.
The Government launched a historic support and outreach programme for the Micro, Small and Medium Enterprises (MSME) sector in November 2018. As part of this programme, the government unveiled 12 key initiatives which would help the growth expansion and facilitation of MSMEs across the country. At the inaugural session of the 15th Global SME Business Summit in New Delhi, Minister of Commerce & Industry and Civil Aviation, Shri Suresh Prabhu, said that the Ministry was examining the proposal to set up trade promotion bodies in 15 countries to promote exports of SMEs from India.
An important development for our export houses is that India is now hopeful that the Chabahar Port in Iran will be fully operational soon. Union Minister Shri Nitin Gadkari and the Iranian Foreign Minister had a fruitful meeting and the leaders agreed to resolve all the pending issues.The Chabahar Port will be a booster for our overseas shipments, particularly to Iran and the Central Asia region.Commerce, Industry and Civil Aviation Minister, Shri Suresh Prabhu said that he would like to make 2019 “A new year for Exports.”
Last year MIICCIA consolidated its position further. It has signed several MoUs for mutual cooperation with other Chambers of Commerce. The most notable amongst those are:
In the context of India’s ‘Act East’ policy and Prime Minister’s thrust for deeper engagement with
ASEAN countries, MIICCIA is organizing a Business Conference “India-ASEAN Connecting for Business” on February 18, 2019 at the Civil Services Officers’ Institute (CSOI), Vinay Marg, Chanakyapuri, New Delhi. The conference will try to identify suitable economic opportunities in ASEAN countries, and create reliable networks for further boost to trade & investment. The Conference will benefit Indian entrepreneurs and business houses with updated information and also provide a platform to interact with Heads of Mission of the ASEAN countries. MIICCIA’s Secretariat would be happy to provide additional information and participation procedure.
We are all waiting for the Interim Budget of the Central Government on 1st Feb. In a bold decision and departure from the past practice, the Government has decided not to present the Economic Survey before the interim budget. They have left the Economic Survey, which outlines the vision and the economic road map for the upcoming year, for presentation by the new government before the full budget.