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Created on Monday, 31 March 2014 10:03
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Road Tunnel image: courtesy Soma
The public suspicion that a part of foreign direct investment (FDI) in India comes from secret Swiss numbered accounts through circuitous route has turned out to be true.
In a case perhaps first of its kind, Soma Tollways Private Limited (STPL) has reluctantly admitted to the Government that a chunk of the unapproved FDI in its share capital has flowed in from two Swiss numbered accounts. The curtain over this unapproved FDI aggregating to Rs. 350 crore is, however yet to be lifted fully.
This money has been pumped in by certain Mauritius-registered foreign institutional investors (FIIs) whose ultimate control lies in the hands of high profile American Investment Bank, J.P. Morgan.
STPL has not disclosed the names of persons holding the two mysterious accounts, Geneva 4813 and Geneva 7631 accounts. It has justified non-disclosure by citing Swiss secrecy laws. That is where the case stands at present.
If STPL does not disclose the ownership of these accounts, then the Indian Government should seek requisite information under the Indo-Swiss Double Taxation Avoidance Convention (DTAC). When and whether this initiative would be taken is unclear at present.
It also remains to be seen whether the Government would take STPL’s case as a tip of the dubious FDI running into thousands of crore of Rupees which has flowed through Mauritius-registered FIIs.
Read more: Unravel JP Morgan affiliate-aided FDI from secret Swiss accounts in STPL
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Created on Friday, 28 April 2023 04:09
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WHAT is unsaid or the least said or simply forgotten is as important as what is hyped in the national discourse. This fact always emerges as the 24-carat gold in any Shuddhi Yagna of policies. This test is equally applicable to the sermons given by all stalwarts over the years across the political spectrum. (See: https://bit.ly/3xyCXT6)
A recent instance that requires Shuddhi Yagna (purification worship) is the policy paralysis on Special Economic Zones (SEZs). These drivers of growth and foreign exchange reserves have been waiting for a decade for policy certainty and stability.
Modi Government inherited terrible mess in this area from the UPA regime. The former was expected to reform SEZ policy, tax incentives and relevant laws to put SEZs on an even keel. This has not happened till today.
Commerce & Industry Minister (CIM) Piyush Goyal did not refer to ‘SEZs' even once in the foreword to Foreign Trade Policy (FTP) 2023. The abbreviation ‘SEZ' went missing in the official presentation of FTP unveiled on 31 st March 2023. There was hardly anything new on SEZs, both in the detailed policy and in the handbook of procedures on FTP.
This oversight is unwelcome as SEZs policy is a great legacy and a big-ticket reforms from Vajpayee Government. It unveiled SEZ policy on 31st March 2000 as an engine for export-led growth. The policy formed part of larger export-import policy (later renamed as FTP).
Read more: Shuddhi Yagna on SEZs Calls for DESH Ordinance
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Created on Thursday, 21 November 2019 02:34
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(Image Courtesy: PIB)
India’s decision to not join the Regional Comprehensive Economic Partnership (RCEP) is generating sound and fury. This should lead to a holistic study of the net global benefits, if any, of thickening jungle of regional trade/free trade/preferential trade agreements (RTAs/FTAs/PTAs).
The total number of RTAs signed during 1948-2018 stand at staggering 681. Of these, 301 are active. Had each bilateral or regional RTA led to rise in respective trade, the global trade would have soared to dizzy height. The situation is actually depressing.
According to WTO release dated 1 October 2019, “Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020”.
World merchandise trade volumes are now expected to rise by only 1.2% in 2019, substantially slower than the 2.6% growth forecast in April. The projected increase in 2020 is now 2.7%, down from 3.0% previously, it notes.
This issue also finds mention in United Nations Conference on Trade and Development (UNCTAD) report titled ‘Review of Maritime Transport 2019’.
Released on 30th October 2019, the Report points out that world maritime trade lost momentum in 2018, with volumes expanding at 2.7 per cent, below the historical averages of 3.0 per cent and 4.1 per cent recorded in 2017.
With these chilling facts in view, we thus need to put common-sensical questions on:1) Correlation between surging RTAs and global slowdown in both trade and economic growth. 2) Hype over RTAs as womb of global value chains (GVCs) and 3) Factors that negate the potential benefits of RTAs.
Read more: Global Trade & Economic Growth Lose Speed in RTAs Maze
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Created on Thursday, 03 January 2019 07:47
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(Image Courtesy: Dedicated Freight Corridor Corporation of India)
When United States Government Accountability Office (GAO) issues a report to tighten enforcement of Buy America Act (BAA) of 1933, it is time to turn eyes on Government procurements (GPs) across the nations.
They are akin to Aladdin’s Magic Lamp containing elixir for free & fair global trade. On the other hand, if a Government’s right to spend is considered as a no-go terrain for globalists, then complete opening up of GPs to imports can be viewed as allowing anyone entry into one’s bedroom.
GPs, coupled with offsets, impact fiscal space at both ends – tax revenue inflows and expenditure efficiency. Offsets, the popular variant of counter-trade, are invariably invoked by developing countries in big-ticket import in defence and aero-space sectors.
Offsets facilitate transfer of technology and local development of components in the importing country. The arms and aircraft exporters are required be to purchase such components under offset contracts.
GP plus offsets (GP+OS) perhaps constitute the most pervasive and tolerable form of protectionism. No wonder such protectionism didn’t get mention in the recently held G20 Summit declaration.
Moreover, global hue and cry over rise in tariff and the usual non-tariff barriers has overshadowed the growth of GP+OS. Major institutions should undertake comprehensive studies at both the national and global levels to assess the impact of GP+OS on national GDP, jobs market and global trade.
Do preferential purchases from local businesses outweigh disadvantages in the form of expenditure inefficiency? Do GP+OS facilitate good growth of excise/VAT & income tax (non-customs revenue) by shifting potential business from foreign suppliers of goods and services to local ones? Are they worth their value as they create or protect jobs?
Read more: Unravel Fiscal Dynamics of Govt Procurement & Offsets
