GST mop-up bounces back in June; crosses ₹90,000 cr

Source: The Hindu Business Line, Jul 01, 2020

New Delhi: The Finance Ministry on Wednesday released the GST collection data for the first three months of the current fiscal. The June collection exceeded ₹90,000 crore, but it was 9 per cent less than the mop-up in the same month last year. This is the first GST data after the pandemic crippled the economy.

The collection was ₹90,917 crore in June, ₹62,009 crore in May and ₹32,294 crore in April. “The GST (Goods and Services Tax) collection for the first quarter of the year is 41 per cent less than the revenue collected during the same quarter last year. However, a large number of taxpayers still have time to file their return for May, ” the statement said.

The collection in June this year is 91 per cent of the GST revenue in the same month last year. The revenue collected from import of goods was 71 per cent of the revenue from the same source in June last year. Revenue from domestic transactions in June 2020 (including import of services) is 97 per cent of the revenue collected under this source during the same month last year.

In June, returns of February 2019, March 2019, and April 2020 have been filed in addition to some returns of May 2020 as the government has allowed a relaxed time schedule for filing of GST returns. Some returns of May, which would have otherwise got filed in June, will get filed during the first few days of July . Commenting on the numbers, Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co, said the increase in GST collection in June is a positive sign and it is an indication that the economy is slowly recovering.

However, it is important to note that many companies paid GST for March, April and May also, in June due to the partial moratorium extended by the government.

“It will be interesting to wait and see how much GST is collected for supplies made in June after unlock 1.0, which will be the true indicator of the economic situation post-lockdown,” he said.

“One fact to be taken into consideration while looking at these collection numbers is that revenue collections are post announcement of government schemes, which were aimed to relax the collection of revenues. These all-cumulative scenarios signify that domestic consumption is back on track, as also the strong comeback of SMEs,” said Kapil Rana, Founder and Chairman, HostBooks Ltd.

BSNL scraps 4G equipment tender to keep Chinese companies at bay

Source: Business Standard, Jul 02, 2020

New Delhi: After banning Chinese apps, the government has decided to scrap its March 23 tender to source fouth-generation (4G) equipment for network upgrade of state-owned Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL).

According to sources, BSNL has been asked to re-tender the order, which will have specifications regarding encouraging domestic telecom equipment makers to participate, but the move is being seen as keeping the Chinese gear makers — Huawei and ZTE at bay.

According to an earlier BSNL notification, the tender was “for planning, engineering, supply, installation, testing, commissioning, and annual maintenance of 4G mobile network in north, east, west, and south zones of BSNL and Delhi, and Mumbai LSA (licensed spectrum access) of MTNL on turnkey basis”.

According to a senior official, BSNL has been asked to re-tender the contract for 50,000 BTS (base transceiver station) for network upgrade. BSNL is in the process of upgrading its network to 4G and BTS that facilitates wireless communication plays a crucial role in it.

Last month, after 20 soldiers were killed by Chinese troops in Galwan Valley of Ladakh, the Department of Telecommunications had directed BSNL to exclude Chinese gear makers from supplying 4G telecom equipment.

In May, BSNL employees had approached Prime Minister Narendra Modi to stop domestic telecom gear makers from scuttling the firm’s revival plan by putting a spanner in the tender for sourcing 4G equipment.

In a letter to Modi, BSNL staff said the issue raised by industry body Telecom Equipment and Services Export Promotion Council (TEPC) was a ploy to stall the 4G equipment procurement and launching of 4G services by BSNL.

All private operators, including Reliance Jio, Airtel, and Vodafone Idea are procuring their 4G equipment from multinational companies like Nokia, Ericsson, ZTE, Huawei, and Samsung, among others.

BSNL would be the last of the telecom companies to join the 4G bandwagon as the company prepares to compete with the likes of Reliance Jio, Bharti Airtel, and Vodafone Idea. The exclusion of Chinese telecom equipment suppliers will further delay the 4G journey for BSNL.

A Bloomberg report on Thursday said the government is likely to advise other telecom operators to shun Chinese equipment, too. The report, quoting people with knowledge of the matter, said the telecom ministry had approached private firms, including Bharti Airtel, Reliance Jio, and Vodafone Idea on their use of Chinese network equipment. A telecom ministry spokesperson was not immediately available for a comment. The telecom ministry met the private operators recently and sought their views on the impact of banning Chinese equipment on costs for roll-out of their proposed 5G networks, the people said.

Customs begins clearing stuck Chinese shipments

Source: The Economic Times, Jul 02, 2020

New Delhi: Indian customs began clearing shipments of Chinese origin that had been stuck at ports for the past 10 days after border tensions escalated. Consignments started moving Wednesday after several representations by multiple industry bodies to various ministries including finance, commerce and industry, chemicals and fertiliser and MSME as well as the Prime Minister’s Office (PMO).

India Inc had petitioned the PMO as delays were hurting the process of normalisation that had begun June 1 with Unlock 1.0. Indian industry relies heavily on inputs from China for its factories and the development threatened to disrupt production.

“Goods are being cleared now… All ports are clearing without 100% physical checking,” a government official told ET. Shipments for which documents were filed up to June 30 will be cleared in this round and no call has been taken on bills of entry submitted after that, he said.

List of Cos Given to Customs
Officials at customs brokers’ associations in New Delhi, Chennai and Mumbai confirmed the development.

However, clearances will continue for imports by US and South Korean companies even after June 30, said a person with knowledge of the development. Officials said a list of companies had been provided to the customs authorities for clearing their consignments without physical checks.

Indian customs authorities at all ports and customs freight stations made 100% physical checks mandatory for all Chinese imports from June 22, bringing clearances to a halt. While there was no official instruction to this effect, authorities said checks were being carried out based on intelligence alerts about narcotics.

The exercise began at Chennai, which receives a bulk of Chinese telecom equipment coming into India besides medical devices and auto components, and soon spread to other ports. The move, soon after the border incident, was seen by industry watchers as a signal by the government to industry to diversify its supply base.

Relaxations were first allowed for US companies such as Apple, Dell, HP and Cisco as well as South Korea’s Samsung. This was later extended to importers of active pharmaceutical ingredients.

It is likely that these relaxations will continue for shipments after June 30 as well, a person familiar with the development said. Physical checks can be cumbersome and a costly affair for the industry as goods can get damaged in the re-packaging process. India imported goods worth $62.4 billion from China in the April-February period of FY20 compared with $70.3 billion in FY19.

Curbs on companies from countries illegally holding Indian land

Source: The Economic Times, Jul 02, 2020

New Delhi: As tensions run high along the border with China, the government is examining a proposal to impose trade and procurement curbs on companies from countries ‘illegally occupying Indian territory’, specifically those active in territories such as Pakistan-Occupied Kashmir (PoK).

ET has gathered that while a final call is yet to be taken, high-level discussions are underway to scrutinise the proposal threadbare, and discuss its implementation and business implications.

Any decision would directly impact Chinese firms as the northern neighbour ‘illegally occupies’ 38,000 sq km of Indian territory in Ladakh. Also, Pakistan, which has occupied a part of Kashmir, has ceded over 5,000 sq km in the Shaksgam Valley to China.

If the proposal is accepted, the curbs are likely to be brought in through changes in the Public Procurement (Preference to ‘Make in India’) Order of 2017, sources said. Some changes may also have to be made in the General Financial Rules. Officials confirmed that the proposal is being looked at carefully, given its ‘high sensitivity’ and possible ramifications on diplomatic ties with China.

In April, without naming China, the government had removed FDI coming in from that country from the automatic route, fearing hostile takeovers. “An entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route,” the notification said.

Big Investments by Chinese Companies
However, the FDI bar preceded the ongoing standoff on the Line of Actual Control (LAC) in eastern Ladakh. The proposal to restrict companies has picked up pace because of the rising tensions between India and China. On Monday, India banned 59 Chinese apps by invoking the national security clause in the IT Act. There are several Chinese companies in India with huge investments in infrastructure projects and telecom equipment.

The discussions are being held amid a growing chorus to keep China’s Huawei out of India’s planned 5G trials.

Issued in June 2017, the Public Procurement (Preference to ‘Make in India’) Order of 2017 could be key to more such moves. The order is central to the initiative to ensure preference in government procurements for local suppliers, and calls for a minimum local content of 50%.

THE PROVISION
The only provision that deals with foreign governments in the 2017 order is Clause 10(d). This clause says that if a nodal ministry is satisfied that Indian suppliers of an item are not allowed to participate/compete in procurements by a foreign government, it may restrict or exclude bidders from that country from eligibility for procurement of that item and/or other items.

New Delhi has in the past urged other nations to not invest in Indian territories illegally occupied by neighbours. In September 2019, ET had reported that defence minister Rajnath Singh had urged South Korea to block investments in infrastructure and other projects in PoK.

Korea had assured India that it would not grant any governmental benefits, such as subsidies and tax breaks, to its companies setting up shop in the disputed region.

Coming soon, an e-marketplace only for tribal sellers

Source: ETRetail.com, Jun 29, 2020

New Delhi : Tribal artisans will soon be able to sell their products at the click of a mouse with the government gearing up to launch a specialised e-marketplace for them this Independence Day.

“We will launch the website – Tribes India e-Mart – on Independence Day on August 15. It will be similar to selling your products on e-commerce giants Amazon or Flipkart. The difference is just that it will be only for tribals,” Managing Director of TRIFED Praveer Krishna said.

A trial run of the e-marketplace will continue from July 30 to August 14.

The government had set up Tribal Cooperative Marketing Development Federation of India in 1987 with an aim to provide fair price for products of tribals across the country.

The agency functions under the Union Tribal Affairs Ministry.

Krishna said tribal artisans will be trained and asked to register themselves as sellers on the website.

“The staff at our 15 regional offices across the country and state government officials working with TRIFED will train these tribals and help them get registered,” he said.

The objective is to bring around 5 lakh tribal artisans online, thus connecting them to a larger national and international market, he said.

Around 5 lakh tribal items across 20,000 categories, including textiles, paintings, home decor items, jewelry, and metal crafts, will be available on the website.

The products of tribal sellers will undergo a strict quality check and a committee will fix prices for each item.

There will be local collection centres from where the products will be supplied across the country.

For every Rs 100, Rs 70 will go to the tribals sellers, Krishna said.

“We will start with around 5,000 tribal artisans on July 30. The target is to connect 5 lakh tribal artisans to the platform and give them access to a larger market,” he said.

“This is in line with Prime Minister Narendra Modi’s vision of an aatmanirbhar (self-reliant) India. Our motto is ‘go vocal for local, go tribal’,” he said.

The worth of a shirt they (tribals) sell in local markets for Rs 200 is Rs 1,000 in Delhi, Krishna said, explaining the economics behind the idea.

Best quality organic products will be delivered to buyers, who will have the option to return the item within 15 days if they are not satisfied with it, he said.

On Saturday, Union Tribal Affairs Minister Arjun Munda launched tribal products on Government e-Marketplace (GeM).

This will help government departments and officers purchase tribal products directly from the website without going through a lengthy process of floating a tender and receiving bids, Krishna explained.

With more and more people going online to meet their various needs – be it for business operations, shopping and communication, an important strategic push has been to adopt an all-encompassing digitization drive to map and link its village-based tribal producers, Munda said.

Ministry launches online portal for MSME registration

Source: The Hindu Business Line, Jun 30, 2020

The Ministry of Micro, Small and Medium Enterprises (MSMEs) on Tuesday launched a new portal for MSME registration. The new process of classification and registration of enterprises starts on July 1.

“The MSME registration process is fully online, paperless and based on self-declaration. No documents or proof are required to be uploaded for registering an MSME,” said an official release.

The portal guides entrepreneurs step by step as to what they should know and what they should do.

After completion of the registration process, an ‘Udyam Registration’ Certificate will be issued. This certificate will have a dynamic QR Code from which the webpage on the portal and details about the enterprise can be accessed, the release added.

The Ministry also clarified that except this portal (www.udyamregistration.gov.in) and the government’s Single Window Facilitation System, no other private online or offline system, service, agency or person is authorised or entitled to do MSME registration or undertake any activity related to the process.

“No enterprise is supposed to file for more than one Udyam Registration. However, any number of activities including manufacturing or service or both may be specified or added in one registration,” the official release added. The registration process is free.

Import Blockage: Relief for Korean, Japanese, US firms; Chinese still stuck

Source: Financial Express, Jul 01, 2020

A week after the customs authorities clamped down on import consignments coming from China by subjecting them to physical checks reportedly on alerts of some contraband, there’s some respite for around 11 companies, which include the likes of LG Electronics, Samsung India, Toyota Kirloskar, Honda Cars, Siemens, and HP India.

These firms fall under Tier 3 AEO (authorised economic operators) importers and after the representation of the electronics body, India Cellular and Electronics Association (ICEA), the authorities have softened their stand and agreed not to subject their consignments to 100% physical checks.

The other company, which despite not being a Tier 3 AEO, has been allowed relaxation is Foxconn, but only for its plant which manufactures phones for Apple. Consignments for its other plant, which manufactures phones for the Chinese firm Xiaomi, have not been granted the relaxation and continue to be stuck at the ports.

Out of a total of 3,503 AEOs in the country, only 11 are of Tier 3 category. The AEOs are basically green channel importers who under normal circumstances get clearance automatically without any examination. Importers are categorised as Tier 1, 2 and 3 based on their size and past track record. Tier 3 is the highest category and importers make to this grade after long years and distinguished track record.

The result of this selective approach adopted by the customs authorities has ensured that plants of South Korean majors, LG and Samsung, or Japanese Toyota and Honda or US-based Apple’s do not suffer, but production has been severely hit of Chinese firms like Xiaomi, Oppo, Vivo, Realme, etc. Though the executives of these firms remained tight-lipped, industry sources said that total stoppage of production is not ruled out in their cases within the next few days.

Although several industrial sectors have been hit hard due to delays in clearance of import consignments, the biggest pinch is being felt by electronics players – manufacturers of smartphones, tablets and laptops – as they operate on very thin stocks, barely of a few days. Any delay in clearing consignments throws their entire production schedule out of gear.

According to Pankaj Mohindroo, chairman, ICEA, “The industry is already in very deep distress having lost production of over Rs 40,000 crore and has only recovered to less than 40% of normalcy. We have just begun to limp back to normal after a massive set of losses for three months – and now this. India is at a very crucial moment with the launch of production linked incentive scheme and two other schemes which require a high level of motivation in the headquarters of global and local companies.”

The vendors of automobile manufacturers also source components from China but their inventory levels are of few weeks therefore they do not face any immediate crunch, but if the delay runs into a longer period of time, they too would feel the pinch.

According to Rajan Wadhera, president of Society of Indian Automobile Manufacturers, “Inordinate delays in clearance due to congestion at ports could eventually impact manufacturing of vehicles in India. The industry is piecing itself together as growth is limping back. Any further disruption at this juncture is best avoided.” Other engineering sectors like steel etc, source mainly machinery parts from China, where the frequency is maybe twice a year, so they are better placed.

Relief for pharma firms as govt starts clearing API imports from China

Source: Business Standard, Jul 01, 2020

New Delhi: Easing restrictions on imports from China, the Customs department has decided to clear pharma raw material shipments from that country. Consignments of 11 top importers, including LG, Samsung, Toyota, Honda, and Siemens, will also be allowed entry, relieving them of the 100 per cent inspection rule.

This comes after a week of economic disruption caused by introducing stringent scrutiny, resulting in shipments originating in China getting held up at Indian ports.

After representations from industry bodies, the government on Tuesday cleared imports of active pharma ingredients (APIs) from China. Besides, the top importers falling within the Tier 3 category of the Authorised Economic Operator (AEO) programme were given exemption from stringent scrutiny.

“Imports of APIs and shipments from AEO T3 importers have been exempt from the 100 per cent check. The Indian pharma industry is heavily dependent on API imports from China and they were facing a huge shortage of raw material. Besides, the tier 3 AEOs are the top importers who meet the highest level of compliance, so they have been given the relaxation,” said a government official.

He said these shipments would get moving from Wednesday. Over 60 per cent of APIs used in India come from China. On June 22, Customs officials in Chennai and Vizag were asked to put all shipments from China on hold until further orders. This was done on the basis of intelligence inputs about “illegal imports of narcotics”.

Informal instructions were given to all ports and airports to do 100 per cent physical checks of shipments originating in China. Bilateral trade between China and India was worth $88 billion in FY19, with a deficit of $53.5 billion in China’s favour.

India is also heavily dependent on China for intermediates and key starting material (KSM) for making drugs. This dependence has grown over the years as local manufacturers have moved to high-margin products (after they could not expand freely due to pollution norms) and Chinese APIs are 30 per cent cheaper than domestic stuff.

The country mostly imports APIs and intermediates for vitamins (like Vitamin C), common antibiotics, and metformin (diabetes) from China. The government has now drawn up a plan to reduce dependence on the country by incentivising the local production of APIs through production-linked incentives (PLI) of up to Rs 10 crore. The government has identified 41 products (molecules), covering 53 crucial APIs, for which India is dependent on China.

Almost 80 per cent of the 41 are intermediates. In 2016, the Customs department had launched the Authorised Economic Operator, or AEO, scheme. It is a voluntary programme, under which an importer gets preferential treatment from Customs for being compliant with supply-chain security standards. AEOs get benefits like fast-tracking shipments, deferred payments, exemption from issuing guarantees, and preferential treatment from Customs.

They are classified into three categories — T1, T2, and T3 — with T3 representing the highest level of compliance. Of the more than 3,000 AEOs, only 11 are in the T3 category. Meanwhile, the government is planning to curtail imports of at least 300 non-essential items from China, either through duty hikes and imposing non-tariff barriers.

India’s fiscal deficit at Rs 4.66 trn, 58.6% of annual target in 2 months

Source: Business Standard, Jun 30, 2020

New Delhi: India’s federal fiscal deficit in the first two months through May stood at Rs 4.66 trillion ($61.67 billion), or 58.6% of the budgeted target for the current fiscal year, government data showed on Tuesday.

Net tax receipts during April-May period were Rs 33,850 cr ($4.48 billion), while total expenditure was Rs 5.12 trillion, the data showed, indicating the government was front-loading its budgeted spending to combat the impact of pandemic.

India’s federal fiscal deficit touched 4.6% of GDP in 2019/20 fiscal year ending March, from initial estimates of 3.3%.

The latest figures for India’s fiscal deficit come at a time when the Centre is said to be seriously considering direct monetisation of the fiscal deficit by RBI having sidestepped the idea for the first half (H1) of 2020-21 (FY21). Business Standard has learnt that it is being seriously considered for the second half of FY21.

“It is a high possibility,” said a top government official, when asked if the Centre was considering direct deficit monetisation. “In the latter half of the year, we will have a clearer picture of the economic damage the Covid-19 pandemic has unleashed, and may require further resources to provide support to the economy,” the official added.

The final decision may be taken before the borrowing calendar for October 2020-March 2021 is announced in late September. Earlier, the Chief Economic Advisor to the Government of India, Krishnamurthy Subramanian had told Business Standard that the Centre’s fiscal deficit in 2020-21, could be 1.7-1.8 percentage points higher than the 3.5 per cent of gross domestic product, which was targeted in the Budget.

India-Bangladesh form LPG joint venture

Source: The Economic Times, Jun 30, 2020

NEW DELHI: New Delhi: Indian Oil Corp has agreed to form an equal joint venture with Bangladesh’s Beximco LPG to set up a terminal to import liquefied petroleum gas in Bangladesh.

Indian Oil’s Dubai unit IOC Middle East FZE and Beximco’s holding company RR Holdings Ltd, Ras Al Khaimah, UAE have signed an agreement for LPG business in Bangladesh, as per a statement by Indian Oil.

The joint venture would begin with acquiring Beximco’s existing LPG assets in Bangladesh. “We intend to set up a large LPG terminal at a deep-water port in Bangladesh, which would facilitate receipt of LPG in Very Large Gas Carriers, leading to reduction in cost of imports. Reduction in cost of import would help make LPG available at an affordable price to the people of Bangladesh,” said Sanjiv Singh, Chairman, Indian Oil.

The JV also intends to diversify into other downstream oil and gas businesses such as lube blending plant, LNG, petrochemicals, LPG export to north east India through pipeline between two nations and renewable energy, the statement said.