Govt to come up with 58 quality control orders in next 6 months to stop imports of sub-standard goods

Source: Financial Express, 06 March 2023

The government will come up with as many as 58 quality control orders (QCOs) for products such as aluminium, copper items and household electrical appliances in the next six months, in a move aimed at containing import of the sub-standard goods and boost domestic industry, a senior government official said. The department for promotion of industry and internal trade (DPIIT) is working hard to promote manufacturing of high quality products in the country.

“Since 1987, only 34 QCOs have been issued. But now we are coming up with 58 QCOs in the next six months. The main objective is to stop import of sub-standard goods. These mandatory norms will be for domestic and foreign players,” Joint Secretary in the DPIIT Sanjiv told PTI. There will be 315 product standards under these orders. The items, under these orders, cannot be produced, sold/traded, imported and stocked unless they bear the BIS (Bureau of Indian Standards) mark.

“These QCOs will be notified within a year after following due process,” he added. He said that the move would also help in providing global markets for domestic goods. In order to facilitate smooth implementation of these orders, particularly for micro and small industries, provisions for additional time periods to get BIS licences and upgrade their testing facilities are being contemplated, he added.

Similarly, exemption to very micro units (investment in plant and machinery up to Rs 25 lakh) is being contemplated on a case to case basis. “With the notification of CCOs, manufacturing, storing and sale of non-BIS certified products are prohibited as per the BIS Act 2016,” the official said.

The violation of the law can attract a penalty of up to two years of imprisonment or with fine of at least Rs 2 lakh for the first offence which increases to Rs 5 lakh minimum for the second and subsequent offences.

Recently, BIS has confiscated 18,600 non-BIS certified toys during raids on several retailers including Hamleys, Wh Smith, Archies and Kids Zone in malls, airports and markets. These orders are issued by the department in consonance with the WTO (World Trade Organisation) Agreement on Technical Barriers to Trade (TBT) for industries falling under its domain.

The agreement recognises that no country should be prevented from taking measures necessary to ensure the quality of its exports or for the protection of human, animal or plant life or health, of the environment, or for the prevention of deceptive practices. As a policy, the standards formulation of BIS has been harmonised as far as possible with the relevant standards as laid down by the International Organisation for Standardisation/International Electrotechnical Commission.

The standard issued for any product is for voluntary compliance unless it is notified by the central government to make it mandatory through issuance of technical regulations primarily through notification of QCOs and compulsory registration order (CRO) of BIS conformity assessment regulations, 2018. As on March 1 this year, BIS has issued about 22,228 standards, out of which 9,774 are product standards. Till date, only 404 standards have been made mandatory through notification of QCO/CRO.

Saniv said that QCO for toys has changed the face of that sector. Due to the quality norms for toys, imports of toys have reduced significantly and exports have jumped. The country’s toy exports have touched Rs 1,017 crore during April-December period this fiscal, according to the government data. In 2021-22, the exports stood at Rs 2,601 crore. During April-December 2013-14, the shipments were at Rs 167 crore. In 2018-19, toys worth Rs 2,960 crore were imported into India. The overall import of toys in India reduced by 70 per cent to Rs 870 crore in 2021-22.

These orders would help in promoting sale of quality products through the ONDC (open network for digital commerce) protocol, being framed by the DPIIT. During April-January this fiscal, India’s imports rose to USD 602.2 billion as against USD 494 billion in the same period previous year.

Govt to bring retail trade policy to promote ease of doing business for traders

Source: Financial Express, 06 March 2023

The government is working to bring a national retail trade policy for brick and mortar retail traders with an aim to promote ease of doing business, a senior official said on Monday.Joint Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Sanjiv said that the policy would also help in providing better infrastructure and more credit to traders.

The Department, he said, is also working to bring an e-commerce policy for online retailers.”We want that there should be synergy between e-commerce as well as retail traders,” Sanjiv said at a conference on FMCG and e-commerce here.

The Department is also in the process of formulating an insurance scheme for all the retail traders. The accident insurance scheme would particularly help small traders of the country, he added.

”The government is trying to do policy changes not only in e-commerce but national retail trade policy which will be for physical traders which will be introducing ease of doing business, providing better infrastructural facilities, providing more credit and providing all sorts of benefits to traders,” he said.The Joint Secretary urged the industry to focus on producing high quality products.

Govt to issue 50 Quality Control Orders by Q2 of FY24: DPIIT

Source: Economic Times, 26 December 2022

The Department for Promotion of Industry and Internal Trade (DPIIT) plans to issue 50 Quality Control Orders (QCO) by the second quarter of FY24 and is in the process to bring aluminium products, lighters, sports goods, potable water bottles and insulated flasks, resin-treated compressed wood laminates and wooden furniture under quality norms, to curb substandard imports and boost domestic manufacturing.

The department has floated draft control orders for all these products after consulting the Bureau of Indian Standards (BIS), it said in a series of office memoranda.

“DPIIT is continuously engaged with BIS and relevant stakeholders for identification of products for which QCOs could be issued. It is our endeavor to issue about 50 QCOs by the second quarter of 2023-24,” the department said.

The items, under these orders, cannot be produced, sold/traded, imported and stocked unless they bear the BIS mark.

“Department for Promotion of Industry and Internal Trade has prepared a draft quality control in respect of lighters in consultation with the Bureau of Indian Standards in order to bring it under mandatory BIS certification keeping in view the human safety and for ensuring the optimum quality of product,” the department said in one such office memorandum.

Work chairs, tables and desks, storage units, beds and bunk beds, wood-based boards and plywood, are proposed to be brought under “mandatory BIS certification keeping in view the human safety and for ensuring the optimum quality of the product”.

Aluminium/ Aluminium Alloy Products, Bolts, Nuts and Fasteners, Ceiling Fan Regulator, Copper Products, Deepwell Handpumps & Components, Drums and Tins, Fire Extinguishers, Hand Tools, Hinges, Household and similar electrical appliances, Laboratory Glassware, Solar DC Cable & Fire Survival Cable, Steel Wires/ Strands, Nylon/ Wire Ropes and Wire mesh Valves and Taps, and Welding Wires are sought to be brought under quality control.

Lay offs are deemed illegal if not carried as per Industrial Disputes Act: Minister Bhupender Yadav

Source: Financial Express, 08 December 2022

Amid reports of mass layoffs by several firms, including in the IT sector, Labour and Employment Minister Bhupender Yadav on Thursday said any retrenchment and layoffs are deemed to be illegal if not carried out as per the provisions of the Industrial Disputes Act.

The minister was replying in the Rajya Sabha to a question about whether the government has taken cognizance of the mass layoffs in various multi-national and Indian companies in the IT, social media, Edu Tech firms and related sectors.

Matters relating to layoffs and retrenchment in industrial establishments are governed by the provisions of the Industrial Disputes Act, 1947 (ID Act) which also regulates various aspects of layoffs and conditions precedent to retrenchment of workmen, said Yadav in reply to a question in the Rajya Sabha.

As per the ID Act, establishments employing 100 persons or more are required to seek prior permission of the appropriate government before effecting closure, retrenchment or lay-off.

“Further, any retrenchment and lay-off are deemed to be illegal which is not carried out as per the provisions of ID Act. ID Act also provides for right of workmen laid off and retrenched for compensation and it also contains provision for re-employment of retrenched workmen,” he said.

Based on their respective jurisdictions as demarcated in the ID Act, Central and State Governments take actions to address the issues of the workmen and protect their interests as per the provision of the Act.

The jurisdiction in the matters with regard to multi-national and Indian companies in the IT, social media, Edu Tech firms and related sectors lie with the respective state governments, the minister said.

He also informed that no data is maintained at the Central level on laying off and retrenchment with reference to these sectors.

Steel imports’ scrutiny norms tweaked

Source: Financial Express, 08 July 2022

In a notification,the DGFT said importers of steel and products need to register with the Steel Import Monitoring System within 60 days before the arrival of their consignment. Earlier, they were mandated to do so at least 15 days before the expected arrival of the consignment.

The new rule, thus, grants the importers more time to register their imports. The government had in late 2020 directed traders to register themselves with the SIMS.

Cross-border insolvency cases: Government will soon put out for consultation the draft legal framework

Source: Economic Times, 19 November 2021

The government will soon put out for consultation the draft legal framework for cross-border insolvency cases.

The Ministry of Corporate Affairs (MCA) and the Insolvency and Bankruptcy Board of India (IBBI) met on Thursday to finalise the contour of the framework to settle bankruptcy cases of companies that have business or operations in more than one country. “A final draft paper to be floated by the end of this month, outlining the legal framework for the cross-border insolvency,” said a government official in the know.

Based on the feedback, the government will try and move a Bill to amend the Insolvency and Bankruptcy Code (IBC) in the upcoming winter session of Parliament.

The amended Code would empower insolvency professionals (IPs) and creditors to access assets outside India of corporate debtors, maximising the value for all stakeholders. Similarly, foreign creditors to an Indian entity become party to bankruptcy proceedings if the borrower goes bankrupt.

Sources privy to the meeting said there were discussions on the details of adopting a law based on the UNCITRAL Model Law on Cross-border Insolvency, 1997 and how it would be beneficial to Indian creditors.

No income tax NOC/NDC required for voluntary liquidations, says IBBI

Source: Business Standards, 18 November 2021

In a move that will ease some compliance burden, insolvency professionals would not be required to obtain any non-objection or no dues certificate from the Income Tax Department while handling the voluntary liquidation process, the Insolvency and Bankruptcy Board of India (IBBI) has clarified.

“The process of applying and obtaining of such NOC/NDC from the Income Tax Department consumes substantial time and thus militates against the express provisions of the Code, and also defeats the objective of time-bound completion of process under the Code,” IBBI said.

Section 178 of the Income-tax Act, 1961 obligates a liquidator to fulfil certain income tax related requirements. The section explicitly also states that its provisions “shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force” except the provisions of the Code.

IBBI clarified that liquidators had been seeking these certificates even though the Code or the Regulations did not ask for such a requirement.

“This clarification is very important as many of the voluntary liquidation matters keep dragging on only because of the delay or non-availability of No Objection or No Dues letter from income tax. Liquidators fear that in case any claim arises after the dissolution, it will be on the head of the liquidators. This clarification would fast track the process substantially,” said Manoj Kumar, partner, Corporate Professionals.

Industry experts said that many liquidators had been raising these queries to the IBBI. “The principles that the Code enjoys supremacy and that the Code intends to achieve the objective of being time-bound are reiterated with the amendment. This would operationally ease the process of voluntary liquidation,” said Veena Sivaramakrishnan, partner, Shardul Amarchand Mangaldas & Co.

Regulation 14 of the IBBI voluntary liquidation process mandates the liquidator to make the public announcement within five days of his appointment, calling for submission of claims by stakeholders within thirty days from the liquidation commencement date.

It also obligates all the financial creditors, operational creditors including government, and other stakeholders to submit their claims within the specified period. If the claims are not submitted in time, the corporate entity may get dissolved without dealing with such claims.

At the end of June 30, 2021, 968 companies had initiated voluntary liquidation. Final reports in 438 cases had been submitted and nine processes had been withdrawn, according to the IBBI’s newsletter.

Most of these companies were small entities. Over 530 of them had a paid up capital of less than Rs 1 crore and only about a hundred of them had a paid up capital of more than Rs 5 crore.

Expert panel pitches for national dashboard for insolvency data

Source: Economic Times, 14 November 2021

An expert panel has suggested designing a national dashboard for insolvency data, saying “reliable real-time data” is essential to assess the performance of the insolvency process under the IBC.

The Insolvency and Bankruptcy Code (IBC), which provides for a time-bound and market-linked resolution of stressed assets, has been in force for more than five years now.

The working group on tracking outcomes under the Code has suggested a framework based on ‘Effectiveness, Efficiency and Efficacy’ with respect to Corporate Insolvency Resolution Process (CIRP).

According to the group, chaired by former Sebi Chairperson G N Bajpai, reliable real-time data is essential to assess the performance of the insolvency process.

While proposing the creation of the national dashboard for insolvency data, the panel also said the IBBI has made commendable efforts in publishing quarterly data on the insolvency resolution process in detail.

The data published by the Insolvency and Bankruptcy Board of India (IBBI), a key institution in implementing the Code, include those on insolvency filings, recovery amount and duration of the insolvency process across corporate debtors for all creditors.

In its report, the group said that cross-validation of data sourced from multiple data banks is a challenge in making credible assessments.

Against this backdrop, there can be a “national dashboard of insolvency data by using the existing data sources to the extent possible along with specific insolvency indicators, which the IBBI reports on a quarterly basis”.

Another suggestion is for the IBBI to look at including quantitative data on cost indicators such as court/bankruptcy authority fees, resolution professional’s fees and asset storage and preservation costs in its quarterly updates.

The report noted that data on time, cost and recovery rates will allow a reliable evaluation of the insolvency process with respect to parameters of effectiveness and efficiency.

Further, the report said it was important to track the performance of related economic indicators to assess the performance of the insolvency process for other objectives such as ‘promoting entrepreneurship’ or ‘enhancing credit availability.

“Such an assessment would measure the performance of the system with respect to the ‘efficacy’ parameter.

“The WG (Working Group) recommends a range of indicators such as the number of new companies registered, credit supply to stressed sectors like real estate, construction, metals etc, change in the cost of capital (particularly for stressed sectors), the status of non-performing loans, employment trends, size of the corporate bond market and investment ratio for the related sectors,” it added.

Fiscal sops, stricter rules in the works to back circular economy

Source: Economic Times, 15 November 2021

India is eyeing a slew of measures, including fiscal incentives and stricter regulations, as part of the framework being firmed up to encourage a circular economy.

Extended producer liability in 11 sectors or products and a refund option for products after use besides some other fiscal sops could be introduced to aid the switch to circular economy from a linear one.

The 11 sectors include scrap metal (ferrous and non-ferrous), lithium ion (Li-ion) batteries, tyre and rubber recycling, gypsum, end-of-life vehicles (ELVs), electronic waste, toxic and hazardous industrial waste, municipal solid waste and liquid waste, agriculture waste, used oil waste (generated from tools and machines) and solar panels.

The idea is to revamp the model of production and consumption in these sectors going forward. “Stricter regulations and compliance across these sectors along with some fiscal measures are being considered,” a top government official told ET. Compliances would be strengthened without compromising with the ease of doing business, the official added.

Extended producer responsibility provisions have already been put in place for plastics and e-waste.

While the work on circular economy has been going for some time, NITI Aayog had put it on a fast track following Prime Minister Narendra Modi’s Independence Day address laying out that the country would emphasize on ‘Mission Circular Economy’.

A circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products if possible to tackle global challenges like climate change, biodiversity loss, waste and pollution.

The government estimates that a circular economy path could bring in annual benefits of ₹40 lakh crore or $624 billion in 2050.

Strict Monitoring
High-level committees formed across the identified sectors are laying out the timeline for the work to be done to help India achieve success in mitigating climate change and adhering to its global commitments on environment.

“Short-term, medium-term and long-term goals are being set for these sectors in consultation with the line ministries,” a top government official told ET.

Short-term targets would be for the remaining period of the current fiscal while medium to long-term targets are being put in place for a period extending up to two years.

The official said these targets would be regularly reviewed.

OECD global tax deal: Large Indian companies rethink overseas investment plans

Source: Economic Times, 25 October 2021

Several large Indian companies exploring outbound investments have put their plans on hold following a global tax deal over concerns of additional taxes and compliance challenges related to the new framework adopted by the world’s leading industrial bloc.

Large companies, especially in the information technology (IT) and information technology-enabled services (ITeS) sectors, were looking to expand in the Middle East, Africa and other Asian countries. To route these investments, the companies were looking to set up entities in tax havens and countries such as Dubai, Singapore, Ireland, Mauritius and the UK, as part of their global structuring and tax and compliance planning.

The Organisation for Economic Cooperation and Development’s (OECD) global tax deal now means that the Indian companies could see their tax liability go up in the near future.

Earlier this month, the OECD had announced that 136 countries had agreed to join an accord to impose a two-pillar global tax reform plan.

As per the deal, large multinationals have to pay a minimum tax of 15% on their global incomes from 2023 and those with profits above a threshold will now have to pay taxes in the markets where they conduct business.

Indian multinationals have now reached out to their legal and tax experts to figure out whether they can still go ahead with the investments or they need additional ring fencing of their entities in the tax havens.

“Under OECD deals, currently only large companies are covered but for several Indian companies that are planning to use certain jurisdictions to make investments in the Middle East, Africa or Asia, this could cause complications in the future,” said Uday Ved, partner at tax advisory firm KNAV. “Most Indian companies want to hold certain entities in countries such as Singapore or UAE to ring fence holding entities here and the tax savings are incidental, but the global tax deal means that they might have to tweak some of these structures.”

Take a large multinational that is looking to invest in Australia, for instance.

The company was looking to set up an entity in Singapore or Mauritius through which the investment would have been made. “The main purpose was to create a buffer between the Australian entity and the Indian holding company, and tax advantage was incidental,” a tax lawyer advising the company told ET.

The company has now reached out to legal advisors to figure out if such a structuring could result in additional taxes or any other compliance issues.

“The biggest problem is whether there could be additional taxes even on the entities based in Singapore or Mauritius. While tax treaties with India would come into play in this regard, the company doesn’t want to let go of control (in Australia) and still wants to limit the risks to its Indian holding company,” the legal expert said.

Traditionally, large Indian groups tend to set up entities in Europe or Singapore to invest outside India. These entities practically work as a pass through vehicles and attract no taxes. However, the OECD deal would mean that in the years to come, if the global taxes are less than 15% additional taxes could apply.

While the OECD deal, as of now, is only applicable to around 100 multinationals that have a particular size, this is set to create tax complications for other companies and entities that are present in tax havens, say tax experts.

The new OECD framework would mean that large companies will have to disclose their global revenues and pay taxes on them.