Ministries Ready Plan to get Economy Started Relook at Trade Pacts likely to Boost Manufacturing
Telecom Bats for More Liberal M&A Policy
The new government is likely to take a relook at the country’s trading arrangements, including tariff structures under free trade pacts that may be undermining domestic manufacturing. “There is a need to spur manufacturing…A group is looking at the tariff structure in respect to the trading arrangements,” a finance ministry official told ET. According to the official, the underlying principle of trading arrangements should be to promote value addition and manufacturing in the country. While this requires tariffs to be lower on inputs and higher on processed and final goods, sever- al of India’s trade pacts are not aligned to this principle, the official said.
A study is expected to suggest a course correction by emphasising removal of inverted duty structure to eliminate the cost disadvantage for Indian manufacturers.
The revenue department, too, has expressed reservations on India signing a Regional Comprehensive Economic Partnership (RCEP) that includes China, according to another finance ministry official.
India has signed free trade agreements with about 20 countries, including Japan, Korea, ASEAN nations, Sri Lanka and Nepal while it is negotiating market-opening pacts with Australia, Canada, New Zealand and the European Union. A course correction is also seen serve two objectives—discouraging imports that have posed a challenge to the external sector and boosting domestic manufacturing. Poor performance of India’s industrial sector has become a cause for worry for policymakers who are looking for ways to create jobs. Industrial production remained almost flat in 2013-14, declining 0.1 % compared with an expansion of 1.1% in 2012-13, mainly on account of a drop in output in manufacturing, especially capital goods. The finance ministry has readied a detailed plan outlining key action points required to improve business sentiment, spur growth, contain inflation and main- tain price stability, boost infrastructure, deepen financial sector and rationalise the foreign investment regime. The government is expected to take up market reforms, paving the way for free movement of farm goods, open market sales and deeper forward markets to enable price discovery of agri goods.
In infrastructure, the focus is on energising the public-private partnership model by inviting bids for projects after clearances are in place and at least 80% of the land required has been acquired. The idea is also to improve model concession agreements to cut down on litigation. On the taxation side, the goods and services tax and the direct taxes code are pending reforms. Complete initiatives such as specturm trading and sharing, national optic fibre network, full number portability Measures to boost energy security, reduce oil import bill and encourage investments in the sector
ANANDITA SINGH MANKOTIA
The telecom department has batted for a more liberal M&A policy in a presentation to the Cabinet secretary, indicating that the new government could relook at the recently unveiled rules which require a buyer to pay market-linked price for airwaves that come with any acquisition, a clause which was panned by operators and analysts. The presentation on Tuesday, which was made in a runup to government formation next week, highlighted the hits and misses of the outgoing UPA-II government, with the major incomplete initiativesbeingspectrumtrading,sharing, national optic fibre network and full mobile number portability. It also proposed further rationalisation of the annual charges that operators pay to use bandwidth, or spectrum usage charge (SUC). The presentation, a copy of which was available with ET, showed that the telecom department (DoT) had already incorporated various points from the BJP manifesto as part of its action plan, including provision of Wi-Fi facilities at urban centres and the creation of digital highways. People privy to the meeting between the Cabinet secretary and DoT secretary MF Farooqui told ET that the department was asked to highlight its achievements in the recent past and point out initiatives which didn’t go according to plan. They added that while the department had prepared an exhaustive list of issues, the higher authority asked for four or five issues that would top the department’s agenda, if it was given a “free-hand” to implement policy. The department will now go back to the government with a refined list of top five issues and proposals. A major point in the telecom department’s presentation was a proposal for easier entry and exit from the sector. This came within three monthsof thepreviousgovernment notifying a new merger and acquisition policy which relaxed the market share cap of a merged entity by increasing it to 50% from 35%.
Enabling Ease of Doing Business: Further Liberalising FDI Regime:
Boosting Exports: SPUR JOBS Decision on special economic zones to make them more attractive