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In relief for India, US could delay action on oil, trade sanctions till June

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India and the US won’t immediately escalate vexed trade-related issues and are expected to hold their position on all important matters till a new government is formed in New Delhi by the month-end, officials with knowledge of the matter said on Tuesday.

US commerce secretary Wilbur Ross too hinted the two sides will maintain their positions in his speech at the Trade Winds business forum, while raising the issue of trade imbalance with India.

“We applaud India’s commitment to addressing some of these barriers once the government is reformed, probably starting in the month of June,” he said.

Election-bound India is expected to form a new government before the tenure of the current Lok Sabha ends on June 3.

India’s main concerns include the US decision to enforce sanctions on oil imports from Iran, one of the country’s main energy suppliers, and the withdrawal of benefits under the Generalized System of Preferences (GSP) programme.

Washington is concerned by the trade imbalance because of tariff and non-tariff barriers, and regulations that US officials say put foreign companies at a disadvantage.

According to the officials cited above, India has explained to the US that strategic matters, including trade-related issues, can be effectively dealt with after the new government is formed.

They added the US has hinted it might make a final decision on withdrawing incentives under GSP after the new government is formed.

The two sides are also locked in disputes over Indian price caps on imported US medical devices, and e-commerce rules barring companies from selling products through firms in which they have an equity interest.

Ross contended India’s push to get foreign firms to store more of their user data locally is a hindrance to trade, and said India’s treatment of Walmart after its acquisition of Flipkart was an “important issue”.

“So the American companies are showing very good will and a very cooperative attitude towards ‘Make in India’ and the other programmes,” Ross told CNBC-TV18. “But there’s a limit to how far the discriminatory behaviour can go.”

Commerce minister Suresh Prabhu said he had “an excellent” meeting with Ross on Monday, during which they discussed “how to take this relationship to the next level”.

Prabhu expanded US President Donald Trump’s slogan “Make America great again” to “Let’s make America great again by making India-US relationship far better again”. Ross rephrased it to “MAGAWIC”, or “Make America great again with Indian cooperation”.

Ross told the business forum US technologies and expertise can play a key role in developing India’s economy but faced “significant market access barriers”. Noting that India is the third largest economy and would become the largest consumer market by 2030, he added: “Yet today, India is only the US’ 13th largest export market due to overly restrictive market access barriers.”

On the other hand, the US is India’s largest export market, accounting for about 20% of the total. “That’s a real imbalance, and it’s an imbalance we must drive to counter,” he said.

He contended India’s average applied tariff rate of 13.8% is the highest of any major world economy and its “bound tariff rates”, or the highest rate that can be charged, on agricultural products ranged from 113.5% to 300%.

Ross referred to Trump’s vision of a free, open and prosperous Indo-Pacific and said India is key to the US administration’s approach to the region.

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Economic growth set to bounce back as slump bottoms out: Govt

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Indian economic growth is poised to bounce back after slipping to a more than six-year low of 4.5% in the July-September quarter as the government has taken measures to prop up investments and consumer demand, a top government adviser said. “Corporate tax reductions, the Insolvency and Bankruptcy Code and the banking sector reforms have helped and will help propel growth further,” Sanjeev Sanyal, principal economic adviser at the finance ministry, told Reuters.

The Insolvency and Bankruptcy Code, introduced in May 2016, has helped banks to recover billions of dollars stuck in outstanding corporate loans and offer loans to new borrowers.

Sanyal said economic growth was set to accelerate to 6% in the financial year beginning in April, compared with estimated growth of 5.0% in the current one.

But many private economists are less optimistic, saying the current downturn may continue for the next few quarters due to a dip in private investments and tepid consumer demand.

Nomura said Asia’s third-largest economy will see a sub-par recovery, and forecast 4.7% GDP growth for the current fiscal year and 5.7% for the next fiscal year.

Sanyal dismissed the conservative estimates and said his numbers took into account early signs of recovery in manufacturing and a pick-up in consumer demand.

He said the government expected that average consumer price inflation would fall to 4% in the next financial year beginning April, after a recent spike driven largely by food prices.

There is enough space for the central bank to further cut interest rates, however, as inflation was likely to ease following a fall in vegetable prices, he said.

“While there was a slowdown, this slowdown has by and large now bottomed out, and if anything from here on, growth is going to go up,” Sanyal said.

Finance Minister Nirmala Sitharaman, who tabled her annual budget earlier this month, told parliament on Tuesday that the signs of “green shoots were visible” and the economy was no longer in trouble.

The Reserve Bank of India last week kept it policy rates steady but downwardly revised the country’s growth forecast for the first half of the next fiscal year to 5.5-6.0% from an earlier projection of 5.9%-6.3%.

Sanyal said the budget has offered a clutch of tax incentives for sovereign wealth and insurance funds, which would leave more banking funds for private companies despite higher state borrowings.

Other than the coronavirus outbreak in China, there is no “major other disruption,” to India, he said adding it was difficult to quantify the impact as the situation was still evolving.

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Taking steps to fix GST loopholes, says Nirmala Sitharaman

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Finance minister Nirmala Sitharaman said on Saturday that the government was taking several steps such as using data analytics to plug loopholes in the Goods and Services Tax (GST) collection and prevent particular areas of misuse and gaming of the system.

During the last three months, the GST collection crossed Rs one lakh crore every month, she said addressing a press conference in Chennai on Budget 2020-21.

At the GST Council meetings, there was a feedback from state finance ministers about various loopholes due to which tax revenue was not accruing to the government, she said. To plug such loopholes and to halt particular areas of misuse and gaming of the system, a lot of steps were being taken, she said.

“Economy is at its robust level and macroeconomics is at its best. The fundamentals are strong. The foreign exchange reserves and FDI investments are at their maximum level,” she said.

She said that there is also a plan by Centre to increase the interaction of banking officials.

She exuded confidence that “India will get back to 8% growth” and said the government is making efforts to “pursue the goals”.

Revenue secretary Ajay Bhushan Pandey said a targeted approach was being followed by tapping on data analytics and Artificial Intelligence and it has helped improve GST collections. In November the collection was close to ~1,04,000 crore and in December it was about Rs 1,03,000 crore, while in January it was around Rs 1,11,000 crore, he said.

The economy has improved and the improved collection was in view of several measures taken, he said. Citing use of data analytics, he said data from income tax, GST, customs, export and import was being mined.

A red flag report on areas of mismatch was prepared, he said, adding a large number of people were tax complaint and honest tax payers. It was only a fraction that might be a few thousand of GST taxpayers who required scrutiny, he said.

In cases of mismatch being up to a level, the tax payers are notified through a text message (SMS) and if it was large, officials are also notified to find out if the discrepancy was due to a genuine reason or otherwise.

Such targeted measures have helped the government improve the tax collections without any “overreach,” he said.

The government will continue to follow identification of problem areas. “We will continue this further and improve collection through data analytics and artificial intelligence so that people who are trying to gain the system are identified in their pursuit and honest taxpayers can be completely free of hassles,” he said.

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Facebook adds Dropbox CEO to the board of directors

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Mark Zuckerberg has made his long-time friend Drew Houston, co-founder and CEO of file hosting service Dropbox, one of the members of Facebook board of directors.

Zuckerberg and Houston have been friends for several years, appearing in photos together at birthday parties and other events.

“Houston brings valuable perspective to our board as a leader of a technology company with services used by millions of people and businesses,” Zuckerberg said in a statement late Monday.

“It’s been inspiring to watch Facebook grow into a platform that reaches billions of people around the world. I’m looking forward to working with Mark and the rest of the Board on the many opportunities and challenges ahead,” added Houston.

Houston co-founded Dropbox in 2007 with Arash Ferdowsi.

He has led the company’s growth from a simple idea to a service used by over 600 million people around the world.

Today, the company is one of the world’s leading business collaboration platforms with 14 million paying subscribers and 2,300 employees across 12 global offices.

Facebook has undergone various board changes in the recent past.

In April last year, Netflix CEO Reed Hastings left Facebook’s board after serving on it for eight years.

The social networking giant then added Paypal’s senior vice president of core markets Peggy Alford, who became the first African-American woman to serve on its board.

Facebook’s current board members are: Mark Zuckerberg; Peggy Alford, Senior Vice President, Core Markets of PayPal Holdings, Inc; Marc L. Andreessen, Andreessen Horowitz; Kenneth I. Chenault, Chairman and Managing Director, General Catalyst; Drew Houston, Co-Founder and CEO, Dropbox; Sheryl K. Sandberg, Chief Operating Officer, Facebook; Peter A. Thiel, Founders Fund; and Jeffrey D. Zients, CEO, the Cranemere Group.

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