India’s manufacturing sector growth falls to 5-month low in March: PMI
India’s manufacturing sector activity fell to a five-month low in March, as new business orders rose at a slower pace, and firms showed little appetite for recruitment, says a monthly survey. The Nikkei India Manufacturing Purchasing Managers Index (PMI), fell from 52.1 in February to a five-month low of 51.0 in March, indicating the slowest improvement in operating conditions recorded by the survey since last October. This is the eighth consecutive month that the index remained above the 50-point-mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. “India’s manufacturing sector continued to grow, albeit at the weakest pace since October, reflecting weaker gains in new business and a decline in employment for the first time in eight months,” said Aashna Dodhia, Economist at IHS Markit and author of the report. Dodhia noted that the impact of US tariffs on steel and aluminium on India is expected to be limited, as India’s exports in both metals to the US accounted for less than 0.4 per cent of total merchandise exports.
Though new export orders rose during March, Dodhia said, “On a negative note, further advances in trade disputes could potentially weigh on sales to international clients”. On the employment front, firms reduced their payroll numbers for the first time in eight months, albeit at a fractional pace. “PMI employment data gave warning signs in the labour market,” Dodhia said, adding that “manufacturers operating in consumption and intermediate market groups signalled no appetite for recruitment”.
Meanwhile, business sentiment remained weak, reflecting some concerns regarding business prospects over the next 12 months. “Indeed, amid a slower expected pace of recovery in consumer spending, IHS Markit marginally downgraded its real GDP forecast to 7.3 per cent for fiscal year 2017-2018,” Dodhia said. On the prices front, the survey noted that the recent “build-up of inflationary pressures eased in March, with softer increases in both input costs and output prices recorded”.
CBDT signs 14 unilateral, 2 bilateral APAs in March
The Central Board of Direct Taxes (CBDT) has signed 14 unilateral advance pricing agreements (APAs) with Indian taxpayers in March as it looks to reduce litigation by providing certainty in transfer pricing. Besides, it has signed two bilateral APAs with the US during the month, a CBDT statement said. “With the signing of these agreements, the total number of APAs entered into by CBDT has gone up to 219. This includes 199 unilateral APAs and 20 bilateral APAs,” it said. A total of 67 APAs (9 bilateral and 58 unilateral) have been signed in 2017-18.
The 16 APAs during March pertain to sectors like telecom, IT, automobile, pharmaceutical, beverage, banking and insurance. The international transactions covered in these agreements include payment of royalty fee, provisions of business support services, marketing support services, engineering design services, engineering support services, among others.
While unilateral pacts involve only the taxpayer and the tax authority of the country where the taxpayer is located, bilateral agreements involve the taxpayer, associated enterprise of the taxpayer in the foreign country, the tax authority of the country where the taxpayer is located and the foreign tax authority.
The progress of the APA scheme strengthens the government’s resolve of fostering a non-adversarial tax regime, the statement added. The APA scheme was introduced in the Income-Tax Act in 2012 and the ‘Rollback’ provisions were introduced in 2014. The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance.
The new basmati? Tulaipanji, this aromatic variety of rice from bengal gaining popularity
An indigenous aromatic rice, grown in a small pocket of north Bengal, has gained so much interest among the farmers due to the state government’s encouragement that its area of cultivation has increased by 45 per cent in just three years, district officials said. Tulaipanji is cultivated in Raiganj, Kaliaganj, Hemtabad and Karandighi blocks of Uttar Dinajpur district and Kushmandi block of Dakshin Dinajpur district. Earlier, the farmers were not very keen to cultivate Tulaipanji, but following the encouragement by the state government, more and more peasants are now engaged in farming this variety. “The yield of Tulaipanji was not enough in earlier years. But now the agriculture department helps us in various ways. We also get a better price for this,” said Palanu Mohammad, a farmer of Bindol in Raiganj block.
In Uttar Dinajpur, Tulaipanji was cultivated in 6,700 hectare in 2017-18, compared to 5,400 hectare in 2016-17 and 4,600 hectare in 2015-16, regisetering a growth of 45 per cent in three years, district agriculture official Srikanta Sinha said. The production of Tulaipanji has also been gradually increasing – 10,120 million tonne in 2015-16, 11,880 mt in 2016-17 and 14,740 mt in 2017-18 – in the district, Sinha told PTI. “If Basmati rice can be marketed countrywide in packets, the same can be done for Tulaipanji. It has an excellent aroma. The government has taken the initiative to market this rice in and outside the country,” said Uttar Dinajpur District Magistrate Ayesha Rani.
The DM said the authorities have applied for GI (geographical identification) tag for Tulaipanji. A GI is primarily an agricultural, natural or a manufactured product (handicrafts and industrial goods) originating from a definite geographical territory. Such a name conveys an assurance of quality and distinctiveness, which is essentially attributable to the place of its origin. The agricultural department of the district has been directed to help farmers grow Tulaipanji, Rani said. Though its grain is not so long as Basmati, but the medium-grained Tulaipanji has the excellent aroma because of the presence of three organic chemicals, another agriculture official Mir Farhad Hossain said.
Recently, Chief Minister Mamata Banerjee had directed the officials to collect Tulaipanji from Uttar and Dakshin Dinajpur districts for packaging and marketing it in all the districts including Kolkata, official sources said. “The production was around 1.8 tonne per hectare a decade ago but it could be increased four times these days using the science of genetics,” said Dr Subhas Chandra Roy, associate professor of the North Bengal University, whose research interest includes rice genetics.
World bank says, India can do a Silicon Valley in 5 years
India has the potential to innovate on the lines of Silicon Valley but it needs to do more for expanding the innovation ecosystem as it aspires to become a middle income country, World Bank India head Junaid Kamal Ahmad said. He said what drives productivity is pertinent when it comes to innovation and is a very relevant question for India as it seeks to move up the ladder from low middle income to high income country. Releasing a World Bank report on innovation in developing countries, he said: “I think we can do a Silicon Valley in India in the next five years..as the world is changing, we can leapfrog.
“I believe firm size, firm capability and innovation have a strong relationship. More needs to be done in the innovation ecosystem in India where firms continue to remain stagnant.” In developing countries, the concept of national innovation system must be expanded, said the World Bank Chief Economist for Equitable Growth, Finance and Institutions, William F Maloney. According to the report, investments for innovation often consist of marginal improvements in process or products, rather than significant technology adoption or new product imitation.
“They very rarely involve frontier research…if a firm (or country) invests in innovation but cannot also import the necessary technology, contract or hire trained workers and engineers, or draw on new organisational techniques, the returns to that investment will be low.” Returns from investments in research and development (R&D) rise initially, but lack of complementary factors over time result in their decline, the report said. “The policy maker’s conception of the national innovation system (NIS) must go beyond the usual institutions and policies designed to offset standard innovation-related market failures. The scope of the NIS must include broader complementary factors and supporting institutions,” it added.
Further, innovation cannot be supply driven, there must be demand from firms that have the capabilities to innovative. “On this demand side, the firm and its decisions to innovate, policy makers must be concerned with the incentives for firms to accumulate the necessary physical, human and knowledge capital,” Maloney said.
Kerala not to forgo additional tax revenue on petroleum products
The CPI(M)-led LDF gan overnment in Kerala made it clear that it could not waive the additional sales tax revenue generated on account of increase in excise duty for petroleum products. State Finance Minister T M Thomas Isaac informed the Assembly that though the left government wished to forgo the additional revenue in this regard, it could not do that now due to the financial constrains faced by the state. However, the Kerala government would take a suitable decision in the future once the state’s revenue goes up with increase in income from GST and E-way bill, he said.
Replying to a notice for adjournment motion over the issue by the Congress-led UDF opposition, Isaac also wanted the BJP government at the Centre to roll back the price hike of petroleum products. “It is a fact that the frequent hike in prices of petrol and diesel is causing severe hardship to people across the board. “But, the state is unable to bear the burden (of waiving the additional revenue) in the wake of the present financial position of the state,” the minister said.
Turning the table on the opposition, he reminded them that the entire process of de-regulation of the petroleum price was started during the tenure of the Congress-led UPA government. Condemning the stand taken by the left government, the UDF opposition wanted it to take a “humanitarian” approach rather than speaking on technicalities on the issue. Demanding a discussion over the matter, Congress’s Thiruvanchur Radhakrishan urged the LDF government to forgo the additional tax revenue and follow the trails of previous UDF government.
“The previous Oommen Chandy-led government had waived the additional tax revenue four times and extended a total benefit of over Rs 600 crore to the people,” he claimed. Leader of Opposition Ramesh Chennithala accused the Centre of “not reducing” the oil price when the price of petroleum products comes down in the international market. Instead of passing on the benefits of lower price in the international oil market, the BJP government was imposing more excise duty and causing hardship to common people, he alleged.
The Congress leader also alleged that both the BJP government at the Centre and the LDF dispensation in the state were equal in terms of “plundering” the people. Before staging a walkout, Chennithala said it would have given a chance to the House to expose the “anti-people oil policy” of the BJP government if the matter was taken for discussion.
GST: Govt sets up cell to address it glitches
In what could come as a relief to some taxpayers, the indirect tax department on Wednesday said it would allow those who couldn’t file the TRAN-1 form on the GST Network portal for claiming transitional credit due to IT glitches to complete the process by the end of the month. However, this facility will be restricted to those who can demonstrate clear IT-related issues for not being able to comply. “GSTN shall identify such taxpayers who could not file TRAN-1 on the basis of electronic audit trail,” the circular issued by the department said. It added that taxpayers won’t be allowed to amend the amount of credit in TRAN-1 during this process from what was recorded in their failed attempts to file the form. The process of redressal of IT glitches will be carried out by a GST implementation committee (GIC), which will act as the IT grievance redressal committee. The circular said: “Where an IT-related glitch has been identified as the reason for failure of a class of taxpayer in filing of a return or a form within the time limit prescribed in the law and there are collateral evidences available to establish that the taxpayer has made bonafide attempt to comply with the process of filing of form or return, GST Council has delegated powers to the IT Grievance Redressal Committee to approve and recommend to the GSTN the steps to be taken to redress the grievance and the procedure to be followed for implementation of the decision.”