Christophe Sirugue, French Minister of State for Industry, spoke to ET’s Dipanjan Roy Chaudhury on growing Indo-French economic partnership on a visit to New Delhi.
On quantum of French investments in India
France is the third largest investor in India. French investment stock is well over 20 billion. French companies in India have a significant and diversified presence: most sectors of activity are represented through more than 1,000 entities spread over the Indian territory, employing over 3,00,000 skilled workers. French companies are set to bring in more than a billion euros annually in new investments over the next few years. French companies invest in India and they innovate in India, through more than 25 R&D centers.
On sectors attractive to French investors under Make in India initiative
Make in India programme offers tremendous opportunities for French companies, which have understood this well and incorporated it in their projects. The areas in which French companies are well-known for their expertise and in which India has immense needs, such as the development of Smart Cities, sustainable modes of transport, renewable energy, have particularly promising potential.
French companies account for 10% of India’s installed capacity in the solar energy sector. Besides they are present in the automobile industry, chemicals and pharmaceuticals, mechanical engineering, aerospace industry, services etc. Renault’s Kwid has met with great success among Indian consumers; Alstom Transport will build 800 electric locomotives in a “Make in India“ unit in Bihar; Sanofi recently set up a vaccine production facility near Hyderabad.
On ease of doing business in India
Reforms initiated by Prime Minister Modi for facilitating FDI are going in the right direction: adoption of the GST is a very important step, which will help catalyse investment inflows. Raising the foreign investment rate in certain sectors, such as in insurance, has also contributed to India’s attractiveness. AXA has made a major investment to increase its share in the Bharti group.
On status of French assisted nuclear power plant in Jaitapur
The Jaitapur project negotiations are progressing well, in continuity with the impetus received during the State Visit of President François Hollande in January this year. A road map has been adopted for the negotiations, the goal being to wrap them up during the semester to come. Six EPRs means a total capacity of almost 10 GW, which will be a major contribution to India’s goal of generating 63 GW of nuclear energy by 2030.
On Indian’s defence acquisitions from France
The recent signing of the Rafale contract was a major step, paving the way for unprecedented industrial and technological cooperation for the 40 years to come. The significance of the 50% offsets in the Rafale contract, will enable the Indian defence industry to develop its technological capabilities and know-how in crucial areas. – http://www.economictimes.indiatimes.com [25-10-2016]
World will toe GST invoice matching, says Deloitte’s David Raistrick
World will toe GST invoice matching, says Deloitte’s David Raistrick
Invoice-to-invoice matching under the proposed goods and service tax (GST) in India will make it harder for the cash economy and other parts of the world will soon like to emulate this feature, says David Raistrick, Deloitte Global Leader for indirect tax.
“India is the only country that is doing it (invoice-to-invoice matching). This is unique…People will have to comply or they will fall out of the GST chain,” Raistrick told ET in an interview.
He said invoice-to-invoice matching will make it harder for people to use cash and for people to be in business and not pay tax. “Only those who play in the cash economy will feel the pressure as they will lose credit,” he added.
Raistrick, who supports indirect tax practices in Deloitte member firms and has also worked at the UK tax authority HM Revenue and Customs, sees introduction of this game-changing feature being done at the opportune time as the country is going in for a new tax framework and believes other global tax administrations to follow suit.
“It is the right time to do as it’s a new tax. It’s going to happen everywhere. It should generate more revenues for the government and improve compliance,” he said.
Raistrick said if India sticks to 18% standard rate that would be reasonable, but pointed out that global norm was also to include petroleum and alcohol within GST but have additional excise duty levied on it to allow industrial consumers to claim credit.
“I don’t think prices will start shooting up. Rates as proposed look sensible. What is proposed is below global average. Food, water goods of peoples’ interest can be lower…. Globally, that (imposing GST on petroleum and alcohol) has become a norm. I would not say what India should do but this is what the world has done,” he said.
India is proposing to roll out GST from April 1, 2017, to create a seamless national market by merging central and state taxes on goods and services.
He said GST will make it easy for foreign investors as they know and understand this tax and make the country an attractive investment destination.
“India has a host of indirect taxes…. hidden from consumer….the current tax regime is very complex. It puts off foreign investment…. International business understands GST, so would feel more comfortable now,” he added.
The norm for launching new tax is 9-18 months and India’s deadline may be very tight but the Central Board of Excise and Customs is preparing and that should help, he said. “The way CBEC has taken upon itself to prepare is fantastic. I have never seen any tax authority do as much. It will definitely help taxpayers. For small business there will be a challenge, but once implemented, it would be quite positive and administrative compliance burden would come down,” he said.
He said some had already started acting and they would be fine. International businesses know GST so they will be fine but those that never believed that GST would be happening and deferred preparations till January “would not be fine”.
On provisions such as anti-profiteering clause, he said: “I don’t personally like such provisions… I don’t think the new tax will be inflationary for India. Normal market economics would come into play.” Source – economictimes.indiatimes.com [25-10-2016]
Manish Sisodia lauds Jaitley over GST, says ‘grateful’ to him
In a rare show of admiration, Deputy chief minister Manish Sisodia on Monday lauded Union Finance Minister Arun Jaitley over the passage of the GST Bill, saying the AAP government is “grateful” to him for pushing for tax reforms in the country.
Addressing a seminar on GST here, Sisodia said the Delhi government is a supporter of new tax reforms subject to “non-harassment” of traders.
“We should congratulate the Centre and Jaitleyji for bringing GST. As per my view, the governments which have implemented the GST across the world have been unpopular (among some sections who have to adjust during the transition),” he said. He said GST becomes “unpopular” among the sections who have to adjust during the transition from one system of taxes to another. But it’s (GST) beneficial for the public at large.
“We are grateful to Jaitleyji for pushing for the tax reforms after talking to all party leaders. GST is the need of the country…I am supporter of GST and Delhi government is also a supporter of GST subject to non-harassment of traders,” the Deputy chief minister said.
The Delhi government had been at loggerheads with the Union Finance Minister in the past over alleged irregularities in Delhi Districts Cricket Association (DDCA). “Delhi government has cleared its stand that there should be Rs 20 lakh threshold limit under GST, but some states want to bring it down upto Rs 5 to 10 lakh,” he added.
He further said traders should be apprised of benefits of GST in Delhi. In August this year, The Delhi Assembly had ratified the GST Bill. Source – timesofindia.indiatimes.com [25-10-2016]
Centre’s proposals on GST rates find favour with NITI Aayog
NITI Aayog vice-chairman Arvind Panagariya on Monday defended the Centre’s proposal of a four-slab goods and services tax (GST) rate structure, beside a cess on luxury and ‘sin’ goods. There is criticism in some quarters that the multiple rates would distort the structure of the proposed indirect tax regime. Panagariya also said the April 1 target for rolling out a national GST was possible, though a race against time. “The criticism that the relevance of GST would be lost due to the proposed four-slab structure is a bit overstated, Panagariya told reporters. One should note, he said, that while there might not be asingle GST rate for all items, each item would have a single rate panIndia. No tax theory, he added, said two slabs were better than a bit more. If GST would have only one rate or two rates, items attracting a levy of three or eight per cent would see much higher inflation. It is so as rates on these items would have to be stretched much more in that case. Those attracting three to eight per cent now are proposed to come under a six per cent GST rate. The other rates are 12, 18 and 26 per cent, plus a cess. Panagariya said this gave predictability to the tax structure, as rates were not altered too much as compared to the present one. This would not have been possible if there had been a twin or single rates. GST, he added, was a process. Hopefully, later, there would be gradual movement towards a single rate. Giving historical perspective, Panagariya said former finance minister Yashwant Sinha had converged 11 excise rates to three — of eight, 16 and 24 per cent — in 1999-2000. There were two additional non-VAT rates on luxury goods. On the proposed move to impose a cess over 26 per cent on luxury and sin goods, he said if this was replaced with another tax, the rate would be much higher than the cess, as 42 per cent of it would go to states. Beside, a cess could be temporary and be done away with, once its purpose to compensate states for revenue loss in the first five years of GST roll-out, is over. The GST Council could not decide on the rates on Thursday as discussion on cess was inconclusive. If cess is decided, then tax rates could be fixed, finance minister Arun Jaitley had said. The next Council meeting on November 3-4 would try to evolve aconsensus on the rates. Former Finance Secretary Vijay Kelkar, who headed the 13th Finance Commission (TFC) that gave recommendations on GST, recently said the proposed structure was disappointing, as it would rob the GST of efficiency enhancing potential. Hed also said the impact of the tax rate proposals on the economy would be only a fourth of the high potential impact the TFC had estimated. Pratik Jain, partner with PwC, said multiple rates werent desirable but were perhaps the only realistic way for a consensus. “In particular, a six per cent band is necessary as many products, including food items, currently attract an effective rate of five to six per cent, and having those at a 12 per cent slab could have been inflationary,” he said. However, he said, a cess on products under the higher slab was not a good idea. It would complicate compliance for business and could lead to cascading of taxes. “Instead, it might be a better idea to increase the tax rate nominally, if needed. In any case, the government might not need to compensate the states if there is revenue buoyancy,” he said. – http://www.business-standard.com[25-10-2016]
Four slab rate structure for GST is better than a single rate
Four slab rate structure for GST is better than a single rate: Arvind Panagariya
NITI Aayog, government’s premier think-tank, has supported the four slab structure for GST besides arguing in favour of cess after several critics have questioned the proposed structure saying that it would dilute the original idea of a single unified rate.
“A four slab rate structure for GST is better than going in one go on to a single rate as in the latter price effect on specific products could be substantial,” Aayog vice chairman and noted economist Arvind Panagariya said.
According to Panagariya, the revenues loss prospects under four slabs will be much less as opposed to the single rate, would be predictable and would give a better picture of what the unified rate could be going forward. “GST is a process and we are gradually heading towards it,” he added.
The Centre has proposed a four-slab rate structure for the Goods & Services Tax, ranging from zero to 26%. The structure proposes the GST at 0 per cent on a host of goods and services, including food, health and education services, and at 26 per cent on luxury items, such as fastmoving consumer goods and consumer durables.
On consumption of ultra-luxury items and demerit goods, such as big cars and tobacco products, it proposes imposition of cess over and above a 26 per cent GST rate. The GST is proposed to be levied at 6 per cent, 12 per cent or 18 per cent on the remaining goods and services.
Further supporting the imposition of cess under GST, Panagariya said that it is temporary in nature and could be withdrawn anytime. “Centre has to compensate states for revenue loss. Keeping it separate from tax rate will mean that it can be withdrawn anytime,” he added.
Commenting on whether the government will be able to meet the April 1 deadline for GST roll-out, Panagariya said government is working towards it and there is no reason why I should believe that it will not happen.
“It’s a little bit of race against time but certainly well within the realm if possibility,” he added. Source -economictimes.indiatimes.com [25-10-2016]
Multiple-rate GST will be disastrous
The proposed multiple rate GST structure will be “disastrous” and nothing more than same old VAT rates in a “new shape”, former finance minister P Chidambaram said on Monday.
“We sincerely hope that we do not misinterpret the design of standard, standard minus and plus rates of GST. We can have 20 rates. It will be disastrous and that cannot be GST, it will be fooling the country,” Chidambaram told an interactive session with IIM Calcutta students on economic reforms.
“A well designed GST is expected to have standard rate, plus and minus standard rate. That latitude interpreted to me as multiple rate — zero to 100 — that’s not GST. That is simply existing VAT rates in a new shape, old wine in a new bottle,” he said.
He said he hoped better counsel would prevail which would reduce the number of rates to “three or so”.
The new Goods and Services Tax (GST) will subsume a number of indirect taxes at the state as well as central level and is targeted for rollout from April 1, 2017.
About states disagreeing and joining the second wave of GST reform, Chidambaram said that even when UPA had implemented VAT, some had not joined initially and they had joined later, and so eventually all states will fall in line.
“Whatever, be the standard rates it will raise service tax,” he said.
At the GST Council meeting last week, there was virtual consensus among states on imposing of the cess, which tax experts and industry have opposed vehemently, saying it defeats the very concept of one-nation, one-tax.
Besides, a four-slab tax structure of 6, 12, 18 and 26 per cent with lower tariff for essential items and the highest bracket for luxury and sin goods also found favour with them but a decision was put off to the next meeting on November 3-4. Source -www.business-standard.com [25-10-2016]