Volume XVII: December 2016 In this Issue…. Basic Facts Brief Clippings on: US-India bilateral ties India-North America total trade and engineering trade pattern Current News Anti Dumping Matters Fairs/Exhibiti on Tender Information Chairman’s Pen…. India and the North America (consisting of USA, Canada and Mexico), have learned a great deal from each other. There exists tremendous possibilities in India-USA economic ties, the latter being one of the largest trading partner. When it comes to deepening bilateral economic relations between the countries, progress has been mixed. Much work lies ahead to make India-North America relationship a ‘defining one’ in the coming years, as we are headed in the right direction. Significant development at the engineering trade front has also been realized. India’s engineering exports to the region accounts for 15.5% to India’s total engineering exports during April-November 2016-17. Overall, engineering products have a share of over 22.8% in India’s total export, and US is its biggest market. During the recent months (April-November 2016-17), however, India’s export of engineering products to the region, particularly US and Canada, has experienced a decline; while exports to Mexico realized a massive jump of more than 43%. With four months remaining of this fiscal we expect the trend in USA and Canada to revive back and come in lines with Mexico. This ‘Newsletter on North America’ presents a brief note on the current trade trend between India and North America. I hope this will be insightful for our readers and they will enjoy reading it. Tarvinder Singh Bhasin
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In this Issue…. · The draft GST Compensation law that was also released last week states that the Central government will compensate states every quarter for GST revenue loss,
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Volume XVII: December 2016
In this
Issue….
Basic Facts
Brief
Clippings on:
US-India bilateral ties
India-North
America total trade and
engineering trade pattern
Current News
Anti Dumping
Matters
Fairs/Exhibiti
on
Tender
Information
Chairman’s Pen….
India and the North America (consisting of USA, Canada and Mexico), have learned a great deal from each other. There exists tremendous possibilities in India-USA economic ties, the latter being one of the largest trading partner. When it comes to deepening bilateral economic relations between the countries, progress has been mixed. Much work lies ahead to make India-North America relationship a ‘defining one’ in the coming years, as we are headed in the right direction. Significant development at the engineering trade front has also been realized. India’s engineering exports to the region accounts for 15.5% to India’s total engineering exports during April-November 2016-17. Overall, engineering products have a share of over 22.8% in India’s total export, and US is its biggest market. During the recent months (April-November 2016-17), however, India’s export of engineering products to the region, particularly US and Canada, has experienced a decline; while exports to Mexico realized a massive jump of more than 43%. With four months remaining of this fiscal we expect the trend in USA and Canada to revive back and come in lines with Mexico.
This ‘Newsletter on North America’ presents a brief note on the current
trade trend between India and North America. I hope this will be
insightful for our readers and they will enjoy reading it.
Tarvinder Singh Bhasin
This seventeenth edition of Territorial Newsletter for North America encaptulates the
latest developments on US-India bilateral ties on the domestic front in India .The current
edition also presents a brief insight on the total trade pattern of the engineering sector in
North America during the April-November of the fiscal 2016-17. Further, it discusses the
top engineering product bilaterally traded between the countries of the region.
Upcoming tenders from the region along with key news items and factsheets of Anti
Dumping Duty matters is compiled and presented for the benefit of our members. I am
hopeful that the Newsletter will give fruitful information to our readers.
Anupam Shah
Area: 24.71 million Sq. km
Population: 576,163,467 (2015)
GDP: USD 20,834.888 billion (2014)
Currency: US Dollar ($)/ Canadian Dollar
Climate: North America includes all of the mainland and related offshore islands lying North of the Isthmus of
Panama which connects it with South America. It has a variety of climate, from the dry, bitter cold of the Arctic to
the steamy heat of the tropics. The North American tundra, the vast treeless plain of the far north, has
temperature rises above freezing for only a short period each summer. In the far south there are low-lying areas
which are always hot and rainy.
Natural resources: North America produces most of the world's corn, meat, cotton, soybeans, tobacco, and wheat, along with a variety of other food and industrial raw material crops. Mineral resources are also abundant; particularly coal, iron ore, bauxite, copper, natural gas, petroleum, mercury, nickel, potash, and silver.
December, 2016:
Few noteworthy developments on US-India bilateral ties in 2016 on the domestic front in India:
Message from Chairman, Committee on Trade with North America
Basic Facts: North America
2016 Updates on U.S.-India bilateral ties
The U.S. Chamber of Commerce, the U.S. India Business Council (USIBC), and the Federation of
Indian Chambers of Commerce and Industry (FICCI) recently hosted the India–United States
Workshop on Trade Facilitation in New Delhi, India. Participants included over 65 representatives
from the Governments of India and the United States and the Indian and U.S. business community.
From the private sector’s perspective, the workshop was a welcome and positive development,
reflecting the type of public-private communication and collaboration that the World Trade
Organization Trade Facilitation Agreement (TFA) is intended to foster. Through these efforts, the
private sector seeks the implementation of “TFA-plus” customs reforms in India, facilitating trade in
legitimate goods, increasing the competitiveness of Indian business, and improving customs risk
management and targeting. As a follow-up, USIBC applauds the Central Board of Excise and Customs
(CBEC) for reducing, and in many instances, eliminating physical printouts for customs clearances
effective December 1, 2016. The business community is buoyed by the coordination between all
customs houses at ports, air cargo complexes, and other freight depots, to graduate to a paper-free
environment, and push for data integration to enhance ease of doing business for importers and
exporters. This move to reform documentation is an important step in the right direction for India’s
ratification of the WTO TFA.
In a major development, the Government of India released its updated draft model of the GST Law.
This weekend, the GST Council will hope to find consensus on the administration of this major reform.
The Government of India aims to introduce legislation in Parliament based on the agreement that will
be concluded by the GST Council. Specific rates for certain sectors will likely be announced by the end
of January.
The draft GST Compensation law that was also released last week states that the Central government
will compensate states every quarter for GST revenue loss, but the final annual number would be
decided only after an audit is carried out by the Comptroller and Auditor General (CAG). The
compensation would be met through a levy of a cess called 'GST Compensation Cess' on luxury items
goods like tobacco, for the first five years.
Earlier this month, the Government of India demonetized INR 500 and INR 1000 notes in a bid to
curb the circulation of black money in the Indian economy and de-risk national security challenges
posed as a result of counterfeit currency. At present, black money accounts for nearly 25%-26% of
India’s GDP, and by removing the impact there will be greater control on inflation while providing an
impetus to the government’s Digital India initiative. However, the implementation of this system
seems to have gone off-track –India is now faced with a cash crunch and the Indian rupee faces risk of
serious devaluation.
India’s relationship with North America have transformed in recent years. As regards India’s overall exports, the
region has consistently been the one of the top export destinations for Indian engineering goods with India
exporting US$ 6.2 billion during April-November 2016-17 to North America. India’s exports to North America
ranks second just after European Union (EU). Exports to the region account for more than 15% of our global
engineering exports. Exports to North America represent a diversified phenomenon as it includes different trade
patterns with the three countries (USA, Mexico and Canada) of the region.
India engineering export with North America – country wise during April-November of the fiscal of 2016-17 is
depicted in the table below. Nations which had the highest demand for Indian engineering products during the
first eight months of the new fiscal 2016-2017 in absolute values include:
Table1: Engineering Exports to North America (country wise)
(Value in USD million)
North America April-November 2015-16 (USD million)
April-November 2016-17 (USD million)
Growth (%)
USA 4636.1 4314.7 -6.9 Mexico 1109.5 1591.8 43.5 Canada 306.8 271.5 -11.5 Total 6052.5 6177.9 2.1
Source: DGCI&S
Chart 1: Trend in Total Engineering Export in North America during 2016-17
(month wise)
727.9 696.7771.4 805.9 805.3 816.1
912.3
702.9
0.0
200.0
400.0
600.0
800.0
1,000.0
Va
lue
in
US
$ M
illi
on
Month Wise Export Pattern in North America during 2016-17
Export
India-North America Information Guide
Trade Trend Analysis in North America
Table 2: Top 15 engineering panels exported to North America in April-November 2016-17
DGCI&S Engineering Panels India’s export in April-November 2015-16
(USD million)
India’s export in April-November 2016-17
(USD million)
Growth (%)
Motor Vehicle/cars 542.3 984.1 81.5 Products of Iron 1015.1 853.8 -15.9 Auto Components/Part 726.5 653.4 -10.1 Electric Machinery 380.8 499.4 31.2 Industrial Machinery 561.7 427.6 -23.9 Aircrafts Spacecrafts 331.9 394.3 18.8 Other Misc. items 378.0 383.6 1.5 Aluminum and products 345.9 340.2 -1.6 Iron and Steel 376.6 306.8 -18.5 IC Engines and Parts 278.8 271.5 -2.6 Machinery for ATMs 196.6 185.4 -5.7 Medical and Scientific Instruments 142.3 162.3 14.1 Copper and products 106.5 99.8 -6.3 Hand Tools Cutting 96.2 86.5 -10.1 Pumps of all types 111.8 75.4 -32.5
Source: DGCI&S
Indian Engineering exports to North America rank second during April-November of the current fiscal 2016-17,
after European Union, while ASEAN and Middle East and West Asia (MEWA) ranks third and fourth during the
same time period.
USA remained at the top for Indian engineering exports registering a slight negative monthly growth of 1.9 % in November 2016 vis-à-vis November 2015. The main engineering products exported to the country include Products of Iron and Steel, Auto Components/Parts, Electrical Machinery and Equipment, Aircrafts and Spacecrafts, Industrial Machinery, Other Misc Items, etc during April- November 2016-17. The following pie chart demonstrates share of different North American countries in India’s total export during April- November 2016-17.
Fig1: India’s engineering export share to North American Countries (%) in April- November 2016-17
Source: DGCI&S
70%
26%
4%
USA Mexico Canada
Trade with USA: Indian engineering exports to USA, continues to be one of the highest during April-
November 2016-17. At present, it accounts for 10.8 per cent of India's eng exports. Top products traded in USA: Top traded products to USA during April-November 2016-17 include Products of Iron and Steel, Auto Components/Parts, Electrical Machinery and Equipment, Aircrafts and Spacecrafts, Industrial Machinery, Other Misc Items, etc.
Trade with Mexico: Mexico is presently India's 4th largest export destination for engineering products
moving up from the 8th rank during the last fiscal 2015-16. At present, it accounts for 4.0 per cent of India's eng exports during April-November 2016-17. Top products traded in Mexico: Top traded products to Mexico during April-November 2016-17 include Motor Vehicles/cars, Iron and Steel, Aluminium and products, Auto Components and Parts, Industrial Machinery, Two and Three Wheelers, etc.
Trade with Canada: India’s engineering trade with Canada accounted for 0.7 per cent of India's
engineering exports in April-November 2016-17. Top products traded in Canada: Major exported products to Canada in April-November 2016-17 include Products of Iron and Steel, Auto Components/Parts, Other Misc Items , Iron and Steel, Machinery for ATMs, Electrical Machinery and Equipment, Aluminium and products, Industrial Machinery, Aircrafts and Spacecrafts etc.
India, US strike deal on advance pricing agreement
India started its bilateral APA process with the USA by accepting applications from the Indian taxpayers from FY 2012-13.
“The two competent authorities reached an agreement on the terms and conditions of the first ever
Bilateral APA involving India and the USA,” a finance ministry statement said on Thursday. At a meeting
held in the last week of October, the two countries resolved 66 transfer pricing disputes and 42 cases
related to treaty interpretation.
News in Focus
MAP, under the Double Taxation Avoidance Agreement (DTAA), is an alternative dispute settlement mechanism available to authorities and foreign investors. “The total amount that was locked up in dispute in these cases is approximately `5,000 crore and these cases were related to Assessment Years ranging from AY 1999-2000 to AY 2011-12,” it added.
The resolved cases pertain to various issues like transfer pricing adjustments made to the international transactions in the nature of payment of royalty, management fees, cost contribution arrangements, engineering design services, contract R&D services, investment advisory services, Marketing Support Services and Software Development Services.
The treaty interpretative issues were in the nature of presence of permanent establishment in India and profit attribution to such PEs, disputes pertaining to royalty income v/s business income of foreign companies.
Advance pricing provides certainty to taxpayers in respect of cross-border sales among related entities by specifying the methods of transfer pricing and determining the arm's length price of international transactions in advance for usually a maximum of five years ahead.
Though India started its Bilateral APA process with the US by accepting applications from the Indian taxpayers from FY 2012-13, the US started its bilateral process with India only in February 2016 by way of accepting applications from US taxpayers. Within a short span of eight months, the agreement has been reached upon in the first ever bilateral APA involving India and the US.
“The speedy resolution of cases and agreement on Bilateral APA due to effective mechanism of development of mutual trust and cooperation between the Competent Authorities of two countries would really be a positive factor in creating a conducive atmosphere for investments and business by US Companies in India,” the finance ministry statement said.
With Donald Trump set to take charge as the next US President, Indo American Chamber of Commerce on Monday suggested that India and the US should exchange wish lists to fast track resolution of bilateral issues which are impeding accelerated investment flow.
Broad contours of the wish lists should include amicable settlement of IPR issues leading to earliest conclusion of a bilateral investment treaty (BIT), totalisation agreement, a sound legal framework to expeditiously settle disputes, settlement of issues emanating from non-tariff measures and importantly, a fast solution to nagging visa problems.
Billionaire businessman Trump is set to take over as the next President of the United States in January. Indo American Chamber of Commerce (IACC) National President N V Srinivasan said there is a growing realisation among the US corporations that India, lying mid-way between West and the East, has the potential to emerge as a gateway for serving both markets. "Many corporations are seriously discussing these ideas in their boardroom meetings, while others are taking concrete steps towards investing in India with a renewed interest. We have to capitalise on the situation by removing impediments to the flow of investments and take concrete steps towards ease of doing business in India to leverage our position as an attractive investment destination," Srinivasan said.
US President-elect Trump has made it clear that he is averse to regional trade agreements like North American Free Trade Agreement (NAFTA), emerging Trans Pacific Partnership (TPP) etc which, according to him, have been militated against the US interests, IACC noted. "He (Trump) is in the process of recalibrating the policies to deal pragmatically with each country by their level of importance and economic engagement.
"Against this backdrop, India's recent policy initiatives like Make in India, Digital India, Smart Cities project, high budget investments in infrastructure etc where critical technical and financial investments are needed, would stand to benefit," Srinivasan said.
Flagging contentious issues that are coming up in the bilateral economic negotiations, such as retrospective tax regime in India, tardy intellectual property rights (IPR) protection and their enforcement, insistence on deciding economic disputes under Indian laws etc, the IACC President said these issues can be settled in a spirit of 'give and take'. "We are happy and privileged to have two administrations in the US and India, which are pro-business and believe in creating an environment for seamless business activities. "Donald Trump's significant business interests in India in various sectors and his statement of
intent to forge a strong business relationship are pointers to an exciting bilateral business relationship," he said.
U.S.-India Business Council concludes Inaugural Manufacturing Mission to India
The U.S.-India Business Council (USIBC) concluded its inaugural manufacturing industry mission to New Delhi yesterday.
The delegation was led by representatives from the automotive, chemical, consumer products, packaging, and other advanced manufacturing companies.
The delegation delivered an optimistic message, and congratulated government officials on the tremendous achievements on the Goods and Services Tax (GST), bankruptcy law, and the advancement of the Trade Facilitation Agreement.
"We are committed to the Government of India's Make in India ambitions, and we focused this week on advancing a vision of 'Make in India for the World' by aggressively pursuing an expanded manufacturing-driven trade policy and facilitating ease of doing business throughout the country," said James Rowland, Regional Director Government Affairs for Asia Pacific at Ford Motor Company and Co-Chair of the USIBC Manufacturing Executive Committee.
The policy priorities for the delegation were focused on three main areas: ease of doing business, international trade, and the GST implementation.
First, the delegation advocated for more collaboration between the state and central governments on issues such as standards, labour, and real estate.
Second, delegates encouraged the Government to further integrate India into the global trade community through joining forums such as the Asia Pacific Economic Cooperation (APEC), expanding the number of export markets by completing more trade agreements, and fully embracing the implementation of the Trade Facilitation Agreement.
Finally, the delegation discussed GST implementation and provided input from the manufacturing sector on critical areas of consideration for the GST.
"We were delighted by the level of engagement with Government officials. It's clear that they are serious about attracting investment in the manufacturing sector and are trying to implement the necessary steps," said Brandon Banner, Senior Manager for manufacturing at the USIBC.
"The purpose of this mission and of the USIBC Manufacturing Committee in general is to bring global manufacturers together with the Government of India to prioritize barriers to future investment and identify strategies to overcome them."
The USIBC delegation also participated in a U.S.-India Workshop on Trade Facilitation hosted in partnership with the Federation of Indian Chambers of Commerce and Industry (FICCI) and the U.S. Chamber of Commerce.
The workshop brought together representatives from the U.S and Indian private sector and government officials to chart a path forward to implement the World Trade Organization Trade Facilitation Agreement (TFA).
The mission was attended by senior representatives from General Motors, Dow, Lyondell Basell, Guardian Industries, Honeywell and Commercial Vehicle Group.
U.S.-India Business Council formed in 1975 at the request of the U.S. and Indian governments, the U.S.-India Business Council is the premier business advocacy organization, comprised of 400 top-tier U.S. and Indian companies advancing U.S.-India commercial ties. Source: http://www.business-standard.com/article/news-ani/u-s-india-business-council-concludes-