121 Part CA 2012

Bilateral Affairs 2012
the Gulf country were also discussed. A memorandum of Understanding was also signed between the Reserve Bank of India and Qatar Central Bank. India and UAE signed an agreement on 4 April 2012 to ease the entry of Indian contract workers in the Emirates. The agreement was signed in Abu Dhabi, UAE. It provides for an electronic contract registration and validation system to safeguard and protect the interests of migrant Indian workers. The move would ensure a transparent, legal and less cumbersome migration of Indian workers to the Emirates. India is the first country with which the United Arab Emirates has entered into the landmark agreement to safeguard the interests of the migrant Indian workers to the Emirates. In the visit of Brazil President Dilma Rouseff, India and Brazil on 30 March agreed to step up efforts towards global reforms, particularly of the U.N. Security Council. The two countries also agreed to further strengthen the bilateral strategic partnership and exploit full potential in areas such as trade, education, defence, space and nuclear energy. Two countries also set a trade target of 15 billion dollars by 2015. The two sides also signed six documents to enhance cooperation in the fields of science and technology, education and culture.
May
Prime Minister Manmohan Singh returned 29 may after a three-day visit to Myanmar during which the two countries agreed to expand trade, improve connectivity and bring peace in border areas and emphasised on closer ties to boost energy security. The two countries inked a dozen agreements, including a $500 million credit line, on areas like border area development and air services. Manmohan Singh, who held wide-ranging talks with President Thein Sein, also met Myanmar's iconic leader Aung San Suu Kyi, who said she was "very happy at the prospect of closer ties with India". India and Bahrain, on 31 May 2012 made a Tax Information Exchange Agreement to promote economic cooperation and joint investment between the two countries. The agreement is aimed at increasing bilateral trade that stands at 1.7 billion dollar. The agreement with its provision for effective exchange of information between the two countries will help in reducing tax evasion and tax avoidance.The agreement was signed by Indian Minister of State for Finance Namo Narain Meena and Bahrains Minister of Transportation and Acting Chief Executive of Economic Development Board Kamal Ahmed in New Delhi. The two countries also inked a Memorandum of Understanding (MoU) to make the ties on technological front more effective. Under the newly signed MoU India will provide technical assistance to Bahrain and help it to develop its own IT sector in Bahrain.
June
India and South Korea on 28 June decided to enhance engagement in civil nuclear energy cooperation as well as space activities including the launch of Korean satellites by India. The two sides also evaluated the progress and expansion of their Strategic Partnership during the 2nd India Republic of Korea (ROK) Foreign Policy and Security Dialogue here. While the Indian side was led by Sanjay Singh, Secretary (East), Ministry of External Affairs, the Korean side by Ahn Ho-young, First Vice Minister, Ministry of Foreign Affairs and Trade. The two sides accepted to work on upgrading their Comprehensive Economic Partnership Agreement (CEPA) with a view to ensuring that it reflects current realities. Noting with satisfaction that in the two years since the implementation of CEPA, bilateral trade has surged by 70 percent to USD 20.5 billion in calendar 2011, the two sides welcomed recent progress in the implementation
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of the POSCO project in eastern India. In view of the large Korean business presence in Tamil Nadu, the ROK expressed interest in opening a new Consulate General in Chennai while welcoming Indias decision to open a new Defence Attaches Office at its Embassy in Seoul before the end of the year. The ministry says that enhancement of cooperation in the field of science and technology was also discussed. In this context, the two sides decided to encourage enhanced engagement in civil nuclear energy cooperation as well as space activities including the launch of Korean satellites by India. India and China on 21 June 2012 agreed to increase their defence and security dialogue and work to take steps to ensure that the two countries achieve a 100 billion dollars trade target by 2015. The decision was taken on the sidelines of the Ri0+ 20 summit at Rio De Janeiro. India also raised the border issue during the talks. India and China agreed that they would continue political dialogue at the political level. India and China also decided that the special representatives would work for preparing the joint record of their work so far, which was already announced in January 2012 and give directions for the future co-ordination between the two countries. India and Israel made a memorandum of understanding (MoU) to expand the bilateral relation in the tourism sector on 24 June 2012. Israel, under the MoU, will open a tourism office in Mumbai and increase the frequency of flights to India. The MoU was signed between Israeli Tourism Minister Stas Misezhnikov and his Indian counterpart Minister Subodh Kant Sahai in Jerusalam in Israel. Israel is also set to invest 660000 dollar to draw more Indian tourists to the country. The MoU also set the foundation to establish a tourism development forum, which will seek the advice from various stakeholders including travel agents, hoteliers, and tour operators and from the media, to expand tourism market in both the countries. The two countries have a great scope of tourism development by engaging into cooperation as nearly 40000 Indian tourists visit Israel every year, and the same number of Israeli citizens comes to India annually. US defence secretary Leon Panetta came India on a two-day visit on 5 June 2012. The visit was aimed at strengthening bilateral strategic and defence cooperation between the two nations. Panetta visited India as the part of his week-long visit to Asia to formulate a new US defence strategy to allies and partners in the region. The strategy, which was released in January 2012, calls for a shift in US strategic focus to the Asia-Pacific. As the time for the withdrawal of US troops from Afghanistan is nearing, America seeks to establish a stronger strategic and defence tie with India, so that it could keep a tab on the regions geopolitics even after the withdrawal of its troops. Many analysts believe that the Panettas visit is the part of Pentagons policy to team up with India against the growing Chinese assertiveness in the global politics. India on 8 June 2012 announced to allow foreign direct investment from Pakistan. The move is aimed at strengthening the bilateral economic relations between the two countries. The decision will also facilitate the economic integration in the South Asian region. The Union Finance Ministry had received a proposal by the Department of Industrial Policy and Promotion (DIPP) seeking changes in Foreign Exchange Management Act (FEMA) to allow FDI from Pakistan. Under the present FDI policy, a Pakistani citizen or an entity incorporated in there is not allowed to invest in India. The Government had earlier allowed investments from Bangladesh under the FIPB route. The bilateral trade between India and Pakistan for the year 2010-11 stood at 2.7 billion dollar. With 2.32 billion dollar exports, India dominated the trade, which grew at a rate of 47 per cent and also approaching forward to occupy 1 per cent share of Indian global exports.
July
India, Indonesia Signed Double Taxation Avoidance Agreement: India and Indonesia signed an agreement to avoid double taxation and prevent fiscal evasion with respect to taxes on income on 27 July 2012. Indonesian Foreign Affairs Minister Dr. R. M. Marty Natalegawa and his Indian counterpart S.M Krishna at the Hyderabad House in New Delhi signed the agreement. Apart from the agreement, both sides also signed the agreed minutes of the fourth Joint Commission Meeting between India and Indonesia. Both the countries, reviewed the entire
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state of bilateral relationship including trade and commerce. Two nations have also agreed to strengthen the bilateral relationship into a strategic partnership both countries share a warm relationship on account of the solid foundation of historical and cultural ties. Both countries are also hopeful of achieving the trade target of 25 billion US Dollars by 2015. Australia to restart uranium supply to India: Months after reversing its policy of not selling uranium to India, Australia on 11th July, said it was in the process of working out internal arrangements to ensure supply of the yellowcake (Uranium) to New Delhi. In December last year, Australia's ruling Labor led by Prime Minister Julia Gillard cleared the way for the Australian uranium to be exported to India after a strong debate on the floor of the party's 46th national conference. Despite resistance from opponents, the landmark policy change was carried out, paving the way for the first Australian country-to-country agreement to sell yellowcake to a nation outside the Nuclear NonProliferation Treaty. Australia has the world's largest reserves of uranium and its ores are considered to be of superior quality among those found elsewhere across the globe. Currently, Australia exports uranium to China, Japan, Taiwan and the United States. However, it had earlier declined sale to India citing a policy that barred nuclear trade with countries that were not signatories to the Nuclear Non-Proliferation Treaty. India, Singapore Signed Agreements and MoU : India and Singapore signed three key bilateral agreements and a Memorandum of Understanding (MOU) on 11 July 2012, New Delhi. The agreements were signed by Prime Minister Manmohan Singh and Singaporean counterpart Lee Hsien Loong. While the MoU was signed by Indian Labour Minister Malikarjun Kharge and Singapore Education Minister Heng Swee Keat. Salient points of Agreements: Both the countries, in the memorandum of understanding have decided to renew the bilateral arrangement between the Air Forces on joint training The military training agreement was signed between Indian Defence Secretary Shashi Kant Sharma and Singapore's Permanent Secretary for Defence Chiang Chie Foo. It stated that the military training that Indian armed forces extend to their Singaporean counterparts shall by all means continue. The other agreement focused on expansion of joint ventures, technological collaboration both bilaterally and in third countries. The agreement also stated that Singapore is all game for investment in education and health. - Both the countries in the agreement also decided to pin on defence cooperation. Pakistan willing to resolove bilateral disputes with Inida: Pakistan on 12th July, said it is willing to go by the agreement that it had in the past with India to resolve some of the disputes like Sir Creek and Siachen. ''If you look at may be some of the disputes that we have. We have Sir Creek, we have Siachen... Pakistan has already made it clear that we are willing to go by the agreement that we had in the past,'' Foreign Minister Hina Rabbani Khar told in an interview. She said the two countries must move forward in the relationship and ''moving forward would require that we all are able to sometimes show flexibility, some times we don't need to show flexibility.'' Ms. Khar is in the Cambodian capital to attend the ASEAN Ministerial meeting. The Confederation of Indian Industry (CII) in partnership with Government of India and Afghanistan along with Afghan investment and business organizations organized a Delhi Investment Summit on Afghanistan on 28 June, 2012. The summit took place at Hotel Taj Palace, New Delhi. The primary objective of the summit was to attract foreign investment into Afghanistan opening in areas like Hydrocarbons, mining and infrastructure. It envisioned fruitful partnerships to help invest in Afghanistan.The participants in the summit were not only the investors from the public sectors, but also private sectors. The summit was expected to provide an extraordinary opportunity to get information on investment opportunities in Afghanistan.
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August
India and China, on 27 August agreed to set up a joint working group (JWG) to look into not only traderelated issues but also investments. The working group is expected to come out with a report within 90 days. The decision to set up the JWG was taken at the meeting of India-China Joint Group on Economic Relations, Trade, Science and Technology in New Delhi on 27 August 2012 .The working group is set up even as India has expressed serious concerns over the widening trade deficit with its neighbour and sought a correction. On its part, China expressed serious concern over the imposition of duty on import of power equipment by New Delhi. Commerce and Industry Minister Anand Sharma said after the meeting, both countries had also agreed to work on a five-year plan on economic cooperation. His Chinas counterpart, Mr. Chen Deming said, in times of global economic crisis, there was a need for strengthening India-China economic relationship. He also expressed the hope that bilateral trade would hit the target of $100 billion by 2015. The total bilateral trade between India and China for 2011-12, stood at 75457.42 million dollar as compared with 59000.36 million dollar in 2010-11. During 2011-12, the exports were 17902.98 million dollar while the imports stood at 57554.44 million dollar. The provisional trade deficit for 2011-12 was 39651.46 million dollar. The Joint Group on Economic Relations, Trade, Science & Technology was formed in 1988 when then Prime Minister Rajiv Gandhi visited Beijing. India and Belgium on 8 August decided to cooperate in the railway sector. A MoU was signed for this purpose in the presence of visiting Deputy Prime Minister Didier Reynders, who also holds the portfolio of Foreign Affairs, Foreign Trade and European Affairs. Speaking on the occasion, Minister of External Affairs SM Krishna said India wanted to collaborate with Belgium in newer areas, particularly in infrastructure and energy sector, including port development, renewable energy, both solar and wind power. He said his discussions with Mr Reyders touched the entire gamut of their bilateral relations and touched on their cooperation in further strengthening the strategic partnership with the European Union. They took note of the fact that despite global economic slowdown, there was substantial increase in their bilateral trade, which has now crossed the 13 billion Euro mark in 2011. Belgium has now emerged as the second largest trading partner in goods sector within the European Union. On the sidelines of the First India-CELAC Foreign Ministers Troika Meeting in New Delhi on August 7, 2012, Vice Foreign Minister of Cuba ,Mr. Rogelio Sierra Diaz, met with External Affairs of India, S.M. Krishna. During the meeting, both sides reviewed the entire gamut of bilateral relations and expressed satisfaction. Both sides reiterated their desire to sustain and consolidate these relations. Both sides noted that the total bilateral trade of US$ 40 million between India and Cuba did not correspond to the excellent bilateral ties. They emphasized that the trade turnover should be enhanced through concerted efforts and underlined that new opportunities for cooperation existed in the area of trade and investment. The Cuban side appreciated the importance of the role played by the Indian Company OVL (ONGC Videsh Ltd.) in the field of petroleum exploration in Cuba and sought OVLs continued engagement in Cuba in this area. The Indian side reiterated its offer of Lines of Credit announced during the visit of its Minister of External Affairs to Cuba in June 2012. India and Cuba agreed on the need for the reform of the United Nations Organisation. The Indian side appreciated Cubas expression of support to Indias candidature for permanent membership of the United Nations Security Council. Both sides emphasised the continued relevance of the Non-Aligned Movement in the current context of global relations and agreed to work towards the success of the forthcoming NAM Summit in Tehran. India and Cuba expressed appreciation over the importance and significance of the First India-CELAC Troika Ministerial Dialogue and recalled the considerable opportunities available for mutually beneficial cooperation between India and CELAC both in a multilateral manner and bilaterally. The first meeting of the India-CELAC (The Community of Latin American and Caribbean States) Troika foreign ministers was held in New Delhi on 7 August 2012. The Minister of Foreign Affairs of Chile Alfredo Moreno Charme, the pro-tempore President of CELAC, led the CELAC Troika. The Foreign Minister of Venezuela Nicolas Maduro and the Vice Foreign Minister of Cuba, Rogelio Sierra participated in the meeting as members of the Troika. The External Affairs Minister of India, SM Krishna, led the Indian delegation. The meeting was held with the objective of strengthening India-CELAC relationship India and the Community of Latin American and Caribbean countries (CELAC) agreed to work for raising their relationship to the level of Strategic Partnership and having regular Summit Level Meetings in the near future. Pending an agreement on full-fledged Strategic Partnership, both sides agreed to cooperate in diverse sectors like trade and investment, energy, minerals, agriculture, science and technology, culture, education and people-to-people contacts. They agreed to work together on common global challenges in the interest of developing countries by maintaining coordinated approach on UN reforms, financial crisis, climate change and international terrorism. They urged the international community to
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adopt a Comprehensive Convention on International Terrorism at the earliest. Both sides acknowledged the efforts of the UN Conference on Sustainable Development (Rio+20) for a renewed political commitment towards Sustainable Development to achieve poverty eradication through a balanced integration of economic, social and environmental aspects. Giving a big boost to trade and bilateral relations with Pakistan, the Government of India on 1 August , notified law permitting investments by citizens and companies, under the government route, in sectors/activities other than defence, space and atomic energy, of the neighbouring country. The move is likely to give new direction to South Asian economic integration. Pakistan was the only country in the negative list under the Foreign Exchange Management Act (FEMA), which prohibits investments in India. Sri Lanka was removed from the list in 2006 and Bangladesh in 2007. The initiative is part of a road map drawn by Trade Ministers and leading chambers of commerce of the two countries to give a fillip to trade and economic engagement. Officials in the Industry Ministry said that to address security concerns over investments from Pakistan, FDI proposals from Islamabad would be routed through the Foreign Investment Promotion Board (FIPB), which is headed by the Economic Affairs Secretary in the Finance Ministry. India and Israel on 2 August, entered into a memorandum of understanding (MoU) for launching a programme that would promote collaborative research across a wide range of disciplines from medical and information technology to social sciences, humanities and arts. The programme, which will run for five years, will provide support up to $1,00,000 a research project for three years. The MoU was signed by Professor Geiger Chairman of the Israel Science Foundation and Chairman of University Grants Commission Ved Prakash. After the signing ceremony, Israeli Ambassador Alon Ushpiz noted that both nations hosted some of the best academic institutions. The linking of our researchers together comes only naturally, he said. The programme was initiated during a recent visit of Minister for Human Resource Development Kapil Sibal to Israel, when he met with Israels Finance Minister Yuval Steinitz, Education Minister Gideon Saar and Chairman of Planning and Budgeting Committee Manuel Trajtenberg. India, on 2 August, invited Belgium to invest in the upcoming national manufacturing and investments zones (NMIZs) with a focused approach in energy, water disposal as well as treatment, and research and training. This was conveyed to the visiting Belgian Deputy Prime Minister and Minister of Foreign Affairs, Foreign Trade and European Affairs, Didier Reynders, by Commerce and Industry Minister, Anand Sharma, during his meeting in New Delhi. An official statement issued after the meeting said the visiting Belgian Minister offered expertise in water treatment, waste disposal and energy sector which would be useful in NMIZs .NMIZs will be mega industrial zones with world-class supporting infrastructure.The government is offering incentives such as exemption from capital gains tax and a liberalised labour and environment norms to promote these zones.
September
India on 17 september, offered a $40 million soft loan to Burundi, a mineral-rich country in eastern Africa, and signed a clutch of pacts in areas of rural development, education, and health and medicine to cement a burgeoning relationship.Prime Minister Manmohan Singh held talks in New Delhi, with Burundi President Pierre Nkurunziza, who is on a three-day visit, on a range of issues including a review of Indias capacity building initiatives in Burundi, deepening trade and investment, and UN reforms.After the talks, the two sides signed the agreements.Underlining Indias commitment to the development of infrastructure in Burundi, Manmohan Singh announced a new line of credit worth over $40 million to Burundi for a farm mechanization and food processing project.This will be addition to the $80 million line of credit for the Kabu hydroelectric project committed earlier.Manmohan Singh also urged the Burundi leader to facilitate Indian investment in agriculture, infrastructure and manufacturing.The two leaders discussed a host of regional and global issues, including the fight against piracy and the need for reforms at the UN Security Council. India and Egypt signed an MoU for cooperation in the field of electoral management and administration on 17 september,in New Delhi. The Election Commission of India and the Supreme Presidential Election Committee of Egypt will henceforth cooperate on initiatives designed to strengthen electoral systems and democratic institutions, besides training of personnel and human resource development. The MoU was signed between India's Chief Election Commissioner V S Sampath and Secretary General of Egypt's Election Committee Hatem Bagato .
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Sampath said Egypt has evinced keen interest in the use of electronic voting machines and India's voter education programme and techniques used for cracking election frauds. India and Burundi signed 3 Major Agreements and issued a Joint Statement: President of the Republic of Burundi visited India from 17 to 19 September 2012. During this visit, India and Burundi signed three agreements-(i) Exchange Programme for Cooperation in the field of Education, (ii) Memorandum of Understanding on Cooperation in the field of Rural Development and (iii) Memorandum of Understanding on Cooperation in the field of Health and Medicine. Besides, India also announced a Line of Credit of 42.38 million US dollars for Farm Mechanisation and Integrated Food Processing Complex in Burundi. India and Burundi issued a joint statement on that occasion. The major highlights of the joint statement are as following: India and Burundi agreed to further enhance the bilateral cooperation in view of the considerable untapped potential. Burundi thanked India for approval of a concessional line of credit of 80 million US dollars for the Kabu 16 Hydro-electric project. Both nations agreed to continue strengthening cooperation in the areas of economy, trade and investment, finance, human resource development, culture, etc. while striving to expand cooperation into other potential areas such as agriculture, food processing, ICT, science & technology, health, mining etc. Burundi conveyed its support for Indias candidature for Permanent Membership in an expanded United Nations Security Council.
Aiming to improve ties between India and Association of South East Asian Nations (ASEAN), "INS Sudarshini", a sail training ship, began its journey on 28 September, from Chennai on a nine nation voyage. Director General, Naval Projects (V) Vice Admiral V K Namballa flagged off the ship, manned by five officers, 31 sailors, 30 Naval and Coast Guard cadets, from the Chennai Port Trust. During its journey, the ship would call on 13 foreign ports across nine nations to bolster friendship across the seas. The ship would take the ancient route of Indian mariners to South East Asia, it said, adding during its journey, the ship would spend a total of 127 days before berthing back at Kochi on March 29, 2013. India, Palestine against any outside interference in solving Gulf issues: India and Palestine on 11 September, called for resolution of all the developments in the Gulf through dialogue without any outside interference. Visiting Palestine President Mahmoud Abbas and Prime Minister Manmohan Singh exchanged views on regional developments, particularly the developments in the West Asian and the Gulf region. "There is a great degree of similarity in our views. We both agree that the developments in the region must be addressed through political dialogue and peaceful means without recourse to violence and outside interference, while taking into account the legitimate aspirations of all people," Dr Singh said in a statement to the media after holding talks with Mr Abbas. Mr Abbas also expressed the commitment of his nation to resolve issues with Israel through negotiations, while calling upon the neighbour to stop all violence and illegal settlements. He thanked India for its continued support to the Palestinian cause and sought to underline that a "Palestinian state with its East Jerusalem as its capital" was all for living in peace with Israel. Responding to the Prime Minister's call for early resumption of the peace dialogue between Palestine and Israel, Mr Abbas said both the states living in peace and security was the objective his government was aspiring forv India extended a credit of $10 Million aid to Palestine in a gesture of support: Indian Prime Minister Manmohan Singh announced a support of $10 Million to Palestine during a meet with Palestines National Authority President Mahmoud Abbas on 11 September 2012. Palestinian president was here in Indian on a three day visit from 10 to 12 September 2012. Mr. Singh also promised his Palestinian counterpart about Indias backing for their full and equal membership of the U.N. the one that is threatened by US for veto. During the meet, both the sides inked three different agreements comprising information and communication technology, education and vocational training. The agreements were inked in presence of the Indian external Affairs Minister S.M. Krishna and the member of executive committee of Palestinian Liberation Organization (PLO) Dr. Saeb M.S. Erakat. A MoU (Memorandum of Understanding) has been signed up to set up two schools at two districts of
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Palestine namely Abu Dees and Asera Al Shamalyeh, which will be named on the name of Pt. Jawaharlal Nehru, Indias first Prime Minister. Cost estimated for the construction of the two schools is US$ 1.8 million and will help about eight hundred students of these districts to fetch quality education. The schools at Abu Dees and Asera Al Shamalyeh will be constructed in an area of 1700 and 1900 square meter with 10 and 12 classes respectively. In the second agreement, India will set a state-of-the-art information and communication technology center in Palestine to create IT experts and generate opportunities of employment. To make the center of Palestine self reliable, some of the IT professionals from Palestine will be trained here in India to a higher level. As per the third agreement, India will participate in providing vocational training to the women and youth of Palestine. The training will include technical and machinery know-how to. Prime Minister Mr. Singh stated that he supported the Palestinian cause to achieve independent, sovereign and united state of Palestine and East Jerusalem as a capital to the state. India, Myanmar and Thailand decided to implement Trilateral Connectivity Project by 2016: India, Myanmar and Thailand on 10 September 2012 reviewed the eagerly awaited trilateral connectivity project and decided to make all efforts to implement this by 2016. This was done at the meeting of the India-Myanmar-Thailand Joint Task Force, which met in New Delhi. It was also agreed during the meeting that steps be initiated to address issues related to harmonisation of customs and immigration procedures at border check-posts to enable seamless movement of goods and people to realise the full potential of the trilateral highway. Commerce and Industry Minister, Anand Sharma, on 4 September, said India and Pakistan would soon ink three agreements in the areas of customs co-operation, mutual recognition of standards and redressal of trade issues to give a fillip to economic activity. Addressing a Pakistani Parliamentary delegation at FICCIs first IndiaPakistan Parliamentary Dialogue, Mr. Sharma said India was ready to grant multi-entry and multi-city visas to businessmen from Pakistan. Mr. Sharma said there was a need to also open up more land routes to allow more people-to-people exchange and smooth entry and exit of business community from both nations. India recently allowed Pakistan nationals and companies to invest in India through the semi-automatic approval route. Bilateral trade between India and Pakistan stood at $2.7 billion in 2010-11.Haider Abbas Rizvi, a member of Pakistan National Assembly, said that increase in trade and investment would help both sides to resolve other matters. India and Tajikistan on 3 September 2012 signed six agreements in the field of sports, health, culture, education, labour, textiles and energy. India and Tajikistan agreed to advance their ties to a strategic partnership in order to impart greater strength to the relationship through all-round co-operation and engagement. Both the countries identified information technology, biotechnology, mining, tourism, pharmaceuticals among other sectors as high potential area. After the agreements, it was decided that India would increase training slots for Tajikistan from 100 to 150 under India Technology and Eco Training Programme. Minister of State for External Affairs of India E Ahamed and Prime Minister of Niue, H. E. Toke Talagi signed a Joint Communique on the establishment of Diplomatic Relations between India and Niue, at Cook Islands. Niue is a Pacific island country, which is a member of regional bodies such as the Pacific Island Forum and the Pacific Community and also of UNESCO, WTO and FAO. Since 2002, India has intensified its cooperative relations with all countries in pacific island region. Niue, is an island of 1400 inhabitants, which is also known as the worlds first Wi-Fi nation, in which free wireless Internet access is provided throughout the country. Niue is also known as the Rock of Polynesia, and is situated 2400 km northeast of New Zealand . India and Pakistan on 8 September signed the much-awaited new liberalised visa agreement to boost people-to-people contacts between the two nations. The new pact, signed between External Affairs Minister SM Krishna and Pakistan Interior Minister Rehman Malik, replaces a 38-year-old restrictive visa agreement. The new visa policy will ease restrictions on visitors from both the countries. In addition, senior citizens will be granted visas on arrival at the Attari and Wagah border in India and Pakistan respectively. Under the new arrangement, senior citizens will be granted a visa on arrival valid for 45 days. For the first time, group tourism will be part of the new pact which will also have other new categories, including multiple city one-year visas for businessmen and visa-onarrival for people aged 65 years.
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October
India on 17 september, offered a $40 million soft loan to Burundi, a mineral-rich country in eastern Africa, and signed a clutch of pacts in areas of rural development, education, and health and medicine to cement a burgeoning relationship.Prime Minister Manmohan Singh held talks in New Delhi, with Burundi President Pierre Nkurunziza, who is on a three-day visit, on a range of issues including a review of Indias capacity building initiatives in Burundi, deepening trade and investment, and UN reforms.After the talks, the two sides signed the agreements.Underlining Indias commitment to the development of infrastructure in Burundi, Manmohan Singh announced a new line of credit worth over $40 million to Burundi for a farm mechanization and food processing project.This will be addition to the $80 million line of credit for the Kabu hydroelectric project committed earlier.Manmohan Singh also urged the Burundi leader to facilitate Indian investment in agriculture, infrastructure and manufacturing.The two leaders discussed a host of regional and global issues, including the fight against piracy and the need for reforms at the UN Security Council. India and Egypt signed an MoU for cooperation in the field of electoral management and administration on 17 september,in New Delhi. The Election Commission of India and the Supreme Presidential Election Committee of Egypt will henceforth cooperate on initiatives designed to strengthen electoral systems and democratic institutions, besides training of personnel and human resource development. The MoU was signed between India's Chief Election Commissioner V S Sampath and Secretary General of Egypt's Election Committee Hatem Bagato . Sampath said Egypt has evinced keen interest in the use of electronic voting machines and India's voter education programme and techniques used for cracking election frauds. India and Burundi signed 3 Major Agreements and issued a Joint Statement: President of the Republic of Burundi visited India from 17 to 19 September 2012. During this visit, India and Burundi signed three agreements-(i) Exchange Programme for Cooperation in the field of Education, (ii) Memorandum of Understanding on Cooperation in the field of Rural Development and (iii) Memorandum of Understanding on Cooperation in the field of Health and Medicine. Besides, India also announced a Line of Credit of 42.38 million US dollars for Farm Mechanisation and Integrated Food Processing Complex in Burundi. India and Burundi issued a joint statement on that occasion. The major highlights of the joint statement are as following: India and Burundi agreed to further enhance the bilateral cooperation in view of the considerable untapped potential. Burundi thanked India for approval of a concessional line of credit of 80 million US dollars for the Kabu 16 Hydro-electric project. Both nations agreed to continue strengthening cooperation in the areas of economy, trade and investment, finance, human resource development, culture, etc. while striving to expand cooperation into other potential areas such as agriculture, food processing, ICT, science & technology, health, mining etc. Burundi conveyed its support for Indias candidature for Permanent Membership in an expanded United Nations Security Council.
Aiming to improve ties between India and Association of South East Asian Nations (ASEAN), "INS Sudarshini", a sail training ship, began its journey on 28 September, from Chennai on a nine nation voyage. Director General, Naval Projects (V) Vice Admiral V K Namballa flagged off the ship, manned by five officers, 31 sailors, 30 Naval and Coast Guard cadets, from the Chennai Port Trust. During its journey, the ship would call on 13 foreign ports across nine nations to bolster friendship across the seas. The ship would take the ancient route of Indian mariners to South East Asia, it said, adding during its journey, the ship would spend a total of 127 days before berthing back at Kochi on March 29, 2013. India, Palestine against any outside interference in solving Gulf issues: India and Palestine on 11 September, called for resolution of all the developments in the Gulf through dialogue without any outside interference. Visiting Palestine President Mahmoud Abbas and Prime Minister Manmohan Singh exchanged views on regional developments, particularly the developments in the West Asian and the Gulf
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region. "There is a great degree of similarity in our views. We both agree that the developments in the region must be addressed through political dialogue and peaceful means without recourse to violence and outside interference, while taking into account the legitimate aspirations of all people," Dr Singh said in a statement to the media after holding talks with Mr Abbas. Mr Abbas also expressed the commitment of his nation to resolve issues with Israel through negotiations, while calling upon the neighbour to stop all violence and illegal settlements. He thanked India for its continued support to the Palestinian cause and sought to underline that a "Palestinian state with its East Jerusalem as its capital" was all for living in peace with Israel. Responding to the Prime Minister's call for early resumption of the peace dialogue between Palestine and Israel, Mr Abbas said both the states living in peace and security was the objective his government was aspiring forv India extended a credit of $10 Million aid to Palestine in a gesture of support: Indian Prime Minister Manmohan Singh announced a support of $10 Million to Palestine during a meet with Palestines National Authority President Mahmoud Abbas on 11 September 2012. Palestinian president was here in Indian on a three day visit from 10 to 12 September 2012. Mr. Singh also promised his Palestinian counterpart about Indias backing for their full and equal membership of the U.N. the one that is threatened by US for veto. During the meet, both the sides inked three different agreements comprising information and communication technology, education and vocational training. The agreements were inked in presence of the Indian external Affairs Minister S.M. Krishna and the member of executive committee of Palestinian Liberation Organization (PLO) Dr. Saeb M.S. Erakat. A MoU (Memorandum of Understanding) has been signed up to set up two schools at two districts of Palestine namely Abu Dees and Asera Al Shamalyeh, which will be named on the name of Pt. Jawaharlal Nehru, Indias first Prime Minister. Cost estimated for the construction of the two schools is US$ 1.8 million and will help about eight hundred students of these districts to fetch quality education. The schools at Abu Dees and Asera Al Shamalyeh will be constructed in an area of 1700 and 1900 square meter with 10 and 12 classes respectively. In the second agreement, India will set a state-of-the-art information and communication technology center in Palestine to create IT experts and generate opportunities of employment. To make the center of Palestine self reliable, some of the IT professionals from Palestine will be trained here in India to a higher level. As per the third agreement, India will participate in providing vocational training to the women and youth of Palestine. The training will include technical and machinery know-how to. Prime Minister Mr. Singh stated that he supported the Palestinian cause to achieve independent, sovereign and united state of Palestine and East Jerusalem as a capital to the state. India, Myanmar and Thailand decided to implement Trilateral Connectivity Project by 2016: India, Myanmar and Thailand on 10 September 2012 reviewed the eagerly awaited trilateral connectivity project and decided to make all efforts to implement this by 2016. This was done at the meeting of the India-Myanmar-Thailand Joint Task Force, which met in New Delhi. It was also agreed during the meeting that steps be initiated to address issues related to harmonisation of customs and immigration procedures at border check-posts to enable seamless movement of goods and people to realise the full potential of the trilateral highway. Commerce and Industry Minister, Anand Sharma, on 4 September, said India and Pakistan would soon ink three agreements in the areas of customs co-operation, mutual recognition of standards and redressal of trade issues to give a fillip to economic activity. Addressing a Pakistani Parliamentary delegation at FICCIs first IndiaPakistan Parliamentary Dialogue, Mr. Sharma said India was ready to grant multi-entry and multi-city visas to businessmen from Pakistan. Mr. Sharma said there was a need to also open up more land routes to allow more people-to-people exchange and smooth entry and exit of business community from both nations. India recently allowed Pakistan nationals and companies to invest in India through the semi-automatic approval route. Bilateral trade between India and Pakistan stood at $2.7 billion in 2010-11.Haider Abbas Rizvi, a member of Pakistan National Assembly, said that increase in trade and investment would help both sides to resolve other matters. India and Tajikistan on 3 September 2012 signed six agreements in the field of sports, health, culture, education, labour, textiles and energy. India and Tajikistan agreed to advance their ties to a strategic partnership in order to impart greater strength to the relationship through all-round co-operation and engagement. Both the countries identified information technology, biotechnology, mining, tourism, pharmaceuticals among other sectors as high potential area. After the agreements, it was decided that India would increase training slots for Tajikistan from 100 to 150 under India Technology and Eco Training Programme.
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Minister of State for External Affairs of India E Ahamed and Prime Minister of Niue, H. E. Toke Talagi signed a Joint Communique on the establishment of Diplomatic Relations between India and Niue, at Cook Islands. Niue is a Pacific island country, which is a member of regional bodies such as the Pacific Island Forum and the Pacific Community and also of UNESCO, WTO and FAO. Since 2002, India has intensified its cooperative relations with all countries in pacific island region. Niue, is an island of 1400 inhabitants, which is also known as the worlds first Wi-Fi nation, in which free wireless Internet access is provided throughout the country. Niue is also known as the Rock of Polynesia, and is situated 2400 km northeast of New Zealand . India and Pakistan on 8 September signed the much-awaited new liberalised visa agreement to boost people-to-people contacts between the two nations. The new pact, signed between External Affairs Minister SM Krishna and Pakistan Interior Minister Rehman Malik, replaces a 38-year-old restrictive visa agreement. The new visa policy will ease restrictions on visitors from both the countries. In addition, senior citizens will be granted visas on arrival at the Attari and Wagah border in India and Pakistan respectively. Under the new arrangement, senior citizens will be granted a visa on arrival valid for 45 days. For the first time, group tourism will be part of the new pact which will also have other new categories, including multiple city one-year visas for businessmen and visa-onarrival for people aged 65 years.
November
India and Libya on 30 November signed a Memorandum of Understanding (MoU) in New Delhi, for cooperation in the field of election management and administration, with Libyan Election Commission seeking training and electoral assistance from Election Commission of India. The MoU was signed by the Chief Election Commissioner of India, V.S. Sampath and the Deputy Chairman of the High National Election Commission of Libya, Mr. Najeeb Abdessalam Mohammed Arrabiti. The major aims of MoU are: promotion of exchanges of knowledge and experience in electoral processes; exchange of information, materials, expertise and training of personnel; production and distribution of materials pertaining to electoral systems, voting technology, voters education and awareness, and participation of women and minorities in electoral process. Election Commission of India has so far signed sixteen MOUs with Election Management Bodies and international organizations across the world. Some of the MoU signed recently are with Egypt, Venezuela, Republic of Korea and UNDP. A social security agreement between India and Sweden was signed in New Delhi on 26 November. The agreement was signed by Vayalar Ravi, Union Minister of Overseas Indian Affairs from the Indian side and Mr. Ulf Kristersson, Minister for Social Security of Sweden from Swedish side. Speaking on the occasion, Ravi said this agreement will help both the countries in more investment and work opportunities for nationals of India and Sweden. The Minister said this agreement will encourage more and more Indians to go to Sweden for employment opportunities. Mr. Kristersson said that 156 Swedish companies are operating in India and expressed the hope that this agreement will encourage Swedish people to come in large numbers to India. He said, India is the first Asian countries with which Sweden has signed this type of agreement. The Social Security Agreement will enhance cooperation on social security between the two countries. The Agreement will provide following benefits to Indian nationals working in Sweden: a) For short term contract up to two years, no social contribution would need to be paid under the Swedish law by the detached workers provided they continue to make social security payment in India. b) The above benefits shall be available even when the Indian company sends its employees to Sweden from a third country. c) Indian workers shall be entitled to the export of the social security benefit if they relocate to India after the completion of their service in Sweden. d) The self-employed Indians in Sweden would also be entitled to export of social security benefit of their relocation to India. There are about 18,000 Overseas Indians in Sweden, most of whom are working as professional and selfemployed. However, there is a huge potential for Indian workers to take employment in Sweden owing to the huge labour supply gap in the market. As such, a bilateral Social Security Agreement with Sweden is a significant requirement from the futuristic point of view to take advantage of the emerging employment opportunities and to strengthen the trade and investment between the two countries. India has singed similar
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agreements with Belgium, Germany, France, Switzerland, Netherlands, Luxembourg, Hungary, Denmark, Czech Republic, the Republic of Korea, Norway, Finland, Canada and Japan. India-Maldives Joint Military Training Exercise EKUVERIN 2012 held in Belgaum The fourth Joint Military Training Exercises between the Indian Army and the Maldives National Defence Force (MNDF) - EKUVERIN 2012 - was held in Belgaum, India from 12 to 25 November 2012. A total of 45 personnel from the MNDF are taking part in the exercises along with the personnel from the Indian Army. The bilateral annual exercises, which commenced in 2009 in Belgaum, are alternately held in India and Maldives. The aim of the exercises is to enhance the close military cooperation between the two countries. In April 2012, both countries, along with Sri Lanka, held joint Coast Guard/Naval exercises DOSTI XI - off the coast of Male (Maldives) to strengthen the bonds of friendship and enhance mutual operational capability and cooperation in the region. The 2nd India-China Strategic economic Dialogue held in New Delhi The 2nd India-China Strategic Economic Dialogue was held in New Delhi on 26 November, 2012. During the 2nd meeting of the Dialogue, India and China discussed a wide range of topics including greater cooperation at the global level, strengthening communication on macro-economic policies, deepening and expanding trade and investment and promoting bilateral cooperation in the financial and infrastructure sectors. The proposals and recommendations made by the five Working Groups were considered during the 2nd Dialogue and directions given for their future activities. A delegation of Saudi India Business Network (SIBN) which called on the Minister of State for Commerce and Industry Dr. S Jagathrakshakan in New Delhi on 22 November, showed keen interest on investing in India and forming joint ventures with Indian companies. The 15 member ISBN delegation was led by its President Dr. Ghazi Binzagar. The Saudi delegation showed particular interest in petroleum, petrochemicals, fertilizers, infrastructure, food processing, health care, herbal and medicinal sectors. Addressing the delegation, Dr Jagathrakshakan detailed the vast investment potential available in India following the spate of new initiatives and liberalization. He said the proposed US $ 750 million Saudi Indo Investment Fund, jointly set up by the Public Investment Fund of Saudi Arabia and the Infrastructure Development Finance Corporation (IDFC) will start in the near future. The fund focuses on channelizing Saudi investments into Indian infrastructure projects. The Minister called upon the delegation to utilize the services of India Invest a joint venture special purpose vehicle of the Department of Industrial Policy & Promotion with FICCI and the State governments. Invest India gives a fillip to investment promotion and handholding services to foreign investors particularly to the Small and Marginal Enterprises (SMEs) and family owned overseas enterprises in a structured manner. Dr. Jagathrakshakan also invited the Saudi business community to participate in the oncoming 4th GCC-India Industrial Conference (IGIC) to be held in Jeddah, Saudi Arabia from 19th to 21st February 2013. India and Israel diplomatic relations were established in 1992. To mark the occasion of 20 years of diplomatic relations, India Post has issued a set of two stamps (Joint Issue-each stamp of Rs. 5 denomination)depicting the festival of lights, Deepavali & Hanukkah, on 5th November, 2012. Hanukkah, is a Jewish holiday commemorating the rededication of the Holy Temple in Jerusalem at the time of the Maccabeen Revolt of the 2nd century BC. Hanukkah is observed for eight night and days, starting on the 25th day of Kislev according to the Hebrew calendar by lighting candles in windows or doorways on each of the eight nights of Hanukkah. The candles are lit in a unique candelabrum, the nine-branched Menorah or Hanukkah. Like the diyas of Deepavali, the Hanukkah candles symbolize the triumph of good over evil and the victory of justice over injustice. The stamps are valid for postal use till the stocks last. India Post Commemorates National and International events by releasing Commemorative and Special Postage Stamps. Union Minister of Health & Family Welfare Ghulam Nabi Azad laid the foundation-stone of PPD Secretariat Building in Dhaka on 12 November. Azad is currently on an official tour to Bangladesh capital Dhaka in connection with the International Conference on Evidence for Action: South-South Collaboration for ICPD beyond 2014 organized jointly by Partners in Population and Development (PPD) and Bangladesh and also for attending PPD governance meetings. Bangladesh is one of the 10 founding members of PPD. It has since 1996 not only been hosting the Secretariat but has also created a conducive environment for seamless
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functioning of the Secretariat. PPD was created in Cairo in 1994, where during the landmark International Conference on Population and Development, ten developing countries united to establish Partners in Population and Development; a unique inter-governmental organization to facilitate the implementation of the ICPD Program of Action in developing countries through South - South Cooperation. PPD currently serves over 57% of the world population and is a permanent observer to the United Nations. Its membership has grown from 10 founding members in 1994 to 25 member countries in 2012 across the global south. Apart from the Secretariat in Dhaka, Bangladesh, PPD has an Africa Regional Office in Kampala, Uganda and a Programme Office in China. Hamid Karzai, the President of Afghanistan paid a state visit to India from 9 November to 13 November 2012 following the invitation of the President of India Pranab Mukherjee. During his India Visit the Afghanistans President attended a business meet at Mumbai on 10 November 2012 participated by the business leaders of India. On 12 November 2012, he delivered a Maulana Abul Kalam Azad Memorial lecture that was organised by the Indian Council of Cultural Relations (ICCR) in New Delhi. The good relations started between the two nations after the two signed a Strategic Partnership Agreement in October 2011 for creation of strong ties between both the nations. India and Japan on 16 November inked two strategic agreements including one that will enable Tokyo to import rare earth minerals that is vital for producing a range of high-tech products. The agreements were inked in Tokyo by Japanese foreign minister Koichiro Gemba and India's ambassador to Japan Deepa Wadhwa. Under the signed agreement, Japan will import over 4,000 tonnes of rare earths a year from India. This is its second deal this month to diversify supply from China for the metals used in mobile phones and hybrid cars to missile guidance systems. Japan has in the past imported all its rare earth requirements from China but has been scouting for alternatives after political turbulence hit its ties with Beijing. With rare earth production at full throttle, India could supply around 4,100 tons annually, equivalent to around 10 percent of Japan's peak annual demand. The production and exports will be conducted by a joint venture between Japan's Toyota Tsusho Corp. and India's state-run Indian Rare Earths Ltd. The other deal is Social Security Agreement which will immediately benefit about 30,000 citizens of both countries. About 22,000 Indians working in Japan and about 8,000 Japanese are employed in India and their social security contributions won't be deducted in both countries. India and Canada agreed on 6 November to boost cooperation in civil nuclear energy, agriculture, information technology and joint research and development in the defense field. Canadian Prime Minister Stephen Harper arrived India on a six day visit .Canadian Prime Minister Stephen Harper and his Indian P.M Manmohan Singh felt that "energy cooperation, particularly exports of Canadian oil and natural gas as well as renewable energy cooperation, was an area with enormous potential."Harper said the two sides welcomed the conclusion of discussions for operationalizing an agreement on civil nuclear energy cooperation they signed two years ago.The agreement provides Canada's nuclear industry access to India's expanding nuclear market cooperating with Indian civilian nuclear installations under international safeguards.India stressed that cooperation with Canada in the field of agriculture was crucial to its food security as it imported 40 percent of its pulses and 25 per cent of potash requirements from Canada.Indian and Canadian officials signed three agreements for avoidance of double social security contributions by workers and cooperation in the areas of information technology, electronics and joint research and development in the defense field and science and technology.Sources said, Canada is seeking to boost its presence in Asia, and two-way trade touched $5.2 billion last year, up more than 28 percent from 2010. Total Canadian investment in India was estimated about $4.3 billion. Both sides expect the two-way trade to triple to $15 billion by 2015.Canada mainly exports vegetables, fertilizers, machinery and wood pulp, while its main imports from India are organic chemicals, knit and woven apparel, precious stones and metals, electronics and machinery. The first ASEAN-India Ministerial Meeting on cooperation in Renewable Energy was held in the New Delhi on 7 November. Dr. Farooq Abdullah, Minister of New and Renewable Energy while inaugurating the meeting said that this meeting is a unique opportunity to catalize the India-ASEAN Renewable Energy family. He underlined the importance of Renewable Energy in Indias energy security, for achieving its goal of providing reliable energy supply and access through a diverse and sustainable energy mix. He stated that ASEAN member countries and India have several commonalities in their quest for targeting renewable energy.
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Globally, renewable energy has started making a positive impact on energy supply. The Global Renewable Energy Status Report 2012 reveals that renewable energy has grown to supply 16.7 per cent of the global energy consumption.Dr. Farooq Abdullah stated that today India stands among the top five countries of the world in terms of renewable energy installed capacity and at present renewable power, with over 26 GW installed capacity, represents about 12.5 percent of the total installed power generation capacity in India. He further said that India aims to achieve about 55 GW of renewable power by 2017. Our renewable energy programme is primarily private sector driven and offers significant investment and business opportunities. The Minister informed that the investment in renewable energy in India has now exceeded US $ 10 billion per year. It may be recalled that ASEAN-India partnership has completed 20 years of existance. To celebrate this successful partnership, the Government of India hosted this meeting of the Ministers of Renewable Energy of ASEAN countries and India. The meeting deliberated and discussed the policy and regulatory framework for promotion of renewable energy in ASEAN member countries and India. The issues of financing of renewable energy, cooperation in research and development, technology transfer were some of the issues that came up for discussion. Prior to this meeting, the Ministry of New and Renewable Energy (MNRE), organized an ASEAN-India Workshop on Cooperation in Renewable Energy of experts and policy planners from ASEAN countries and India on 5-6 November 2012 at Vigyan Bhavan New Delhi. India and Malaysia have agreed to promote cooperation in renewable energy, especially in the areas of biomass and biogas, micro hydropower, solar energy and wind power. A Memorandum of Understanding (MoU) to this effect was signed in New Delhi on 8 November. The MoU was signed by Dr. Farooq Abdullah, Minister of New and Renewable Energy and Data Sri Peter Chin Fah Kui, Minister of Energy, Green Technology and Water, Malaysia. Both the countries also agreed to form a Joint Working Group for better coordination through joint research on subjects of mutual interest, exchange and training of scientific and technical personnel, exchange of available scientific and technologies information and data, organization of workshops, seminars and working groups, transfer of know-how, technology and equipment, on noncommercial basis etc. Dr. Farooq Abdullah briefed his Malaysian counterpart on the progress made by India in renewable energy with special reference to the National Solar Mission launched in 2010 under the National Action Plan on Climate Change. Tourism Ministry reported that, in the month of October, a total number of 1457 (Visa on Arrivals) VoAs were issued under VoA Scheme as compared to 1234 VoAs during October 2011 registering a positive growth of 18.1 %. During the period January-October 2012, a total number of 12273 VoAs were issued as compared to 9739 VoAs during the corresponding period of 2011, registering a growth of 26 %. As a facilitative measure to attract more foreign tourists to India, Government launched a Scheme of Visa on Arrival (VoA) in January 2010 for citizens of five countries, viz. Finland, Japan, Luxembourg, New Zealand and Singapore, visiting India for tourism purposes. This scheme was extended for the citizens of six more countries, namely Cambodia, Indonesia, Vietnam, Philippines, Laos and Myanmar from January 2011. The Bangladesh Minister of Agriculture, Begum Matia Chowdhury on 7 november, called on the Union Minister of Water Resources, Harish Rawat in New Delhi. During the meeting, discussions were held on matters of common interest including sharing of waters of Teesta and other common rivers, irrigation projects in Bangladesh, Tipaimukh Hydro-Electric Project, dredging of rivers and other issues of cooperation. Rawat reiterated Indias commitment on signing the Interim Water Sharing Agreement on river Teesta and stated that India is pursuing the matter with stakeholders rigorously and is hopeful of resolving the issue shortly. Rawat also agreed to Bangladeshs suggestion to help it build irrigation facilities in the South of Bangladesh. It could also help Bangladesh in conservation of ground water, so as to prevent increasing salinity in the coastal region. On the request of Bangladesh Minister to consider supply of amphibian dredgers, Rawat assured full cooperation and requested that a formal proposal be sent by Bangladesh. Both Ministers also agreed to move ahead and expeditiously resolve other minor issues to benefit people of both countries. Frequent consultations / discussions at various levels between the countries were also emphasized. An agreement for loan of US$ 106 million for Phase-I of the World Bank assistance for the ICDS Systems Strengthening and Nutrition Improvement Project (ISSNIP) was signed at New Delhi on 5 November between Prabodh Saxena (Joint Secretary, Department of Economic Affairs) on behalf of Government of India and Mr. Onno Ruhl, Country Director, World Bank (India) on behalf of the World
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Bank. Representatives from Ministry of Women and Child Development and officials from the World Bank, among others, were present. The overarching Goal of the proposed two-phased Program is to improve nutritional outcomes of children in India. The Objective of the Phase-I is to support Government of India and participating states to: 1)Strengthen the Integrated Child Development Service (ICDS) policy framework, systems and capacities, and facilitate community engagement, to ensure greater focus on children under three years of age. 2)Strengthen convergent actions for improved nutrition outcomes. The Phase-I of ISSNIP is for 3 years. India and Britain on 8 November 2012 decided to step-up cooperation in Cyber Security during the Foreign Minister level talks of both the nations. The representatives of both the nations, William Hague the British Foreign Secretary and Salman Khurshid India's External Affairs Minister after agreeing on the issues of cooperation on cyber crimes, which included cooperation in defining the ways of tackling the cyber crime, bilaterally issued a joint statement on the issues discussed. The London Conference on Cyberspace of 2011 was attended at Ministerial level from the Indian side and following the results of the conference, both the countries started its first dialogue on cooperation in October 2012. India & Britain upgraded the relationship of strategic partnership in the year 2004 and since then the foreign ministers of both the nations have been working on the areas of common interest in the cyber domain. Britain also allowed its citizens to visit Srinagar and Jammu by lifting the ban because of the changed ground realities of the land. The Union Finance Minister, P. Chidambram will be arriving in Mexico City, Mexico on 3 November 2012 in order to participate in G-20 Finance Ministers and Central Bank Governors meeting. The Finance Minister along with Governor, RBI D.Subba Rao will attend the session on Global Economy and Framework. On 5 November 2012, the Finance Minister Chidambram along with Governor, RBI and Secretary, Department of Economic Affairs, Ministry of Finance will attend the second session on Financial Regulation and Financial Inclusion, third session on Energy, Commodities and other issues including Climate Finance and Disaster Risk and the last session on International Financial Architecture. India and UK signed a Protocol amending the Convention between the Government of India and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect of Taxes on Income and Capital Gains (DTAC). This Protocol amends the earlier Convention that was assigned in New Delhi on 25th January, 1993. The Protocol was signed on 30th October 2012 in London by Dr Jaimini Bhagwati, High Commissioner of India to the UK on behalf of the Government of India and Mr David Gauke MP, Exchequer Secretary to the Treasury on behalf of the Government of UK. The Protocol streamlines the provisions relating to partnership and taxation of dividends in both the countries. Now, benefits of the Convention would also be available to partners of the UK partnerships to the extent income of UK partnership are taxed in their hands. Further, the withholding taxes on the dividends would be 10% or 15% and would be equally applicable in UK and in India. The Convention, as amended by this Protocol, will provide tax stability to the residents of India and U.K. and will facilitate mutual economic cooperation between the two countries. It will also stimulate the flow of investment, technology and services between India and U.K. The Government of India is hosting a meeting of the Ministers of Renewable Energy of ASEAN countries and India in New Delhi on 7th November 2012. In the meeting, the Ministers in-charge of Renewable Energy of ASEAN member countries and India would deliberate upon and discuss policy and regulatory framework for promotion of renewable energy in ASEAN member countries and INDIA. Financing of renewable energy, cooperation in research and development, technology transfer and resource assessment would be specific issues that would engage their attention.Prior to the Ministerial level meeting, a two-day workshop on renewable energy of experts and policy planners from ASEAN countries and India is being organized by Ministry of New and Renewable Energy (MNRE), Department of Science and Technology (DST) and Global Innovation Technology Alliance (GITA) and is scheduled in New Delhi on 5-6 November 2012. The Finance Minister of India, P. Chidambaram and the Minister of Strategy and Finance of the Republic of Korea, Mr. Jaewan Bahk met in Seoul, South Korea on 2 November, for their 3rd Bilateral Meeting. The two ministers and their delegations discussed a wide range of issues ranging from macroeconomic trends and outlook, fiscal cooperation, revision of the Double taxation avoidance convention (DTAC), expanding information sharing between the taxation authorities, cooperation in modernising the
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customs system of each country, public procurement cooperation and measures to develop co-financing infrastructure projects. The first bilateral meeting of Finance Ministers of India and South Korea was held in Seoul in September 2006 and the second meeting in New Delhi in January 2011. India-Korea relations rest on deep historical ties based on a strong foundation of shared cultural heritage, commitment to democracy and desire to establish a long-term cooperative partnership. The cooperation between the two countries covers all areas of bilateral relations, namely political, economic and commercial, defence, information technology, science and technology, cultural exchange, etc. The bilateral meeting between the finance ministers is expected to further strengthen this relationship, increase mutual cooperation, and lead to increased investment opportunities in the two countries. Agriculture and Food Processing Industries Minister, Sharad Pawar is to inaugurate a world-class institution in food processing sector called NIFTEM - at kundli, Haryana, on 7th November. Haryana Chief Minister Bhupinder Singh Hooda and a number of Union and State Ministers will be present at the inaugural function.NIFTEM or the National Institute of Food Technology Entrepreneurship and Management has been conferred Deemed University status. The institute has begun its first academic session this summer. It will confer B. Tech. (Food Technology and Management), M. Tech. and Ph. D. in the area of Food Technology and Management. One important aspect of its functioning is that it has theme centres on different sectors such as dairying, cereal-based products, animal protein, beverages, confectionery, and fruit and vegetable based foods. There are also themes cutting across these sectors, e.g. management, packaging, food standards and testing. With India and China set to hold their annual Strategic Economic Dialogue (SED) in New Delhi in the last week of November, both countries this week launched a renewed push to address a ballooning trade deficit which, officials say, is beginning to increasingly strain the trade relationship. While bilateral trade has soared from a few billion dollars to $74 billion last year when China became Indias biggest trade partner the trade imbalance has widened rapidly, reaching $27 billion in 2011.
December
Defence deals worth around $4 billion (Rs 22,000 crore) were among 10 key pacts inked on 24 December, between India and Russia after comprehensive talks including on differences over $3 billion investment by Russian telecom major Sistema, whose license was cancelled. Visited Russian President Vladimir Putin and Prime Minister Manmohan Singh undertook an extensive review of bilateral cooperation, especially in the field of nuclear energy and discussed ways to expedite an agreement for nuclear reactor 3 and 4 at Kudankulam. All key bilateral issues, including defence, space, trade and investment, science and technology, education, culture and tourism were discussed in the meeting which also witnessed Russians raising their concerns over the issue of Sistema.Sistema, with investment of $3.1 billion, has 56.68% stake in Shyam Sistema Teleservices (SSTL) whose 21 out of 22 licences were cancelled by the Supreme Court on February 2 as irregularities were found in their allocation. About their discussions on regional and international issues, P.M Manmohan Singh said, "India and Russia share the objective of a stable, united, democratic and prosperous Afghanistan, free from extremism, terrorism and external interference. We reviewed the ongoing developments in Afghanistan, and agreed to work together against threats posed by extremist ideologies and drug trafficking. "The pacts include Foreign Office consultations protocol, cultural exchanges, science, technology and innovation, telecommunications; financing of projects and promoting investments which envisages investments up to $2 billion in important bilateral projects or companies, privatisation and other opportunities. The defence deals include contract for delivery of 71 Mi -17V5 helicopters and contract for delivery of 42 technological kits for SU-30MKI aircraft licenced production. The leaders also expressed satisfaction at the improved bilateral trade during 2011 and 2012 and agreed to enhance efforts to achieve the target of $20 billion bilateral trade by 2015. India welcomed Russia's recent accession to the WTO and both sides agreed that it provided further opportunities to augment bilateral trade and investment and business-to- business linkages. The much awaited Free Trade Agreement (FTA) in investments and services was finalised between India and Association of Southeast Asian Nations (ASEAN) on 20 December 2012. The actions would be beneficial in
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enhancing the trade to around 100 billion dollar by 2015. Also, it will help in enhancing the economic ties.FTA in the goods was operationalised in 2011 and since then both the sides were busy in widening the pact by also including investments and services. Trade between the two sides is at present 80 billion dollar. Indias Prime Minister Dr. Manmohan Singh declared that after implementation of FTA in the goods, the trade between the two sides increased by 41 percent in the year 2011-2012. Manmohan Singh announced at the summit that two-way flows in terms of investment grew rapidly and reached the mark of 43 billion dollar over last 10 years. Because the investments through ASEAN in India grew, therefore the ASEAN countries also emerged as lucrative destination for the Indian companies. The agreement would create new pathways for greater economic integration. Post, FTA in investments and services, India was also planning to hold market opening negotiations like these with other members of the group. FTA was already implemented with Malaysia and Singapore. Negotiations with Thailand and Indonesia were still on its way. Final legal paper work on investment and services pact would be given a concrete shape by February 2013. Signing of the agreement would take place in August 2013. India and Ukraine have agreed to forge a comprehensive partnership and have identified areas for commercial ties, Prime Minister Manmohan Singh announced on 10 December. Addressing the media after a meeting with visiting Ukraine President Viktor Yanukovych, the Prime Minister said that they had identified a number of areas such as fertilisers, pharmaceuticals, information technology, mining and heavy machinery for special attention. The Prime Minister also conveyed to Yanukovych, Indias interest in visa arrangements to facilitate travel by businessmen, professionals, students and people. The two countries signed five documents during the visit, including an agreement on co-operation in defence. The agreement will provide the framework for expanding military technical co-operation on an institutionalised basis. An agreement was also signed between the Atomic Energy Regulatory Board and the State Nuclear Regulatory Inspector of Ukraine for exchange of technical information and co-operation on nuclear safety and radiation protection. The agreement envisages cooperation in some important regulatory activities including legislative regulations, safety guides and technical criteria on nuclear safety, design, construction, operation decommissioning of nuclear facilities waste management and environmental impact, among others. India and Pakistan jointly operationalized the new Visa Agreement on 14 December 2012 in New Delhi during the visit of Pakistan interior minister A. Rehman Malik to India. However, the Visa-on-Arrival will come into effect from 15 January 2013 and the Group Tourist Visa from 15 March 2013. Government of India and the Government of Pakistan had signed on 8 September 2012, a new Visa Agreement to facilitate travel for the citizens of both countries desirous of travelling to the other country and to promote people to people contact.Main features of the India-Pakistan new Visa Agreement are as following:1)Places of visit allowable increased from three to five places 2)In exceptional cases visitor visa for one year could be issued in the past. 3)Exemption from Police Reporting for Business visa granted to businessmen with an annual income above Pak Rs. 5 million or equivalent or annual turnover above Pak 30 million rupees or equivalent.4)Group Tourist Visa for 30 days may be issued for travel in groups, with not less than 10 members and not more than 50 members in each group, organized by approved tour operators/travel agents (effective from 15 March 2013). A delegation led by Dr. Lee Ju-ho, Minister of Education, Science and Technology, Republic of Korea met Dr. Shashi Tharoor, Minister of State in the Ministry of Human Resource Development, in New Delhi on 12 December.Both leaders appreciated the ongoing cooperation between the two countries in the field of education and discussed the need to have more arrangements for cooperation in the field of education and research. Both sides appreciated the existing collaborations between the Universities from both the countries and highlighted the need for more collaborations in the areas of scientific research as well as research in social sciences and humanities. A Memorandum of Understanding on Educational Cooperation between the two countries was also signed during the meeting. Both the countries agreed to cooperate in education in different fields through Exchange of scholars, teachers, researchers ; organization of training programmes for teaching professionals; facilitating mutual recognition of educational qualifications; exchange of academic scholarships for higher education; organization of seminars; promotion of languages of both the countries and application of Information Technology and open educational education resources. It was also agreed to form a Joint Working Group (JWG) to monitor the implementation of the programmes envisaged in the MoU. India and Japan on 4 December, signed a currency swap agreement for up to USD 15 billion to address shortterm liquidity problems. The bilateral swap arrangement (BSA) between the Reserve Bank of India and the
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Bank of Japan enables both countries to swap their local currencies either Japanese yen or Indian rupee against US dollar for an amount up to USD 15 billion. "The arrangement aims at addressing short-term liquidity difficulties and supplementing the existing international financial arrangements, as one of the efforts in strengthening mutual cooperation between Japan and India," RBI said in a statement. The arrangement to be effective from December 4, 2012 would be for a three year period. Earlier, both countries had a similar arrangement for an amount of up to USD 3 billion for a period of 3 years between June 2008 and June 2011. The arrangement was signed by RBI Governor D Subbarao and Bank of Japan Governor Masaaki Shirakawa. The Minister for Human Resource Development Dr M M Pallam Raju has announced the Ministrys inprinciple approval for setting up the Indira Gandhi Centre for Sustainable Development at the Somerville College, University of Oxford. The Minister said this after discussions with a delegation led by Dr. Alice Prochaska, Principal, Somerville College in New Delhi on 7 december. An Inter-Ministerial Committee is already in place to discuss the proposal.Somerville College, University of Oxford had submitted a proposal to establish the centre. The institution is a constituent college of University of Oxford and is Smt. Indira Gandhis alma mater. The Indira Gandhi Centre will honour the late Indian Prime Ministers legacy to the world by addressing key issues of sustainable development and will result in building up Indias intellectual capital and expertise in the area. The proposed Centre will enhance scholarship opportunities at Oxford for the bright and talented students from India in the field of sustainable development. It will invest in intellectual capital and build a platform for strengthening partnerships with Indian scholars and leading institutions thereby creating a community of alumni engaged in lifelong learning. The Centre is aimed at having a transformational impact on the lives of future leaders, who will help to direct a new paradigm of Sustainable Development in India and beyond.
Economic Affairs 2012

January
The Union government on 31 January 2012 revised the economic growth rate for 2010-2011 financial year to 8.4 percent in comparison to the previous estimate of 8.5 percent.The Indian economy, Asias third-largest slowed in recent quarters due to the impact of the global slowdown, high inflation and high interest rates. The Reserve Bank of India (RBI) on 24 January 2012 cut the cash reserve ratio (CRR) by 50 basis points from 6 per cent to 5.5 percent with effect from 28 January 2012. RBI thus released Rs 32000 crore to banks. The RBI kept the repo rate unchanged at 8.50 per cent for the second consecutive time after raising it 13 times between March 2010 and October 2011. It also kept Reverse Repo Rate unchanged. The Department of Industrial Policy and Promotion (DIPP) notified the rules allowing 100% foreign direct investment (FDI) in single-brand retail. Currently 51% FDI is permitted in this segment of retailing which was opened to foreign players almost six years ago. Andhra Pradesh Power Generation Corporation Ltd (APGENCO) announced the commissioning of a 1-MW photovoltaic-cell-based solar power plant at Priyadharsini Jurala Hydro-Electric Project. This is AP Genco's maiden entry into solar power generation. The Indian Renewable Energy Development Agency (IREDA), a public limited company under the control of the Ministry of New and Renewable Energy, allocated this power project to AP Genco under phase-1 of the Jawaharlal Nehru National Solar Mission (JNNSM).
February
The Reserve Bank of India (RBI) panel on priority sector lending headed by M. V. Nair, Chairman, Union Bank of India ,on 21 February 2012 proposed increment in the target (priority sector) for foreign banks to 40% of net bank credit from the current level of 32 per cent with sub-targets of 15 per cent for exports and 15 per cent for the MSE sector. The target of domestic scheduled commercial banks for lending to the priority sector is to be retained at 40 per cent of net bank credit.
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As per the first nationwide retail inflation data released by the Centre of Statistical Office on 21 February 2012, inflation based on the all India Consumer Price Index stood at 7.65 per cent in January 2012. The annual consumer price index (CPI) data released for the first time measures retail prices in major food groups, fuel, clothing, housing and education across rural and urban India.Consumer price inflation for rural India (CPIR) was recorded at 7.38%, for urban India (CPI-U), it stood at 8.25%.Inflation as measured by the WPI eased to a 26-month low of 6.55% in January 2012.Beginning 21 February 2012, the union government will release the nation-wide Consumer Price Index (CPI) on a monthly basis for better reflection of retail price movement as well as help the Reserve Bank take effective monetary policy steps to tackle inflation. The new CPI will eventually replace the Wholesale Price Index (WPI) for policy actions to deal with the price situation. The Prime Minister's Economic Advisory Panel (PMEAC) on 22 February 2012 projected 7.5 - 8 per cent growth rate for the fiscal 2012-13. The economy recorded a growth rate of 8.4 per cent in 2010-11, which according to the CSO estimates is expected to moderate to 6.7 per cent in the current fiscal 2011-12. The New Telecom Policy was announced by communications minister Kapil Sibal on 15 February 2012.The key policy measures are aimed at reassuring incumbent operators who had been seeking clarity in rules at a time when the government is making every possible effort to put the scam-tainted telecom sector back on track. Telcome companies operating in the same region will be allowed to share 2G spectrum. All future allocation of airwaves will only be through auctions. Also, future licences will be delinked from spectrum and companies must buy bandwidth at market rates. The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee on 15 February 2012 approved the auction route for selling 5 per cent stake in state-run oil major ONGC before the end of the current fiscal 2011-12. The government of India on 9 February 2012 approved setting up of a National Centre for Cold Chain Development, NCCD, as a society under the Societies Registration Act, 1860. The NCCD will be having a Governing Council under the Chairmanship of Secretary with 22 members, covering government officials, Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, FICCI and other stake holders. The move comes in the wake of post harvest losses to the tune of 50000 crore rupees annually in absence of proper storage facilities. The Central Empowered Committee (CEC) set up by the Supreme Court to investigate illegal mining in Karnataka submitted its final report on 4 February 2012. The committee recommended the cancellation of leases of 49 mines that have violated the terms of their licence. It also recommended the auction of these leases. The Union Government of India on 1 February 2012 gave its approval for setting up a National Council for Senior Citizens. It will be headed by the Minister of Social Justice and Empowerment. The Council will comprise of 20 members including the Minister of State for Social Justice and Empowerment along with the oldest members from both the Houses of Parliament and distinguished personalities from different fields. It will advice the Central and State Governments on issues related to welfare of senior citizens. The Council will suggest special policies and programmes for the physical and financial security of the senior citizens in the country. As per the latest Sample Registration System (SRS) bulletin, December 2011 it is revealed that, Infant Mortality Rate (IMR) has dropped further by 3 points from 50 to 47 infants deaths per 1000 live births during 2010. The IMR for rural areas has dropped by 4 points from 55 to 51 infant deaths per 1000 live births while the Urban rate now stands at 31 from the previous 34/1000. State of Goa still has the lowest IMR of 10 infant deaths followed by Kerala with 13 infant deaths per 1000 live births. Bihar, Chandigarh, Haryana, Rajasthan, Meghalaya still have IMRs more than the national average of 47. The Supreme Court observed that the allocation of 2G spectrum under former telecom minister A. Raja was wholly arbitrary and contrary to public interest apart from being violative of the doctrine of equality favour some companies at the cost of the public exchequer. The Supreme Court cancelled all the 122 2G licenses. According to the verdict, telecom regulator TRAI is to make fresh recommendations on the grant of licenses.
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March
The R B I on 26 March 2012 restructured the fair practices code (FPC) to be adopted by non-banking finance companies (NBFCs) while doing lending business. The guidelines issued by the central bank covered general principles on adequate disclosures on the terms and conditions of a loan and also adopting a non-coercive recovery method. The modified FPC is required to be put in place by all NBFCs with the approval of their boards within one month from the date of issue of this circular (26 March 2012). Also RBI directed that the FPC should be published on the web-site of the company for public information. The NBFCs were directed not to resort to undue harassment such as persistently bothering the borrowers at odd hours and use of muscle power with respect to loan recovery. In 2006, the RBI had issued FPC norms for all NBFCs to be adopted by them while doing the lending business Four States namely Jharkhand, Mizoram, Sikkim and Lakshadweep on 16 March 2012 signed MoU with the Ministry of Statistics and Programme Implementation under the Indian Statistical Strengthening Project (ISSP) for the States and Union Territories. ISSP is aimed at strengthening State Statistical Systems by way of providing adequate technical and financial support to improve their statistical capacity and infrastructure. ISSP is a very important and a comprehensive project of Ministry of Statistics & Programme Implementation, with an approved outlay of about 650 crore rupees, out of which 80% has been funded through World Bank Loan and 20 percent is being borne by the Government of India. Union Railway Minister Mukul Roy rolled back the railway fare hike as proposed by Dinesh Trivedi in the first Union Rail Budget 2012-13 presented on 14 March 2012. Roy also struck down the plan to restructure Railway Board. The hike announced by Roys predecessor Trivedi was the first instance in 9 years when the fares had been raised. All railway reform measures suggested by Trivedi such as setting up of an independent tariff regulator, restructuring of Railway Board on professional lines, and creation of posts of Member PPP and Member Safety was also ignored in the latest budget tabled by Roy. Finance Minister Pranab Mukherjee presented the Economy Survey report 2011-12 in Lok Sabha on 15 March. Following are the highlights of the economic survey1. The country's economic growth estimated at 6.9 per cent in the current fiscal; growth momentum to pick up in next two fiscals to 7.6 per cent in 2012-13 and 8.6 per cent in 2013-14. 2. RBI expected to lower policy interest rates, as inflationary pressures expected to ease in coming months; A low interest rate regime to encourage investment activity and push forward economic growth. 3. Steps required for deepening of domestic financial markets, especially corporate bond market and attracting longer-term inflows from abroad; Efforts at attracting dedicated infrastructure funds have begun. 4. The growth rate of investment in the economy is estimated to have declined significantly; borrowing costs up due to a sharp increase in interest rates. 5. Slowdown in Indian economy largely due to global factors, as also because of domestic factors like tightening of monetary policy, high inflation and slower investment and industrial activities. 6. Inflation high, but showing clear signs of slowdown by the year-end; Whole-sale food inflation down to 1.6 per cent in January 2012 from 20.2 per cent in February 2010. 7. India remains one of the fastest growing economies of the world; Country's sovereign credit rating rose by a substantial 2.98 per cent 2007-12 8. Farm sector growth pegged at 2.5 percent for 2011-12. 9. Services sector to grow at 9.4 percent. 10. Services sector share in GDP to go up to 59 percent in the fiscal ending March 31. 11. Industrial growth pegged at 4-5 percent, expected to improve as economic recovery resumes. 12. Calibrated steps initiated to rein-in inflation on top priority. 13. Fiscal consolidation on track - savings and capital formation expected to rise. 14. Exports grew by 40.5 percent in the first half of this fiscal and imports grew by 30.4 percent. 15. Foreign trade performance to remain a key driver of growth. 16. Forex reserves enhanced - covering nearly the entire external debt stock. 17. Central spending on social services goes up to 18.5 percent this fiscal from 13.4 percent in 2006-07.
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Following are some more key highlights of the Union Budget 2012-13, presented by Finance Minister Pranab Mukherjee in the Parliament on 16 March. 18. Tax burden for individuals to come down: Income tax exemption limit raised from Rs. 1,80,000 to Rs. 2,00,000; 10 per cent tax for 2-5 lakh income; 20 per cent for 5-10 lakh and 30 per cent beyond Rs. 10 lakh; Savings bank account interest up to Rs. 10,000 exempted from tax. 19. Many services and goods to cost more: No change in corporate tax rate, but standard rate of excise duty, as also service tax rates, raised from 10 per cent to 12 per cent; No change in peak customs duty of 10 per cent on non-agri goods. 20. Large cars, imported bicycles, cigarettes, bidis and some imported jewellery to cost more; branded silver jewellery may get cheaper. 21. Boost for capital markets: Securities Transaction Tax on cash delivery reduced by 25 per cent to 0.1 per cent; A new Rajiv Gandhi Equity Saving Scheme to allow income tax deduction to retail investors in stocks. 22. Economy expected to gain ground: GDP growth rate pegged at 7.6 per cent in 2012-13; Subsidy Expenditure to be checked and higher tax revenues targeted; Rs. 30,000 crore to be raised from disinvestment. 23. Capital boost to financial and infrastructure sectors: Rs. 15,888 crore to be provided for capitalisation of public sector banks and financial institutions; Infrastructure investment of Rs. 50 lakh crore in 12th period, with half from private sector; Tax free bonds of Rs. 60,000 crore to be allowed for financial infrastructure projects. 24. Fight against black money: White paper on black money in current session of Parliament; Introduction of compulsory reporting requirement for assets held abroad; tax collection at source on high-value cash purchase of bullion, jewellery, immovable property and trading in coal, lignite and iron ore. 25. Greater scrutiny of closely-held companies for funds; Taxation of unexplained money, credits, investments, expenses at highest rate of 30 per cent irrespective of income slab. 26. Tax reforms: Direct Taxes Code (DTC) at earliest; GST network to be operational by August 2012; Central Excise and Service Tax being harmonized. A General Anti-Avoidance Rule (GAAR) to be introduced to counter aggressive tax avoidance. 27. Attracting foreign funds: Efforts on to allow FDI in multi-brand retail and permitting foreign airlines invest in domestic players; External borrowings to the extent of USD one billion for aviation companies; Qualified Foreign Investors to get access to corporate bond market. 28. Tax relief for stressed sectors: Sectors like agriculture, infrastructure, mining, railways, roads, civil aviation, manufacturing, health and nutrition, and environment to get duty relief; Turnover limit for compulsory tax audit for SMEs raised from Rs 60 lakh to Rs 1 crore. 29. Farming for growth: Target for agricultural credit raised to Rs 5,75,000 crore; Interest subvention for short-term crop loans to farmers at 7 per cent interest continues; additional 3 per cent for prompt paying farmers. Financial Highlights of Budget 2012-12: 30. Direct proposals to give in net revenue loss of Rs. 4,500 crore and net gain of Rs. 45,940 crore from indirect taxes, resulting into a net gain of Rs. 41,440 crore. 31. Fiscal deficit targeted at 5.1 per cent of GDP in 2012-13, down from 5.9 per cent in 2011-12; Central Government debt at 45.5 per cent of GDP. 32. Defence services get Rs. 1,93,407 crore; any further requirement to be met. 33. Total expenditure budgeted at Rs. 14,90,925 crore; plan expenditure at Rs. 5,21,025 crore, 18 per cent higher than 2011-12 budget; non-plan expenditure at Rs. 9,69,900 crore. 34. Gross Tax Receipts estimated at Rs. 10,77,612 crore, 15.6 per cent higher than original budget estimates and 19.5 per cent over the revised estimates for 2011-12. 35. Net tax to the Centre in 2012-13 estimated at Rs. 7,71,071 crore; Non-Tax Revenue Receipts estimated at Rs. 1,64,614 crore and Non-debt Capital Receipts at Rs. 41,650 crore. Railway Minister Dinesh Trivedi Presented the annual Railway Budget for the financial year 2012-13 in Parliament on 14 March. He made the following key proposals:
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36. Passenger fares to be hiked by 2 paise per km for suburban and ordinary second class travel; 3 paise per km for mail/ express second class; 5 paise per km for sleeper class; 10 paise per km for AC chair car/AC 3-tier and First Class; 15 paise per km for AC 2-tier and 30 paise per km for AC 1-tier. 37. Minimum fare and platform tickets to cost Rs 5. 38. 75 new Express trains to be introduced, along with 21 new passenger services, nine DEMU services and 8 MEMU services trains. 39. Railways to hire more than one lakh employees in 2012-13; 80,000 persons hired last year. 40. Indian Railways Stations Development Corp to be set up to re-develop stations and maintain them like airports. 41. To set up an independent Railway Safety Authority as a statutory body. 42. The open discharge toilets on trains to be replaced with green (bio) toilets. 43. All unmanned level crossings to be abolished in next five years; To target zero deaths due to rail accidents. 44. To provide rail connectivity to neighbouring countries, a new line from Agartala to Akura in Bangladesh to be set up. 45. Double-decker container trains to be introduced. 46. Two new members, one for marketing, and other for safety, to be inducted into Railway Board. 47. Specially designed coaches for differently-abled persons to be provided in each Mail/Express trains. 48. Railway Tariff Regulatory Authority to be considered. 49. National High Speed Rail Authority to be set up; Pre-feasibility studies on six high speed corridors completed; study on Delhi-Jaipur-Ajmer-Jodhpur to be taken up in 2012-13. 50. Institution of Rail Khel Ratna Award for 10 rail sportspersons every year. 51. A wagon factory at Sitapali, Odisha, rail coach factory at Palakkad, two additional new coach manufacturing units in Kutch (Gujarat) and Kolar (Karnataka); component factory at Shyamnagar (West Bengal); new coaching terminal at Naihati, the birth place of Bankim Chandra Chattopadhyay. 52. Freight loading of 1,025 MT targeted; 55 MT more than 201112; Passenger growth targeted at 5.4 per cent. 53. Passenger earnings to increase to Rs 36,200 crore. 54. The union government decided to increase public spending in the health sector to 2.5 per cent of GDP from the current 1.4 per cent in the 12th Five Year Plan period beginning 2012.The Prime Ministers Office (PMO) directed the Planning Commission to allocate funds during the 12th Five-Year Plan. The decision to increase the funds in this sector was in tune with the recommendations of the Srinath Reddy-led committee on universal healthcare coverage set up by the plan panel. The union government decided to increase public spending in the health sector to 2.5 per cent of GDP from the current 1.4 per cent in the 12th Five Year Plan period beginning 2012.The Prime Ministers Office (PMO) directed the Planning Commission to allocate funds during the 12th Five-Year Plan. The decision to increase the funds in this sector was in tune with the recommendations of the Srinath Reddy-led committee on universal healthcare coverage set up by the plan panel.
April
The International Monetary Fund (IMF) on 27 April 2012 lowered Indias growth projection to 6.9 per cent for 2012. The multilateral agency in January projected Indian economy to grow to by 7 per cent for 2012. The slashed growth projection is broadly attributed to the countrys poor performance on the front of economic reforms and slowing investment. Standard & Poor's downgraded credit rating outlook for India to negative from stable on 25 April 2012. The cut in credit rating is the reflection of India's widening fiscal and current account deficits. Indias fiscal deficit widened to 5.9% of gross domestic product in the fiscal year 2011-12, which is higher than the government's target of 4.6%. The country is performing equally bad on the front of foreign institutional investment as it witnessed a sharp decline in the FII over the past few months. India has drawn nearly 171.8 million dollar FII so far in April 2012 against more than 5 billion dollar in February 2012.The credit rating
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downgrading indicates that the government will now have to contemplate seriously over the long-pending economic reforms and push them through as soon as possible. Reserve Bank of India, the apex Indian Bank, on 17 April 2012, cut the key policy rates for the first time in the past three years. While the repo rate was cut down by 50 basis points from 8.50 per cent to 8.00 per cent, the reverse repo rate was reduced to 7.0 per cent. The marginal standing facility rate, which has a spread of 100 basis points above the repo rate, now stands at 9.0 per cent. The move injected 80000 crore rupees into the system. The RBI also brought in about 1.3 lakh crore rupees into the system through open market operations. The RBIs move to cut down key policy rates came in the wake of slumping growth which was reduced to 6.1 per cent in the third quarter of fiscal year 2011-12. The International Monetary Fund (IMF) in its World Economic Outlook (WEO), released ahead of the IMFWorld Bank Spring Meetings, marginally lowered Indias economic growth forecast to 6.9% in 2012, from 7% projected earlier. The IMF projected world economic growth rate to slump to 3.5% in 2012 from 3.9% in 2011. It pegged Indias growth during the 2013 calendar year at 7.3%. According to the estimates of Indias Central Statistical Organisation (CSO), the growth rate during the financial year 2011-12 slipped to a 3-year low of 6.9%. The Union government projected a growth rate of 7.6% for 2012-13 fiscal year. The Reserve Bank of India however expects it to be 7.3%. The Union government on 12 April 2012 approved Rs 30000 crore bailout for Air India. In this regard, Rs 6750 crore would be infused immediately to meet the airline's working capital requirement. The Rs 30000 crore-bailout package was approved in addition to the equity infusion of Rs 3200 crore already in place. The Union Cabinet on 12 April 2012 approved a proposal to set up a Special Purpose Vehicle (SPV) for Goods and Services Tax Network (GSTN) to help facilitate the smooth introduction of the new indirect tax regime. GSTN SPV is to be incorporated as Section 25 not-for-profit private limited company in which strategic control would be held by the Centre. It will provide IT infrastructure and services to various stakeholders including the Centre and states. The Union Cabinet on 12 April 2012 approved the extension of funding support for implementing the Swavalamban Scheme under the New Pension System (NPS) from three years to five years for all subscribers enrolled during 2010-11, 2011-12 and 2012-13. The decision will benefit 70 lakh workers in the unorganised sector. The Cabinet decided to provide an additional funding support of Rs 2065 crore to the scheme until 2016-17.
May
The Central Government announced the setting up of a five-member technical group under the Chairmanship of Dr C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, to revisit poverty estimates, methodologies and identification of the poor. The committee made a comprehensively review of the existing methodology of estimation of poverty and examine if the poverty line should be fixed solely in terms of consumption basket or whether other criteria were also relevant. The Union government on 30 May 2012 announced the constitution of a committee under the chairmanship of Prime Minister's Economic Advisory Councils (PMEAC) chairman C. Rangarajan to review the existing production sharing contracts (PSCs). The PSCs are to be reviewed in the backdrop of the recent spat between Reliance Industries Ltd. (RIL) and the Petroleum Ministry. The review followed the Comptroller and Auditor Generals (CAG) draft report that had asked the Petroleum Ministry to carry out a comprehensive review of the PSCs to protect the interests of the Government. The committee will look into the structure and elements of the guidelines for determining the basis or formula for the price of domestically produced gas, and for monitoring actual price fixation as well as for any other issues relating to PSCs. It will rewrite some of the terms in the PSCs signed for exploration and production of oil and gas.
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According to data released by Ministry of Statistics of India on 1 June 2012, Bihar emerged as the state with highest economic growth rate in the country. The state recorded an impressive 13.1 per cent growth in 201112. Bihar topped the list for second consecutive year. The state was closely followed by Delhi and Puducherry. The Union cabinet on 31 May 2012 approved a new telecom policy 2012 which seeks to do away with roaming charges across the country. The new policy called National Telecom Policy-2012 will replace more than decade old legislation. The new Telecom Policy also simplifies the licencing policy.It also seeks to provide a predictable and stable policy regime for a period of nearly 10 years. Some of the New Telecom Policy-2012 Highlights are1) Increase rural teledensity from the current level of around 39 to 70 by the year 2017 and 100 by the year 2020 2) Repositioning of Mobile phone as an instrument of empowerment 3) Broadband -"'Broadband For All" at a minimum download speed of 2 Mbps 4) Domestic Manufacturing - Making India a global hub The Competition Commission of India (CCI) formed an Eminent Persons Advisory Group (EPAG) on 7 May 2012. The group is constituted to give advice to CCI, on issues impacting markets and competition. The group comprise Infosys founder N.R. Narayana Murthy, former Comptroller and Auditor General V.N. Kaul, former Deputy Governor of Reserve Bank of India Rakesh Mohan, Biocon Chairman and MD Kiran Mazumdar-Shaw, former Director, of IIM-Ahmedabad Bakul Dholakia, former Chairman of CERC S.L Rao, former Vice-Chancellor of NLSIU, Bangalore N.L Mitra. The Group will have interaction/meetings with the Commission two to three times a year. Goa gained top rank with highest per capita income in the country with a total per capita income of 192652 rupees in 2011-12. The national average was estimated at 38005 rupees in 2011-12 against 35993 rupees in 2010-11.Delhi has the second position with a total per capita income of 1.75 lakh rupees. Haryana with per capita income of 109227 rupees positioned third. The estimates were prepared as per methodology prescribed by the Central Statistical Organisation based on provisional data provided by it.
June
Indian Rupee plunged to an all time low of 56.90 rupees against the US dollar on 22 June 2012 on global risk aversion and demand for dollar. Indias slipping domestic growth, declining industrial output figure, RBIs stringent monetary policy stance, persistent high rate of inflation and credit rating downgrade by international rating agencies like Fitch and Standard and Poors have prompted the worsening of Indian rupee against the dollar. Rupee, given its current trading status, is proving to be Asia's worst performing currency. The currency has also been the poorest performer among the all-Asian currencies this week, on a 5-day basis. So far, the Indian currency had tumbled 6.7 per cent in the year 2012. International credit rating agency Fitch revised the credit outlook of India to negative on 18 June 2012. The agency cited rampant corruption and stalled reform existing in the country as the reason behind the move to downgrade the country's credit rating. The rating agency maintained the India's sovereign rating at 'BBB'.However, The Union Finance Ministry rejected the agencys rating and pointed out that foreign institutional investors (FII) have reposed their faith in the Indian economy and have already invested a net 12.3 billion dollar in the first five months of the calendar year 2012 compared to 8.3 billion dollar in the full calendar year of 2011.Another credit rating agency Standard & Poor's had also revised the Indias credit outlook to negative in April 2012. S&Ps in its most recent report on Indias credit outlook released on 12 June 2012 had warned that given its sluggish growth rate and stalled economic policy reforms, India could be the first among the BRIC grouping nations to lose investment-grade rating. The World Bank in its report named Global Economic Prospects released on 12 June 2012, projected Indian economy to grow by 6.9% in the financial year 2012-13. The World Bank report predicted Indias growth
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increasing to 6.9 per cent, 7.2 per cent and 7.4 per cent in fiscal years 2012-13, 2013-14 and 2014-15, respectively. It estimates monetary policy, long paused reforms, persistent inflation and widening fiscal deficit for the countrys poor growth in 2011.World Bank advised India to take some corrective measures to improve the sinking growth. Indian economy grew by 6.5 per cent in 2011-12, the lowest in the past nine years. The economy had registered an impressive 8.4 per cent growth in the previous two years. While the Indian government had projected the economy to grow at 7.6 per cent in the fiscal year 2012-13, but given the prevailing economic and political situations in the country, the projected growth rate could be hard to achieve. The Union Government of India on 5 June 2012 announced a new trade policy aimed at achieving 20 per cent increase in exports to 360 billion dollar in the fiscal year 2012-13. India's exports grew by 21 per cent and touched 303.7 billion dollar in 2011-1. As the part of the new trade policy, the Union Commerce Ministry had added seven new markets to the focus market scheme (FMS) and an equal number of new markets to the special FMS. Countries like Algeria, Aruba, Austria, Cambodia, Myanmar, the Netherland Antilles and Ukraine have been added to FMS; while countries including Belize, Chile, El Salvador, Guatemala, Honduras, Morocco and Uruguay have been added to special FMS. The FMS and SFMS scheme will help India to explore new markets and promote the product diversification. The highlights of the new trade policy are as follows:1) Government set the export target for 2012-13 at 20 per cent. 2)2 per cent interest subsidy scheme extended till March 2013. 3) Government to announce new guidelines to promote SEZs 4) Incentives for exports from north-eastern states. 5) Foreign Trade Policy document to be more user friendly.6) Single revolving bank guarantee for different export deals. 7) Market linked focus product scheme extended till March'13 for apparel export to USA and EU According to data released by Ministry of Statistics of India on 1 June 2012, Bihar emerged as the state with highest economic growth rate in the country. The state recorded an impressive 13.1 per cent growth in 201112. Bihar topped the list for second consecutive year. The state was closely followed by Delhi and Puducherry.
July
The Reserve Bank of India (RBI), on 31 July, kept the key indicative policy rates unchanged while it cut the gross domestic product (GDP) forecast for the current financial year from 7.3 per cent to 6.5 per cent and raised the inflation forecast from 6.5 per cent to 7 per cent. However, the RBI cut the Statutory Liquidity Ratio (SLR) by one percentage point from 24 per cent to 23 per cent which is expected to provide liquidity of around Rs.60,000 crore. The RBI left interest rates unchanged for the second straight review. It kept the Repo rate unchanged at 8 per cent, and the Cash Reserve Ratio (CRR) at 4.75 per cent. Repo rate is the rate at which banks borrow money from the central bank. CRR is the portion of deposits banks have to keep with the central bank in cash. However, in a move to provide more liquidity in the system, the central bank has reduced the Statutory Liquidity Ratio (SLR) from 24 per cent to 23 per cent with effect from August 11. SLR is the amount of liquid assets or securities that commercial banks must maintain as reserves other than the cash. After constituting the Parthasarathi Shome committee in the first week of July to look into the controversial GAAR (General Anti-Avoidance Rules) provisions and address the thorny issues to the satisfaction of foreign investors and all other stakeholders, Prime Minister Manmohan Singh, on 30 July, set up yet another panel to bring about clarity on taxation matters pertaining to development centres and the IT sector. In this regard, the Prime Ministers Office (PMO) said that a four-member panel headed by former CBDT (Central Board of Direct Taxes) Chairman N. Rangachary would hold consultations with stakeholders and government departments concerned to finalise the approach to taxation of Development Centres and suggest appropriate measures.Incidentally, Mr. Rangachary is also a member of the expert committee on GAAR headed by Dr. Shome. SEBI tightened Eligibility & Exit Criteria for Stocks in Derivatives Segment: The market regulator, Securities and Exchange Board of India (SEBI) on 23 July 2012 tightened eligibility and exit criteria for stocks in the derivatives segment by increasing the benchmark liquidity level for any scrip to be eligible for trading in
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the derivatives segments. By doing away with illiquid stocks, SEBI aims to check manipulation. According to the circular issued by SEBI, scrips with a minimum trading volume value of Rs 10 lakh and market wide position limit (MWPL) or market capitalisation of Rs 300 crore cannot be eligible for entry into the Future and Options (F&O) segment. Over 220 scrips trade in the F&O segment on the National Stock Exchange (NSE) at present. Of these 220 scrips only 100 scrips will possibly meet the new eligibility criteria set by the market regulator. The minimum Median Quarter Sigma Order Size, which indicates liquidity/order size in scrip, a requirement for introduction in derivatives segment was revised to Rs 10 lakh, from Rs 5 lakh at present. The MWPL, indicating the size of the company was also raised to Rs 300 crore, from Rs 100 crore. Scrips that fail to maintain a minimum MWPL requirement of Rs 200 crore would cease to be in the F&O segment. The earlier limit was set at Rs 60 crore. SEBI also tightened the minimum conditions for a stock to continue trading in the derivatives segment. As per the circular, a stock's MQSOS over the last six months ought to be more than Rs 5 lakh against Rs 2 lakh earlier for the stock to continue trading. Maruti Suzuki India Ltd announced closing: -Indias leading four-wheeler manufacturer Maruti Suzuki India Limited announced to close down its factory at Manesar,located in Haryana on 21 July 2012. The companys move came after a scuffle between the workers and senior management of the company broke out at the factory site on 18 July 2012.The scuffle, which left many of the companys executivesinjured, broke out after the workers' demand of pay-parity was not accepted by the company.The plant had witnessed 5 workers strike in year 2011 itself. In October 2011 the company had witnessed a 14-day-long strike that ended on 21 October 2011, after the company gave in to the workers' demand to register a trade union. 14 foreign FDI proposals approved: The finance ministry declared on 24 July 2012 that the government based on the recommendation of the Foreign Investment Promotion Board approved 14 foreign direct investment (FDI) proposals worth Rs 1584.11 crore. The FDI proposal which received government approval included 225-crore investment in the Indian operations of Asian equity research firm CLSA. Maharashtra based Abhijeet Powers proposal to invest Rs 674 crore for induction of foreign equity in an investing company to make downstream investment also received approval. The government also cleared the proposal of Pune-based Bajaj Finserv, which sought a nod for issue of equity shares to carry out NBFC activities directly and through subsidiaries. It proposed to bring in FDI worth Rs 100 crore. 2G: EGoM recommends lower price for auction The empowered group of ministers (EGoM) on telecommunications, headed by union home minister P Chidambaram , recommended to reduce the base price for 2G spectrum airwaves by 4000 crore rupees. The EGoM recommended the base price for 2G spectrum at 14000-16000 crore rupees against 18000 crore rupees suggested by Telecom Regulatory Authority of India (TRAI). The EGoM announced a cut in spectrum usage charges (which will be part of the operators revenues towards spectrum fee) from 8-10 percent recommended by Trai to between 3 percent and 6 percent. The EGoMs recommendations will now be sent to the Union Cabinet for its approval. The EGoM also approved the department of telecommunications (DoT) suggestion to defer the mode of payment for auction winners. Giving in to demand of telecom operators the DoT had suggested the EGoM that the auction winners should be allowed to pay 25-30 percent of the spectrum fee upfront and rest amount divided in 10 equal installments annually. Cabinet Committee on Economic Affairs approved 10.82 Per Cent Disinvestment in SAIL: The divestment will help the government to raise about 4000 crore rupees. The government holds 85.82 per cent stake in SAIL. In its annual budget 2012-13 the govt. has set the disinvestment target at 30000 crore rupees (300 billion rupees). On the issue of ownership, it made clear that at least 51 per cent ownership and management control of Central Public Sector Enterprises would remain with the Government. MCX-SX is now full-fledged Stock Exchange The Securities and Exchange Board of India (SEBI) granted permission to MCX-SX to operate as a full-fledged stock exchange on 10 july, a development that will bring in more competition in markets.MCX Stock Exchange (MCXSX) was first granted recognition by SEBI in September 2008, but it was allowed to conduct trading only in the currency derivatives segment.With the approval, MCX-SX would be able to offer additional asset classes such as equity and equity F&O (Futures and Options), interest rate futures and wholesale debt segments.At present, Sebi has granted permanent recognition to eight stock exchanges in the country, but only two of them
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BSE and NSE are operating as active nationallevel bourses across the segments.MCX-SX and USE (United Stock Exchange) are present in the currency derivatives trade only.With Sebi's latest decision, MCX-SX is likely to become the third major national-level fullfledged stock exchange. Euro finance ministers agree on Spain bank bailout As part of the agreement with Spain, finance ministers from all 27 European Union countries are expected to approve a one-year extension, until 2014, of Spains deadline for achieving a budget deficit of 3 per cent. There will be specific conditions for specific banks, and the supervision of the financial sector overall will be strengthened, Mr. Juncker said. ''We are convinced that this conditionality will succeed in addressing the remaining weakness in the Spanish banking sector''he said. Dutch Finance Minister Jan Kees de Jager said the agreement should be finalised soon. ''We have a tentative deal on the bailout conditions for a bailout of Spanish banks,'' Mr. de Jager said. ''The total will likely be 100 billion. Some countries like the Netherlands, Germany and Finland need to get parliamentary approval. We hope this can be wrapped up within a week.'' The exact amount of the bailout will likely not be known until September, when individual examinations of different Spanish banks have been completed. Mr. de Jager said Madrid's partners agree that ''financial sector reforms in Spain must be ruthlessly implemented. These reforms include, notably, a cap on salaries of bank executives and a ban on bonuses.'' ''There are still differences over this,'' he said. ''The details will be worked out by the end of the year.'' As part of the agreement with Spain, finance ministers from all 27 European Union countries are expected to approve a one-year extension, until 2014, of Spains deadline for achieving a budget deficit of 3 per cent. No Service Tax on remittences from abroad: Setting at rest concerns expressed in various quarters, the Central Board of Excise and Customs (CBEC), on 10th July,, clarified that remittances from abroad would not attract service tax. A new service tax regime, based on a negative list of exempted services, will come into effect all over the country on Ist July. With this, all services - except the 38 activities put on the negative list - will come under the tax at the increased rate of 12 per cent, as announced in the Union Budget. As of now, service tax is being levied on 119 services based on a positive list. The switch-over to a negative list-based approach is aimed at aligning the indirect taxation system to the proposed Goods and Services Tax (GST) regime, which is sought to be introduced to unify the levies of the Centre and the States into a composite system. With the services sector now accounting for 60 per cent of the gross domestic product, the Finance Ministry has set a target of Rs.1.24 lakh crore for service tax collection during 2012-13. This is significantly higher than the Rs.97,000 crore mopped up during the previous fiscal.As per the negative list-based approach, services such as metered taxis, auto-rickshaws, betting, gambling, lottery, entry to amusement parks, transport of goods or passengers and transmission and distribution of electricity by distribution companies will not come under the service tax net. Other important services exempted from the levy are solemn activities such as funeral, burial, mutate services and transport of deceased. In the education sector, school and university courses, as also approved vocational studies, have been exempted. Likewise, auxiliary educational services and renting of immovable property by educational institutions in respect of education will not be taxed. However, coaching classes and training institutions will be taxed. Among the other services included in the negative list are those provided to government, local authorities or a government authority for repair and maintenance of an aircraft. Likewise, services provided by advocates to other advocates and business entities up to a turnover of Rs. 10 lakh in the preceding financial year will be exempt from the tax. Services provided by way of public convenience, such as bathroom, washroom, urinals or toilets, are included in the negative list, just as services relating to work contracts for a scheme under the Jawaharlal Nehru National Rural Urban Renewal Mission or the Rajiv Awas Yojana. SBI waives minimum balance for savings accounts: State Bank of India (SBI), to attract new customers, has done away with the minimum balance criteria for saving banks account. The bank will not levy any charge for breaching the minimum balance criteria. The facility is available to existing customers also, SBI said in an advertisement. For the normal SBI savings account with cheque book facility, a customer had to maintain a minimum balance of Rs.1,000 in his or her account failing which it attracts penalty. There are certain saving account products of the bank where the minimum monthly balance is as low as Rs.50. Depending on the features and facility, the minimum average monthly balance varies. The waiver would help the bank in
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improving the customer base, an official said, adding that it would also help the bank in generating low cost deposits as the savings bank account earned interest rate of just 4 per cent. According to the World Investment Report 2012 released by United Nations Conference on Trade and Development (UNCTAD) on 5 July 2012, India emerged as the third most preferred Foreign Direct Investment (FDI) destination in the world. The first position was occupied by China followed by US. The report noted that FDI inflows to India had increased by 33 percent in 2011 to 31.6 billion dollar vis- -vis 24.2 billion dollar in 2010. The FDI, however, continue to be much less than that received by China (123.9 billion dollar). The report further observed that foreign investment in India escalated for the first time in three years in 2011, as global business majors reinstated their faith in Indias resilient economy and rapidly expanding middle-class. After receiving 43.4 billion dollar FDI inflows in 2008, which was also the highest received by India in a year the FDI inflow slipped to 35.5 billion dollar in 2009 and 24.2 billion dollar in 2010. Indonesia, Brazil, Australia, UK, Germany, Russia and Thailand were the other countries who made it to the list of top ten investment destinations in the world. The report, was released by United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) chief economist Nagesh Kumar. UNCTAD conducted a survey of 179 top global business houses, where they were asked about their favourite destination for business investment.
August
The Supreme Court on 31 August, held that the economic offences committed by Saharas must be dealt with by an iron hand and directed the Sahara India Real Estate Corporation Ltd. (SIRECL) and the Sahara Housing Investment Corporation Ltd. (SHICL) to refund over Rs. 24,400 crore collected from 2.21 crore depositors through the optimally fully convertible debentures (OFCDs) by way of bonds. A Bench of Justices K.S. Radhakrishnan and J.S. Khehar said they should refund the amounts collected through Red Herring Prospectus (RHPs) dated March 13, 2008 (Rs. 17,400 crore) and October 16, 2009 (over Rs. 7,000 crore), along with 15 per cent interest to the Securities and Exchange Board of India (SEBI) from the date of receipt of the subscription amount till the date of repayment, within three months. The sum should be deposited in a nationalised bank bearing the maximum rate of interest. In its common order, the Bench directed Saharas to furnish the SEBI, in 10 days, with all documents in their custody, especially the application forms submitted by subscribers, the approval and allotment of bonds, to enable it to ascertain the genuineness of the subscribers as well as the amounts deposited. The court appointed the retired Supreme Court judge, B.N. Agrawal, to oversee whether directions issued by this court are properly and effectively complied with by the SEBI (WTM) from the date of this order. Mr. Justice B.N. Agarwal would also oversee the entire steps adopted by the SEBI (WTM) and other officials for the effective and proper implementation of the directions issued by this court. GAIL (India) and GDF SUEZ of France, on 27 August, announced that they had entered into a mediumterm LNG supply agreement for supply of 12 cargoes from 2013 to 2014, representing a total of 0.8 million tones. This agreement will contribute to supply the Indian gas market, which is expected to grow from 58 billion cubic meters in 2012 to 220 cubic meters in 2020, representing a CAGR of over 18 per cent. The agreement was signed in Paris. B.C. Tripathi, chairman and managing director, GAIL said that, this agreement with GDF SUEZ is yet another step by GAIL to bridge the demand-supply deficit of the Indian market in the medium-term. This is in addition to other initiatives of GAIL towards LNG sourcing, creating LNG regasification infrastructure and augmenting transmission capacity significantly during the next two to three years. The Confederation of Indian Industry (CII) held the eleventh Energy Efficient Summit in HICC, Novotel Hyderabad. The summit was held between 22 August 2012 to 25 August 2012. The objective of the summit was to facilitate the Indian industry to improve energy efficiency on a continuous basis and help them in achieving the target set as part of Perform Achieve and Trade under the National Mission on Enhanced Energy Efficiency. The other objective was also to disseminate information on the latest trends and energy efficient technologies and facilitate sharing of best practices amongst the Industries. In addition, while the summit was
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going on, The Swedish Energy Agency, CII and the Cleantech Scandinavia entered into a memorandum of understanding (MoU) of understanding for cooperation in the energy sector. The government of India on 29 August 2012 approved a 14000 crore rupees fund to spur the production of hybrid and electrical vehicles in the country. According to a new policy approved, Automobile companies and the government plan to put six million electric vehicles on road by 2020. The government under the new policy will fund research and development, infrastructure and subsidies. With an aim at reducing the burden on fossil fuels, the Union government in national budget 2011 had proposed a plan to develop electric and hybrid vehicles. Later, the government set up a National Council for Electric Mobility led by heavy industries minister Praful Patel, and a National Board for Electric Mobility to ensure uniform rules in all the states. The government has long been contemplating a policy to reduce its dependence on oil which make up a substantial part of Indias huge import basket. The hybrid and electric vehicles have emerged as a better alternative of traditional oil-based vehicles over the years. Indias market regulator Security and Exchange Board of India (SEBI) on 28 August 2012 allowed partial flexibility in the conversion of Indian Depository Receipts (IDRs) into equity shares by investors. The SEBI move is aimed at retaining domestic liquidity besides; it is also expected to attract foreign entities to enroll their IDRs on India stock exchanges. In another circular released by the RBI, the central bank put an overall cap of 5 billion dollar for raising of capital through IDRs by foreign companies in Indian markets. The RBI measure will help Indian investors to convert their depository receipts into equity shares of the issuer company and vice versa. Supreme Court of India on 27 August 2012 extended the deadline for 2G spectrum auction and instructed the union government to carry out the auction by 11 January 2013. The court also allowed the mobile companies whose licenses are set to be annulled to operate until 18 January 2013. In its first, the union government is set to conduct an open auction of 2G mobile radio airwaves, after the apex court scrapped all 2G licenses awarded to mobile companies, citing massive irregularity in the license distribution as the reason. The court had earlier ordered the government to carry out the radio wave auction by the end of August 2012and had ruled that the affected companies can operate on their existing licenses until 7 September 2012. The government later urged the court to extend the deadline until 12 November 2012 to begin the auction and 40 days from the completion of auction to allocate frequencies. The government has said that it requires around two months to complete the entire auction process. Finance Minister P. Chidambaram has been appointed as India's Governor on the Board of Governors of the African Development Bank and African Development Fund in place of Pranab Mukherjee.Likewise, Department of Economic Affairs Secretary Arvind Mayaram has been appointed as India's alternate Governor. SEBI has allowed seven Alternative Investment Funds (AIF) to set up shop in the country under a newly formulated route, which allows pooling of funds for investments in areas such as real estate, private equity and hedge funds. The approval has been given to all the seven AIFs by the Securities and Exchange Board of India in a period of less than one month, as per the information available with the market regulator. SEBI had notified its guidelines in May for AIFs, which are funds established or incorporated in India for the purpose of pooling in of capital from Indian and foreign investors for investing as per a pre-decided policy. As per SEBI data, six AIFs registered with the regulator during August 2012, while one was granted registration on July 23. India on 26 August, extended the ban on milk and milk products from China for another year till June 2013. The Directorate General of Foreign Trade (DGFT) said in a notification that, Prohibition on import of milk and milk products (including chocolates and chocolate products and candies/confectionary/ food preparations with milk or milk solids as an ingredient) from China is further extended till June 2013, or until further orders. The ban had ended on June 24 this year. Imports of milk and milk products from China have been prohibited since September 24, 2008. Though the DGFT has not cited any reason for the ban, it is understood it was over fears of Chinese milk containing melamine, a deadly chemical. The Finance Ministry has approved foreign direct investment in insurance and pension sectors up to 49%. The Insurance and Pension Bills will now need Cabinet approval before coming up before Parliament.
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These Bills have already made one trip to the Cabinet, but at the time it was for 26% FDI. When Pranab Mukherjee was the Finance Minister, they had gone to the Cabinet but they had deferred the decision. With P Chidambaram now headed the finance portfolio, these bills were relooked and now the FDI limit stands at 49%. Whether the bills will come up for Cabinet approval or not, or what decision the Cabinet takes will be a political decision. Both these bills have seen strong opposition from the Mamata Banerjee led Trinamool Congress. But if the Cabinet clears these two bills, they will be introduced in the winter session of Parliament. Parliament's Public Accounts Committee on 23 August 2012 decided to bring the three latest CAG reports on coal allocations, GMR-run Delhi airport and Reliance Power, onto its agenda for the year 2012. The Public Accounts Committee (PAC) in its meeting on 23 August 2012 called for deterrent penal provisions against units in Special Economic Zones which default duty payments to the exchequer. PAC in a report adopted in the meeting recommended an oversight mechanism which would ensure no misuse of the SEZ policy. The PAC panel based its findings on a sample of 22 SEZ units. The panel found that out of an overall export of Rs 7149.23 crore made by 22 SEZ units, the actual export content was only Rs 1999.27 crore (28%) and the remaining Rs 5149.96 crores (72%) related to Domestic Tariff Area earnings. The committee recommended that all SEZs undertake physical export of at least 51% of their product, and even import tax waivers raw material for goods falling under the Domestic Tariff Area (DTA) is to be considered on the credit account of the SEZ firms. It was noted that SEZ units could sell their goods, including by products, and services in DTA on payment of applicable duty including at nil rate with no requirement to payback the duty foregone on inputs used in the clearance of products. This policy will put SEZ units at a distinctly advantageous position compared to similar units in the DTA. The Comptroller and Auditor General (CAG) of India in its audit report noted that Indias exchequer suffered a massive loss of 1.86 lakh crore due to the distribution of coal blocks without bidding. The CAG report was tabled in the parliament on 17 August 2012.The CAG in its report stated that 57 coal blocks that were allocated to private companies during 2004-2009, extended them a windfall gain of 1.86 lakh crore rupees. The CAG report has also brought Prime Minister Manmohan Singh under scrutiny as he was holding the charge of Coal Ministry from 2006 to 2009. Besides, the CAG report also raised serious allegations against the PMO which delayed the fair bidding process for coal blocks despite the clearance from Law and Justice Ministry. Tata Group, Reliance Power, Jindal Power and Steel, Abhijit Group, Bhushan Group, Electro Steel, OP Jindal Group were some of the major beneficiaries of the coal blocks distribution. The government has distributed about 150 coal blocks over the past eight years. During this period Prime Minister Manmohan Singh, Shibu Soren and Prakash Jaiswal have been charged the Coal Ministry. The 1.86 lakh rupees scam is the biggest in the history of India as it surpassed the 1.7 lakh crore 2G spectrum scam. Indias leading car maker Maruti Suzuki India, on 16 august, announced termination of services of 500 regular workers and resumption of normal operations from August 21 at its violence-hit plant at Manesar, Haryana. Maruti Suzuki India (MSI) Chairman R. C. Bhargava told that, they had issued termination notices to 500 regular worker and they had plan to lift the lock-out from August 21 and resume operations at the facility in phases. The company said termination notices had been issued to regular workers who were allegedly involved in the July 18 violent incidents that led to the death of a senior MSI executive, Ashwani Kumar, and left nearly 100 others injured. Maruti Suzuki India had declared a lockout at the Manesar plant on July 21, stating the safety and well-being of its employees were paramount to the company. The United States administration has announced setting up of an institute for manufacturing innovations, which will help prevent jobs going to India and China. President Barack Obama said in a statement that,this institute would help make sure that manufacturing jobs of tomorrow take root not in places such as China or India, but right here in the United States of America. The National Additive Manufacturing Innovation Institute (NAMII), which will be based in Ohio, will be a public-private partnership initiative and has received $70 million as initial financial assistance.On March 9, Mr. Obama had announced plans to invest $1 billion to catalyze a network of up to 15 manufacturing innovation institutes around the country that would serve as regional hubs of manufacturing excellence and help to make manufacturers more competitive and encourage investment in the U.S. According to the White House, the NAMII will provide the innovation infrastructure needed to support new additive manufacturing technology and products to become a global centre of excellence in this field. Additive manufacturing, often referred to as 3D printing, is a new way of making products and
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components from a digital model, and will have implications in a wide range of industries, including defence, aerospace, automotive, and metals manufacturing. In yet another indication of slowdown, the Prime Minister's Economic Advisory Council (PMEAC) on 18 August, revised downwards its economic growth projections for the current fiscal to 6.7% from an earlier 7.5-8%. The PMEAC also raised its inflation forecast to 6.5-7% from an earlier estimate of 5-6% for the current fiscal. PMEAC Chairman C Rangarajan said , Food inflation is expected to remain high in the coming months. The Andhra Pradesh government has decided to extend equity support up to Rs.4,000 crore to AP Genco during the next four years to facilitate early completion of its upcoming power projects. This government response followed consistent Opposition criticism that the Genco is being neglected by it vis--vis private developers. The undertaking which meets over 40 per cent of the power demand in the State through its various thermal, hydel and other stations, has taken up new projects with installed capacity of 21,000 MW at a huge cost of over Rs.36,000 crore. The Chief Minister of A.P ,N. Kiran Kumar Reddy cleared a slew of measures to improve the electricity availability to consumers in the State and ensure seven-hour supply to farmers. These included a decision to give boost to renewable energy sources by facilitating establishment/completion of new projects based on wind and solar energy on fast track mode as they were expected to add 1,000 MW to the grid (over 20 million units). Securities and Exchange Board of India (SEBI) inaugurated their local office in Jaipur on 4 August. It was inaugurated by Rajeev Kumar Agarwal, the member of SEBI. The office will be responsible to look after all the regulatory aspects of investor protection, investor education and all the other responsibilities within Rajasthan state. As per the latest global ranking compiled and published by the World Federation of Exchanges (WFE) in August 2012, the National Stock Exchange of India (NSE) became the worlds largest bourse in terms of the number of trades in equity segment for the first six months of 2012. A total of 735474 trades took place in the equity segment of NSE in the January-June period of 2012, making it the worlds largest exchange on this parameter. NSE was followed by NYSE Euronext and Nasdaq OMX at the second and the third positions. NSE is the second largest exchange globally after Korea Exchange for index options. Eurex was the third largest exchange worldwide in terms of total number of index options traded during the first six months of 2012.BSE recorded 187824 trades during this period in its equity segment. The total number of listed companies is much larger in case of the BSE, the exchange however lags behind NSE significantly in terms of volume and value of trades. Moody's Analytics cut India's growth forecast to 5.5 percent for the fiscal year 2012-13. It blamed the government and RBI of inaction despite slowing economy, as well as a poor monsoon. The research unit of ratings agency Moody's Investors Service becomes the latest to cut India's growth forecasts this week. Earlier CLSA and Citigroup had cut their growth outlooks for India to 5.4 percent and 5.5 percent, respectively for the fiscal year ending in March 2013. India Post on 9 August has chosen Infosys as its technology and consulting partner to integrate its delivery of financial products across its network of 1.5 lakh post offices in the country. The transformational project, part of the India Post 2012 initiative, would cost the postal service Rs.700 crore. The Reserve Bank of India (RBI) permitted banks to lend to telecom companies for the upcoming auction for spectrum, subject to conditions such as mortgaging the spectrum to the lenders. The RBI had laid down a few pre-conditions for financing of telecom firms for the auction of airwaves to protect banks against potential defaults. The Union cabinet on 3 August 2012 approved a proposal that allows telecom companies bidding for airwaves to mortgage spectrum to raise funds from banks. The government set a reserve or base price of Rs 14000 crore for the auction. The Reserve Bank of India, on 1 August, constituted a committee to suggest ways to strengthen the rural co-operative credit structure. The panel, headed by Nabard Chairman Prakash Bakshi, will review the existing short-term co-operative credit structure (STCCS), focussing on structural constraints in the rural credit
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