In Picture: H.E. Mr. GANBOLD Dambajav, Ambassador Extraordinary and Plenipotentiary of Mongolia to the Republic of India (right) being felicitated by Dr. Vijay Kalantri, Chairman, MVIRDC WTC Mumbai at an interactive meeting in WTC Mumbai
“India and Mongolia are spiritual neighbours and our relationships 4,500 years old when Mongolian monks traveled to India to study at Nalanda University. To revive our ancient relationship, the Mongolian President is planning a state visit to India around November this year. We can collaborate in areas such as food security, energy security, mining and infrastructure. We invite Indian companies to mine our rich gold, coal, lithium, copper and other reserves. Some of these minerals are critical raw materials for semiconductors, electric vehicle batteries and electronic goods. India’s GAIL is setting up an oil refinery in Mongolia and we can explore further collaboration to meet the energy security of both countries. Mongolia can also export its world-renowned Cashmere yarn to India for further processing and export of readymade garments,” said H.E. Mr. GANBOLD Dambajav, Ambassador of Mongolia to India at an interactive meeting in WTC Mumbai.
The Ambassador invited Indian companies to partner in the areas of agriculture, animal husbandry and dairy production as Mongolia has a 75 million livestock population. “Geographically, Mongolia is half the size of India and we need technology and manpower from India for the cultivation of crops and dairy farming to meet the food security of the world,” the Ambassador pointed out.
In the area of railway infrastructure, Indian companies can build East-West railway links to connect Mongolia with Southeast Asian countries. “Mongolia already has north-south rail connectivity, linking Russia to China. We want Indian companies to build an East-West railway corridor to connect our country with South East Asia,” the Ambassador proposed.
H.E. Mr. Dambajav suggested that Indian companies consider Mongolia as the gateway to Russia, China Europe and other advanced countries. “Mongolia has duty-free market access to Russia and China. It also has concessional market access to European Union for 2500 products.”
The Ambassador invited the Indian entertainment industry to explore film production in Mongolia. He said, “Mongolian government reimburses up to 50% cost of producing movies, television serials, documentaries and other shows in Mongolia.”
Tourism is another potential sector to boost bilateral relations. “Mongolia is one of the few countries in the world gifted with pristine nature, rich wildlife, beautiful lakes, snowcap and Gobi desert. Indian tourists can get visas by paying a nominal service charge. We are in discussion with Air India to launch a direct flight service between Mongolia and India. Our religious connection is conducive to promoting tourists to India as Mongolians consider Dharamshala, Ganges and Bodh Gaya as sacred places,” the Ambassador added.
Earlier in his welcome remarks, Dr. Vijay Kalantri, Chairman, MVIRDC WTC Mumbai pointed out, “India-Mongolia bilateral trade volume is hardly USD 35 million, which is below the true potential. Indian business community can explore the alternative trading route via Russia (bypassing China) to strengthen our trade relationship with Mongolia. India can also explore the huge untapped mineral resources such as lithium, copper, gold and coal in Mongolia. Digital economy, semiconductor, mining and batteries for electric vehicles are promising sectors for mutual collaboration.”
Dr. Kalantri suggested that Indian companies set up semiconductor manufacturing plants in Mongolia by making use of the available raw material in that country and then exporting these semiconductors to India for assembly into final electronic goods.
Dr. Kalantri proposed that WTC Mumbai can host a roadshow during the proposed visit of the Mongolian President to India later this year. The roadshow will have conferences, panel sessions, exhibitions, investor meetings and B2B sessions to promote two-way commercial relations.
Speaking on this occasion, Ms. Rupa Naik, Executive Director, WTC Mumbai suggested that the roadshow will be an ideal occasion to showcase the trade, tourism, infrastructure and agriculture potential of Mongolia. The meeting was also attended by Mr. Kishor Mokashi, Chief (Relations), Consulate of Mongolia in Mumbai.
The Finance Ministry has notified 21 countries, including the US, UK and France, from where non-resident investment in unlisted Indian startups will not attract angel tax.
The list, however, excludes investment from countries like Singapore, Netherlands and Mauritius. The government had in the Budget brought overseas investment in unlisted closely held companies, except DPIIT recognised startups, under the Angel Tax net.
Following that, the startup and venture capital industry sought exemption for certain overseas investor classes.
The Central Board of Direct Taxes (CBDT) on May 24 notified classes of investors who would not come under the Angel Tax provision.
Excluded entities include those registered with Sebi as Category-I FPI, Endowment Funds, Pension Funds and broad-based pooled investment vehicles, which are residents of 21 specified nations, including the US, UK, Australia, Germany and Spain, as per the notification.
The other nations mentioned in the notification are Austria, Canada, Czech Republic, Belgium, Denmark, Finland, Israel, Italy, Iceland, Japan, Korea, Russia, Norway, New Zealand and Sweden.
The CBDT notification comes into effect on April 1.
In April 2022, when Russia invaded Ukraine resulted in economic disruption all around the world, the downfall of the tech sector in America, and global inflation somewhere attract global attention towards the need for a substitute for the dollar as a global currency. As a response to respective incidents, India made a policy to shift its foreign transaction from the dollar to domestic and local currencies. In the series of actions, India demonstrates a 'Special Rupee Vostro Account 'with Malaysia in April 2023, as Malaysia is 16th largest trading partner of India. India also commenced talks with Russia for the same. But Russia adjourned the talks of trade in the rupee with India. Russia claims that its share of India in global trade is just 2% in merchandise and 4% in services. Such an agreement results in a $40 billion deficit to Russia. So the talks have been suspended by Russia.
However, it was a golden opportunity for India as India's imports of crude oil from Russia has been a significant rise of 33.4% in April 2023. Russia is a major exporter of defense equipment to India. It is actually an admonishing incident for India to encourage export potential. This policy of India to trade in local currencies can be considered as a compere of future global trade structure.
As India has intended to achieve 10% share in global export. The New FTP aims to $2 trillion target of foreign trade by 2030. In order to accomplish all the respective objectives India needs to explore its export potential. A stable market condition and an incentivized economic structure facilitate to set up CEPA (Comprehensive Economic Partnership Agreement) and free trade bilateral agreements with nations. Appropriate implementation of planned and designed policies is vital to gain prosperity back and making happen rupee a global currency for international trade.
The writer is a student of Masters in Economics.
The world is gradually becoming cashless, and India is one of the frontrunners in this direction. In a cashless economy, a substantial fraction of transactions is carried out without exchanging currency notes or coins. So, a cashless economy is not essentially a cash-strapped economy. The primary objective of a cashless economy is to ensure that people and institutions carry out their transactions, payments, and settlements without holding cash. However, currency notes and coins of smaller denominations continue in circulation even in a cashless society.
Theoretically, money is demanded in an economy for three motives, namely precautionary motive, transaction motive, and speculative motive. In a cashless economy, these motives are fulfilled through a variety of other methods of transactions. Transactions without cash are done mainly through digital information exchange systems, which can occur in multiple forms like credit cards, debit cards, electronic wallets, Universal Payment Interface (UPI), National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) and Immediate Payment Service (IMPS), or any other such means. However, traditional means like checks and demand drafts also continue in the cashless system.
In the year 2008, the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) established a non-profit organisation called the National Payments Corporation of India (NPCI) to facilitate internet-based digital transactions and develop a robust payment and settlement infrastructure in India. NPCI got a shot in the arm during the COVID phase when online transactions in India peaked in June 2020. UPI, BHIM UPI, BharatQR, the Cheque Truncation System (CTS), RuPay, and most recently, Digital Rupee, are some important initiatives undertaken by NPCI. Further, from 2015 onward, the cashless system of payment in the country got a boost under the Digital India Mission. Among other digitisation objectives, the mission ambitiously aims for universal digital literacy in the country. The digitisation of the economy will steer the economy into a new era of development and greater integration with the rest of the world. At present, about 10 percent of the economic activities in India are fully digitised.
In her budget speech in February 2022, Finance Minister Nirmala Sitharaman announced the farsighted plan to launch the digital rupee (e? or eINR), a Central Bank Digital Currency (CBDC). In this direction, on 1st December, 2022 RBI announced the launch of the first retail digital rupee (e?-R) on a pilot basis at selected locations in closed user groups. The launch of the digital rupee is the most significant milestone in the direction of a cashless economy in the country. Further, RBI is expected to launch the Digital Rupee for Wholesale (e?-W) for institutional financial settlements like inter-bank settlements. Thus, CBDC is different from virtual currencies like cryptos (Bitcoins, Ethereums, Solana, and Polkadot etc.) which are neither legal tender nor supported by central banks. Cryptos may be acceptable in closed user groups, but not universally. So far, nine countries have established a CBDC, while many are seriously exploring this alternative.
Pros and Cons
A cashless economy brings advantages and challenges. The most important advantage of a cashless system is the substantial reduction in the cost of financial transactions, the cost of printing, and the cost of safely circulating currency notes from the bank note press to the rest of the country.
The cashless system is an elixir for the banking system. The issue department of the RBI, which is responsible for the proper and efficient management of currency note issue, will be left with almost no work. Further, the cost of the currency verification and processing system (CVPS), shredding, and recycling of soiled currency notes will also be significantly reduced. Apart from that, the cost of physical security will also be reduced, while the cost of cyber security will steeply go up. RBI estimates show that a full-fledged rollout of CBDC will eliminate ?4,984.80 crore security printing cost of physical currency currently borne by the general public, businesses, banks, and RBI. With a reduced cost of handling currency notes, CBDC will reduce the cost of the entire banking system, and a metamorphosis of the banking infrastructure is expected. Less employees and fewer branches with a little hard cash in smaller denominations will be sufficient because the bulk of our payments will be made in digital rupee. ATMs either will not be required or may be needed to dispense money in digital currency from an account to the device of the account holder. Money held in digital currency form will be like currency in hand and will not bear any interest; however, the system of interest-bearing savings accounts will continue in an existing manner.
A cashless system is a panacea for the formalisation of the informal sector and for detecting gray market transactions and tax evasion. Estimates show that the informal sector, with 80 percent of the labour force engaged, accounts for about 43 percent of the GDP at present. Formalisation will not only broaden the tax base but will also reduce tax evasion. Thus, the revenue productivity of the tax system will go up. With better coverage and reduced gray market transactions, the input tax rebate system under the Goods and Services Tax (GST) will become seamless, and the distortionary cascading effect will diminish. Real estate sector transactions will particularly reflect the genuine market value of property. Consequently, the revenue of the states and the center from stamp and registration duties and capital gains, respectively, will increase abundantly. Receipts from personal income tax will also increase as underreported income will be visible from the cashless digital transactions. In a cashless environment, corruption and illegal and criminal activities involving money will come under an inescapable scanner. Overall, the size of the black economy in the country will greatly decrease.
On the darker side, individual privacy will be significantly reduced in a cashless system. Spending details can be easily tracked, and financial behavior can be monitored. Leakage or theft of this private information may expose any individual to unimaginable financial risks. Cyber frauds may often mutate and appear in a variety of forms. And, people who have no access to internet-enabled devices (like beggars) will be at an immediate disadvantage in this system.
The success of a cashless economy will greatly depend on digital literacy, seamless connectivity, public confidence in digital currency, and enhanced protection from cyber-attacks and fraud. At present, India, with a 75 percent literacy rate, is an unfit case for a full-fledged cashless economy, let alone digital literacy. Each adult and youngster in the country needs to be not only literate but also digitally literate and capable of affording a smartphone-like service with stable and seamless internet connectivity. According to Statista.com, the present smartphone penetration in India is about 55 percent, and it is expected to reach 96 percent by 2040.
Prime Minister Jan Dhan Yojna has so far ensconced about 50 crore beneficiary account holders in the web of the financial system. Further, the Jan Dhan-Aadhaar-Mobile (JAM) trinity has shown a transmuting effect on the digitisation of the financial system in the county. Now, the adoption of CBDC by the masses in the country is only a matter of acquaintance with basic digital technology and the availability of internet-enabled devices. Further, the existing legal framework pertaining to banking and payments needs to be revamped to align it with the emerging requirements of a cashless economy. Apart from that, contract laws also need to be in harmony with banking and payment laws.
Cues from the West
Hundreds of countries in the world are aspiring to a cashless society. According to FinTech Magazine, Sweden, the United Kingdom, Finland, Norway, the Netherlands, and Denmark are way ahead in cashless and contactless transactions. They are highly likely to become fully cashless soon. In the cashless societies of the West, cash is used by a few vendors and largely by older people. Even youngsters use apps for their pocket money. Consequently, cash in circulation in these countries has substantially decreased in recent years. Sweden has halved its cash in the last five years. People in the West are very adaptive to technologies and capable of affording digital devices.
The transition to a cashless economy is an ongoing process that requires an analysis of the potential advantages, problems, and challenges, in addition to actions that ensure universal access to the requisite technology and infrastructure with adequate safeguards in the digital economy. At this juncture, given the low literacy rate and a variety of other challenges, it seems that the pace of financial digitisation in India will remain slow and gradual and it will take many years for India to usher into a full-fledged cashless economy. Hastened attempts in this direction may be agonizing and vexing for many.
Taking the digital transformation to the next level, Payments and financial services company Paytm on Thursday announced that it has partnered with SBI Card to launch Paytm SBI Card on the RuPay network.
The Paytm and SBI Card partnership, which began in 2020, is now expanding with the addition of National Payments Corporation of India’s RuPay, as all three home-grown brands join forces to further drive the growth of inclusive, digital-first financial services in the country.
Paytm founder and CEO Vijay Shekhar Sharma told reporters that India is at the cusp of the next payments revolution where credit will become the mainstream payment choice.
“Together with SBI Card, Paytm RuPay credit card will be a great choice for consumers. Our users are already savvy on QR code-based payments and with RuPay credit cards working on UPI QR codes, transactions through mobile phones will get a further boost, marking a new era in digital payments,” he added.
Cardholders of either variant will be entitled to 2 per cent cashback on all Paytm ecosystem spends and 1 per cent cashback on all other purchases except wallet reloads and fuel expenditures.
They will also receive the added benefit of a 1 per cent fuel surcharge waiver and `1,00,000 cyber fraud insurance coverage in the case of ‘Platinum’ cardholders.
As a welcome benefit, customers can enjoy exclusive privileges worth up to `75,000 with a complimentary Paytm First membership.
The Economic Offences Wing of the Delhi Police has filed an FIR against BharatPe co-founder Ashneer Grover, his wife Madhuri Jain Grover and family members Deepak Gupta, Suresh Jain and Shwetank Jain for an alleged Rs 81 crore fraud after a complaint by the fintech unicorn.
The FIR, a copy of which has been seen by PTI, was filed on Wednesday under eight sections of the Indian Penal Code.
The case has been registered under sections 406 (punishment for criminal breach of trust), 408 (criminal breach of trust by clerk or servant), 409 (criminal breach of trust by a public servant, or by banker, merchant or agent), 420 (cheating and dishonestly inducing delivery of property), 467 (forgery of valuable security, will, etc.), 468 (forgery for purpose of cheating), 471 (using as genuine a forged) and 120B (punishment of criminal conspiracy).
According to the FIR, the company undertook an internal reconciliation of transactions and was assisted by independent professionals in this regard. Several irregularities and illegalities have come to the attention of the company, which give rise to the present complaint.
BharatPe in the complaint alleged that Grover and his family caused damages of about Rs 81.3 crore through illegitimate payments to bogus human resource consultants, inflated and undue payments through passthrough vendors connected to the accused, sham transactions in input tax credit and payment of penalty to GST authorities, illegal payment to travel agencies, forged invoices by Madhuri Jain and destruction of evidence.
If convicted, Grover, Madhuri and others can face up to anything between 10 years to life imprisonment. EOW now has the power to arrest all the accused.
Adani Enterprises Ltd said that its quarterly profit more than doubled, helped by a strong performance at its key coal trading division.
The company's consolidated profit increased to 7.22 billion Indian rupees ($88.3 million) in the fourth quarter ended March 31, from 3.04 billion rupees a year earlier.
Adani Enterprises' mainstay coal trading business recorded a 42% jump in earnings before interest, taxes, depreciation, and amortization (EBITDA). While coal prices fell in the quarter, the trading business benefited from higher volumes as well as cost optimisation, the company said.
Demand for coal picked up this year as power plants stocked up the fuel in anticipation of a surge in summer electricity consumption.
The wholesale price-based inflation eased to a 29-month low of 1.34 percent in March on easing prices of manufactured products and fuel items, even though food articles turned costly.
March is the 10th straight month when wholesale price index (WPI) based inflation has declined.
The inflation was 3.85 percent in February and 14.63 percent in March 2022. Inflation in food articles, however, rose to 5.48 percent in March as against 3.81 percent in February.
"Decline in the rate of inflation in March 2023 is primarily contributed by fall in prices of basic metals, food products, textiles, non-food articles, minerals, rubber & plastic products, crude petroleum & natural gas and paper and paper products," the commerce and industry ministry said on Monday.
Inflation in wheat and pulses was 9.16 percent and 3.03 percent, respectively while in vegetables it was (-)2.22 percent. Inflation in oilseeds was (-)15.05 percent in March 2023.
Fuel and power basket inflation eased to 8.96 percent last month from 14.82 percent in February. In manufactured products, inflation was (-)0.77 percent as against 1.94 percent.
The deceleration in WPI comes in line with the easing of March retail inflation.
Union Finance Minister Nirmala Sitharaman has urged American businesses to invest in the country while asserting that India meets the requirements of a fair and transparent economy,
Indian FM was addressing a business roundtable organized by US India Business Council, with representatives of top US companies, the finance minister said India, under the current government, is creating opportunities for global industry to participate in the nation's growth story.
In her remarks, Sitharaman emphasized that policy consistency and pursuit of reforms despite the pandemic have been a hallmark of the government's approach. Highlighting the impact of digitalization and economic formalization at length, Sitharaman said that due to its achievements in transitioning to digital payments and integrating the informal sector, India meets the requirements of a fair and transparent economy.
She invited the investor community to make the most of the opportunities that India has to offer, now and going forward.
In his remarks, Indian Ambassador to the US, Taranjit Singh Sandhu said as the President of G20, India is committed to multi-stakeholder engagement. “We are trying to be a voice not only for the people who are in the room, but those who are outside of it. G20 is touching all stakeholders,” he said.
Stating that US and India bilateral trade last year crossed USD190 billion, Sandhu underscored that the Ministry of Finance seeks the business community's ideas and candid feedback as they seek to continue progress on the economic partnership.
Atul Keshap, USIBC president, said,“We have seen some great achievement on the liberalization agenda during her tenure—our members are optimistic that continued momentum can yield more concrete results in the ease of doing business and improving India's investment environment and deal flow that can help boost India's GDP and the well-being of all of its people.”
Welcoming the finance minister to the US Chamber of Commerce, Todd Skinner, president, of International of TransUnion, emphasized the importance of industry consultations like the roundtable to facilitating international investment.
The potential of India's digital public infrastructure such as its Unified Payments Interface was a recurring theme, especially when it encourages and complements private sector innovation. Several companies expressed support for frameworks that would allow the private sector to leverage digital payments data to expand financial inclusion and develop new financial products and credit instruments for the Indian market.
USIBC highlighted the simplification of Know-Your-Customer processes and the establishment of a national financial information registry as key actions that could further develop India's standard-setting FinTech ecosystem.
The COVID-19 pandemic has had a profound impact on economies around the world, and the relationship between the United States and India has not been immune to this disruption. However, as the pandemic subsides and the world begins to emerge from its economic slumber, the future of US-India economic relations looks bright.
One reason for this optimism is the growing importance of India as a major economic power. In recent years, India has emerged as one of the world's fastest-growing economies, and its population of over 1.3 billion people represents a significant market for US businesses. Furthermore, India has made a concerted effort to modernize its economy and infrastructure, which has attracted increased investment from the US and other countries.
The US, for its part, has long recognized the strategic importance of India as a partner in Asia. As the world's second-most populous country and a major regional power, India has the potential to be a key ally for the US in its efforts to maintain a balance of power in the region. In recent years, the US has taken steps to deepen its economic and strategic ties with India, including through the US-India Strategic Partnership Forum and the US-India Business Council.
Despite the challenges posed by the pandemic, there are reasons to be optimistic about the future of US-India economic relations. One key area of focus will be on increasing trade and investment between the two countries. Although bilateral trade between the US and India has grown significantly in recent years, there is still significant room for growth, particularly in sectors such as technology, pharmaceuticals, and defense.
To this end, the US and India have already taken steps to reduce trade barriers and improve market access for each other's businesses. In 2019, the US and India signed a trade deal that reduced tariffs on a range of products and services, and the two countries have also launched a high-level trade dialogue aimed at increasing trade and investment flows.
Another area of potential cooperation is in the field of renewable energy. Both the US and India have set ambitious goals for reducing carbon emissions and transitioning to clean energy, and there is significant potential for collaboration in this area. The US has already announced plans to provide technical assistance and financing for India's renewable energy sector, and there is potential for increased collaboration on research and development of new clean energy technologies.
Of course, there are still challenges that must be overcome if the US and India are to deepen their economic partnership. One of the biggest obstacles is India's complex regulatory environment, which can be difficult for US businesses to navigate. India has made some progress in recent years in streamlining its regulations and improving the ease of doing business, but more work needs to be done to create a more business-friendly environment.
Another challenge is the issue of intellectual property rights. The US has expressed concerns about India's intellectual property regime, which it views as insufficiently protective of US companies' patents and trademarks. This is a sensitive issue for India, which has argued that its intellectual property laws are designed to promote innovation and access to affordable medicines.
Despite these challenges, there are reasons to be optimistic about the future of US-India economic relations post-pandemic. Both countries have a strong interest in deepening their economic ties, and there is significant potential for increased trade and investment between the two countries. As the world continues to recover from the pandemic, the US and India will be well-positioned to work together to promote economic growth and prosperity in the region and beyond.
The Indian government today came out with Foreign Trade Policy (FTP) 2023 which seeks to boost the country's exports to $2 trillion by 2030 by shifting from incentives to remission and entitlement based regime.
Unlike the practice of announcing 5-year FTP, the latest policy has no end date and will be updated as and when needed, said Director General of Foreign Trade (DGFT) Santosh Sarangi while briefing media about FTP 2023. Earlier, Commerce and Industry Minister Piyush Goyal unveiled FTP 2023 which will come into effect from April 1, 2023.
The DGFT also said India is likely to end this fiscal year with total exports of $760-770 billion as against $676 billion in 2021-22.
The last five-year policy came into force on April 1, 2015. However, it was extended several times in the wake of coronavirus outbreak and subsequent disruptions in economic activities globally. The last extension was given in September 2022 till March 31, 2023.