A major area of concern flagged by US Trade Representative (USTR) in regard to ‘alleged’ non-observance of trade related intellectual property rights (TRIPs) by India relates to grant of compulsory licenses (CLs) by latter to generic Indian drug firms for the much-in-demand new drugs for which an innovator company holds a patent. The grant of a patent confers ‘exclusive rights’ on patent holder for manufacturing and marketing of a product. Thus, during the term of patent (20 years from the date filing patent application), any person keen to make and/or sell cannot do so without seeking prior consent of patent holder. A CL authorizes the concerned entity to manufacture and market a patented product even without prior consent from the...
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Non-adversarial tax regime – Modi-government on track
During the last leg of UPA-II dispensation, there was a substantial deterioration in business environment leading to erosion of confidence in India. This not only dis-comforted foreign investors but also, prompted Indian companies to pursue their investment plans in foreign destinations. Apart from a virtual policy paralysis and various approvals and clearances – especially environment and land acquisition – getting jammed, the investment sentiment received a big blow due to retrospective amendment in tax laws initiated by then finance minister, Pranab Mukherjee in 2012. The amendment was made to negate a judgement of Supreme Court (SC) in Vodafone case which declared untenable tax demand on a transaction in 2007 involving sale of Hutchison shares to Vodafone. SC held that being...
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GST – guard against flawed design
Having made substantial progress in reforming governance and adapting Indian bureaucracy to his style of functioning, Modi has already got cracking on major economic reforms thereby silencing the critiques who alleged ‘big bang was missing’. During the winter session of parliament commencing on November 24, 2014, the government has on top of its agenda a constitutional amendment bill on Goods and Services Tax (GST) – a revolutionary reform that was originally slated to come in to force in April, 2010 and has since missed several deadlines. After considerable dilly dallying, the bill was introduced in the Lok Sabha in 2011 by erstwhile UPA government but lapsed with the dissolution of its 15th term. In less than 6 months of its...
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Indo-US accord on food security – where is ‘permanent’ solution?
India had faced all round flak for its stance in meeting of WTO General Council, Geneva (July 31, 2014) that linked approval of Trade Facilitation Agreement (TFA) with time bound actions to address concerns of developing countries in regard to support to resource poor farmers for food security. It was accused of allegedly going back on declaration at Bali ministerial in December, 2013 and stampeding progress of work under the Doha Round. Some developed countries were even willing to move forward – without India – to seal the deal on TFA leaving food security issue in the lurch. Now, USA not only appears to have made a climb down, but also applauded constructive role played by our leadership in ending...
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Direct fertilizer subsidy payment to farmers – why dither?
Direct transfer of subsidy to farmers hold the key to countenancing all ills afflicting the fertilizer sector in India. Successive governments have talked about it and yet, none has ventured to implement this concept. What has held them back? The idea was first mooted nearly 4 decades ago when in March 1976, faced with increasing prices of complex phosphate fertilizers (then, there were no controls and manufacturers were free to fix price), the government introduced flat subsidy @ Rs 1250 per ton phosphate nutrient (P2O5). The initial plan was to give the money directly to farmers so that the effective price (net of subsidy) paid by them for these fertilizers was correspondingly reduced say by Rs 575 per ton in...
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Modi walks the talk on labour reforms
Increasing unemployment is a major issue in India. Every year a whopping 10 million youth join the workforce and only a fraction of these are lucky enough to find a proper job. Absorption of workforce in the organized sector has been abysmal. Time and again, industries and businesses have minced no words in emphatically stating that the biggest factor that prevents them from create quality employment is that their hands are tied down by antiquated labour laws. By nature, business is a risky proposition subject to frequent ups and down. Situations may arise when sheer compulsion of survival in a downward phase may require owner to shed some work force. In extreme circumstances, management may even be forced to close...
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Cleansing the maligned coal sector in India
In August/September, 2014 when Supreme Court (SC) declared all 218 coal blocs allotted since 1993 ‘illegal’ followed by de-allocation of ‘all’ except 4 [2 of these are with PSUs viz., NTPC and SAIL and other 2 are for ultra mega power projects (UMPP) given under competitive bidding], this led to a hue and cry. The associations representing the beneficiaries of illegal allotments – in their presentations before SC – submitted that investment to the tune of about Rs 250,000 crores in development of coal mines and another Rs 400,000 crores in setting up of end use projects viz., power, steel, cement etc would be at risk. Commentators too joined the chorus opining that this will affect availability of domestic coal...
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Gas pricing – Modi’s ‘modified’ R-formula
For quite some time, media has been agog with strident criticism about Modi government’s alleged inability to come up with big bang reforms. One area where it has been targeted the most for alleged delay pertains to pricing of gas. To put things in perspective, a few words on the background are in order. In 2007, based on recommendation of a group of ministers (GoM), then UPA government had approved a price of US$ 4.2 per million British thermal unit (mBtu) – on net calorific value (NCV) basis – for gas supplies from Reliance Industries Limited (RIL’s) KG-D6 fields [awarded in first NELP (new exploration and licensing policy) round 1999] chargeable for 5 years from commencement of production. This price was...
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Leveraging MGNREGA for inclusive growth
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) – a flagship welfare scheme of the erstwhile UPA dispensation launched in 2005 – has come under rigorous scrutiny by Modi government with a view to bring it in line with its agenda for inclusive development. Already, based on an examination of all facts regarding working of the scheme, the ministry for rural development (MoRD) has finalized a note for consideration by the cabinet. So, what are proposed changes? Before we take a look at that, a few words about basics of MGNREGA are in order. MGNREGA provides for ‘guaranteed’ employment to a member of a poor family for a minimum of 100 days in a year and pay wage @ Rs...
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Modi’s tirade against corruption & black money
A central point of prime minister Modi’s campaign during general elections was fight against corruption. A related focus area was his commitment to bring back the black money stashed abroad by concerned Indians. With the new government in office for over four-and-a-half months, opposition parties with Congress in the front have started castigating it for its alleged failure to bring back even a single rupee. This is totally unwarranted and un-called for. Modi does not have a magic wand to deliver within such a short period and that too in an area where previous dispensations failed for decades. He needs to be tested on the basis of his actions rather than outcomes which naturally take time. Thus, within a week...
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