Category: Economics

GST and Doing Business in India

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Sacchidananda Mukherjee, PhD, Associate Professor, National Institute of Public Finance and Policy, New Delhi

A version of this article was originally published in Chinese as ‘商品和服务税对在印经商的影响’ [Shangpin he fuwu shui (GST) dui Yin jingshang de yingxiang], Diyi Caijing, 15 May 2015. This is part of a series by Indian scholars in China’s top business affairs news portal facilitated by the ICS. The English version follows below the Chinese text.

在经历漫长的等待之后，印度终将于2017年7月1日起推出商品和服务税（GST)，实现统一税制。在四项法案（Central GST、Integrated GST、Union Territory GST、GST Compensation to States）通过印度两院批准后，将会形成GST征税行政框架以及执行规则。

预计GST改革委员会将于2017年5月为各商品指定税率。不同社会经济阶层所需承担的不同税负在很大程度上取决于细致划分下不同税率的商品与服务。目前，委员会已确定了四层税率结构（5％、12％、18％和28％），预计委员会还将公布一份简短的，包含了部分基础商品及服务的豁免清单。而对于低质货物（如烟草制品、汽水）及对环境有害的物质（如煤炭），除了征收最高税率外，还有征收额外的GST补偿税。由补偿税组成的税收收入将用于补偿邦政府在新税制实施头5年面临的税收损失。此外，委员会还明确了针对不同类别商品设定的相应的最高GST补偿税率，如对槟榔、豪车分别征收135%、15%的税，对每吨煤征收400卢比。不过具体到各不同商品的GST补偿税尚未明确。因进项税可抵免GST补偿税，因此不会产生针对补偿税的阶梯税率。 Continue reading “GST and Doing Business in India” →

Economic Ties with China: India Needs to Look Beyond Politics

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Alka Acharya, ICS Honorary Fellow and Professor, Centre for East Asian Studies, School of International Studies, Jawaharlal Nehru University, New Delhi

There appears to be a world of difference between the images presented by India-China economic and commercial ties on the one hand and the politico-strategic on the other. Interactions and exchanges with representatives from both these domains are markedly different in tone and tenor—the former focus on the opportunities, openings, benefits and profits while the latter dwell more on the dangers, threats, challenges and disputes.

Prima facie, they appear to be working at different levels, according to their own—somewhat different—logic and rationale, and it does not look like they will converge any time soon in a more composite picture of this most critical of relationships in the world today. The political understanding at the highest level, which is committed to building a strategic and cooperative—and now more promisingly ‘developmental’—partnership, struggles with deep suspicion that runs through practically our entire strategic discourse. On the other hand, economic engagements have become the most dynamic and transformative aspects of the India-China relationship today. But this has to contend with the structural mismatch between the manufacturing strengths and industrial capacity of the two economies—and therefore, unsurprisingly, perceived by and large as a situation that works only to China’s advantage. The controversial and contentious political issues and the angry exchanges understandably garner greater attention.

Bigger Picture

And yet we must ask ourselves as to whether that is all there is to the overall picture. Continue reading “Economic Ties with China: India Needs to Look Beyond Politics” →

Explaining China’s Belt and Road Initiative

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Ashok K. Kantha, Director, ICS and former Indian ambassador to China

The Silk Road Economic Belt and the 21st Century Maritime Silk Road, launched in late 2013, is the signature project of Chinese President Xi Jinping. Now re-designated as the Belt and Road Initiative (BRI), it is one of the most ambitious programmes ever rolled out by any government. The Belt and Road Forum being held in Beijing on May 14-15 showcases its achievements to 28 foreign heads of state and government, as also delegations from other countries. No official participation from India has been announced so far. Backed by huge resources, BRI has acquired overarching importance in foreign policy and domestic domains of China. As it has Xi’s personal imprimatur, a wide range of ongoing projects and activities have been folded into the grand narrative of the BRI, with its contours still evolving. Continue reading “Explaining China’s Belt and Road Initiative” →

Why China Cannot Replace the US

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Shyam Saran, Member, ICS Governing Council and former Indian Foreign Secretary

We are currently at one of those rare inflexion points in history when an old and familiar order is passing but the emerging order is both fluid and uncertain. And yet it is this very fluidity which offers opportunities to countries like India to carve out an active role in shaping the new architecture of global governance.

The international landscape is becoming chaotic and unpredictable but this is a passing phase. Sooner or later, whether peacefully or violently, a more stable world order will be born, with a new guardian or set of guardians to uphold and maintain it. This could be a multipolar order with major powers, both old and new, putting in place an altered set of norms and rules of the game, anchored in new or modified institutions. Or, there could be a 21st century hegemon which could use its overwhelming economic and military power to construct a new international order, which others will have to acquiesce in, by choice or by compulsion. This was so with the U.S. in the post World War-II period, until its predominance began to be steadily eroded in recent decades.

As we look ahead, there are three possible scenarios which could emerge. Continue reading “Why China Cannot Replace the US” →

Key Issues in Urbanization in China

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Lu Ming, Professor, Antai College of Economics and Management, Shanghai Jiao Tong University

A version of this article was originally published in the Business Standard as ‘Towards sustainable urbanisation in China’, 6 May 2017. This is part of a series by Chinese economists facilitated by the ICS.

China has received enormous dividends from its decades of urbanization, which provided labour resources for the development of its industrial and service sectors and rapidly raised the income of the Chinese people. A large number of Chinese farmers became part of the country’s modernization process, allowing for poverty alleviation in rural areas. At the end of 2016, the urbanization rate of China stood at around 57%

China however, continues to face serious impediments in the urbanization process.

One of these is China’s household registration system or the hukou, which connects a person’s right to access public services with whether or not he has a resident status in a locality. The reality is that some one-third of city dwellers in China are trans-regional immigrants who actually do not possess local household registration. As a result, they do not enjoy the same level of social security and public services as local urban residents.

This is a particularly serious social problem for China. Continue reading “Key Issues in Urbanization in China” →

India and China: For a Change in Mindsets

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Ravi Bhoothalingam, Honorary Fellow, ICS

In the previous article (“Why China matters”, May 2), we explored four reasons why China is important for India in our journey towards vikas for our citizens. Accordingly, the article argued that it is to India’s advantage to engage strongly with China on the economic front, whilst managing our various political differences. But what assets does India bring to the table in this engagement? What steps are needed to make it fruitful? Is it possible to think of China-India cooperation as having a larger — even transformational — effect on Asia if not the world? Continue reading “India and China: For a Change in Mindsets” →

Why Economic Engagement with China Matters

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Ravi Bhoothalingam, Honorary Fellow, ICS

In the aftermath of the Dalai Lama’s visit to Arunachal Pradesh, India-China bilateral relations have plumbed new depths. China accuses India of using the Dalai Lama to provoke anti- Chinese sentiment, and says that diplomatic relations are “seriously damaged”. But His Holiness is a popular and revered guest in India, and so the Indian government’s resolute defence of his right to travel anywhere in the country remains fully in harmony with popular sentiment. Still, we should expect a climate of “cold peace” between the two countries for some time to come, with bilateral political issues remaining unresolved. However, a Sinophobic public climate can damage our own public interest, and this the government should work to avoid. Because China matters to India — if not politically — certainly in the realm of economic development. And it matters in four quite specific ways. Continue reading “Why Economic Engagement with China Matters” →

Why China Should Support “Make in India”

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Ravi Bhoothalingam, Honorary Fellow, ICS

A version of this article was originally published in Chinese as ‘中国为何应支持“印度制造”’ (Zhongguo weihe ying zhichi “Yindu zhizao”), 第一财经 (Yicai), 4 April 2017. This is part of a series by Indian scholars in China’s top business affairs news portal facilitated by the ICS. The Chinese version follows below the English text.

“Make in India”—a signature campaign of Indian Prime Minister Narendra Modi– was launched in late 2014 with the objective of transforming India into a dynamic global manufacturing hub, and thus radically enhancing employment and the prosperity of the Indian people. Just a few months later came an announcement from China’s State Council of “Made in China 2025”—a set of eight policy measures to re-orient the Chinese manufacturing sector in line with the country’s economic structural adjustment program. So, are “Make in India” and “Made in China” competitive programmes which coud drive another wedge between these two nations?

To answer this question, we need to understand the nature of both “Make in India” and “Made in China” more closely. Continue reading “Why China Should Support “Make in India”” →

Sheikh Hasina’s India Visit: China in the Background

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Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

Bangladesh Prime Minister Sheikh Hasina state visit to India from 7-10 April came after at least two postponements. The difficulty in getting the visit to take off is a far cry from the warmth and cordiality that was on display in words and deeds during Indian Prime Minister Modi’s visit to Dhaka in June 2015.

Hasina’s reservations had to do with her fear of coming away from New Delhi without any agreement either on sharing the Teesta river waters or on constructing the Ganges Barrage on the Padma river at Pangsha near Rajbari, which is what has happened. The agreement has fallen through multiple times during both the UPA tenure as well as during Modi’s visit and despite Dhaka agreeing to major India’s major demands of allowing transit of goods to Northeast both from Indian mainland overland through Bangladesh territory and by sea through the Bangladeshi ports of Chittagong and Mongla.

The Contrast

The coming state visit will be Hasina’s first in seven years to India and it might be useful to compare and contrast the progress in Dhaka’s ties with China – India’s principal challenger for Bangladesh’s affections – in the meantime. Continue reading “Sheikh Hasina’s India Visit: China in the Background” →

China and the Iran-Saudi Rivalry: Towards a Greater Role?

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Kishorchand Nongmaithem, Research Assistant, ICS

In January last year, when the Chinese President Xi Jinping visited Iran, the two countries agreed to expand their commercial ties to US$600 billion in the next ten years.[1] On that visit, Iran’s Supreme Leader Ayatollah Ali Khamenei told Xi that, “Iran never trusted the West” that’s why Iran “seeks cooperation with more independent countries” (like China).[2] China also welcomed Iran to work together under its ‘Belt and Road’ connectivity framework.[3]

A year later in March 2017, King Salman bin Abdulaziz of Saudi Arabia visited China, and during his three-day stay, the two countries signed deals worth US$56 billion that included 14 cooperative agreements and 21 other deals on oil production, investment, energy, space and other areas.[4] Continue reading “China and the Iran-Saudi Rivalry: Towards a Greater Role?” →