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Covid-19: A cry for relooking transfer pricing APAs and safe harbour rules

Comparable Uncontrolled Price Method compares price charged for the property or service in a controlled transaction with the price charged for comparable property or service in an uncontrolled transaction in comparable circumstances.

Gagan Kumar

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A significant volume of global trade consists of international transfer of goods, services, capital and intangibles. As per the United Nations Practical Manual on Transfer Pricing, 2013, international transfers within MNE group entities which are called intragroup transfers are growing steadily and account for more than 30% of the total international transactions. What is paid by one entity to another entity in the intra-group transfer is called the transfer price. Such transactions are controlled transactions because they are between two associated or connected enterprises as distinct from uncontrolled transactions which are between two entities which are not associated and operate on arm’s length basis. Transfer pricing adjustment enables the tax administration of a country to correct the transfer price and compute the same on arm’s length price, to check, avoid and ensure correct payment of taxes. Arm’s length price (“ALP”) in simple words means the price which a willing buyer would pay to a willing seller in an uninfluenced situation.

ALP is arrived at by applying various methods (discussed below). The gravamen of ALP is that transaction between associated enterprises is compared with the transaction between unrelated enterprises. This process is known as Benchmarking. Detailed Transfer Pricing documents are required to be maintained to substantiate the Benchmarking process. The tax department often challenges the Benchmarking undertaken by the taxpayer, and adjustments are made in transfer price, leading to plethoric income.

Therefore, to eschew litigation, apart from such Benchmarking, the Act also provides Safe Harbour Rules (“SHR”) and Advance Pricing Agreements (“APA”). The purpose of SHR is to ensure that ALP is not intransigent but allow some latitude. APA is an agreement between the taxpayer and the tax department regarding use of preagreed margins for computing ALP.

This article aims to highlight the possible impact of the current pandemic on the determination of ALP.

Impact on ALP computation

Section 92 of the Income Tax Act,1961 (“the Act”)  deals with the computation of income from international transactions lays down that any income arising from an international transaction shall be computed having regard to the ALP.

 The arm›s length principle as adumbrated in Article 9 of the OECD Model Convention stipulates that «where conditions are made or imposed between two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profit which would, but for those conditions, have accrued to one of the enterprises, but by reason of those conditions, having so accrued, may be included in the profits of that enterprise and taxed accordingly.»

Section 92F of the Act defines ALP is the price applied (or proposed to be applied) when two unrelated persons enter into a transaction in uncontrolled conditions.

Section 92C(1) is of significance and relevance as it stipulates that ALP in relation to an international transaction can be determined by any of the five methods specified therein, with authority to the Central Board of Direct Taxes (“CBDT”) to prescribe the sixth method.

The five methods are (a) Comparable Uncontrolled Price Method; (b) RP Method, i.e. Resale Price Method; (c) CP Method, i.e. Cost Plus Method; (d) Profit Split Method; and, (e) TNM Method, i.e. Transactional Net Margin Method. Subsections (1) and (2) to Section 92C casts an obligation on the assessed to compute arm’s length price as per the methods prescribed. 

Comparable Uncontrolled Price Method compares price charged for the property or service in a controlled transaction with the price charged for comparable property or service in an uncontrolled transaction in comparable circumstances.

In RP Method, the price paid for the product by an independent third party, i.e. the resale price received by an AE is taken as the basis. A reverse exercise computes the arm’s length price by determining the normal gross profit margin, i.e. gross profit margin, of an unrelated enterprise. Expenses incurred are thereafter, reduced and adjustments for differences in comparable is made to arrive at the arm’s length price.

 Cost Plus Method requires determination of the appropriate gross profit margin which would be charged by a comparable and adding the same mark up to the expenditure/cost incurred by the AE to determine the proper profit given market conditions and functions performed. The three methods above are treated as traditional transactional methods.

TNM Method or Profit Split Method are called transactional profit methods or profit-based methods. TNM Method measures the net operating profits realized from controlled transactions. It then compares the profit level to the profit level realized by independent enterprises engaging in comparable transactions. Profit Split Method takes the combined profit earned by two related parties from one or a series of transactions. It then divides those profits using an economically valid defined basis. It aims at replicating the division of profits which would have been anticipated in an agreement made at arm’s length. It requires working back from the profit to the price.

The five methods stipulated in sub-section (1) to Section 92C, are set out and articulated step-wise in detail in Rule 10B of the Income Tax Rules, 1962(“the Rules”).

 Be it any of the five methods, the first step to be exercised is to identify the international transaction and the transfer price paid for the same by two AEs. The second step is to carry out functional analysis, i.e. the functions to be performed by the two AEs taking into account the assets employed, risk assumed, the contractual terms, the economic circumstances of the parties and the business strategy pursued by the parties.

 On the question of comparability analysis, United Nations’ Practical Manual on Transfer Pricing in paragraph 5.1.1 states that the analysis is used to designate two distinct but related analytical steps. First, being to understand the significant economic characteristic of the controlled transaction between the two AEs and the respective roles of the parties thereto. The second analytical step is the comparison of those conditions of the controlled transactions with uncontrolled transactions, i.e. transactions between the two AEs taking into account the economically significant characteristics of the controlled transactions and the respective roles of the five comparability factors.

The analysis mentioned above, therefore, requires selection of appropriate comparable, i.e. an uncontrolled transaction which is to be compared with a tested party. The comparable can be internal, i.e. one of the AEs enters into a similar uncontrolled transaction with an independent enterprise; or external, i.e. involving an independent enterprise in the same market or industry.

The comparison must be about the comparability analysis as elucidated in paragraph 5.1.1 of the United Nations Practical Manual on Transfer Pricing. In other words, the economically relevant characteristics of the two transactions being compared must be sufficiently comparable. This entails and implies that difference, if any, between controlled and uncontrolled transaction, should not materially affect the conditions being examined given the methodology being adopted for determining the price or the margin. When this is not possible, it should be ascertained whether reasonably accurate adjustments can be made to eliminate the effect of such differences on the price or margin.

 Thus, identification of the potential comparable is the key to the transfer pricing analysis. As a sequitur, it follows that the choice of the most appropriate method would be dependent upon availability of potential comparable keeping in mind the comparability analysis, including befitting adjustments which may be required. As the degree of the comparability increases, the extent of possible differences which would render the analysis inaccurate necessarily decreases.

Therefore, the current situation of the pandemic has jeopardized the very basis of comparability exercise based on which the Transfer Pricing is based.

 Indeed, transfer pricing is not an exact science but a method of legitimate quantification which requires the exercise of judgment on the part of the tax administration and the taxpayer to have a certain degree of certainty. It is a method and formulabased and, therefore, rational and scientific. However, not being sacrosanct or infallible, first and the second proviso to sub-section (2) along with stipulations in Sub-section (2A) and 2(B) of section 92C posit a ‘getaway’ clause when the arm’s length price so determined and the controlled price does not exceed 5% (reduced to 3% w.e.f. 1st April 2012).

The “gateway” of 5% or 3%, as the case may be, can be applied if the variation in arm’s length price and transaction/ controlled price does not exceed the specified percentage. Sub-section (2A), therefore, stipulates that where the difference exceeds the prescribed rate, the taxpayer would not be entitled to exercise the option under the first proviso to sub-section (2) to Section 92C and claim reduction.

Since the selection of comparable may not give an appropriate picture, therefore, the Government may consider increasing the gateway limit to account for the changed circumstances.

 Impact on SHR

SHR were introduced by the CBDT in the year 2009 and provides for circumstances in which a specified category of taxpayers can follow a simple set of rules under which the revenue authorities automatically accept transfer prices.

After its enactment in 2009, the first set of rules were notified in 2013 for three years, followed by a revision in 2017 in the SHR were applicable until FY 2019.

The SHR is applicable on certain eligible international transactions. ‘Eligible international transaction’ means an international transaction between the eligible taxpayer and its associated enterprise, either or both of whom are non-resident, and which comprises of:

 (i)  provision of software development services;

(ii)  provision of information technology-enabled services;

(iii) provision of knowledge process outsourcing services;

(iv) advance of intra-group loan;

(v)  provision of a corporate guarantee, where the amount guaranteed,— (a)  does not exceed one hundred crore rupees; or (b)  exceeds one hundred crore rupees, and the credit rating of the associated enterprise, done by an agency registered with the Securities and Exchange Board of India, is of the adequate to highest safety;

(vi)  provision of contract research and development services wholly or partly relating to software development;

(vii)  provision of contract research and development services wholly or partly relating to generic pharmaceutical drugs;

(viii)  manufacture and export of core auto components; 

(ix)  manufacture and export of non-core auto components; or by the eligible assessee.

(x) receipt of low value-adding intra-group services from one or more members of its group,

Rule 10TD of the Rules specifies the rates which if shown by the Assessee are accepted by the tax department. For example: The operating profit margin declared by the eligible assessee from the Provision of software development services in relation to operating expense incurred is acceptable, if – (i) not less than 20 per cent, where the aggregate value of such transactions entered into during the previous year does not exceed a sum of five hundred crore rupees; or (ii) not less than 22 per cent, where the aggregate value of such transactions entered into during the previous year exceeds a sum of five hundred crore rupees.

The CBDT has notified changes in SHR vide notification no. 25/2020 dt. 20th May 2020. The notification said that the rates with the changes applicable for AY 2017-18 to AY 2019-20 would continue to apply for AY 2020-21 also, i.e. for the Financial Year 2019-20.

 Earlier, these were made applicable for three years. Still, this time the Government seems to have decided to announce only for one year considering that the Covid-19 disruptions would impact businesses in FY 2020-21.

 It is, therefore, expected that the minimum rates of profit margins might be reduced when the SHR are notified for the FY 2020-21 as the overall margins of the industries described above have declined.

Impact on Advance Pricing Agreements

An APA is an agreement between the CBDT and any person, which determines, in advance, the ALP or specifies the manner of the determination of ALP (or both), in relation to an international transaction.

The primary objective of an APA is to provide certainty and comfort to taxpayers so that predictable and foreseeable conditions and outcomes can be expected regarding transfer pricing practices. The benefits of an APA are many. The risk of double taxation is eliminated in the bilateral APA. The APA also provides for an agreement on maintenance of documentation, so that the burden of record-keeping is reduced. Further, there is no full-scale transfer pricing audit and only a compliance audit to check the adherence to the agreed terms and conditions.

The APA was introduced in the year 2012 in the Act. The provisions regarding the rollback of the APA were added later in the year 2015. 

 India has created a legal framework providing for a legally binding agreement between the taxpayer and the CBDT. The Finance Act, 2012, inserted sections 92CC and 92 CD in the Act to provide the legal basis for APA in India. These statutory provisions, effective from 1st July 2012, empowered the CBDT to enter an agreement with any person, with the approval of Central Government, determining the ALP or specifying the manner of determination of ALP in relation to an international transaction to be entered into by that person.

The rules regarding the implementation aspects of the APA Scheme were notified later on 30 August 2012 in the form of Rules 10F to 10T and rule 44GA of the Rules. These provisions lay down the detailed procedures for the filing of pre-filing consultation application, prefiling consultation, fees, the filing of APA application, processing of the application, amendment of application, withdrawal of application, terms and conditions, filing of Annual Compliance Report, Compliance Audit, revision, cancellation and renewal of the APA.

Rollback provisions in the APA Scheme were introduced through the insertion of sub-section (9A) in section 92CC by the Finance Act, 2014. The relevant rules (10MA and 10RA) for the rollback of the APA were notified on 14 March 2015.

A taxpayer would be able to have certainty in matters of transfer pricing for a maximum period of 9 years (prospective five years and four rollback years) by applying for an APA along with an application for the rollback of the APA.

Taxpayers with existing APAs which were entered under the normal circumstances may soon have to grapple with honouring the same. APAs are conditional on a set of critical assumptions, and this crisis may invalidate one or more of the premises for the remaining term of the APA. APAs which are in the stage of negotiation should consider deferring the consultation until the market comes on track for having proper adjustments and/or comparable.

 Transfer Pricing Audit compliance

In practice, comparable company financial data are not audited and released until after the end of the applicable fiscal year-end reporting date. Thus, the comparable company information relied upon in setting prices will usually lag behind the tested party data. As such, the most recently available data for analyzing 2020 tested party results contemporaneously will likely be information from 2018 or 2019. It may cause practical challenges concerning comparability, as the economic conditions in 2020 due to the Covid-19 outbreak are very different from those of the immediately preceding years when most industries operated under relatively normal market conditions. Accordingly, comparable company data from the years immediately preceding the downturn years may not provide appropriate benchmarks in economic downturns.

Therefore, the pragmatic approach should be to extend the compliance for audit report by a year or so to get the most appropriate comparable. Otherwise, it will adversely affect the transfer pricing tax regime, resulting in unnecessary litigation on contravention of transfer pricing settled principles. In these odd times, tax authorities may be advised to formulate such exceptions, changes, and measures which taxpayers can undertake on their transfer pricing arrangements to dampen and mitigate the adverse effects on their businesses, to acclimatize with the downturn economy of the world.

 Conclusion

 The prodigious economic disruption caused due to the menace of COVID, which started in China has brought the whole world on its knees. The tax department has always been very considerate while formulating transfer pricing rules, as evidenced by the introduction of SHR and APAs regimes. Consequently, the taxpayer awaits such an altruistic approach from the administration again as the global outbreak of COVID-19 is already arguably the most socially and economically disruptive worldwide event of our lifetime. As the pandemic persists, it is clear the economic impact of the crisis will worsen. Businesses will suffer, and industries may be transformed in unforeseen ways. From a transfer pricing perspective, it is crucial to understand the implications of this pandemic. Through careful consideration of transfer pricing and economic theory, the evaluation of heuristic approaches, and formulating some mitigating strategies considering all the prevailing factors, will put out intense positive energy.

 Adv. Gagan Kumar, a Chartered Accountant and Advocate practices as an Arguing counsel at the Supreme Court & Delhi High Court. He is the founder of Krishnomics Legal

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Policy & Politics

INDIAN REAL ESTATE SECTOR ATTRACTS $1.8 BN PE FUNDS IN H1 FY22, Y-O-Y RISE OF 27%

Tarun Nangia

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TOP 10 DEALS IN H1 FY 2022

Displaying continued confidence on the Indian real estate sector, private equity funds pumped about USD 1,790 Mn into the sector in the first half of the FY2022, finds ANAROCK Capital’s latest Flux Market Monitor for Capital Flows in Indian Real Estate. This is a 27% growth over the corresponding period in FY 2021 when inflows were approx. USD 1,410 Mn.

“The average ticket size for the PE deals in the current period declined by 32% – from USD 114 Mn in H1 FY21 to USD 78 Mn in H1 FY22,” says Shobhit Agarwal, MD & CEO – ANAROCK Capital. “Notably, investors this time preferred single city deals in contrast to multi-city deals. As seen, the share of multi-city deals reduced from 77% to 42% in H1 FY 2022. Further, the top 10 deals in H1 FY22 contributed a approx. 81% of the total PE investments in the country.”

In comparison with H1 FY21, structured debt and equity witnessed considerable growth in H1 FY22, at 25% and 28% respectively. Structured debt went primarily towards project-level assets.

SEGMENT-WISE BREAKUP

Of the total private equity inflows of USD 1,790 Mn in the period:

• The commercial office sector once again attracted the bulk of investments – nearly 33% or approx. USD 591 Mn.

• The Industrial & Logistics sector saw significant investments of approx. USD 537 Mn in H1 FY22, comprising a 30% overall share.

• Residential sector saw investments to the tune of USD 394 Mn i.e., approx. 22% of the total PE funds.

• Data Centres, Land and Mixed-use developments attracted the remaining 15% of the overall PE inflows comprising 5% each

Data further revealed that while overall PE inflows in Indian real estate increased in H1 FY2022, the share of foreign funds reduced by 19% as compared to H1 FY21. Investments by domestic funds jumped from less than USD 10 Mn in H1 FY21 to USD 650 Mn in H1 FY22, a reflection of the improving situation in the country resulting in higher confidence by domestic funds.

OTHER NOTABLE TRENDS

With total PE investments seeing a close to 27% yearly jump in H1 FY2022, investor confidence in Indian real estate is seen to be increasing.

• Foreign investors continued to remain major contributors with a approx. 63% share of the total inflows of USD 1790 Mn. However, in the same period of FY2021, they contributed a 99% share. This indicates the growing confidence of domestic funds amid the growing economy despite the second COVID-19 wave.

• Investors have maintained their confidence in listed REITs. Post the dip in market capitalisation earlier this year, REITs have bounced back well.

• Demand for flexi offices is gaining momentum; they are expected to attract more PE investments over the next 1-2 years.

• Operators are aggressively looking at expansion of data centres across major locations in the country.

• Like seen in FY2021 trends, last-mile funding continues to gain momentum. SWAMIH Fund & various foreign funds are actively evaluating and executing various options.

• The residential sector is witnessing accelerated consumer demand amid growing preference for homeownership coupled with historically low home loan rates. Investors will seek various investment themes within this asset-class.

• Private equity investments were approx. USD 1.41 bn in corresponding period of FY21

• Commercial sector attracted highest investments (of 33%), followed by Industrial & Logistics (30%) & Residential (22%)

• Investors this time preferred single city deals in contrast to multi-city deals earlier; top 10 deals in H1 FY22 contributed nearly 81% of the total PE investments in the country

• Avg. ticket size for PE deals declined 32% – from USD 114 Mn in H1 FY21 to USD 78 Mn in H1 FY22

• While overall PE inflows in Indian RE increased, share of foreign funds reduced 19% in H1 FY22 compared to H1 FY21; investments by domestic funds jumped from less than USD 10 Mn in H1 FY21 to USD 650 Mn in H1 FY22, reflecting their confidence

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Policy & Politics

KARNATAKA HC DIRECTS STATE TO COMPLY WITH SC DIRECTIONS BARRING INSTALLATION OF STATUES ON PUBLIC ROADS, PAVEMENTS

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In a welcome, wonderful and wise judgment titled Akhila Bharata Kshatriya Mahasabha v. State of Karnataka in WP No. 49960/2017 delivered on September 7, 2021, the Karnataka High Court has directed the State Government to ensure compliance with the landmark, learned and laudable directions of the Supreme Court barring installation of statues or construction of any structure in public roads, pavements, sideways and other public utility places. This was the crying need of the hour also. Now the State Government in Karnataka is duty bound to comply with it.

To start with, this brief, brilliant and balanced judgment authored by the then Acting Chief Justice Of Karnataka High Court – Hon’ble Mr Satish Chandra Sharma for himself and Hon’ble Mr Justice Sachin Shankar Magadum sets the ball rolling first and foremost in para 2 wherein it is put forth that, “The facts of the case reveal that the 1st petitioner is an All India Trust and 2nd petitioner is the State level Trust, as stated in the petition, involved in the work of social economical upliftment of the people belonging to backward and downtrodden community. Their grievance is that inspite of the order passed by the Hon’ble Supreme Court on 18.01.2013 in SLP.No.8519/2006 the bust of Sri.Shivarathri Rajendra Swamiji at the southern entrance of Mysore palce near Gun house is being installed and the State Government has granted permission for the same. The order of the State Government dated 3.3.2017 is on record and a prayer has been made for quashment of the order of the State Government (Annexure-E) as well as the order dated 28.8.2017 (Annexure-F) meaning thereby that the prayer has been made for quashment of the resolution passed by the Mysuru Mahanagara Palike as well as the State Government for installing the statue of Sri. Shivaratri Rajendra Mahaswamy at Gun house circle, which is on the main road. It has also been stated by the petitioners that a request was also made initially for installing the statue of Sri. Srikantadatta Narasimharaja Wodeyar to the District Urban Development Cell and the same was rejected citing the judgment of the Apex Court and inspite of the judgment of the Apex Court, permission has been granted to install the statue of Sri. Shivarathri Rajendra Swamiji.”

 To put things in perspective, the Bench then points out in para 3 that, “The State Government has filed the statement of objections and the stand of the State Government is that the present petition has been filed with the vested interest, as the request of the petitioners was turned down for installing the statue of Sri. Srikantadatta Narasimharaja Wodeyar and it is only after their request was turned down, they are raising hue and cry as the State Government has granted permission to install the statue of Sri. Shivarathri Rajendra Mahaswamy at Gun House circle. It has been stated that the Supreme Court in the case of Union of India .vs. State of Gujarath and others has directed not to grant any permission for installation of any statue or construction of any structure in public roads, pavements, sideways and other public utility places. However, the Gun House Circle is in existence since from the Maharaja’s period and there are several such circles in Mysuru City and several such statues are already in existence and therefore, Mysuru Mahanagara Palike has taken a decision to instal the statue of Sri. Shivaratri Rajendra Mahaswamy in the Gun House Circle as the circle is in existence since long time and it is not part of the public road nor does it fall within the definition of pavement, sideways and other public places.”

Quite rightly, the Bench then enunciates in para 8 that, “The undisputed facts of the case makes it very clear that the place where the statue in question is likely to be installed is certainly one of the most busy square near Mysuru palace near Gus House. The map has been filed by the State Government and the same reveals, as many as six roads are joining at the square and the circle is certainly the part of the road. It is really strange that the respondent-State Government has stated before this Court that it is not part of the road. Colour photographs have also been filed in the matter. The maps and all other documents clearly establish that the spot is in the center of the road and therefore, the issue is whether the statue can be installed at the center of the road on the circle which is in existence?”

Quite significantly, the Bench then hastens to recall in para 9 that, “The order passed by the Hon’ble Supreme Court in Special Leave to Appeal(Civil) No.8519/2006 dated 18.01.2013 on I.A.No.10/2012 reads as under:

1. We have heard Mr. Basavaprabhu S. Patil, learned senior counsel for the applicant and Mr. M.T. George, learned counsel for the State of Kerala.

2. Mr. M.T. George, leaned counsel for the State of Kerala placed before us a copy of the order dated September 7, 2011 passed by the Government of Kerala granting permission for installation of statue of late Shri. N. Sundaran Nadar, Ex-Deputy Speaker of Kerala Legislative Assembly near to Neyyattinkara-Poovar Road in the curve turning to the KSRTC Bus Stand Neyyattinkara in the Kanyakumari National Highway near bus stand.

3. We have our doubt whether such permission could have been granted by the State Government for installation of statue on the national highway.

4. Until further orders, we direct that the status-quo, as obtaining today, shall be maintained in all respects by all concerned with regard to the Triangle Island where statue of late Shri. N. Sundaran Nadar has been permitted to be sanctioned. We further direct that henceforth, State Government shall not grant any permission for installation of any statue or construction of any structure in public roads, pavements, sideways and other public street lights or construction relating to electrification, traffic, toll or for development and beautification of the streets, highways, roads etc. and relating to public utility and facilities.

5. The above order shall also apply to all other states and union territories. The concerned Chief Secretary/Administrator shall ensure compliance of the above order.””

Most significantly, the Bench then makes it clear in para 10 that, “The Hon’ble Supreme Court has categorically directed the State Governments not to grant any permission for installation of any statue or construction of any structure in public roads, pavements, sideways and other public utility places and therefore, on account of the order passed by the Hon’ble Supreme Court, the question of permitting the State Government and the Mysure Mahanagara Palike to install the statue does not arise.”

Furthermore, what is equally significant is that the Bench then also makes it pretty clear in para 11 that, “In the considered opinion of this Court, neither the petitioners nor any one can install the statue on the island which is on the road (circle which is on the road) keeping in view the judgment delivered by the Hon’ble Supreme Court.”   

Finally and as a corollary, the Bench then holds in para 12 that, “Resultantly, the writ petition is allowed. The impugned orders passed by the State Government dated 3.3.2017 and the order dated 28.8.2017 of the 2nd respondent-Mysuru Mahanagara Palike are hereby quashed. The State Government is also directed to ensure compliance of the directions of the Hon’ble Supreme Court in the entire State of Karnataka.”

 In conclusion, it may well be said that the Karnataka High Court Bench comprising of the then Acting Chief Justice Hon’ble Mr Satish Chandra Sharma and Hon’ble Mr Justice Sachin Shankar Magadum have by this cogent, commendable, composed and convincing judgment left not even an iota of doubt of any kind that the State Government of Karnataka has just no option but to comply with the Supreme Court directions baring installations of statues on public roads and pavements. This is specifically elaborated upon most elegantly in para 9 and 10 which the State Government of Karnataka has to adhere to in totality. This will certainly well serve the public interest also which should always be paramount under all circumstances also!

Sanjeev Sirohi, Advocate

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Policy & Politics

Textiles sector poised for a $100 bn export: Vikram Jardosh, MoS for Textiles

Industry should take full advantage full advantage of the global market shifts: Secretary, Ministry of Textiles.

Tarun Nangia

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The Government has set a strong aspirational goal of achieving $100 billion from textiles exports in thenext 5 years and we will remain committed to ensure implementation of all development schemes and bring in many more schemes in pursuit of this aspiration, said Darshana Vikram Jardosh, Minister of State for Textiles, Ministry of Textiles, Government of India.

Government has already announced MITRA scheme to attract new investments and build mega textile parks in the country. Other significant programs including the launch of PLI scheme for achieving manufacturing excellence and RoDTEP for enhancing export competitiveness will help India to position it as a global leader in the sector.

The Minister was speaking at the inauguration of TEXCON: The 13th edition of the International Conference on Textiles & Apparel organized by the Confederation of Indian Industry today. A specialCII-Kearney report was also released on “Creating a competitive advantage for India in the global textiles and apparel industry”. The report covers the entire textile value chain and highlights the imperatives for both government and industry to bring global positioning for the sector.

Speaking on the occasion, Upendra Prasad Singh, Secretary, Ministry of Textiles said that the Government is making all efforts to proactively address the challenges and facilitate the creation of an enabling environment for the growth and development of the Textiles and Apparel sector. “We are capable to meet the domestic as well as the global market demands. I would like to urge the industry to take full advantage of the present global market shifts in establishing the excellence and prominence of India globally.”

Dilip Gaur, Chairman, CII National Committee on Textiles and Apparel & Managing Director, Grasim Industries Limited, Aditya Birla Group said, achieving breakthrough growth in Indian textiles will imply doubling down on multiple areas. The key ones include increasing share in MMF fiber and yarn, become regional leaders in apparel and fabrics and further augmenting India’s position as global home textiles leader. “Government of India has already shown strong commitment to this sector by launching multiple mega schemes in recent times which set a very positive tone for the future and to energize all industry stakeholders to take necessary steps forward in achieving the goals”, he added.

Kulin Lalbhai, Co-Chairman, CII National Committee on Textiles and Apparel & Executive Director, Arvind Ltd said, “The growing sentiment around “China plus one” sourcing is a golden opportunity for Indian textiles to stage a turnaround and gain back its leadership position as a lead exporting economy.” India is much better placed to maximize this opportunity as compared to competitors like Vietnam and Bangladesh because of India’s strategic depth.

Dilip Gaur, Chairman, CII National Committee on Textiles and Apparel & Managing Director, Grasim Industries Limited, Aditya Birla Group said, achieving breakthrough growth in Indian textiles will imply doubling down on multiple areas. The key ones include increasing share in MMF fiber and yarn, become regional leaders in apparel and fabrics.

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Policy & Politics

Piyush Goyal calls for free trade within rules-based multilateral trading system

We must work to resolve issues posed by Non-Tariff Barriers in international trade: Piyush Goyal.

Tarun Nangia

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The Minister of Commerce and Industries, Consumer Affairs, Food and Public Distribution and Textiles, Piyush Goyaltoday called for free trade within a rules-based multilateral trading system with honesty and transparency as core values. He added that wherever India faces an unfair or unjust treatment, it will take reciprocal action. Shri Goyal also emphasized upon the need for resolution of issues posed by Non- Tariff Barriers in international trade. He was addressing the 54th Convocation of Indian Institute of Foreign Trade in New Delhi today.

Referring to India’s recent achievement of 100 crore vaccines, he said that the milestone was the result a collective effort of 130 crore Indians and a proof of India’s ‘Atmanirbhartha’ and its resolve to leverage its capacities to the best possible extent and to serve the needs of the entire world.

Piyush Goyal said that a convocation is an important ceremony that marks the next step in the journey of the graduates when they grow from ‘acquisition of knowledge’ to ‘application of knowledge’.

He commended IIFT for contributing immensely to India’s external trade since its establishment in 1963. He said that IIFT has been widely recognized for its strong knowledge &resource base and has been consistently ranked amongst theleading business schools in the Asia-Pacific Region.

Underscoring the need for a committed and vibrant leadership in the field of academics in India, Shri Piyush Goyal called for enhancing exposure of our students to the best of technology, foreign law, economics, and international trade. Calling for tie-ups of Indian Universities with institutions of eminence across the world, he asked Indian universities to enter into sustained collaborations with such institutions.

Encouraging academic institutions to engage on a much larger scale with the industry, Shri Goyal asked students to take up internships with both the public sector and private players. Speaking of the opportunities offered by online education, Shri Goyal called for more exploration into online and hybrid modes of education.

Piyush Goyal told the students that they were graduating amidst one of the most disruptive events in the collective memory of our times. He emphasized that in the post-COVID ‘New Normal’, we can no longer play by the old rules. He called for using the disruptive interventions brought about by COVID to reorient our conventional, traditional thinking processes. Offering two cents from his versatile experience in foreign trade, Shri Goyal urged the students to ‘Learn, Unlearn, Relearn and Repeat’.

Piyush Goyal said that despite challenges, India under PM Modi has aimed to convert a crisis into an opportunity for transformation. He said that India is being looked upon as a trusted partner & we are engaging with like-minded nations e.g. EU, UK, Canada, Australia & UAE for early conclusion of FTAs.

Referring to India’s ambitious programmes like the PM GatiShakti National Master Plan for infrastructure and multimodal connectivity, Shri Goyal said that there was a need for planned, focussed efforts to create infrastructure in the country by breaking silos and bringing in synergy. “There is a need to bring in quality and productivity in all we do. A ‘Made in India’ product must be a guarantee to the world”, he added.

Applauding the Prime Minister, Narendra Modi’s visionary leadership, Goyal said that India’s decisive leadership, strong industry, vibrant media and its resolve to uphold the rule of law, had made India a trusted partner to world nations.

Lamenting that India had suffered from several missed opportunities in the past, Shri Goyal expressed the hope that we would now be able to seize every opportunity available to us to grow. “The past is a stepping stone, not a milestone”, he added.

Observing that contemporary India was confident & yet dissatisfied, he said that dissatisfied, confident people are the ones who would change the world. He urged fellow Indians to never settle for less and to work together to make India a global leader.

On the occasion, Shri Goyal presented several awards for excellence to graduating students.

Encouraging academic institutions to engage on a much larger scale with the industry, Shri Goyal asked students to take up internships with both the public sector and private players. Speaking of the opportunities offered by online education, Shri Goyal called for more exploration into online and hybrid modes of education.

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Policy & Politics

Builder hardware products from India have considerable global demand, says Minister of State for Commerce Som Parkash

Tarun Nangia

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Builder hardware industry is linked to the construction equipment industry where the revenue was valued at US$ 6.5 billion in 2020 and construction market is expected to be the third largest globally by 2025: MSME Secretary B B Swain

India is the 17th largest supplier of builder hardware products and is on its way to fulfil the government ambition to become a global manufacturing hub of builder hardware products.

Builder Hardware is another performer making India as one of the top 20 suppliers with a 1.2 percent share in the world builder hardware export pie, said Som Parkash, Minister of State of Commerce & Industry

While addressing the Builder Hardware Expo, organised by EEPC India, virtually today, the Minister noted that builder hardware products from India have considerable demand across the continents.

Indian builder hardware product is one of the best performing segments in the Indian engineering goods sector which has been the key driver of merchandise exports from the country.

“Builder hardware industry is linked to the construction equipment industry where the revenue was valued at US$ 6.5 billion in 2020 and the construction market is expected to be the third largest globally by 2025,” said Mr B B Swain, Secretary, Ministry of Micro, Small and Medium Enterprises (MSME).

India is the 17th largest supplier of builder hardware products and is on its way to fulfil the government ambition to become a global manufacturing hub of builder hardware products.

Swain stated that EEPC India with more than 60 per cent of its members representing MSME sector took several initiatives even during pandemic to provide global interaction opportunities to small players in the form of webinars and virtual Expos.

“The Government of India has been proactive to ensure that all the benefits of the MSME schemes reach the intended beneficiaries in time,” said Mr Swain.

EEPC India Chairman Mahesh Desai said that the four-day virtual Expo would provide opportunity to the Indian exhibitors to display an array of over 200 domestic builder hardware products to overseas buyers from nine focus regions and trade blocs.

“The buyers would comprise contractors, builders, building engineers, architects, landscape artists, interior designers, consultants and project management professionals,” he said.

Speaking at the Expo, EEPC India Vice Chairman Arun Kumar Garodia said India belongs to the league of leading builder hardware manufacturing and exporting nations.

“The Government of India has now set a National Mission of merchandise exports to reach US$ 400 billion within this fiscal, US$ 500 billion by FY-24 and US$ 1 trillion by FY-28 by making Indian products the only choice for global buyers,” he said.

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Policy & Politics

MOU SIGNED BETWEEN J&K AND GOVERNMENT OF DUBAI FOR REAL ESTATE DEVELOPMENT, INDUSTRIAL PARKS, SUPER SPECIALITY HOSPITALS

MoU will give UT a big developmental push: Piyush Goyal

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Jammu and Kashmir administration has signed a Memorandum of Understanding (MoU) with the Government of Dubai for real estate development, industrial parks, IT towers, multipurpose towers, logistics, medical college, super specialty hospital and more.

Union Minister for Commerce and Industry Piyush Goyal highlighted the significance of the day and said that with the signing of the MoU with Dubai Government, the world has started to recognize the pace with which Jammu and Kashmir is traversing on the development bandwagon. This MoU gives out a strong signal to the entire world that the way India is transforming into a global power, Jammu & Kashmir is having a significant role in that as well.

This MoU is a milestone after which the investment will pour in from entire globe and is a big developmental push. Different entities from Dubai have shown keen interest in investment. Development has to be aspired on all fronts and we are on track, he added.

Goyal thanked Prime Minister Narendra Modi and Home Minister Shri Amit Shah for their focus and commitment towards the development of UT of Jammu & Kashmir. Recent industrial package of 28,400 Crore rupees is a testimony towards ensured development.

Terming it a momentous occasion for the UT of Jammu and Kashmir, Jammu and Kashmir Lieutenant Governor Shri Manoj Sinha said that this development journey will help the Union Territory to scale new heights in Industrialization and sustainable growth.

Union Minister for Commerce and Industry Piyush Goyal highlighted the significance of the day and said that with the signing of the MoU with Dubai Government, the world has started to recognize the pace with which Jammu and Kashmir is traversing on the development bandwagon.

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