It has been a longstanding practice for brands to engage in advertising using print media, broadcasting on televisions and nowadays, with the advent of technology, the internet has become a potent tactic for promoting a brand. Worldwide, brands have actively started collaborating with ‘social media influencers’ for marketing their products. Influencer advertising is amongst the latest trends of gaining publicity which is rapidly being adopted by all manufacturers, ranging from large-scale multinational producers to local businesses. Owing to the ongoing pandemic, usage of social media has increased manifold as people were homebound and in a constant search for entertainment. A large number of people took to Instagram and Facebook to launch their local businesses, while others started creating quality content. Generally speaking, an influencer is basically a person who influences others in their purchasing choices. The public starts looking up to social media influencers and basing their decisions on these influencers’ remarks, feedback, and experiences. A social media influencer builds up his/her reputation through active engagement with their accounts.
As digital marketing is becoming highly ubiquitous, it has become vital to regulate the same. More and more consumers are gaining access to advertisements on digital platforms. Opinions of the influencers regarding the products persuade or dissuade the consumers from purchasing that particular product. Therefore, in the interest of protecting the rights of the consumers, it is required that misleading advertisements or promotions are not made. A consumer has the right to be correctly informed about the quantity, quality and standard of products. In light of these considerations, the Advertising Standards Council of India (ASCI) has proposed to frame guidelines on influencer marketing to understand the peculiarities of these advertisements and the way consumers view them.
LAW GOVERNING ADVERTISEMENT AND ENDORSEMENTS BY INFLUENCERS
The Consumer Protection Act, 2019 (COPRA, 2019) is the foremost and prominent statute applicable to advertisements on various media platforms. This Act is one of a kind being the first legislation bringing within its ambit the representations made using electronic media or records. Advertisements by influencers and celebrities impact large masses; any deceptive endorsement can harm many consumers at a time. Under the COPRA 2019, a misleading advertisement has been explicitly defined as an advertisement falsely describing the product or service or misinforms the consumers regarding the nature, substance, quantity or quality of such product or service. Rendering misleading representations as to the ‘quality, quantity, grade, composition, style or model’ of goods and services is an unfair trade practice that is punishable under the Act. If an influencer intentionally deceives persons by lying about the product’s usefulness and viability, a consumer motivated by such advertisement can make a complaint against such unfair trade practices. Under Section 89 of the COPRA, 2019, the penalty for making misleading advertisements that are prejudicial to the consumers’ interest is imprisonment for a term extending up to two years and a fine, extending to ten lakh rupees. In case of a subsequent offence, such a person shall be punished with imprisonment for a term that may extend to five years and a fine, extending to fifty lakh rupees.
In addition to the Act of 2019, the Ministry of Consumer Affairs notified draft guidelines titled the Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020. Under these guidelines, an endorser of a product or service must mandatorily observe due diligence concerning the representations made by her/him. The endorser must ascertain that their endorsement does not convey any express or implied representations that would be false, misleading or deceptive. Furthermore, the standard of due diligence has also been provided in the guidelines as taking advice from an advertising self-regulatory organisation or a legal opinion from an independent legal practitioner regarding the honesty of statements in their endorsement and its compliance guidelines. The provisions of the Consumer Protection Act, 2019 shall apply for any violation of the provisions of these guidelines.
The Advertising Standards Council of India (ASCI) has framed a Self-regulatory Code prescribing the rules for advertisements in India. The Ministry of Information and Broadcasting has recognised these rules under the Cable television network Rules. The Code lays down a series of rules and regulations to ensure the authenticity of the advertisement content.
The role of social media influencers is expanding at an unprecedented rate. Considering the large audience who are exposed to promotions by celebrities and influencers, it is essential that advertisements made by them comply with the provisions of the law. They should not be misleading and deceptive to impinge upon the rights of the consumer.
In Marico Limited v. Abhijeet Bhansali, the Bombay High Court granted an interim injunction order against the Defendant, a Youtuber by the name ‘bearded chokra’ stating that he committed a ‘targeted attack’ towards the product of the respondent, namely Parachute Coconut Oil. It was alleged that the respondent made scathing reviews of the product, remarking it to smell like a rotten coconut and causing damage to his hair, which severely influenced the reputation of the product. Bhansali contended that it was an honest opinion and that mere viewing of his video does not mean that the viewers were swayed to not buy the product. The Court held that the respondent made the video to increase his viewership and thus falls under the ‘nascent category’ of social media influencers. The Court observed that social media influencers wield great power to influence minds. “With power also comes responsibility. I do not believe that a social media influencer can deliver statements with the same impunity available to an ordinary person. Such a person bears a higher burden to ensure there is a degree of truthfulness in his statements. A social media influencer is not only aware of the impact of his statement but also makes a purposeful attempt to spread his opinion to society / the public. In view of the same, the Defendant had a higher responsibility to ensure that his statements do not mislead the public and that he is disseminating correct information. The Defendant’s recklessness has a much greater impact on the Plaintiffs / its product’s reputation as compared to a reckless statement by an ordinary individual.”
However, a Division Bench of Bombay High Court lifted the injunction granted by the Single Judge and allowed Bhansali to post the video subject to removal and alteration of certain parts of the video demarcated by the Court.
ASCI DRAFT GUIDELINES FOR INFLUENCER ADVERTISING ON DIGITAL MEDIA
The ASCI is a voluntary self-regulatory organization seeking to ensure that advertisements conform to its Code. It seeks to ensure that all advertising material is truthful, legal, honest, decent, does not objectify women, safe for consumers and fair to their competitors. It seeks to maintain and enhance consumer’s interest and confidence in advertising. ASCI review all sort of complaints related to advertising under the category media including TV, SMS, Print, Internet, brochures, etc. In the light of growing promotions and endorsements by influencers on digital media, the ASCI formulated draft guidelines for influencer advertising on digital media (hereinafter referred to as guidelines) for consultation by stakeholders in February 2021.
The guidelines have been drafted considering the need to enable consumers to differentiate between promotions made to influence their opinion or commercial gain. The consumers may view several promotions and be influenced by them, not realising whether they are genuine opinions of the influencers or paid collaborations. This is inherently misleading and amounts to unfair trade practice. The guidelines apply to advertisements across all digital media platforms, including internet, mobile broadcast, digital TV etc.
KEY FEATURES OF THE GUIDELINES INCLUDE
Definition of advertisements as ‘a paid-for communication, addressed to the public or a section of it, the purpose of which is to influence the opinions and/or behaviour of those to whom it is addressed.’
An influencer is defined to be a person ‘who has access to an audience and the power to affect their purchasing decisions or opinions about any product, service, brand or experience, because of the influencer’s authority, knowledge, position, or relationship with their audience.’
The guidelines require the influencer, publishing account or the advertiser to make a disclosure clarifying that particular promotion is an advertisement such that an average consumer must be able to recognise it as an advertisement without clicking or otherwise interacting with it. The disclosure must be clear, unambiguous and obvious.
Disclosures have to be made from amongst the labels prescribed by the ASCI. These include #ad, #collab, #promo, #sponsored or #partnership. Only permitted disclosure labels will be considered sufficient disclosure since consumers may not be familiar with various creative ways in which advertisers and influencers may signify that the said communication is an advertisement.
Advertisements must be obviously differentiable by an average consumer from editorial and independent user-generated content to prevent the audience from confusing between them.
The disclosure label needs to be placed so that it is evident, clear and prominent. The user must not have to click or scroll to find the label; it must be mentioned within the first two lines. The disclosure label should also be compatible with all devices or platforms. The disclosure label has to be in English or translated into the language understood by the average consumer viewing the advertisement.
If an advertisement is posted on Instagram stories or Snapchat, the label should be imposed. Different durations have been provided for which the disclosure should be visible to the consumer in the case of video advertisements without any accompanying text.
The influencers should do their due diligence about any technical or performance claims made by them. Evidence of due diligence would include correspondence with the advertiser or brand owner confirming that the specific claim made in the advertisement is capable of scientific substantiation.
In case of a violation of these guidelines, the ASCI will have the authority to take action. It can issue notice to the brand owner and influencer upon a complaint made by a consumer or suo motu cognisance of a potentially objectionable advertisement.
Feedback and suggestions on these draft guidelines have been taken from the stakeholders, and the ASCI will shortly release the final guidelines.
In the backdrop of the growing influence and reach of these influencer marketing on digital media platforms, there is a crucial need for regulating these advertisements in the interest of consumers. It is a consumer’s right to be informed of the actual quantity and quality of the product or service. As a natural corollary, the consumer must also be able to differentiate between genuine opinions of the influencers and the promotions done for monetary gain.
This will enable the consumer to make a more informed and well-rounded decision. The guidelines are being viewed as a step in the right direction. These guidelines will bring in more transparency and responsibility on the part of the influencers endorsing brands. This will also strengthen the trust of consumers in the influencers as well as the brands. The influencers will now have to be more mindful before making representations and ensure authenticity.
In addition to the Act of 2019, the Ministry of Consumer Affairs notified draft guidelines titled the Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020. Under these guidelines, an endorser of a product or service must mandatorily observe due diligence concerning the representations made by her/him. The endorser must ascertain that his/her endorsement does not convey any express or implied representations that would be false, misleading or deceptive.
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The Unique Indian Market: Doing Business in India
The complex and challenging diversity of India has confused many – Indians as well as foreigners have tried and are still trying to understand the market for taking right decisions. But often they have failed. Some learnt their lessons and survived whereas others quit. But no one could sum up common problems or common prospects with sure shot definition of the Indian market and its attributes like most global peers (by definition of a country). Now, here is a book which has tied all aspects about the country together in one thread and very brilliantly put them in mere 200 odd pages. This quick read summarizes the History, Geography, Democratic Politics and Economics of modern Free India along with undivided India/ colonial India(before independence), without compromising on data and the key facts.
The initial chapters in the book focus on an overall status of Indian market – a brief history, success, and failures of foreign companies in India. This is followed by describing the diversity across all possible parameters viz. ethnic, linguistic, regional, religious, cultural, food habits, lifestyle etc. The next few chapters brilliantly summarize the history of foreign attacks and rulers from Gupta Dynasty in 4th Century to the British rule till 1947 (middle of 20th Century) along with foreign business in India since 1292AD. All the East India Companies of different countries for different goods in different Indian territories, debate on acknowledgement of “India” and failure of an American East India Company (yet a successful ice-export to America by ship in 1883) is covered here.
Stating credible and authentic sources, the author boasts of the 35% contribution made by India to the world GDP before the foreign attacks and compares it to the ‘less than 1%’ a decade before the start of the 21st Century. The book compares the golden history with current concerns and struggles for the SMEs in the country providing valid reasons for the change over centuries and suggestions for making a mark again. It talks about how the country directly jumped from being an agrarian economy to the service one, grossly skipping the important manufacturing lessons. The seeds sown by the invaders that made India a supplier of raw materials and importer of finished goods, are still reaping their bitter fruits which has made Indians totally dependent on other countries or their MNCs/companies in India for the manufacturing part. Every eye is now on the results of ‘Make-In-India’ and ‘Atma-Nirbhar-Bharat’. How India makes up for the losses it faced for centuries and gets back its prosperity, which it lost to the greed of others, and self-created mistakes!
The next few chapters provide the reader an exhaustive overview of governance and administration system in India with around 1000 political parties at country level, and the love-hate relationship between the union and state governments, and its implications on businesses. Following these are topics on classification of the country based on wealth inequality, religion, reservations, working, education, native status, region, languages, surnames etc.
An exceptional set of chapters on Social Capital of India and Indian Education System follow next. The author highlights how successful SME with international trade existed even in ancient history. Pluralism based rich heritage was present without existence of slaves or concept of castes. Qualities and actions were given more importance in ancient India, not the family of birth – all these were changed by the British for their selfish motives and ‘divide and rule’ policies; castes were assigned at birth and first caste-based census was reported in 1987. Castes were brought by the Portuguese and the British. Jati
(based on knowledge) or Varna (community) is not same as Caste. Caste and Reservations based systems were the main cause for lack of development , disharmony, and social problems like untouchability. The Indian Education System today faces issue of ample knowledge but lacks in skills and trainings, because it has shifted from the Gurukul system and well-developed universities to current faulty Pro-Degree one. This was surely another downgrade by foreign invaders who wanted India to remain a raw-material exporter. Practice based education system was converted to theory based, same education system for all, high tenure in education system of 10+2+3/4 years. The upcoming New Education Policy gets a ray of hope to cater to these drawbacks and revive the ancient Indian entrepreneurial system with new nomenclature.
India’s orientation towards service sector and the problems of agriculture and industries is covered in detail in the following chapters. How ‘thriving SMEs were uprooted and License-Quota-Permit-Raj was imposed’ is discussed. Even after 75 years of independence and multiple changes in industrial policy, manufacturing industry is still not even close to the ancient SMEs. Due to the strong Government control, even now around 2,000 different approvals and permissions are required to start and run a manufacturing business, which need to regularly undergo lot of inspections and regulations.
Business culture, business systems and impact of family system on business is well defined and exhaustively discussed by Dr. Jain. India vs. Bharat debate and India’s Diaspora with Indians who have settled abroad are a decent read. The author does not forget to cover the regular and massive festivals and celebrations and their role in business.Interestingly chapters that follow next highlight on media –(advertising and PR), Jugaad Technology, existence of parallel systems and paradoxes seen in the country which create a base for how things are not as they appear.
The last few chapters talk in detail about India being in transition, the taxation & legal system in India and strategies and tips for a successful India entry. Throughout the book, the author continues to assess the performance and what lacks in the SMEs ,he provides apt suggestions to cater to the later.
A well-researched, well-structured, and well-expressed book of 30 chapters, “The Unique Indian Market: Doing Business in India” is a masterpiece for existing and prospective entrepreneurs and for everyone who intends to understand the country (in fact, the Sub-continent – considering the diversity as the author Dr. Prateek Jain puts it). Dr. Jain has used a varied range of writing flavors – seriousness of facts, jokes with good sense of humor, using anecdotes or simple essaying – keeping the essence intact and effective. Each chapter is complete in itself, yet well connected with the other.
In a nutshell, after the detailed and fact-based analysis, the author convinces the reader how 2020s is the best time to do business in India. Success is guaranteed if the uniqueness of the market is accepted and appreciated, and case specific related action taken. Though targeted with a business in India focus, this book is a must-read book for a traveler, a student or a homemaker!
Hemant G. Golechha is PhD Research Scholar, Dr. Vishwanath Karad’s MIT World Peace University.
INDIA’S MERCHANDISE EXPORT IN APRIL 2021 WAS US$30.21 BILLION
India’s merchandise exports in April 2021 was USD 30.21 billion, an increase of 197.03% over USD 10.17 billion in April 2020 and an increase of 16.03% over USD 26.04 billion in April 2019.
India’s merchandise imports in April 2021 was USD 45.45 billion, with an increase of 165.99% over USD 17.09 billion in April 2020 and an increase of 7.22% over USD 42.39 billion in April 2019.
India is thus a net importer in April 2021 with a trade deficit of USD 15.24 billion, which increased by 120.34% over trade deficit of USD 6.92 billion in April 2020 and declined by 6.81% over trade deficit of USD 16.35 billion in April 2019.
In April 2021, the value of non-petroleum exports was USD 26.85 billion, registering a positive growth of 200.62% over USD 8.93 billion in April 2020 and a positive growth of 19.44% over USD 22.48 billion in April 2019. The value of non-petroleum and non-gems and jewellery exports in April 2021 was USD 23.51 billion, registering a positive growth of 164.28% over USD 8.90 billion in April 2020 and a positive growth of 19.89% over USD 19.61 billion in April 2019.
In April 2021, Oil imports was USD 10.8 billion, a positive growth of 132.26% compared to USD 4.65 billion in April 2020 and a negative growth of 6.62 compared to USD 11.56 billion in April 2019.
Non-oil imports in April 2021 was estimated at USD 34.65 billion, showing an increase of 178.6% compared to USD 12.44 billion in April 2020 and an increase of 12.42% compared to USD 30.82 billion in April 2019.
Non-oil, non-GJ (gold, silver &Precious metals) imports was USD 26.05 billion in April 2021, recording a positive growth of 111.3%, as compared to non-oil and non-GJ imports of USD 12.33 billion in April 2020 and a positive growth of 6.48% over USD 24.46 billion in April 2019.
All Major commodities have recorded positive growth in export during April 2021 vis-à-vis April 2020 namely, Gems and Jewellery (9158.63%), Jute mfg. Including floor covering (1556.39%), Carpet (1351.48%), Handicrafts excl. Hand-made carpet (1207.98%), Leather and leather manufactures (1168.96%), RMG of All Textiles (920.52%), Cotton yarn/fabrics/made-ups, handloom products etc. (616.6%), Man-made yarn/fabrics/made-ups etc. (583.53%), Ceramic products and glassware (441.57%), Other cereals (441.46%), Electronic Goods (362.86%), Oil meals (275.91%), Cashew (252.46%), Mica, coal and other ores, minerals including process (234.63%), Engineering goods (234.63%), Tobacco (183.86%), Iron ore (175.15%), Petroleum products (171.11%), Cereal preparations and miscellaneous processed item (170.86%), Oil Seeds (166.24%), Meat, dairy and poultry products (148.6%), Tea (143.04%), Marine products (107.59%), Spices (102.32%), Coffee (73.83%), Organic and Inorganic Chemicals (69.39%), Rice (60.29%), Plastic and linoleum (47.49%), Fruits and vegetables (21.82%), and Drugs and pharmaceuticals (20.68%).
Major commodity groups of export showing positive growth in April 2021 over April 2019 are: Iron ore (219.55%), Other cereals (206.43%), Oil meals (86.59%), Jute mfg. Including floor covering (66.19%), Rice (49.45%), Cereal preparations and miscellaneous processed item (40.34%), Electronic Goods (35.81%), Mica, coal and other ores, minerals including process (33.17%), Spices (32.72%), Cotton yarn/fabrics/made-ups, handloom products etc. (25.27%), Ceramic products and glassware (22.57%), Drugs and pharmaceuticals (22.55%), Carpet (22.38%), Engineering goods (18.61%), Cashew (16.57%), Gems and Jewellery (16.38%), Marine products (16.34%), Handicrafts excl. Hand-made carpet (14.33%), Plastic and linoleum (13.31%), Fruits and vegetables (11.66%), Man-made yarn/fabrics/made-ups etc. (8.35%), and Oil Seeds (1.30%).
Major commodity groups of export showing negative growth in April 2021 over April 2019 are: Tea (-23.66%%), Leather and leather manufactures (-13.27%), Tobacco (-9.86%), RMG of All Textiles (-8.01%), Petroleum products (-5.5%), Coffee (-2.56%), Organic and Inorganic Chemicals (-2.21%), and Meat, dairy and poultry products (-1.38%).
Major commodity groups of import showing positive growth in April 2021 over the corresponding month of last year are: Gold (215906.91%), Pearls, precious & Semi-precious stones (119500.48%), Sulphur & Unroasted Iron Pyrites (1525.05%), Electronic goods (213.59%), Non-ferrous metals (193.89%), Transport equipment (170.95%), Professional instrument, Optical goods, etc. (163.13%), Artificial resins, plastic materials, etc. (138.18%), Metaliferrous ores & other minerals (133.77%), Petroleum, Crude & products (132.26%), Machinery, electrical & non-electrical (113.73%), Textile yarn Fabric, made-up articles (111.7%), Wood & Wood products (101.01%), Machine tools (100.93%), Vegetable Oil (97.57%), Project Goods (91.79%), Leather & leather products (91.59%), Dyeing/tanning/colouring materials (88.10%), Chemical material & products (84.57%), Iron & Steel (73.19%), Organic & Inorganic Chemicals (72.73%), Fruits & vegetables (70.0%), Coal, Coke & Briquettes, etc. (65.98%), Medcnl. & Pharmaceutical products (56.92%), Pulp and Waste paper (46.35%), Cotton Raw & Waste (11.68%) and Fertilisers, Crude & manufactured (7.75%).
Major commodity groups of import showing negative growth in April 2021 over the corresponding month of last year are: Silver (-88.55%), Newsprint (-46.07%), and Pulses (-42.46%).
Major commodity groups of import showing positive growth in April 2021 over April 2019 are: Vegetable Oil (75.85%), Gold (54.17%), Chemical material & products (41.68%), Artificial resins, plastic materials, etc. (36.69%), Metaliferrous ores & other minerals (29.60%), Sulphur & Unroasted Iron Pyrites (25.23%), Medcnl. & Pharmaceutical products (22.23%), Fruits & vegetables (18.95%), Electronic goods (17.01%), Pearls, precious & Semi-precious stones (15.39%), Non-ferrous metals (13.51%), Organic & Inorganic Chemicals (12.46%), Professional instrument, Optical goods, etc. (6.78%), Dyeing/tanning/colouring materials (5.54%), and Wood & Wood products (2.63%).
Major commodity groups of import showing negative growth in April 2021 over April 2019 are: Silver (-95.25%), Newsprint (-59.63%), Cotton Raw & Waste (-50.42%), Pulses (-46.98%), Project Goods (-37.47%), Leather & leather products (-33.10%), Transport equipment (-24.49%), Machine tools (-23.40%), Pulp and Waste paper (-18.09%), Iron & Steel (-17.93%), Coal, Coke & Briquettes, etc. (-14.84%), Fertilisers, Crude & manufactured (-11.44%), Petroleum, Crude & products (-6.62%), Machinery, electrical & non-electrical (-1.55%), and Textile yarn Fabric, made-up articles (-0.37%).
Badrinath to be developed as spiritual and smart hill town by oil and gas PSUs
Chief Minister of Uttarakhand and Minister for Petroleum and Natural Gas & Steel jointly witness the signing.
Memoranda of Understanding (MOUs) were signed today between the Oil and Gas PSUs-IndianOil, BPCL, HPCL, ONGC and GAIL, and Shri BadrinathUtthan Charitable Trust for Construction and Redevelopment of Badrinath Dham as a Spiritual Smart hill Town. The MoUs were signed in the august presence of the Chief Minister of Uttarakhand Tirath Singh Rawat, Union Minister of Petroleum and Natural Gas & Steel Dharmendra Pradhan, Tourism Minister of Uttarakhand Satpal Maharaj, Secretary, MoPNG Tarun Kapoor, Chief Secretary of Uttarakhand Shri Om Prakash, and senior officers of the MoPNG, Uttarakhand Government and Oil & Gas PSUs.
As per the MoUs, the Oil & Gas PSUs will be contributing Rs. 99.60 crore in the first phase of the developmental activities, including river embankment work, building all-terrain vehicular path, building bridges, beautifying existing bridges, establishing gurukul facilities with accommodation, creating toilet and drinking water facilities, installing streetlights, mural paintings etc.
Speaking on the occasion, Pradhan said that Char Dham is close to millions of Indians, due to spiritual, religious and cultural reasons. The Oil and Gas PSUs will not only contribute to the development work of the Badrinath but are also part of the development of Kedarnath, Uttarkashi, Yamunotri and Gangotri. He said “Today’s event is a significant milestone in the direction of Prime Minister Narendra Modi’s vision of developing Badrinath shrine as a mini smart and spiritual city, without compromising on the religious sanctity and mythological importance of the region.”
Lauding the efforts of Oil & Gas PSUs in developing the facilities, Pradhan said, “I am glad that Oil and Gas PSUs of this nation have come forward to realise the vision of developing BadrinathDham into a Smart Spiritual Town. Tourism is one of the key industries, which is playing a critical role in the development of the state. Development of the sites like Badrinath would also help in attracting more tourists, which in turn would strengthen the economy of the state.”
Addressing the occasion, Tirath Singh Rawat said, “I congratulate Union Minister Dharmendra Pradhan and Oil & Gas PSUs for extending their supports for this noble initiative. Shri Badrinath Dham has a special place in the hearts of the people of this country. It is considered to be one of the most sacred places in our country, and developmental activities are much needed to provide the best of facilities to the pilgrims from across the country. With the concerted efforts of both Uttarakhand Govt. and Oil & Gas PSUs, we are hopeful that the rejuvenation work of Shri Badrinath Dham will be completed within a span of three-year time.”
SIGNIFICANT ECONOMIC PRESENCE: ADDING ANOTHER STRING TO THE BOW
Over the years, digitalisation and technology have revolutionised our world and daily lives. Emerging technologies such as internet of things, quantum computing, augmented reality, artificial intelligence, big data, machine learning, blockchain etc have a marked influence on our economic as well as social activities and are changing the way people connect, entertain, socialise, create, sell, shop and work. With technological advancement, the pace at which businesses have proliferated their extraterritorial presence without having any tangible footprint, is astonishing. India is among the top three global economies in terms of digital consumer base, with 624 million active internet users. Taxation systems in major developing economies, including India, were drafted taking into consideration, the traditional way of doing business, ie a brick-and-mortar model. The conventional residence-based and source-based concepts of taxation have become outmoded over time and incapable of effectively taxing the digital economy largely due to its distinctive amorphous nature. This has resulted in either double taxation or non-taxation of revenues and has become a key base erosion and profit shifting concern across the globe. The OECD and G-20 countries have been working determinedly under the inclusive framework on BEPS to address the need for tax reforms. The OECD is spearheading a project to develop a consensus-based solution to address this crisis through revised profit allocation and nexus rules. India has been at the fore of adopting changes in international tax systems to keep pace with progression in the digital world. India was among the first to implement Equalisation Levy in 2016 on online advertisements related services and to substantially expanded the scope of this levy in 2020 to cover e-commerce supply and services. Equalisation Levy is designed to operate outside the framework of the existing system of tax treaties and transactions covered thereunder are not subject to income tax.
In the year 2018, the domestic tax laws in India were amended to widen the scope of ‘business connection’ with the introduction of Significant Economic Presence (SEP). The resulting income of a non-resident attributable to SEP in India were to be considered taxable. However, owing to delay in accomplishing a global consensus, SEP provisions were deferred till April 1, 2021 and the enacting thresholds were not prescribed. Pursuant to the amendments in Finance Act 2020 and the recent notification prescribing these thresholds, SEP is now defined to mean any transaction in respect of any goods, services or property carried out by a non-resident with any person in India, including the provision of download of data or software in India, subject to payments threshold of INR 20 million or systematic and continuous soliciting of business activities or engaging in interaction with 0.3 million or more number of users in India. Moreover, transactions and activities may constitute SEP in India, regardless of whether a non-resident has a residence or place of business in India, or renders services in India, or agreement for such transactions or activities is entered in India. This all-embracing definition is not restricted to digital transactions and could also impact typical buy-sell or service transactions between non-resident and an Indian resident. Far from the original intent, SEP provisions may also embrace offshore sale of goods and provisions of services outside India, unless clarified otherwise. Necessary clarifications regarding definition of key terms such as goods, property, systematic and continuous soliciting etc are awaited too from the Regulators.
Although SEP related provisions are applicable from April 1, 2021, it may only be a ‘paper tiger’ as non-residents from tax treaty network countries are shielded under the narrower definition of Permanent Establishment (PE) in respective tax treaties. India has an operational tax treaty alliance with majority of countries housing businesses that derive income from India. Unless these tax treaties are renegotiated through bilateral or multilateral instrument and corresponding modifications are made to include provisions similar to SEP in those tax treaties, SEP provisions under domestic tax laws seem innocuous. Irrespective of this armour, test of beneficial ownership could still be a relevant aspect to evaluate, especially in cases of multi-tier structures, where a non-resident could invoke tax treaty protection to duck SEP test. On other side of the fence, SEP provisions would set in motion for all businesses coming from countries such as the Bahamas, Bermuda, Cayman Islands, etc, with whom India does not have a tax treaty yet.
A conjoint assessment of net basis taxation under SEP and gross basis taxation under Equalisation Levy would become critical for digital businesses. Equalisation Levy would become an elective regime once a non-resident e-commerce operator accedes to an Indian PE, in the form of SEP. In a scenario where a non-resident constitutes SEP in India, only income attributable to such transaction or activities would be taxable in India. While a public consultation document on profit attribution for SEP was issued by the Central Board of Direct Taxes, no rules have been notified so far. It, therefore, becomes apposite to assess the applicability of Rule 10 in such a scenario. Constitution of SEP would unfold various compliance obligations for both, payers and non-residents. Payers would be required to review withholding tax position as any shortfall could trigger expense disallowance, interest, and penal consequences. Non-residents, on the other hand, could be required to file income tax return, tax audit and transfer pricing reports in India, wherever applicable. Notably, non-compliance related to transactions carried out between April 1 and May 2 of 2021 (ie before threshold notification date) may possibly be defended by payers on the tenet of impossibility of performance.
Though the payment threshold for Equalisation Levy and SEP are calibrated at same level, it is quite low given the size of Indian economy and growing consumer base. Even after the Apex Court settled the highly debated issue of taxation of software, taxpayers cannot breathe a sigh of relief as the ruling was based entirely on the premise of no PE in India and software sale as well as services transactions could now well be covered under the new SEP regime. The evolving ecosystem of taxation in India would require non-residents to tread a tightrope as dynamic provisions such as SEP are plugging-in loopholes that may have existed under domestic tax laws for a while. What lies ahead is the hope of reaching a quick global consensus that could provide a fair and just system of taxation, followed by modification of tax treaties to incorporate the suggested amendments.
Pradhan flags off used cooking oil-based biodiesel from Indian Oil’s Tikrikalan terminal
Minister of Petroleum & Natural Gas and Steel, Dharmendra Pradhan, remotely flagged off the first supply of UCO (Used Cooking Oil) based Biodiesel blended Diesel under the EOI Scheme from IndianOil’s Tikrikalan Terminal. Secretary, Ministry of Petroleum & Natural Gas Tarun Kapoor and Chairman, IndianOil S M Vaidya, were also present on the occasion.
To create an eco-system for collection and conversion of UCO into Biodiesel and developing entrepreneurship opportunities, Hon’ble Minister of Petroleum and Natural Gas & Steel, along with Hon’ble Minister of Health & Family Welfare, Science & Technology and Earth Sciences, had initiated Expressions of Interest (EoIs) for “Procurement of Bio-diesel produced from Used Cooking Oil (UCO)” on the occasion of World Biofuel Day on 10th August 2019. And such “Expression of Interest” is being periodically released by Oil Marketing Companies (OMCs). In the first phase, 11 EoIs were floated between 10.08.2019 to 09.11.2020 for 200 locations. Publication of EoIs has been extended for one more year up to 31.12.2021, for 300 locations across the country.
Under this initiative, OMCs offer periodically incremental price guarantees for five years and extend off-take guarantees for ten years to prospective entrepreneurs. So far, IndianOil has also issued 23 LOIs for Biodiesel plants with a total capacity of 22.95 Cr Litres (557.57 TPD). Under this initiative, IndianOil has received 51KL of UCO-Biodiesel at its Tikrikalan terminal in Delhi as of 31.3.2021.
Speaking on the occasion, Dharmendra Pradhan complimented the Oil industry on the stellar role they have played to keep the fuel lines running despite the stiff challenges of the pandemic. He also lauded the OMCs for going beyond the usual business imperatives by extending support for medical oxygen supply to the nation in this crisis. Mr Pradhan also appreciated IndianOil’s leadership role in smoothening the Liquid oxygen logistics in the country through various initiatives.
Referring to the flag-off of the first supply of UCO-based Biodiesel from IndianOil’s Tikrikalan Terminal, Mr Pradhan said, “This is a landmark in India’s pursuance of Biofuels and will have a positive impact on the environment. This initiative will garner substantial economic benefits for the nation by shoring up indigenous Biodiesel supply, reducing import dependence, and generating rural employment”. He appreciated the proactive role played by OMCs in this direction and shared that 30 LOIs have already been issued.
Secretary, Ministry of Petroleum & Natural Gas, Tarun Kapoor, while delivering his address, said, “With this flag off, a new era of Bioenergy has been ushered in that will revolutionize the Indian petroleum sector. Feedstock availability in Biodiesel is a challenge, and leveraging UCO can be a major breakthrough that will enable us to reach the target of 5% Biodiesel blending. It will also help divert the unhealthy used oil from the food chain to a more productive purpose”. Mr Kapoor also complimented IndianOil for their focused drive on UCO based Biodiesel and for the concerted efforts undertaken to promote the benefits of Biodiesel.
Earlier, Chairman IndianOil S M Vaidya, while welcoming the gathering, said, “IndianOil is committed to contributing to this remarkable drive to retrieve the unhealthy Used Cooking Oil and usher in a revolution through “Randhan se Indhan”. We aspire to trace even the last drop of UCO and ensure its conversion to Biodiesel, thereby contributing to a more energy secure, greener and healthier India. This event is yet another significant step towards a Swachh and Aatmanirbhar Bharat”. He also shared that IndianOil has started constructing eight Biodiesels plants across Uttar Pradesh, Gujarat, and Madhya Pradesh.
Biodiesel is an alternative fuel similar to conventional or ‘fossil’ diesel. It can be produced from vegetable oil, animal fats, tallow and waste cooking oil. A significant advantage of Biodiesel is its carbon-neutrality, i.e. the oilseed absorbs the same amount of CO2 as is released when the fuel is combusted in a vehicle. Also, Biodiesel is rapidly biodegradable and completely non-toxic.
INDIA BEGINS EXPORT OF ORGANIC MILLETS GROWN IN HIMALAYAS TO DENMARK
In a major boost to organic products exports from the country, first consignment of millets grown in Himalayas from snow-melt water of Ganges in Dev Bhoomi (Land of the God), Uttarakhand would be exported to Denmark.
APEDA, in collaboration with Uttarakhand Agriculture Produce Marketing Board (UKAPMB) & Just Organik, an exporter, has sourced & processed ragi (finger millet), and jhingora(barnyard millet) from farmers in Uttarakhand for exports, which meets the organic certification standards of the European Union.
UKAPMB procured millets directly from these farmers which have been processed in the state-of-art processing unit built by mandi board and operated by Just Organik.
“Millets are unique agricultural products from India which have significant demand in the global market. We will continue to carry out export promotion for the millets with a special focus on products sourced from Himalayas,” said by Dr M Angamuthu, Chairman, APEDA. He stated that Indian organic products, nutraceuticals and health food are gaining more demand in overseas market
In Uttarakhand, many of the common varieties of millets are the staple foods in the hills. The Uttarakhand government has been supporting organic farming. UKAPMB, through a unique initiative has been supporting thousands of farmers for organic certification. These farmers produce mainly millets such as ragi, barnyard millet, amaranthus etc.
The exports of millets to Denmark would expand exports opportunities in European countries. The exports would also support thousands of farmers that are getting into organic farming. Millets are gaining a lot of popularity globally because of high nutritive values and being gluten free also.
Meanwhile, India’s export of organic food products rose by more than 51% to Rs 7078 crore ($ 1040 million) during April-February (2020-21) compared to the same period in the previous fiscal (2019-20).
In terms of quantity, the exports of organic food products grew by 39% to 888,179 metric tonne (MT) during April-February (2020-21) compared to 638,998 MT shipped in April- February (2020-21). The growth in organic products have been achieved despite logistical and operational challenges posed by the COVID19 pandemic.
Oil cake meal is a major commodity of the organic product exports from the country followed by oil seeds, fruit pulps and purees, cereals & millets, spices, tea, medicinal plant products, dry fruits, sugar, pulses, coffee, essential oil etc. India’s organic products have been exported to 58 countries including USA, European Union, Canada, Great Britain, Australia, Switzerland, Israel and South Korea.
At present, organic products are exported provided they are produced, processed, packed and labelled as per the requirements of the National Programme for Organic Production (NPOP). The NPOP has been implemented by APEDA since its inception in 2001 as notified under the Foreign Trade (Development and Regulations) Act, 1992.
The NPOP certification has been recognized by the European Union and Switzerland which enables India to export unprocessed plant products to these countries without the requirement of additional certification. NPOP also facilitates export of Indian organic products to the United Kingdom even in the post Brexit phase.
In order to facilitate the trade between major importing countries, negotiations are underway with Taiwan, Korea, Japan, Australia, UAE, New Zealand for achieving Mutual Recognition Agreements for exports of organic products from India.
NPOP has also been recognized by the Food Safety Standard Authority of India (FSSAI) for trade of organic products in the domestic market. Organic products covered under the bilateral agreement with NPOP need not to be recertified for import in India.
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