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Shanghai, Hong Kong falling: Opportunity for IFSC and India

IBUs can undertake transactions with resident (for deployment of funds) and non-resident (for both raising of resources and deployment of funds) entities other than individuals. However, transactions shall be in currency other than Indian rupee. It can also deal with the Wholly Owned Subsidiaries/Joint Ventures of Indian companies registered abroad. However, IBUs are not allowed to open savings accounts.

Naveen J. Sirohi & Kritika Krishnamurthy




Financial centres rise and fall, and this is a constant phenomenon in world history. In the course of last 200 odd years, different countries at different points in time of their economic journey have taken the initiative to develop International Financial Centre (IFC) to provide international financial services. These IFCs contributed immensely to economic growth and job creation.  Eighty out of 196 countries in the world have developed centres to cater to the demand of international financial services. The High-Powered Expert Committee on Making Mumbai an International Financial Centre report, 2007 (known as the Percy Mistry Committee report) categorizes IFCs in the following categories:

 Global Financial Centres, that genuinely serve clients from all over the world in the provision of the widest possible array of international financial services;

Regional Financial Centres. Which serve their regional rather than their national economies;

 Non-global and non-regional, ordinary international IFCs includes centres like Paris, Frankfurt, Tokyo and Sydney that provide a wide range of international financial services but cater mainly to the needs of their national economies rather than their regions or the world; and

Offshore Financial centres, includes centres that are primarily tax havens for wealth management and global tax management rather than providing the fully array of international financial services.

Hong Kong is the world’s largest equity-raising hub, the third-largest dollar trading center and a primary gateway to the second-largest economy. Despite the growing significance of places like Shanghai, Hong Kong had remained a key gateway connecting mainland China with global financial markets. This was mostly attributed to the relaxed capital control measures in Hong Kong. Today, Hong Kong is trapped in an escalating conflict that threatens its position as Asia’s premier international business center. In this light, the debate around who will replace Hong Kong and Shanghai in Asia is burning.

In 2015, the first International Financial Services Centre (IFSC) in India started functioning from the Gujarat International Finance TecCity (GIFT-City) at Gandhinagar, Gujarat with the ambition of becoming a successful global financial centre. The legal and regulatory regime around this endeavour is discussed in brief below. Recently, the International Financial Services Authority was notified by the Ministry of Finance.

1. Laws governing IFSCs in India

1.1 Power of Government to establish an IFSC

The concept of IFSC finds its inception in Section 18 of the Special Economic Zones Act, 2005 (SEZ Act). The Central Government is empowered to establish only one IFSC in a Special Economic Zone.

1.2 Exemption from paying dividend transaction tax

Under the SEZ Act, all units setup at an IFSC shall be eligible for exemption from the dividend transaction tax leviable, if the transaction was entered into by a nonresident through the IFSC.

1.3 Tax holiday

Where the assessee is a Scheduled Banks under Section 2(e) of the Reserve Bank of India Act, 1934 or if the assessee owns an offshore banking unit in an SEZ are be eligible for a deduction under section 80LA of the Income Tax Act, 1961. The income must be received from an offshore banking unit in an SEZ or from a business involved with any activities under section 6(1) of the Banking Regulations Act, 1949 with an undertaking at an SEZ. The tax holiday for the units in GIFT-City IFSC was extended till 2030 in the 2019 budget.

1.4 Foreign Exchange Management (International Financial Services Centre) Regulations, 2015

 Any financial institution or branch of a financial institution set up in the IFSC and permitted/recognised as such by the Government of India or a Regulatory Authority will be treated as a person resident outside India.

1.5 Exemption from Capital Gains Tax

The Finance Act, 2019 also extended the exemption from capital gains tax on transfer of GDRs, rupee denominated bonds and derivatives on a stock exchange in an IFSC. The income from the such transfers arising to non-resident investors of Category III AIFs located in an IFSC, deriving income solely in convertible foreign exchange and having all units held by non-residents except for the units held by the sponsor or manager.

1.6 Single regulator to overlook IFSCs in India

With the notification of this International Financial Services Centres Authority Act, 2019, the power to regulate IFSCs which was vested in different regulators, including RBI, SEBI, IRDAI and PFRDA was culminated into a single regulator, the International Financial Services Centres Authority.

1.7, Setting up of IFSC Banking Units (IBUs)

 IBUs can undertake transactions with resident (for deployment of funds) and non-resident (for both raising of resources and deployment of funds) entities other than individuals. However, Transactions shall be in currency other than INR. It can also deal with the Wholly Owned Subsidiaries /Joint Ventures of Indian companies registered abroad. However, IBUs are not allowed to open savings accounts.

IBUs can undertake factoring/forfaiting of export receivables. It may also undertake derivative transactions including structured products that the banks operating in India. They are also allowed to open foreign currency escrow account of Indian resident entities to temporally hold subscriptions to the GDR/ADR issues until issuance of the Receipts.

2. Key features of IFSCs in other jurisdictions

Dubai, Shanghai, Hong Kong, New York, London, Tokyo and Singapore are some of the leading Global Financial Centers of the world.

2.1 Dubai

The Dubai International Financial Centre (DIFC) was a part of Dubai’s long-term vision to strategically diversify its economic resources and to intensify the capital inclusion in the region. It is a Financial Free Zone under the Federal Law with an independent jurisdiction within the UAE. Founded in 2004, DIFC has the authority to formulate its own laws for all civil and commercial matters. Its unique legal and regulatory framework is based on the principles of international law and common law. It is tailored to the region’s unique needs by formulating an optimal environment for financial services, related industries and services to grow. The DIFC has established three independent bodies to enable and support the growth and development of businesses at the Centre. These include, the DIFC Authority, the Dubai Financial Services Authority (DFSA), the DIFC Courts and the Dispute Resolution Authority (DRA). Dubai’s can be seen as a well-planned emerging model in future. The units under the DIFC also receive exemptions from various Dubai laws and regulations, under certain conditions. In addition to this, the Law of the DIFC on “The Financial Free Zones in the United Arab Emirates” allowed for the creation of a Financial Free Zone as well as in any of the 7 emirates of the UAE through a Federal Decree. It provides exemption of all the Financial Free Zones and the financial activities from all federal civil and commercial laws. However, the federal criminal laws are applicable in the Financial Free Zones, including the federal laws on Anti-Money Laundering. Dubai enjoys diversity which comes from its rich global workforce and varied vibrant financial ecosystem. DIFC acts as a bridging entity between the Middle East, Africa and South Asia (MEASA) and Europe, Asia and Americas. During 2019, DIFC introduced series of measures to enhance the regulatory and legal structures that included introduction of new laws related to intellectual property, providing entrepreneurs with full legal protection they need to innovate, new regulations for insolvency, employment, financial collateral, security and a new framework for prescribed companies.

2.2 Shanghai

This Shanghai IFC is aiming at being the first tier international financial centre. To improve the efficiency of shipping business and promoting foreign investment, the Chinese Central Government announced the approval of China (Shanghai) Pilot Free-Trade Zone (CSPFTZ) in September 2013, which aimed to establish Shanghai as an Global Finance Centre by 2020. CSPFTZ released regulations to foreign investment, finance and tax. Foreign banks are allowed to directly establish their branches, wholly-owned subsidiary or majority-controlled subsidiary with mainland Chinese business partners in the region within a shorter period timeline. Customs supervision framework was upgraded. Reduced tax rates and incentives were provided besides supporting innovative business models in the CSPFTZ. The responsibility for the implementation of the Framework Plan for the CSPFTZ, 2013 was upon the Shanghai Municipal People’s Government at the district level. A “Green Channel” set up to provide market access in foreign trade zones (FTZ) to enhance the administration efficiency by setting time limits for certain items. The “Green Channel” is aimed at streamlining the market access for financial institutions by optimizing the supervision mechanism, to promote opening and competition among banks and financial institution within the CSPFTZ.

2.3 Hong Kong

Adaptability and the policy of “Positive non-intervention” are the essence of Hong Kong’s unique history. Hong Kong has many locational and physical attributes in its favour. The city is centrally situated in the Asia Pacific region with excellent transport and telecommunication facilities. Its time zone position and flexible working hours enable it to engage in arbitrage operations between the Atlantic and Pacific seaboard centres. Its proximity to mainland China attracts multinational firms, both financial and non-financial, that intend to enter vast China market. Financially, Hong Kong is blessed with a free exchange rate, a prudent fiscal system with low tax rates, simple tax structure, a relatively stable currency and the advantage of free convertibility. In 2016, the Hong Kong Monetary Authority (HKMA) set up the Fintech Facilitation Centre (FFO) to facilitate the healthy development of fintech ecosystem and promote Hong Kong as a fintech hub in Asia. Infrastructure Financing Facilitation Centre (IFFO) was established same year to improve Hong Kong’s international profile as a financing hub for infrastructure investments.

 2.4 New York When we talk about the leading IFC in the world, New York has surged ahead of London as the world’s top financial centre of the world. New York City remains the largest Global Financial centre for trading in public equity and debt capital markets, driven in part by the size and financial development of its economy. The NYSE and NASDAQ are the two largest stock exchanges in the world. New York and Chicago are financial centres that reflect the overwhelming dominance of United States over the global economy. In addition to this, Chicago has a strong position in exchangetraded derivatives as well. The rules-based regulation in the United States faces severe competition from the principles-based regulation of the UK.

 2.5 London

London has been a leading international financial centre since the 19th century, acting as the centre of lending and investment around the world. London is the largest centre for derivatives markets, foreign exchange markets, money markets, issuance of international debt securities, international insurance, trading in gold, silver and base metals through the London bullion market and London Metal Exchange, and international bank lending. The Bank of England enjoys statutory independence in monetary policies and has created a single unified Financial System Regulator (FSA). This, over the last decade has become the ideal model for central banks and financial regulators worldwide. Though London lacks as large a national economy like New York, Shanghai etc., still it has managed to serve as a premier IFC in the world.


 Tokyo aspires to become a leading global financial centre capitalizing on the inherent advantages of the country, i.e. being a large economy (third largest in the world); status of Japanese Yen as the third international currency after US Dollar and the Euro; large financial and capital markets with abundant capital. During 1996-2001, comprehensive financial and market reforms known as ‘Japanese Financial Big Bang’ were implemented in this direction. Other notable reforms included the Stewardship Code in 2014 and a new Corporate Governance Code in 2015. While Tokyo benefits from economic and political stability, well-managed risk, good infrastructure and overall government effectiveness, there are areas that need improvement. The government needs to continue with policies and reforms to open up in a number of areas. Human capital development also needs improvement since a world class financial centre has to be sustained by a ready supply of right talent possessing the highest standards of professionalism.

2.6 Singapore

In the short 50 years since its independence, Singapore has established itself as a leading financial centre. The state-led and development-driven approach to the financial sector development continues to drive Singapore’s development as a global financial hub. While Singapore lacks the advantage of Tokyo’s large economic base and Hong Kong’s proximity to China, it positions itself as a financial centre by providing a world class regulatory environment that responds to the needs of the global markets and institutions, along with most efficient infrastructure for businesses to use as a platform for all of Asia. The Monetary Authority of Singapore (MAS), constituted in 1971, has identified four major value propositions that continue to underpin Singapore’s success as a financial centre, namely conducive pro-business environment, cost competitiveness, business infrastructure and skilled workforce. The approach of ‘policy co-creation’ adopted by Singapore further contributed to greater regulatory compliance with policymakers incorporating feedback received from industry and non-state actors and re-designing the regulation to minimize costs arising from overly onerous regulation on one hand and ensuring overall systemic stability at the other.


A historical glance at the riseand-fall cycles among major international financial centres highlight four correlative factors that require attention by India, namely trust in financial centre’s abiliites; central banking and monetary policy system of the domestic nation; domestic nation’s landscape of financial policy and regulation; and overall stability of the financial centre itself. International and regional financial centres have to constantly remain innovative and competitive. The normal factors of competitive advantage like location relative to time zones, language, rule of law and culture are important but don’t reflect the complete picture. To create a differentiated momentum, regulatory and supervisor coherence, tax policy, deep pool of talent, alternative dispute resolution mechanism besides political recognition and support are necessary. With globalization revolutionizing the financial industry and expanding the network of financial markets and activities, the trend seems to be towards concentration with fewer mega financial centres complemented by smaller financial centres with more specialized focus. Indian IFSC have to define its vision clearly in the ever-evolving landscape of global financial services. The future of international finance centres will also be impacted by emerging disruptive technologies offering greater advantages. The international financial centers should try to fuse with such emerging disruptive technologies to create a new model of financial services combining the benefits of efficiency improvements of technology and the agglomeration benefits of financial centres. With global trade and investment growing in new directions, international financial centres have to adapt to reflect new needs and opportunities.

Though the disruptions and instabilities that characterize the financial markets may render any predictions about the future of Indian IFSC problematic or less than reliable, several possible trajectories and directions of India’s development as a global financial hub, based on emerging economic, technological and geopolitical trends, can be identified. The establishment of a unified regulator for IFSCs in India is a welcome policy initiative towards providing worldclass regulatory environment to market participants from the perspective of ease of doing business. Indian IFSC should aspire to be a major financial centre in Asia and a node in the the global network of financial markets. It will help in re-importing our securities market besides creating employment opportunities. It may also try and stop brain drain from India by offering qualified Indian Professionals to pursue global opportunities. To conclude, by implementing the right policies and strategies, the Indian IFSC will go a long way in building a stronger, stable and more prosperous economy.

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Policy & Politics

Tax on ocean freight: A case of inequitable double taxation at its best

Supply of ocean freight service is not covered either by Section 7 (inter-state supply) or Section 8 (intra-state supply) of the IGST Act. The Act does not contemplate levy or collection of tax from a person who is neither the supplier nor the recipient of supply.




 Ocean Freight is a method of transporting huge quantities of goods through the sea. The levy of taxes on Ocean Freight has been a matter of dispute in India for a while now. The GST law requires the importers to pay tax on ocean freight services under Section 9(3) of the CGST Act and Section 5(3) of the IGST Act, better known as the ‘Reverse Charge Mechanism’.

The location of the Service Provider (SP) and the Service Recipient (SR) must be considered. If the location of the SP and the SR is in India, Section 12(8) applies. But when the Location of SP or SR is outside India, the location of the SR is considered, unless the location of the SP is not known, then the SP’s location is considered but only for transportation [under Section 13(9)]. If the SP and SR are both outside India, the Importer is liable to pay IGST @ 5%. In addition to this, the importer also pays customs duty, freight on the CIF (Cost, Insurance and Freight) value and insurance even if the importer has paid IGST on the CIF value, he is still required to pay GST on ocean freight. This, is what any prudent person would term as “double taxation”.

When it comes to import on the CIF basis, the foreign supplier transports goods from a place outside India through a foreign shipping agency, to a port located in India. In CIF, the freight is paid by the foreign exporter to the shipping agency and the foreign supplier transports such shipment through the foreign shipping agency.


 From 01.06.2016, transportation of goods from a place outside India up to the customs clearance station in India became liable to service tax, through the Finance Act, 2016. But an exemption was given for services by way of transportation of goods by an aircraft from a place outside India up to the customs clearance station.

If the service provider was situated outside India, the liability to pay service tax would be on the service recipient. In Free on Board (FoB) imports, service tax would be payable by the shipping line, if the shipping line was based in India; and the service tax would be payable by the importer under reverse charge if the shipping line is not based in India.

In case of CIF imports, there was no service tax levy on freight, as the service provider as well as the service recipient are situated outside India.

There existed ambiguity in levy of service tax that was attracted on ocean freight component only in case of FOB imports, and not attracted for CIF imports.

Vide Notifications dated. 12.01.2017 (Notification 3/2017) and 20.06.2012 (Notification 30/2012 ST), some efforts were made to clear the ambiguities. In addition to this, in respect of services provided or agreed to be provided by way of transportation of goods by a vessel from a place outside India up to the customs clearance station in India, the person liable for paying service tax other than the service provider would be the person in India who complies with sections 29, 30 or 38 read with section 148 of the Customs Act, 1962.

In addition to this a series of Notifications were issued pursuant to the problem at hand:

 1. Vide Notification dated. 13.04.2017 (Notification 2/2017 ST), the definition of “person liable for payment of service tax” under Rule 2 (1) (d) (i) was amended and a new sub rule (Rule 7CA) was introduced in the Service Tax Rules, 1994.

 2. Vide Notification dated. 13.04.2017 (Notification 14/2017 ST), a new rule, Rule 8B was introduced in Point of Taxation Rules, 2011, which spoke about the “Determination of point of taxation in case of services provided by a person located in non-taxable territory to a person in non-taxable territory.”

3. Vide Notification dated. 13.04.2017 (Notification 10/2017 CE NT), the definition of “input service” in the CENVAT Credit Rules, 2004, was amended to further facilitate proper implementation of the respective tax provisions.

The importer was thus made liable to pay service tax for the services of transportation of goods by vessel from a foreign port to Indian port in case of CIF imports.

 The above position continued up to 30.06.2017, i.e., until the introduction of GST.


 And as per Section 14 of the Customs Act, 1962, the value of the imported goods shall be the transaction value of such goods for the purpose of levy of Customs duty and such transaction value in the case of imported goods shall include, in addition to price, any amount paid or payable for costs and services, including commissions and brokerage, royalties and licence fees, costs of transportation to the place of import, insurance, loading, unloading and handling charges to the extent as per Rule 10(2) of the Customs valuation (Determination of Value of Imported Goods) Rules, 2007.

Section 5(3) of the IGST Act, 2017 empowered the Centre to issue notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and the recipient of such goods or services or both is liable to pay tax under reverse charge in relation to the supply of such goods or services or both.

Where the value of taxable service provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India is not available with the person liable for paying integrated tax, the same shall be deemed to be 10 % of the CIF value of imported goods.

How ocean freight suffers double taxation

Ocean freight component suffers tax twice; first, it suffers IGST as component of Customs Duty on imported goods on CIF basis and second time IGST @ 5% in the form of Import of Services (Reverse Charge Mechanism) for payment by the importer. Therefore, IGST payment is levied twice on Ocean freight in the guise as part of transaction value of imported goods.

The impugned notifications are contrary to the provisions of Article 265 of the Indian Constitution which says that “no tax shall be levied or collected except by authority of law”. A delegated legislation (includes the notifications herein or rules) cannot provide levy or collection of tax which is not authorised by the parent statute.

 Supply of ocean freight service is not covered either by Section 7 (inter-state supply) or Section 8 (intra-state supply) of the IGST Act. The Act does not contemplate levy or collection of tax from a person who is neither the supplier nor the recipient of supply.

A person other than a recipient cannot determine the “time of supply” as per the provisions of Section 13 of the IGST Act. In addition to this, Input Tax Credit can only be availed by the recipient of the supply which are intended to be used in the course of furtherance of business, under the provisions of Section 16 of the Act.

 The Supreme Court in case of State of Rajasthan v. Basant Agrotech (India) Limited [2014 (302) E.L.T. 3 (SC)], held that the rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be constructed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all.

Commissioner of Central Excise v. Acer India Limited [2004 (172) E.L.T. 289 (S.C.)], the SC held – “The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic result sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plan, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute, then there is no tax in law.”

The Hon’ble Gujarat High Court in the case of Mohit Minerals Pvt. Ltd. Vs. Union of India [Special Civil Application No. 726 of 2018], has set aside IGST on Ocean Freight and held that no tax is leviable under the IGST Act, 2017 on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible in law and that taxing ocean freight is ultra vires and leads to double taxation.

Despite the attempts of the judiciary in defending the very concept of negating any occurrence of double taxation, the efforts made to amend the imprudent levy of IGST on ocean freight, or so to say, the lack thereof, is still very unsettling.

A person other than a recipient cannot determine the “time of supply” as per the provisions of Section 13 of the IGST Act. In addition to this, Input Tax Credit can only be availed by the recipient of the supply which are intended to be used in the course of furtherance of business, under the provisions of Section 16 of the Act.

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Policy & Politics


Tarun Nangia



In line with its vision to improve the quality of life of people, National Capital Regional Transport Corporation (NCRTC) has signed MoU with SECI (Solar Energy Corporation of India) today to harness blended renewable energy for RRTS. MOU has provisions to explore possible opportunities in electric/ transformative mobility, Hydrogen based economy, and other alternative sources of fuels and energy.

MoU was signed in presence of Jatindra Nath Swain IAS, Secretary (Fisheries), GOI & CMD/SECI, Vinay Kumar Singh, Managing Director/NCRTC and Mahendra Kumar, Director(E&RS)/NCRTC alongwith other senior officials of NCRTC and SECI.

NCRTC, as part of its Energy Management Policy, intends to maximize the use of blended renewable energy such as solar power etc. for meeting full energy requirement of NCRTC. SECI, being an industry leader, will help in arranging blended renewable energy to NCRTC round the clock at affordable rates for Delhi-Ghaziabad-Meerut Corridor and cooperation to extend the same for other future corridors.

Use of clean energy, through this association will ensure reduction in expenditure on electricity and significantly lesser CO2 emissions, which is essential for sustainable development.

This cooperation is a part of NCRTC’s long term strategy to make RRTS and NCRTC financially as well as environmentally sustainable.

NCRTC is adopting following measures also for energy efficiency in India’s first RRTS corridor-

1. All elevated RRTS stations and depots will be provided with solar panels.

2. NCRTC is targeting to generate minimum 10 MW renewable energy.

3. 40% of the total energy requirement of Delhi Meerut RRTS corridor is targeted to be procured/generated from renewable energy.

4. RRTS rolling stock will be provided with state-of-the-art regenerative braking system which converts train’s kinetic energy into electrical energy..

5. Regenerative braking will result in reduced wear and tear of wheels, brake pads and other associated moving brake-gear parts of rolling stock resulting in significantly less consumption of these spare part/items during train maintenance life cycle which again will result in substantial reduction in CO2 emission which otherwise would have been generated in the manufacturing and supply chain process of these spare parts/items.

6. RRTS trains will have push buttons for selective opening of doors on need basis. This eliminates the requirement of opening all doors at every station, thus leading to energy saving. RRTS rolling stock will have lighting and temperature control systems to enhance the passenger experience with less energy consumption.

7. All RRTS station and their premises, depot, office spaces and trains will be equipped with energy-saving LED lights.

8. Platform Screen Doors will be installed at every RRTS stations that will help in saving significant energy consumption in underground stations.

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Policy & Politics


Tarun Nangia



The growth in outbound shipments has been robust in the last few months and the outlook remains positive for the current year but rising cost of key raw materials especially steel is an area of concern, said EEPC India Chairman Mr Mahesh Desai.

As expected, the value of engineering goods exports jumped 53% to US$ 8.64 billion in May, 2021 as against US$ 5.65 billion in the corresponding month last year primarily due to low base effect and increasing demand from key markets.

“Soaring prices of various metals is a big challenge for the engineering goods manufacturers which were badly affected by the Coronavirus outbreak and the subsequent lockdowns,” he said.

While hoping that the rates for the export promotion scheme RoDTEP would be announced shortly, the EEPC India Chairman expects the government to provide more targeted support as suggested by the RBI.

Announcing the decisions of the Monetary Policy Committee (MPC) on June 4, RBI Governor Mr Shaktikanta Das had said that conducive external conditions were forming for a durable recovery beyond pre-pandemic levels. He further said that the need of the hour is for enhanced and targeted policy support for exports.

EEPC India Chairman said that while the export outlook has been projected to be positive in the current fiscal, there were downside risks too given that public health experts have predicted a possible third wave of the pandemic.

“The efforts must be made now to minimise the impact of pandemic on trade and business as protecting livelihood is no less important than lives. The plans should be in place to ensure goods movement, especially export consignments, are not affected by lockdowns, night curfews or any other restrictions imposed by states to prevent the spread of virus,” Mr Desai said.

Announcing the decisions of the Monetary Policy Committee (MPC) on 4 June, RBI Governor Shaktikanta Das said that conducive external conditions were forming for a durable recovery beyond pre-pandemic levels.

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Policy & Politics

India’s exports continue to perform impressively for third month in a row

FIEO president reiterated that though the government has announced a slew of measures to support exports, the need of the hour is to soon notify the RoDTEP rates to remove uncertainty from the minds of the trade and industry, thereby helping in further forging new contracts with the foreigner buyers.

Tarun Nangia



Responding to the trade data for May, 2021, Sharad Kumar Saraf, President, FIEO said that the continuing impressive growth in exports by about 70% to USD 32.27 billion compared to a low base of USD 19.05 billion during May 2020, reiterate our assessment that order booking position of our exporters is not only extremely good but also the gradual opening up of major global markets and improvement of situation in the country is expected to push exports growth further. President FIEO said that growing by over 8% even on the base of May 2019 reflects a positive trend for the sector. Saraf particularly emphasised that the growth in labour-intensive sectors like Cereal preparations and miscellaneous processed item, Gems & Jewellery, Engineering goods, Leather and Leather Products, Ceramic products and glassware, Cotton yarn/fabrics/made-ups, handloom products, Marine products, Spices, Carpets and Man-made yarn/fabrics/made-ups etc. augurs well for the job scenario, which is most relevant in the current context.

FIEO Chief added that such a growth during the month has been mainly on account of growth in Petroleum products, Engineering goods, Organic & Inorganic Chemicals and Gems & Jewellery, the major contributors to the country’s export basket, which have shown impressive performance compared to May, 2020. He also said that 25 out of 30 major product groups of exports have either shown a very high growth or are in positive territory defying all the odds when there is still a bit of scepticism persisting in the global economy on the expectation of a third wave of Covid-19 pandemic.

Sharad Kumar Saraf further reiterated that continuing on with such a growth performance in exports during the second month of the new financial year not only shows signs of resilience of the exporting community facing squeezing profits but also the resolve of the government. FIEO Chief complimented the government for its continuous support during such challenging times. Increase in May 2021 imports by about 74 percent to USD 38.55 billion compared to the same period during the previous fiscal led to the increase in trade deficit of USD 6.28 billion, which is an increase of over 99.61 percent during the month and should be looked into.

FIEO President reiterated that though the government has announced a slew of measures to support exports, the need of the hour is to soon notify the RoDTEP rates to remove uncertainty from the minds of the trade and industry thereby helping in further forging new contracts with the foreigner buyers. Mr Saraf also reiterated that the government must address some of the key issues including priority status to exports sector, extension of Interest Equalisation Scheme beyond June 2021 till at least 31st March, 2024, release of the necessary funds for MEIS and clarity on SEIS benefits, resolving risky exporters’ issues and continuance of seamless refund of IGST and more importantly continuing with IGST option for exports to further give boost to the sector during these challenging times.

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Policy & Politics

Making it happen: Covid management in Sonipat

Imaginative planning, meticulous execution and untiring efforts by young IAS officer Shyam Lal Poonia and his team have helped the district sail through the second wave.

Anil Swarup




Like many regions of the country, the second wave of the Covid hit the district of Sonipat (adjoining Delhi) really hard with the positivity rate reaching a high of 54.71% on 25 April 2021. With the second wave came different sorts of challenges of which oxygen supply was most critical, given the non-existent perennial supply system for the hospitals including the 500-bedded Medical College at Khanpur Kalan. 

The challenge of medical oxygen was altogether new for Sonipat like many other districts in the country. This, coupled with close to 60% patients coming from Delhi, led to quick saturation of bed capacity in Covid hospitals of the district by 25 April 2021. Consequently, a dual challenge of increasing oxygen beds on one hand and managing oxygen demand within the available quota on the other was faced. As on 24th April, the district was receiving a daily quota of 9 MT liquid oxygen. To add to the worries, the agency responsible for supplying around 4 MT daily oxygen to Medical College had pulled out. As the state allocated oxygen quota was being determined elsewhere, the focus was on mobilization of resources and managing within this quota for which the following line of action was undertaken: 

PSA Plant: A 200 LPM capacity PSA plant approved under PM Cares Fund was lying idle since February as the Agency didn’t install it and district health team didn’t realise its importance. With the help of one Prof. Jogendra from Pacific College, Sonipat, PSA oxygen plant was commissioned at Civil Hospital Sonipat on 30th April. This helped increase the number of oxygen beds at Civil hospital.  

Oxygen Audit: Nodal officer was appointed for oxygen supply and officers were positioned at each of the bottling plants and hospitals. A multi-pronged approach was adopted to prevent wastage and siphoning off of medical oxygen at bottling plants and in hospitals.  A formula was put in placeabout average consumption on the basis of guidelines issued by MoFHW. Accordingly, average consumption in all hospitals was calculated. A committee was also constituted for oxygen consumption audit in all hospitals. Quota was now being allocated to hospitals based on their patient load. These steps helped save 2-3 MT of LMO per day.  This resulted in the increase of oxygen beds from 605 to 791 by 1st May. Moreover, the district quota was increased to 13 MT on 2nd May by the Government which helped further increasing the number of oxygen beds to 950 including 90 ventilators.

Augmenting Oxygen Storage: By end of April, 2021, the district had only one Bottling Plant with storage capacity of 20 MT which was catering to more than 25 hospitals. Through concerted efforts two more bottling plants licenses were facilitated for medical oxygen and a storage capacity of 50 MT was added within 15 days.

LMO Tank at BPS Government Medical College, Khanpur: With a daily oxygen demand of more than 450 D-Type cylinders, the Medical College was the major consumer for oxygen in the district. With every passing day and increase in patient load, it was becoming difficult to maintain regular supplies through cylinders. With the help of one of the Bottling Plants, an LMO storage tank with 12 MT capacity was installed within a week at BPSGMC. This gave a major boost to oxygen supply at the Medical College and the number of oxygen-supported beds increased from 150 to 350. This also resolved issues related to oxygen flow pressure and refilling and transportation of oxygen cylinders.

PSA Plant at BPSGMC: To further augment oxygen availability in the district and to tackle any unforeseen situation in days to come, a PSA oxygen generation plant under CSR has been installed at Govt Medical College, Khanpur with a capacity of 1000 LPM. Installation of one more PSA Plant with 1000 LPM capacity by DRDO is under progress.

At one point in time, the district had more than 7000 active cases and 90% of them were under home isolation spread across the geography of the district. To monitor them on a regular basis was a challenge given the inadequate manpower in the field. 

With the support from young MBBS/PG medical students from BPS Medical College, a motto  – Chase The Patient – was coined. Tele-consultation services were provided for all home isolated patients. 120 PG students of the Medical College were engaged to monitor all the home isolated patients of the district. The students were divided into 15 area-wise teams, each team connected with their respective Community Health Centre (CHCs) and Urban Health Centres (UHCs). 

A team of IMA doctors was roped in which constantly supported patients with their COVID treatment, psycho-social care and post COVID recovery issues. Timely tele-consultation meant that scores of patients were provided early medical care and prevented from being hospitalized.

Even as oxygen bed capacity was being increased across the district, it was observed that admission in COVID facilities was leading to disconnection of patients with their family members, due to restrictions. This was especially true for those not possessing smart phones. Covid treatment protocols couldn’t be violated. However, families were especially feeling anxious to talk to patients and know their health status. The District Administration accordingly initiated e-Samvaad wherein 6 tablets have been provided to Civil Hospital, Sonipat and BPS Govt Medical College to facilitate interaction of admitted patients with their family members. During a fixed time slot, the attendant/ family members can now interact with their patient on video call through WhatsApp/ Google Meet/ Zoom. The Nursing Staff dedicates themselves for this purpose in the given time slot. 

Given the exponential rise in cases across Sonipat, it was important to set up a central COVID Control Room to address all citizen queries and to manage the situation on-ground.  A team of 40 teachers and operators was trained to work round the clock in three shifts. Dedicated helpline catering to all citizen queries around vaccination, testing, bed availability, oxygen cylinders, movement passes and for lodging complaints against black marketing, overcharging, were made operational.

Imaginative planning, meticulous execution and untiring efforts by this young IAS officer, Shyam Lal Poonia and his team have helped the district sail through the second wave. Positivity rate is now below 2% and hospital bed occupancy is less than 20%. They made it happen amidst trying set of circumstances. 

Anil Swarup has served as the head of the Project Monitoring Group, which is currently under the Prime Minister’s Offic. He has also served as Secretary, Ministry of Coal and Secretary, Ministry of School Education.

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Policy & Politics

Politics on Central Vista project unreasonable

A modern building equipped with the latest digital technology replacing the 90-year-old Parliament House is the need of the hour. Do you know that 12 ministries of the Central government are functioning from rented buildings and the government spends about Rs 1,000 crore annually to pay the rent? Around Rs 20,000 crore would have been paid towards rent only during the period I was in Parliament. This project is the need of the hour keeping the future in mind. If all the ministries are brought together, it will help them function even more proficiently.

Vijay Darda



If we just keep trying to prove Prime Minister Narendra Modi wrong on everything, it will weaken the very existence of the Opposition. The voice of the Opposition will carry weight only if the opposition or protest will be constructive, and not just for the sake of it. Today some people are protesting about the Central Vista project, but they should understand that the first initiative was taken by the then Lok Sabha speaker Meira Kumar during the Congress-led government in 2012 to build a new Parliament building. The leaders of other parties including Atal Bihari Vajpayee had supported it.

Under the Central Vista project, the offices of the Vice President, the Prime Minister as well as all the 51 ministries will be housed under one roof. MPs will have offices. All the buildings will be connected to each other. This will benefit from the security point of view and help get rid of the problems people face during the VIP movement too.

The project will cost about Rs 20,000 crore and Prime Minister Narendra Modi wants to complete most of the important work of this project before the end of his second term in 2024. The rest of the work will be done later.

A section of the society is questioning the need to spend such a huge amount on the project in the midst of this pandemic when the economy is badly hit. People are also questioning the purpose and benefits of this project.

Normally, this logic may sound right, but if you understand things with a deeper perspective, you will understand how important the completion of the Central Vista project is from the administrative point of view keeping in mind the future. I have been a part of the Parliament for 18 years so I have seen and understood the requirements closely. Many of these buildings are dilapidated. It is difficult to work sitting there. The legislative section of India sits in the Parliament House whereas the President, Vice President, Prime Minister and officials of 51 ministries sit at different places. Rashtrapati Bhavan, Parliament House, North Block and South Block, and National Museum building were built in 1931. After that Nirman Bhawan, Shastri Bhawan, Udyog Bhawan, Rail Bhawan and Krishi Bhawan were constructed between 1956 and 1968. Today, 39 ministries are housed in different buildings in the Central Vista area while 12 ministries are occupying rented premises outside.

You will be surprised to know that their annual rent is about Rs 1,000 crore and their distance from the PMO and other ministries is quite long too. Obviously, the administrative work gets hampered. So, is it justified to spend such a huge amount on rent? Just calculate how much rent the government would have paid till now. Around Rs 20,000 crore must have been paid only during the period I was in Parliament.

Another important point is that when the buildings were built in Central Vista and its surrounding areas, there was no digitalization like it is today. Now along with the security of Parliament House and ministries, there is always a big question for the security of digital files. Building a new complex will ensure better security for both.

India is a rising power in the world today. Priorities are changing, so it is very important that the entire Central government should be accommodated in a cluster of buildings equipped with modern technology so that ministers can easily reach out to each other, meet and interact. If 51 ministries located in the buildings being rebuilt in the Central Vista project are near each other, it will definitely benefit from the administrative point of view.

We also have to keep in mind that our population is growing, so surely the number of MPs will have to be increased too in future. Keeping this in mind, the new building of Parliament House will be built on about 65,400 square metres of land and have a large Constitution Hall, a lounge for MPs, a library, offices of several committees, etc. The Lok Sabha chamber will have a seating capacity for 888 members and the Rajya Sabha chamber will have the same for 384 members. Along with this, there will be ample space for the National Museum, National Archives and Indira Gandhi Art Museum and our heritage will also be displayed in a dignified manner.

Those who are critical of this project say that an amount of Rs 20,000 crore should be spent on helping the poor and providing healthcare facilities during the pandemic. But the question is whether the government is executing this project by diverting the funds meant for the poor or the needy? Of course not. The government is not rolling back any welfare scheme meant for the poor. All schemes are running as before. I believe that the poor must be helped and every government has been doing this. The point is we have to plan for the future too.

If we look at the post-independence history, be it Pandit Jawaharlal Nehru, Lal Bahadur Shastri, Indira Gandhi, Rajiv Gandhi, Atal Bihari Vajpayee or any other person who has been in power, everyone has worked on planning for the future and that is why India has occupied this prime position today. If Rajiv Gandhi would not have dreamt of a technology-rich India, had we been where we are today? We must worry about the present. Problems should also be solved, but we should also dream of a better future. The office of our Prime Minister should also be state-of-the-art, equipped and secure like the Parliament and Presidential buildings of America, Russia, Britain and other developed countries. That’s why I want to say that there should be no politics, at least in the case of the Central Vista project. There are several other subjects for politicking.

The author is the chairman, Editorial Board of Lokmat Media and former member of Rajya Sabha.

India is a rising power in the world today. Priorities are changing, so it is very important that the entire Central government should be accommodated in a cluster of buildings equipped with modern technology so that ministers can easily reach out to each other, meet and interact.

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