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Policy & Politics

The khadi revolution under the Modi government

The Khadi and Village Industries Commission officials finally are seeing a resurgence in their brand; the new reforms brought in by the Modi government seem to have started the road to revival for the industry and the revival of the thousands of people whose livelihood depends on these crafts.

Pinky Anand

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Khadi as a garment, has had a very synonymous history with the history of India. The first image of free India is often a picture of Mahatma Gandhi on his charkha, weaving and smiling. The Charka became a symbol of resistance against foreign rule and products and became a symbolic revolution with the rising of the Indian freedom movement. Khadi is as synonymous with Indian Cottage industry as its it with its artisan, but as with all things that lose favour, when newer shiner gadgets appear on the market, our humble khadi was relegated to the back of our closets. With newer technology, came newer materials and threads, rayon, nylon, and a hundred other fashions, easier to mass produce and cheaper to buy and longer lasting.

In this, Khadi the humble cloth, was lost.

Khadi refers to a handspun and hand-woven cloth. The raw materials may be cotton, silk, or wool, which are spun into threads on a charkha, a traditional spinning implement. Khadi was launched in 1920 as a form of self reliance, which later translated into a symbolic political weapon in the Swadeshi movement of Mahatma Gandhi.

Khadi cloth is sourced from different parts of India, depending upon its raw materials – While the silk variety is sourced from West Bengal, Bihar, Odisha and North Eastern states, the cotton variety comes from Andhra Pradesh, Uttar Pradesh, Bihar and West Bengal. Khadi poly is spun in Gujarat and Rajasthan while Haryana, Himachal Pradesh and Jammu and Kashmir  are known for the  woollen  variety. The Khadi and Village Industries Commission (KVIC), is a statutory organisation created by an Act of the Parliament and is engaged in promoting and developing Khadi and village industries.

The importance of Khadi in our economy is not just as a cloth. It is a symbol of our self reliance, or more recently as our Prime minster said ‘Atmanirbharta’. the Khadi Gram udyog is an industry that is made up exclusively of village economy. Khadi gram udyog provides a way for the rural craft and knowhow to penetrate the urban, shining, glitzy economies and in turn, lifts up the rural population, and their production capacities.

 As a young woman, I remember going to Khadi to buy kurtas for my brothers, because no Fab India existed at that time. Our woven rugs and patola sarees were all sourced from khadi gram udyog showrooms and if we were lucky there would sometimes be little treats like aam papad which we would buy and bring home.

Khadi has in essence embodied the spirit of an urban India, an India which still lives in the nostalgic Indian Coffee Houses and comprises of individuals with one eye to the west, dressed in clothes from the fanciest labels in Paris and Milan, but have ‘dadi ke nuske’ for when they catch a cold.

From 4.23 % to 8.49, Khadi’s share in textile production has doubled in the last five fiscals. Khadi has also seen increase in its production by 65.42 million square meters in last five years till 2019. The production has grown from 103.22 million square meters in 2014-15 to 170.80 million square meters in 2018-19.

The Khadi and Village Industries Commission officials finally are seeing a resurgence in their brand, the new reforms brought in by the Modi government seem to have started the road to revival for the industry and the revival of the thousands of people whose livelihood depends on these crafts.

The MSME Ministry and departments have been active and extremely supportive in giving impetus to village industries, from taking suggestions from stakeholders, to implementing these suggestions as well as following up. The project for revival of khadi was taken on a war footing with the Modi government.

In 2018, an exercise was initiated of creating a plan for the vision for KVIC to take it to the next level. This was to shift the focus of the KVIC from ‘administration’ to ‘sales’. The KVIC has taken the idea of the Prime Minister of ‘good governance’ and ‘ease of doing business and implemented it: for example no vendor now has to come to office for payment and all payments have to be cleared within 45 days of sale of their products. If the payment is not cleared, the approving authority pays 5 % interest from his/her pocket. File movement is limited to three levels and each level needs to take action within seven days (unless requiring SFC / Commission approval). This is to cut the delays on file movement.

The commission officials have been advised to use ‘Common sense’ more than the ‘Committees’. KVIC was known for committees which led to inordinate delays. This change gives the senior officials the authority to act swiftly and independently and also, fix the individual accountability for wrong decision and delays. Another important change has been to cut down the external influence on decisions.

 Khadi is not a cloth, it is a movement, as has been eloquently put by our Prime Minister. The Prime Minister Narender Modi is himself known to favour and wear khaki, even when he was a party worker in his younger days, and today it is due to his impetus and the call ‘Khadi for the nation, Khadi for fashion’ that the Khadi industry has seen a 167% rise in its sales.

The biggest lure of khadi to anyone who is patriotic is that it is home grown, woven by weavers, often women, in villages, it is a way for many homes to earn that extra income which would eventually go towards educating their children, or towards paying off pending loans. The fact that the Khadi Ashram in Varanasi, which was lying defunct for the last 26 years has today been revived is a telling parameter of the way that Khadi has been revived.

Today, in a world ravaged by the pandemic, it has become more important than ever to look inward, to given impetus to homegrown products, of which khadi is an inalienable part. World over, there is a clarion call for sustainable fashion, and to reject and discard fashion fashion. To India, Khadi is that answer.

Sr. Adv. Pinky Anand has served as the Additional Solicitor General of India. She has also served as the head of the Legal Cell of the Bharatiya Janata Party.

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Policy & Politics

‘What are the key learnings that hospitality industry can take from current conditions?’

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The Connaught has been turned around as one of the Taj Group’s prestigious SeleQtions hotels.

The world is currently battling with the unprecedented effects of the COVID-19. With the UN claiming it to be a crisis on humanity like never before, it has put our social fabric and cohesion under tremendous stress. In the face of this fatal virus, the economies worldwide have come to a standstill, making the travel restrictions and social distancing policies the new normal.

Impact of the Outbreak: The hospitality industry has taken a massive hit around the globe with occupancy rates dropping by 59% in US hotels alone. Significant declines are also forecasted in average daily rate (ADR), occupancy, demand, and revenue per available room (RevPAR) for 2020.

Current forecasts predict a deep economic contraction in the first half of the year, followed by a bounce-back in the latter half. However, there could also be a prolonged economic uncertainty that would resist a sharp bounce-back. As hotels counter this economic crisis, there will be a dire need to assess the business continuity and operational challenges, both for the short and long term, and understand the impact on Cash, Working Capital, and Profitability.

The severe situation had stalled travel plans for the majority of the people around the world but it is expected that hotel bookings will see a recovery after September 2020. However, it is also predicted that people will be more inclined towards traveling domestic rather than international. Thus, it is imperative for the hotels to be prepared before the business starts to ramp up and use this interim period as an opportunity to overhaul their legacy systems.

THE NEED OF THE HOUR

Regain Guest Confidence: The core of the relationship between any brand and its consumers is “the trust”, and thus recapturing guest confidence should be the primary step for any brand amidst this pandemic situation. At a time when consumer confidence is at an all-time low, communication will play the lead role in re-assuring the guests of the safe environments at different hotels. Also, within the hotel premises, the way hotels empower their guests with increasingly relevant and timely information, will also hold the key to future.

Revisit Hospitality Offerings:Hotels will need to review their existing service offerings to adapt to the “new normal” and provide a touch-free experience to their guests when they arrive at the property. To achieve this, Hotels will need a transformation in their daily operations to provide an experience that would ensure that both the guests and the hotel staff are in safe hands.

Employee Well Being: A turnaround is also expected in the hospitality industry at the employer level. The current working models need to be re-evaluated for efficiency with ‘employee wellbeing’ positioned higher than ever in the hotel’s priority list. Providing them with safety kits and eliminating the different touchpoints while serving the guests are the major needs of the hour.

Regulatory Compliances Liabilities: In this new environment, hotels need to adopt new practices to regulate the environment in which the business happens. Once the operations begin, stern measures on sanitation and hygiene will be very important and hotel properties will have to not just be aesthetically clean but also clinically clean. It will also be important to ensure that the mandatory regulatory guidelines such as social distancing are being followed at their properties

OPPORTUNITIES TO UPGRADE THE SKILL SET

Up-skill: Creating opportunities for hotel employees to add value to their skill-sets could build confidence in hotel companies, as layoffs can be expected by all major and minor hotel companies. Hyper-local hotels may see the largest number of layoffs due to the popular asset-light model, where large number of operating units, scattered across countries, could be written off all at once. This will bleed out a vast number of hospitality employees into an already difficult market. Individuals who can upgrade their skill sets by way of enrolling in speciality-specific courses could benefit greatly.

Re-skill:Offering routes such as ‘Recognition of Prior Learning’ opportunities to qualified hospitality front-line professionals could accelerate the process in re-skilling individuals, hence preparing them for roles in hotels and other hospitality-related operations in an environment where lean, yet skilled operations will be required.

Hygiene and sanitation remained a recurrent sub-theme throughout the responses, be it about foreseeable consumer behaviour or learnings for the industry and educators or trainers. The issue of hygiene has been well documented in tourism and hospitality literature. However, for a developing country like India that deals with issues like over-crowdedness and congestion, it is too serious a concern to be overlooked. where the researchers have speculated presence of SARS-COV-2 in human waste water becomes more consequential if not managed effectively. The seriousness of this issue can’t be emphasised enough and regardless of the type and size of the establishment, next crucial aspect that is likely to govern the survival would be the presence of standards of waste management and effective sanitation practices visible in all forms of hospitality operations.

Hospitality management must consider wearing masks mandatory until a sustained solution, for instance the most contemplated solution+COVID-19 vaccine, is achieved. Irrespective of type of operations, managers must consider creating dedicated task forces among employees to address hygiene issues and related training and awareness creation. Basing on the responses received it seems clear now that there is stark need of formulating national standards for tourism and hospitality enterprises, and their implementation and monitoring should be effectively carried out, failing that should invite relative penalties. The need of national standards also resonate with the recommendations made by authorities/researchers. One such standard practice could be mandatory temperature checking and its record keeping at the entry and exit points of work places and institutions.

The notion of retaining optimism and hopes of revival remained highThis was particularly visible with the responses pertaining to the manpower development. This viewpoint of the experts in tourism and hospitality may be attributable to their rich experiences, where they must have observed highs and lows in the industry. Although COVID-19 presents an unprecedented case before all the sectors, in that the reduced demand and revenues are obvious consequences, which can resonate with the previous crises that also had detrimental effects. However, in previous health (e.g. SARS, Swine Flu, MERS, and Ebola) or other sorts of crises (acts of terrorism, natural calamities) travellers mostly had alternatives at their disposal. This time the entire planet has been held hostage to this severe pandemic, which has brought an absolute halt on various activities, leisure sector being the prominent casualty. From the responses it is evident that alike educators, industry managers too didn’t shy away from highlighting the human resilience and seemed hopeful towards the eventual recovery, meanwhile reassuring individuals who have or intend to pursue careers in the industry.

Budgets and Capital Expenditure:Hotel owners should consider whether the existing rights of the owner in relation to the setting, approval and variation of budgets and decisions relating to capital expenditures are adequate or should be enhanced in order to give the owner greater say on decisions relating to expenditure that is considered necessary or desirable in light of Covid-19, for instance investments towards improving the health and safety components of the hotel.

This is extremely important from a hotel owner’s perspective because: (a) they have the obligation to fund the hotel’s working capital and capital expenditure requirements; and (b) the owner’s performance termination rights will typically be linked to the level of operating profit generated by the hotel operator relative to the budgeted operating profit. If the owner does not have adequate rights in respect to the setting of the budget and approval of variations from the budget and sufficient control over the budget process, then the operator could provide for a lower operating profit in the budget and thereby ensure that it does not fail the operating profit test (this is over and above a general exclusion which an operator may include for force majeure events).

Additionally, it would also be worthwhile to consider including a mechanism thereby the owner and operator have to mutually agree to adjust the budgets and capital expenditure for a specific period in the event of a force majeure event occurring and the operator should not have a unilateral right to make any such adjustments.

Compulsory Acquisition:During recent times, there have been instances where government authorities in certain countries have taken over hotels to use them as quarantine facilities for Covid-19 patients. While these instances may not be common, it gives rise to another scenario which may need to be covered in the condemnation provisions of hotel operating contracts. Further, as the hotel owner is unlikely to receive any substantial compensation from the government, the rights of an operator to receive any portion of the compensation received from the government should also be considered and re-examined and specific carve-outs may need to be agreed. Consideration should also be given to the hotel’s insurance policies and whether any conversion of use of the hotel into a quarantine or other medical facility may vitiate these insurance policies.

Public Health Emergency Obligations:Hotel operating contracts do not, usually, contain any provisions on: (a) the procedures to be followed by the parties; and (b) the rights and obligations of each party, in the event of a public health emergency occurring in the hotel (for example, a guest or staff testing positive for Covid-19). It is important that these gaps are filled to ensure that there is no ambiguity on the roles and responsibilities of the parties and thereby avoiding the blame-game.

HOTEL MANAGEMENT REQUIRES LIFELONG LEARNING

Albert Einstein said, “Once you stop learning, you start dying”, and the saying has never been truer than in the current context. Even if you were a seasoned hotel manager, the COVID-19 crisis has likely challenged all of your past experience and knowledge about the profession. In the face of uncertainty, hoteliers have had to relearn some of the key cornerstones of the industry, such as staffing and revenue management, both of which underwent major transformations because of COVID.

As a result, web traffic on hospitality-related educational platforms nearly doubled in the past few months. Instead of wallowing in self-pity, hoteliers understood that they needed to take action in order to adapt and save their business. In a great showing of courage and resilience, most of them took the matter into their own hands and kept looking for ways to survive amidst the plethora of constraining safety measures and lockdowns. This gave birth to new innovative strategies for hotels to generate revenue.

HOPING FOR A BEGINNING OF AN END

We can say that,

Post Covid19, organisations will surely redesign/reorganise their business models based on the loss handled and market conditions for the future. Workforce reduction is a possibility however smarter organisations may look at utilising the available workforce in newer roles as per the need of the business. Its (sic) important to understand that hospitality is all about human connections and people will be at the heart of everything we strategize.

COVID-19 is pushing the industry to manage, adapt, and respond to the uncertainty and risk associated with this global health incident. Managing the guests’ & employees’ safety and delivering as per guests’ expectations will not be considered a competitive advantage, but rather an industry imperative. Enterprises in the hospitality industry should partner with the right technology solutions providers to ensure a foolproof digital transformational strategy for the future.

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RELAXATIONS PROVIDED UNDER GAS CYLINDERS RULES, 2016 TO FAST-TRACK IMPORTS

The relaxations in rules will fast-track approvals for imported cylinders and pressure vessels for storage and transportation of medical oxygen.

Tarun Nangia

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Government of India has reviewed the existing procedure for approval of global manufacturers for importing oxygen cylinders by Petroleum and Explosive Safety Organization (PESO). In view of the COVID pandemic, PESO shall not carry out physical inspection of global manufacturers’ production facilities before grant of such approval. Now, such approvals shall be granted online without any delay on submission of manufacturer’s particulars; ISO certificate of manufacturer; List of Cylinders their specifications, drawings & batch number; Hydro test certificate and Third-Party inspection Certificate. Every foreign manufacturer/ importer who wants to import oxygen cylinders is required to apply for import permission through PESO online system.

In view of emergent situation, procedures are relaxed and the following process is to be followed wherever due to unavoidable circumstances or urgencies, consignment of oxygen cylinders, ISO containers or PSA plants or its related equipment have already arrived in India, without taking import permission from PESO. The filling permission for these cylinders will be issued based on the following relaxation in the rules. Same procedure will apply for import of further such equipment in case the online approvals have not been taken.

As such, Certification of PESO will not be mandatory pre-shipment. However, the certification of PESO will be required before use of the oxygen cylinders which entails weight and hydro testing. The Indian Missions should however ensure that the oxygen cylinders should comply with India or International standards before shipment. In case of filled cylinders, the agency exporting to India shall certify that the oxygen filled in the cylinder is of such purity and concentration that is fit for medical use. The certification shall be attested by the Indian Mission in the exporting country. Further, soon upon receipt in India, such filled cylinders shall be inspected on sample basis by an empanelled agency of PESO and certified as fit for medical use.

All the filled cylinders must be verified for quality of gas filled therein under the supervision of medical/ Food and Drugs Controllers and if quality of gas conforms to their requirement of medical oxygen, cylinder may be sent directly to hospitals for use. On emptying out the oxygen, cylinder shall be sent to filler and the process as given above shall be followed.

Guidelines for PSA installations at hospitals with filling facility or at COVID centers:

A. PSA plants where generated oxygen is directly supplied to hospital/ no filling of cylinder is taking place; does not need any permission or license under rules administered by PESO and can be allowed.

B. If PSA is attached with a compressor and filling of oxygen cylinder is to take place, hospital must notify it to PESO with following information:

a. Number of filling points.

b. Number of cylinders to be stored at site

c. An SRV shall be mandatorily installed in the pipeline outlet to compressor.

d. Well ventilated location with adequate illumination.

e. Before filling the cylinder, shall be examined/ cleaned for absence of any Carbonaceous grease and valid hydro test certificate (tested cylinder at 225 Kg/Cm2 hydrostatically)

f. Filling operation shall be carried out under supervision of a competent & experienced person.

g. The space for filling of cylinders to be isolated and maintain clearance of 1m from filling point on all the sides.

C. Any COVID centre may utilize liquid cylinders on board with vaporizer for supplying of gaseous medical oxygen through pipeline or for filling cylinders in open places are permitted subject to conditions stipulated under Sr No. (B) above for PSA and information be submitted to PESO.

These relaxations shall be valid for a period of 6 months or till further orders of Department for Promotion of Industry and Internal Trade, whichever is earlier

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RESOLUTION OF PENDING ISSUES OF EXPORTERS WOULD GIVE IMPETUS TO TRADE, SAYS EEPC INDIA CHAIRMAN

Tarun Nangia

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The value of engineering goods shipments registered a year-on-year growth of 238.27% during April, 2021 owing primarily to lower base effect and strong demand from traditional markets. This shows recovery in external trade is very much on track and improved trade outlook, said EEPC India Chairman Mahesh Desai.

“As vaccine coverage rises in Europe and North America we see further increase in demand. Shipments to China have already been quite healthy and we expect the trend to continue,” he noted.

As per data released by the government, India’s overall merchandise exports in April 2021 was US$ 30.63 billion, a jump of 195.72% over US$10.36 billion in April 2020. As compared to April 2019, exports in April 2021 exhibited a positive growth of 17.62%.

Mr Desai said that the recent surge in Covid cases has some downside risks to the growth as various state governments have imposed lockdowns and curfews to contain the spread of the virus.

“This has caused a slowdown in inter-state movement of goods and shortage of manpower. In order to address this, we urge the government to classify the export sector as the essential services,” he said.

The EEPC Chairman noted that the government has largely taken a very balanced approach to deal with the health crisis focussing both on saving lives and protecting livelihood.

In a very encouraging development, Department of Commerce has taken up various issues of exporters with the Finance Ministry for their early resolution. Some of the pending issues pertain to Remission of Duties and Taxes on Export Products (RoDTEP), Merchandise Exports from India Scheme (MEIS) and Inverted duty structure.

“Once resolved, it will further provide impetus to the export sector,” said Mr Desai.

Given the growth trends in previous fiscal and April this year, it is hoped that merchandise exports could touch $400 billion in FY22. The value of exports in the first week of May was up by almost 9% (over the same period last year) pointing to a positive trend, the EEPC Chairman concluded.

RBI SUPPORTS MEASURES TO HELP SMALL BUSINESSES HIT BY SECOND PANDEMIC WAVE

Besides providing liquidity support to small borrowers, the measures announced by RBI would boost confidence of the trade and business, said Desai.

“Over the last few months, India’s merchandise exports have shown an upward trend but the surge in new Covid cases has posed some downside risks. The relief measures announced by RBI for MSMEs should mitigate those risks,“ he added.

One of the key focus areas of the central bank was facilitating easy credit for entities in the health sector including vaccine manufacturers and suppliers of oxygen and ventilators. For this, an on-tap liquidity window of Rs 50,000 crore has been announced. This will help strengthen Covid infrastructure in the country and ensure that the impact of the second wave of the infection on the economy is minimal.

Another key support measure announced by the RBI was Resolution Framework 2.0 for Covid related stressed assets of individuals, small businesses and MSMEs. This is a major relief for small and medium players, noted Desai.

Among other things, the Production Linked Incentive (PLI) worth Rs 6,238 crore for air conditioners and LED lights would certainly give a big boost to local manufacturing. The various PLI schemes are being seen as the mega policy plan of the government to make India a global manufacturing hub, said Desai.

He noted that the PLI schemes were also being considered one of the major pull factors for MNCs looking to diversify their supply chains “This will not only bring fresh investments into the country but also offer opportunities for local firms to enter into technical tie-up and form joint ventures,” he said.

The government has so far cleared nine PLI schemes for different sectors. Both local and foreign players have shown keen interest in the scheme. Overall, an outlay of Rs 1.97 lakh crore has been lined up for 13 key sectors. All the schemes together are projected to boost India’s output by over US$ 500 billion in the next five years.

The additional manufacturing capacity coming under the PLI scheme would have a huge multiplier effect and help build a robust supply chain network linked with global giants. It will positively impact the SME sector and spur growth and employment, said Mr Desai applauding the policy action.

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Policy & Politics

INDIA’S TRADE PRFORMANCE CONTINUES TO BE IMPRESSIVE IN APRIL 2021

Merchandise exports accelerate by an impressive 195.72 per cent over April 2020 levels and 17.62 per cent over the April 2019 levels.

Tarun Nangia

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Piyush Goyal

India’s export performance continues to be impressive in April 2021 with merchandise exports accelerating by an impressive 195.72 per cent over April 2020 levels and 17.62 per cent over the April 2019 levels.

Merchandise export, excluding POL and Gems & Jewellery, have increased by 160.24% in April 2021 over the same period of 2020-21 and by 20.47% over same period of 2019-20.

The Economic recovery is also visible in the rising import growth of 167.05 per cent and 7.87 per cent during April 2021 over same period of 2020-21 and 2019-20 respectively.

Service exports estimated for April 2021* are USD 21.17 Billion, registering a positive growth of 28.68 percent vis-à-vis April 2020. The estimated value of services import for April 2021* is USD 13.00 Billion, registering a positive growth of 39.75 percent vis-à-vis April 2020. The estimated value of Net of services export for April 2021* is USD 8.17 Billion registering a positive growth of 14.28 percent vis-à-vis April 2020.

COMMODITY-WISE GROWTH TRENDS

The commodities/commodity groups which have recorded positive growth during April 2021 vis-à-vis April 2020 are Gems & jewellery (9271.21%), Jute mfg. including floor covering (1684.62%), Carpet (1352.68%), Handicrafts excl. handmade carpet (1275.46%), Leather & leather products (1201.44%), RMG of all textiles (927.08%), Cotton yarn/fabs./made-ups, handloom products etc. (618.26%), Man-made yarn/fabs./made-ups etc. (587.01%), Other cereals (451.39%), Ceramic products & glassware (444.45%), Electronic goods (372.62%), Oil meals (279.49%), Cashew (260.48%), Mica, Coal & other ores, minerals including processed minerals (241.21%), Engineering goods (238.27%), Petroleum products (191.53%), Tobacco (187.4%), Cereal preparations & miscellaneous processed items (174.61%), Iron ore (172.16%), Oil seeds (169.04%), Meat, dairy & poultry products (148.81%), Tea (146.31%), Marine products (107.94%), Spices (97.56%), Coffee (75.02%), Organic & inorganic chemicals (68.54%), Rice (61.64%), Plastic & Linoleum (51.89%), Fruits & vegetables (25.4%) and Drugs & pharmaceuticals (23.43%).

Iron Ore and Drugs & Pharmaceuticals exports have been consistently growing throughout 2020-2021 and April 2021. Rice export has been consistently growing during 2020-2021 and April 2021 except for the month of April 2020. Cereal preparations & miscellaneous processed items, Other Cereals and Oil Meals exports have been consistently growing since June 2020. Jute Mfg. including Floor Covering and Carpet exports have been consistently growing since July 2020. Handicrafts, excl. handmade carpet, Cotton Yarn/Fabs./made-ups, Handloom Products etc., Ceramic products & glassware, spices and ‘others’ categories exports are growing consistently since September 2020. Mica, Coal & Other Ores, Minerals including processed minerals export is consistently growing since October 2020.

Sectors such as Leather & leather products, Man-made Yarn/Fabs./made-ups etc., and Marine products which had been exhibiting negative growth during the pandemic (2020-2021) have picked up from March 2021 onwards.

*Note: The latest data for services sector released by RBI is for March 2021. The data for April 2021 is estimates, which may undergo revision with subsequent releases of RBI.

Commerce Minister Piyush Goyal had a virtual meeting with Ambassador Kathleen Tai, US Trade Representative on 14th May 2021. The meeting focused on increasing vaccine availability in an inclusive and equitable manner to combat the global pandemic caused by Covid-19. The proposal of India on waiver of certain TRIPS provisions to increase global vaccine production in order to take on the challenge of vaccinating the poorest of the poor and save lives was also discussed. The Minister thanked the USTR for the US announcing its support for India’s proposal. The Minister mentioned the supply chains for the vaccine manufacturers must be kept open and unbridled as the entire world is in dire need of vaccines. Both sides agreed to work towards the common resolve of increasing vaccine availability and saving lives.

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Policy & Politics

GOYAL LAUNCHES ‘DGFT TRADE FACILITATION APP’ FOR PROVIDING INSTANT ACCESS TO EXPORTERS/IMPORTERS ANYTIME, ANYWHERE

Commerce & Industry Minister Piyush Goyal says that the trade facilitation app is ready for Industry 4.0.

Tarun Nangia

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Piyush Goyal

Commerce & Industry Minister Piyush Goyal recently launched DGFT ‘Trade Facilitation’ Mobile Application, for promoting ease of doing business and providing quick access to information to importers/exporters.

Speaking about the app, Goyal said that in the post-covid world, tech-enabled governance will play a key role in determining India’s growth and competitiveness. He said that a Single-window approach has enabled tech transformation of service delivery in India. It has liberated last-mile beneficiary from location based constraints, and enhanced ease of doing business. He said that Progress in technology helps develop the economy and strengthen Indian firms in the competitive global market. “We desire to move towards paperless, automated processing systems, simple procedures for trade players, online data exchange between departments & digital payments & acknowledgements.”, he added

Lauding the initiative of DGFT, Goyal said that the new Trade Facilitation App is a step in the right direction as it provides easy, omni-channel access to various trade related processes and enquiries at the touch of button. He said that truly imbibing Prime Minister’s vision of Minimum Government, Maximum Governance, DGFT is standing up for businesses as a true leader with e-issuance of certificates, QR scan process to validate documents. It will reduce transaction cost and time for imports and exports related processes, and usher in transparency. He said that ‘Trade Facilitation Mobile App’ is a symbol of India’s Idea of Aatmanirbharta – Making governance easy, economical & accessible, as it symbolises shift in traditional thinking.

Shri Goyal said that Trade facilitation App is READY for Industry 4.0, as it provides

• Real-time trade policy updates, notifications, application status alert, tracking help requests

• Explore item-wise Export-Import policy & statistics, Track IEC Portfolio

• AI-based 24*7 assistance for trade queries

• DGFT services made accessible to all

• Your Trade Dashboard accessible anytime & anywhere

The Minister said that ‘Mobile’ India creates an international trade opportunities for MSMEs and Foreign players. It will enable creation of a quality conscious and cost-competitive domestic industry. Further, it will significantly contribute to export target of $1 Trillion by 2025 and GDP target of $5 Trillion. He said that for advanced App development, more inputs & ideas of all stakeholders should be invited for further refinement which will help in expediting our technological transformation. Shri Goyal also called for engagement with technology and language specialists to develop Governance Apps in various regional languages, which will support the spirit of oneness amongst our citizens.

The new Mobile App of DGFT provides the following features for ease of the exporters and importers –

• Real-time Trade Policy Updates and Event Notifications

• Your Trade Dashboard Anytime Anywhere

• Access all services offered by DGFT in App

• Explore Item-wise Export-Import Policy and Statistics

• 24×7 Virtual Assistance for Trade Related Queries

• Track your IEC Portfolio – IEC, Applications, Authorizations

• Real-time Alerts on status of applications

• Raise and track help requests in real-time

• Share Trade Notices, Public Notices easily

The App will be available on Android and iOS platforms. The App can also be downloaded from the DGFT Website (https://dgft.gov.in). It has been developed by the Tata Consultancy Services (TCS), as per the directions of the Directorate General of Foreign Trade (DGFT).

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Policy & Politics

THE ROAD NOT TAKEN: CROSS-BORDER INSOLVENCY REGIME IN INDIA

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OVERVIEW: CONCEPT OF CROSS-BOUNDARY INSOLVENCY

The recent judgment on Jet Airways v SBI & Ors is a strike on the previously closed doors of the Cross Border Insolvency regime in India under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as ‘IBC’). The Indian jurisdiction has time and again questioned with respect to it’s competence in handing cross border insolvency proceedings. The advent case of Jet Airways has given Indian an eccentric window to exhibit its potential and capabilities for handling the cross border insolvency disputes. The Hon’ble National Company Law Tribunal (hereinafter referred as ‘NCLT’) has set aside a non-arbitrary order towards the disputed position of Jet Airways and recognized that the resolution of the party which has the operations and stakeholders across the globe shall have implications if parties are spread across jurisdiction. The Appellate Tribunal has also set aside the order upholding the recent cross-border protocol agreed between NCLT appointed Resolution Professional (hereinafter referred as RP) and the Dutch insolvency trustee and deciding that the Dutch trustee is equivalent and analogous to the RP. Thus, clearly stating that the trustee has a right to attend the meeting of the committee of creditors as per the provisions of the insolvency law. However, it is pertinent to highlight that the NCLT specifically pointed out a quintessential cross-swording between two emblematic concepts of universalism and territorialism. These two conceptual terms are intertwined with each other in their basic sense.

The basic idea behind adverting these two concepts was due to the undemonstrated provisions in the cross border insolvency regime in IBC and clueless reasoning and deliberate abandonment of a United Nation Commission on International Trade model law on Cross Border insolvency (‘Model Law’) by the Indian jurisdiction. The notion of cross border insolvency comes into delineation when the insolvent debtor has assets located in more than one jurisdiction or in a circumstances where some of the creditors of such debtor are not located in a jurisdiction where the insolvency proceedings has been commenced.

CROSS-BORDER REGIME: INDIAN JURISDICTION

In 2000 the aforementioned difficulty was acknowledged by the Justice V. Balakrishna Eradi Committee which called for urgency in adoption of the Model Law, partly or in whole for an effective cross border regime. Subsequently, N.L Mitra Committee report reiterated the need for adoption of the Model Law. Earlier in India, as regards to Cross Border Insolvency under the Companies Act, 1956 and the Companies Act, 2013, a court could order winding up of a foreign company limited to the extent of its assets in India. However, there were no specific statutory provisions in case an Indian company having is assets abroad was sought to be wound up. Therefore, it was done through a mutual recognition of foreign decrees as provided under the Code of Civil Procedure, 1908. In the absence of such recognition it was a tricky situation for the liquidator in gathering information with regards to foreign assets and disposing them under the liquidation.

Presently, Section 234 and 235 of the IBC provides the legal framework under the IBC with respect to Cross Border Insolvency and envisage entering into bilateral agreements Finalizing such bilateral treaties require time consuming negotiations and every treaty made would be distinct which will create ambiguity for foreign investors. However, the provided legal framework has not been notified yet and therefore is not into effect and any orders passed in India with respect to Cross Border Insolvency will not have any effect in a foreign country. IBC is silent on the position of a foreign creditors’ right to approach NCLT to initiate corporate insolvency proceedings. However, in the matter of Macquarie Bank Limited v. Shilpi Cable Technologies Ltd, the Hon’ble Supreme Court gave a clarity that rights of the foreign creditors are similar to the rights of the domestic creditors with respect to initiating and participating in Corporate Insolvency Resolution Process under IBC.

MODEL LAW & INDIA’S RECOMMENDATION FOR ITS ADOPTION

Model Law was recognized as a framework which was globally accepted. The Model Law got its consensus by UNCITRAL in 1997 and since then it has become as the most widely accepted framework which deals with the Cross Border Insolvency issues and therefore, around 44 countries and in total 46 jurisdictions have adopted the legislation based on the Model Law. Under the Model Law, recognition is given to both the proceedings i.e. remedies provided under the foreign proceedings as well as the remedies provided under the Domestic proceedings. Relief can be provided if the foreign proceeding is either a main or non-main proceedings. It provides coordination between the foreign and domestic insolvency proceedings by encouraging cooperation between the courts. It allows the foreign insolvency professionals and foreign creditors to participate in the domestic insolvency proceedings against the debtor. Presently, on perusal of Section 234 of IBC it is clear that there is direct access with regards to the foreign creditors has been provided under the IBC. However, with respect to the foreign insolvency professionals no such provisions have been envisaged under the IBC.

The Model Law endows basic legal framework for cooperation between the domestic and foreign courts/ insolvency professionals. In India Insolvency Law Committee in its report recommended adoption of Model Law, as it provides for a wide-ranging framework to deal with Cross Border Insolvency issues. However, few carve out were suggested by the Insolvency Law Committee in order to ensure that there is no contradiction between the current domestic insolvency framework and Model Law framework.

Further, Countries which enact the Model Law are allowed to exempt certain entities from the application of the Model Law therefore; the Committee recommended to exclude the banks and insurance company from the scope of Model Law. The rationale provided behind this exclusion was that the insolvency of those entities requires particularly prompt and circumspect action and may be subject to a special insolvency regime. Further, the Committee was of the view that Section 234 and 235 of IBC should be amended so that it is applied only to individuals and partnership firms since the content relevant to the Corporate Debtor has already been captured under the Proposed Model Law. With respect to dual regime, the Committee noted that at present the Companies Act, 2013 already contain provisions related to insolvency of foreign companies.

In the Model Law, reciprocity indicates that a domestic court will recognize and enforce a foreign court’s judgment only in the case if the foreign country has adopted an akin legislation to the domestic country. Thus on Reciprocity, the committee recommended that the Model Law may be adopted initially on a reciprocity basis which may be diluted upon reconsideration. Foreign proceedings and its relief are duly recognized under the Model Law. Relief will be provided irrespective of the fact that the proceeding is a main proceedings or non-main proceeding. Therefore, if the domestic court determines that the debtor has its centre of main interest in a foreign country; such foreign proceedings will be recognized as the main proceedings. This recognition will allow foreign representative greater powers in handling the debtor’s estate.

CONCLUSION: TWO-STEP FORWARD APPROACH

Cross Border Insolvency regime is a road talked boastfully about, but is a road not taken yet. Cross Border Insolvency, the less travelled road would make all the difference in India. It encircles three major circumstances: firstly, the debtor’s assets that are located in diverse jurisdictions and the creditors want to cover those assets for the purpose of insolvency proceedings, secondly, in safeguarding the creditors’ rights who have interest in the assets of the debtor located in the different jurisdiction, and thirdly, in cases when the insolvency proceedings have been initiated in more than one jurisdiction on the same Corporate Debtor. It is pertinent to mention that the majority of countries are yet to agree upon an amicable and a singular code or a treaty which is pivotal for bestowing and uncovering the blanket on such cases without inviting any difference of opinion or interest of the related parties.

In the era of neoliberalism, the proposed draft by the Insolvency Law Committee will empower Indian jurisdiction to deal with the matters pertaining to Indian companies having their assets overseas and vice versa. The balance in inclusion and exclusion will be a major game changer for the Indian jurisdiction. The chapter of Cross Border Insolvency under IBC is much awaited and would enable the legal framework to have effective assistance in situations of concurrent proceedings. Therefore, it is paramount for us to clean our lenses and take the road less travelled, the road which would yield our nation the benefit of lost battles in past and untimely progress in future.

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