FDI slippage worry
BEHIND THE NET FDI SLIDEHigh repatriation: MNCs take their investments back to their home country after earning returns through the automatic route after a three-year lock-in period, a share buyback and remittance of assets like proceeds from shares and securitiesExperts say there is a trading mentality among foreign investors rather than a commitment to long-term capital formationThis 'inward orientation' has been promi-nent especially after the global financial crisisThe multitude of regulations that companies need to comply with in India also make it tough to do businessOutward FDI: More Indian companies are expanding and diversifying by investing abroad, aided by the Overseas Direct Investment or ODI guidelines liberalised in 2022
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Hindustan Times
15 minutes ago
- Hindustan Times
India-US trade talks need political push for final leg
The fine print of a preliminary trade deal between India and the US has mostly been worked out by negotiators from both sides but the ball is now in the court of the political leadership to break a stalemate, people aware of the parleys told HT, disclosing two of the topmost sticking points that remain. Trade experts said an interim trade deal between India and the US is possible by July 9, provided both respect practical and political sensitivities of each other. (AFP File) According to these people, these issues are: an unequivocal assurance that New Delhi seeks from Washington that all punitive levies will be repealed, and a freer access to India's politically sensitive agriculture sector that the American side has sought. 'The two-day deliberation that started in Washington on Thursday will likely stretch over to next week,' one of these people, who has direct knowledge of the talks, told HT. Both sides are in a sprint to announce a breakthrough, which will be a preliminary deal covering some portion of the trade between two nations, with a larger bilateral trade deal expected to be signed by October. Once the deal is done, India wants America to withdraw all existing and potential retaliatory tariffs, including the 26% reciprocal tariff — this comprises a 10% baseline tariff imposed from April 5 and an additional 16% country-specific levy set to trigger from July 9. India also wants the US to revoke all safeguard duties disputed at the World Trade Organisation—50% on Indian steel and aluminium and 25% on automobiles and auto parts—and to reciprocate New Delhi's move by proportionately slashing its most favoured nation tariffs. 'Washington has not yet given any unequivocal commitment on these matters, which are crucial for Indian interests,' another person said. American negotiators have been suggesting India replicate the US-UK Economic Prosperity Deal model, where Britain accepted continued 10% baseline tariffs on most goods while securing relief from additional sectoral tariffs. However, Indian negotiators have rejected this approach. The other sticking point is the US insistence on India opening its agriculture and farming sector. While the American side is open to tariff rate quotas (TRQ) — a mechanism under which concessional duty or duty-free access of any specified item applies to a limited quantity — their insistence on some sensitive sectors is a challenge. 'The problem lies in wanting India to also open its sensitive sectors. Dairy imports are restricted for two reasons. First, India's dairy farming is at a subsistence level with one or two cows or buffaloes. The livelihoods of millions of farmers are at stake as they could not compete with America's commercial-scale dairy farms. Secondly, the US cattle feed includes non-vegetarian products, something against religious sentiments of Indian consumers,' a third person said. Similarly, India is unable to accept the US demand to allow unrestricted access to American agricultural items such as corn and soybean because Indian law does not permit genetically modified crops. 'America is unwilling to accept an institutional mechanism which would certify that its India-bound agriculture produce are not genetically modified, saying there is a practical problem in segregating GM and non-GM products,' this person said. This person added that solving such issues now require a political directive from the highest levels of the government. 'While majority of issues have been resolved with near consensus, including on removing tariff and non-tariff barriers on most of the items of interest for both countries, certain sensitive matters require political directives from the two leaders. An interim India-US trade deal, mainly involving goods, is possible to conclude before July 9, depending on political resolution of the stalemate,' the second person said. The Indian negotiating team could extend its stay in Washington next week and the two parties would discuss contentious issues, depending on any political directive, according to the first person. The Indian negotiating team led by chief negotiator and special secretary-commerce Rajesh Agrawal was still in Washington on Saturday, indicating that talks may extend into next week. Trade experts said an interim trade deal between India and the US is possible by July 9, provided both respect practical and political sensitivities of each other. Global Trade Research Initiative founder Ajay Srivastava outlined a likely scenario: 'The more likely outcome is a limited trade pact—styled after the US-UK mini trade deal announced on May 8. Under such a deal, India is expected to cut MFN tariffs on a wide range of industrial goods, including automobiles, a persistent demand from Washington. In agriculture, India may offer limited market access through tariff reductions and TRQs on select US products such as ethanol, almonds, walnuts, apples, raisins, avocados, olive oil, spirits, and wine.' 'However, India is unlikely to budge on sensitive sectors. No tariff cuts are expected for dairy products or key food grains like rice and wheat, where farm livelihoods are at stake. These categories are politically and economically sensitive, affecting over 700 million people in India's rural economy,' he added. Srivastava warned that 'the talks may collapse' if the US continues to insist on opening India's core agriculture sectors or allowing entry of GM products. The prudent move for Washington would be to respect Indian sensitivities and forge a deal for stronger strategic cooperation in future, he said, noting that 'agricultural goods account for less than 5% of US exports to India.' Another expert working in a multinational consulting firm said: 'Now it is the time for America to act as India has already given several concessions, making its intent clear for stronger and everlasting economic cooperation with the US.' After a week where tariffs took a back seat to the US strike on Iran's nuclear facilities and the massive tax and spending bill in the US Congress, the Trump administration's trade negotiations have picked up. News agency Reuters reported Washington had sent a new proposal to the EU on Thursday and held talks with Japan on Friday. Both India and Japan are in advanced negotiations.
Indian Express
24 minutes ago
- Indian Express
Behind Mazagon Dock's Lanka deal: Eye on China, Colombo bailout plea
A strategic move to contain China's expanding footprint in the region, a Sri Lankan SOS for bailout, and a failing Japanese firm — these were among the factors that led to the Indian government-run Mazagon Dock Shipbuilders Limited's decision to acquire a controlling stake in Sri Lanka's Colombo Dockyard PLC under a US$ 52.96 million deal, officials have told The Indian Express. Announcing its decision on Friday, Mazagon Dock Shipbuilders Limited (MDL) had said: 'Located in the Port of Colombo, Colombo Dockyard PLC (CDPLC) gives MDL a strategic foothold in the Indian Ocean Region — a key maritime corridor.' CDPLC, listed on the Colombo Stock Exchange, is the flagship of Sri Lanka's maritime industry and serves a wide spectrum of commercial and governmental clients across Asia, Middle East and Africa. Officials from both the Sri Lankan and Indian governments worked overtime to conclude this strategic deal on Sri Lanka's largest shipyard, said sources. According to officials, CDPLC has been in dire straits for some time. 'Since it is 51% owned by Onomichi Dockyard Company Ltd, they initially sought relief from the Government of Japan, and thereafter from the Government of Sri Lanka. However, neither government could provide any financial relief to them,' an official said. At the end of November 2024, Onomichi Dockyard exited from CDPLC. At this point, officials said, the Sri Lankan government requested the Indian government to encourage Indian investors to look at Colombo Dockyard. 'A default by CDPLC would be serious for the Sri Lankan government as, out of the remaining 49% stake, around 16% is owned by their Employees' Provident Fund. Sri Lanka's insurance fund owns around 9%, Sri Lanka Ports Authority 5% and so on. A default would also have brought great financial distress and uncertainty for the workers employed in Colombo Dockyard,' the official said. 'A few companies, with strong credentials, expressed an interest in CDPLC. As per the due process followed for a listed company, MDL was shortlisted in view of its prowess in shipbuilding as well as its financial strength. Both these aspects are key for the turnover of Colombo Dockyard,' the official said. MDL's net worth, represented by its market capitalisation, is approximately $15.12 billion as of June 25, 2025. The company is almost debt-free. It has reported a turnover of approximately $1.13 billion, according to officials. MDL's decision is expected to significantly change the shipbuilding and ship repair landscape in the region. With CDPLC its first international venture, it is seen as a major milestone in the company's transformation from a purely domestic shipbuilder into a regional maritime player with global aspirations. 'It demonstrates the appetite by Indian industry, including PSUs, to acquire strategic assets overseas and to build investment-led partnerships,' the official said. On the other hand, MDL's controlling stake will serve as a force multiplier for CDPLC, said officials. MDL will bring an order pipeline for CDPLC from both domestic and international market for repairs, refits and new builds, they said. The move is expected to boost the existing revenue stream from the Indian sub-continent's ship repairs. A number of orders for which potential clients are approaching MDL can be diverted to CDPLC, the official said. On sharing of expertise, the official said both the shipyards possess enormous expertise garnered over the past decades. 'This strength can be leveraged for mutual benefit and can result in a win-win scenario,' the official said. The resources available at both the yards can be shared for mutual benefit. 'For instance, the detailed design capabilities possessed by both the yards can be leveraged for projects at MDL as well as at CDPLC,' the official said. CDPLC, which is currently under financial distress, can benefit from MDL's strong financial capabilities, thereby expediting the turnaround process. CDPLC will now be in a position to secure contracts which it missed earlier due to poor financial health, the official said. In a regulatory filing, the Mumbai-headquartered shipbuilder said the proposed acquisition would enable the company to strengthen its position in the ship repair and shipbuilding industry by unlocking operational synergies, enhancing research development capacities and expanding market reach. 'It supports the company's long-term growth vision in the shipbuilding and ship repair industry,' it said. The move comes amid concerns in New Delhi over Beijing's persistent attempts to expand its strategic influence in the island nation. China Merchants Port Holdings holds an 85% stake in Hambantota International Port Group (HIPG) and secured a 99-year lease on the Hambantota International Port (HIP) in Sri Lanka in 2017. In July 2024, CDPLC and HIPG signed an agreement to set up a full-fledged workshop at HIP. Shubhajit Roy, Diplomatic Editor at The Indian Express, has been a journalist for more than 25 years now. Roy joined The Indian Express in October 2003 and has been reporting on foreign affairs for more than 17 years now. Based in Delhi, he has also led the National government and political bureau at The Indian Express in Delhi — a team of reporters who cover the national government and politics for the newspaper. He has got the Ramnath Goenka Journalism award for Excellence in Journalism '2016. He got this award for his coverage of the Holey Bakery attack in Dhaka and its aftermath. He also got the IIMCAA Award for the Journalist of the Year, 2022, (Jury's special mention) for his coverage of the fall of Kabul in August 2021 — he was one of the few Indian journalists in Kabul and the only mainstream newspaper to have covered the Taliban's capture of power in mid-August, 2021. ... Read More
India.com
3 hours ago
- India.com
This 'F' word is pushing India backword, can't defeat China due to..., why is 6400000000000 scaring India
This 'F' word is pushing India backword, can't defeat China due to…, why is 6400000000000 scaring India Indian states are going to increase their spending on social welfare schemes. It is estimated that these states will spend about 2 percent of their Gross State Domestic Product (GSDP), or Rs 6.4 lakh crore in 2025, much more than the previous year's spending. Several states have introduced schemes such as monthly income for women and free travel in government-run buses. These welfare schemes have increased the expenses of the states. This has raised concerns as this level of spending is expected to impact India in many ways. Will India Be Able to Beat China Economically? Notably, to beat China economically, India will have to take visionary steps beyond just spending on social welfare. According to a report by rating agency Crisil, spending huge amounts on welfare schemes has reduced states' ability to spend on infrastructure development and other development works. Crisil analysed the budget of 18 major states which account for nearly 90precent of the total GSDP. The central government, on the other hand, also spends huge amount on several welfare schemes such as Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), Jal Jeevan Mission, PM Kisan, PM Awas Yojana and PM Poshan. The central government has allocated Rs 86,000 crore for MNREGA that too only for this year. What Kind Of Warning Is This? Crisil has warned that increased state spending on welfare programs, particularly those targeting women, children, and marginalised groups, will widen their revenue deficits. This surge in spending, consistent with previous years at 1.4 to1.6 percent of GSDP between FY19 and FY24 will likely curtail states capacity for capital investment. The rise in expenditure is attributed to pre-election initiatives, including income support schemes and free public transportation for women. What Is Needed To Defeat China? To overtake China economically, India has to take concrete and far-sighted steps rather just spending on social welfare schemes. Focus on productive investments India should focus on creation of world-class infrastructure like roads, railways, ports, power, digital connectivity. These developments will reduce logistics costs and boosts industries. Investments in education, healthcare, and skills development is also needed to create a skilled and healthy workforce. India has to work on increasing public and private investment in research and development. This will promote innovation. Notably, China has invested big in this. Development of the manufacturing sector China's robust manufacturing sector significantly contributes to its economic growth. India's economic progress requires bolstering initiatives like 'Make in India' by streamlining manufacturing establishment, offering tax benefits, and enhancing global supply chain integration. Emphasis on exports China has an export-oriented economy. India also needs to expand its export base in high value-added goods and services. Policy stability A stable policy environment is essential to attract investors. Improving the ease of doing business will automatically reduce red tape. Financial discipline Both the states and the Centre must keep the fiscal deficit under control. This will reduce debt and increase revenue.
