India-EU Free Trade Agreement
talks
1)
India has concluded agreements with ASEAN, Japan, Singapore and
Korea.
2)
The meeting of the OECD countries scheduled for June offers an
opportunity for both sides to draw up a road map.
3)
Chronological events :
i.
The EU identified India as a ‘strategic partner’ in 2004
ii.
A Joint Action Plan was signed in 2005
iii.
Negotiations on the proposed Broad-based Trade and Investment
Agreement (BTIA) were launched in June 2007
iv.
Eight years down the line, some contentious issues still remain
4)
India-EU trade :
i.
The EU is one of India’s largest trading partners and a major
source of FDI.
ii.
The value of EU-India trade grew from €28.6 billion in 2003 to
€72.5 billion in 2014, while trade in commercial services rose from €5.2
billion in 2002 to €23.7 billion in 2013.
5)
Areas of disagreements :
i.
EU is unhappy with India’s protectionism in the automobile sector.
ii.
EU wants steep cuts in duties, and tariff cuts in things such as
wine, spirits and dairy products.
iii.
But tariff cuts in the agricultural sector would mean Europe’s
heavily subsidised agro industry will dump its surplus here, hitting Indian
farmers.
iv.
India’s generic drug market also raises intellectual property
concerns for European pharmaceutical corporations.
v.
On the other hand, India is unhappy with the EU not recognising it
as a “data secure nation”, and with what the EU has to offer in the area of
IT/BPO/ KPO services (Mode 1) and the movement of skilled professionals (Mode
4).
6)
Another criticism levelled against the FTA talks has been over
lack of transparency and inadequate consultations with civil society
participants.
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Draft guidelines on Gold Monetization Scheme
1)
The union govt. is considering allowing banks to
utilise gold mobilised under the monetisation scheme for meeting mandatory
liquidity requirements set by RBI, according to a draft guidelines on the
scheme.
2)
To
incentivise banks, it is proposed that they may be permitted to deposit the
mobilised gold as part of their CRR/SLR requirements with RBI.
3)
Benefits to banks : CRR is 4% and SLR is 21.5% i.e.
25.5% of cash deposit mobilised by banks are locked in these two statutory
ratios. So, if mobilised gold is considered for meeting the CRR and SLR
requirements, then banks would have additional cash for lending purpose.
4)
The
value of gold will be considered as deposits for meeting the reserve ratios.
5)
Benefits to depositors : The interest earned the gold
deposit would be exempt from income tax as well as capital gains tax.
6)
The
scheme is proposed to be initially introduced only in selected cities.
7)
How the scheme works?
i.
A
customer brings in the gold to the counter of specified agency or bank.
ii.
The
purity of gold is determined from BIS-approved hallmarking centres and exact
quantity of gold is credited in the metal account.
iii.
Customers
may be asked to complete KYC (Know-Your-Customer) process.
iv.
The
deposited gold will be lent by banks to jewellers at an interest rate little
higher than the interest paid to customer.
v.
Customer
will have the choice to take cash or gold on redemption, but the preference has
to be stated at the time of deposit.
8)
How is the interest
rate calculated?
i.
Both
principal and interest to be paid to the depositors of gold, will be valued in
gold.
ii.
For
example, if a customer deposits 100 gm of gold and gets 1% interest, then, on
maturity he has a credit of 101 gm.
9)
Basic Facts :
i.
minimum
tenure of 1 year
ii.
minimum
quantity of deposits - 30 gm
iii.
The
gold can be in any form, bullion or jewellery
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