Voice of America (VOA) reported that in response to the US’s decision to raise tariffs on imports from China, Chinese officials have strongly vowed to retaliate, emphasizing that this action will significantly impact bilateral cooperation with the US. The White House stated on Tuesday that President Joe Biden has instructed his Trade Representative to elevate tariffs on $18 billion worth of imports from China, encompassing semiconductors, solar cells, batteries, and crucial minerals, with the aim of safeguarding American workers and businesses.

China’s Ministry of Commerce, in a reply to the US’s move, stated, “This will seriously affect the atmosphere of bilateral cooperation. The United States should immediately correct its wrongdoing and cancel the additional tariffs imposed on China. China will take resolute measures to defend its rights and interests.”

The White House announcement on Tuesday came at the conclusion of a statutory review of tariffs, which occurs every four years.

It further stated that the decision has come in response to China’s ‘unfair trade practices’ and to counteract the resulting harms. “China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers. China is also flooding global markets with artificially low-priced exports. In response to China’s unfair trade practices and to counteract the resulting harms, today, President Biden is directing his Trade Representative to increase tariffs under Section 301 of the Trade Act of 1974 on USD 18 billion of imports from China to protect American workers and businesses,” the White House statement read.

The statement on hiked tariffs on imports from China also noted that the Chinese government has used unfair and non-market practices for too long now. Moreover, US President Biden accused the Chinese government of “cheating” when it competes with other nations in international trade. “For years, the Chinese government has poured state money into Chinese companies across a whole range of industries: steel and aluminium, semiconductors, electric vehicles, solar panels – the industries of the future–and even critical health equipment, like gloves and masks,” he said. “China heavily subsidised all these products, pushing Chinese companies to produce far more than the rest of the world can absorb,” Biden said. “And then dumping the excess products onto the market at unfairly low prices, driving other manufacturers around the world out of business.”

Additionally, Biden said that the existing tariffs, many of which were put in place during the administration of former President Donald Trump, would remain in place and that the additional tariffs would target specific products and industries.

Moreover, along with the 100 per cent tariff on electric vehicles, the administration is also planning new levies on electric vehicle batteries, certain kinds of semiconductors, solar cells, and equipment used in the health care industry, including face masks, medical gloves, syringes and needles.

Deputy Governor Swaminathan J of the Reserve Bank of India (RBI) emphasized the imperative for Non-Banking Financial Companies (NBFCs) to bolster their governance and assurance functions while remaining vigilant against potential risks and vulnerabilities. Speaking at an interaction in Mumbai, attended by about 280 participants from over 100 NBFCs, Deputy Governors M Rajeshwar Rao and Swaminathan J addressed the attendees.

The conference, primarily targeting Heads of Assurance Functions such as Chief Compliance Officers, Chief Risk Officers, and Heads of Internal Audit of select NBFCs, focused on the critical role of these functions in ensuring the stability and resilience of the financial sector. Swaminathan J underscored the heightened exposure of NBFCs to various risks, including cybersecurity threats and operational vulnerabilities. He articulated the RBI’s expectations regarding assurance functions, emphasizing the need for independent and effective oversight mechanisms.

Highlighting specific risks such as cybersecurity threats, operational challenges, credit risks arising from rule-based credit models, and liquidity risks, Swaminathan J conveyed the RBI’s supervisory expectations from regulated entities. The emphasis was on fostering fair and transparent conduct towards customers while ensuring robust risk management practices within NBFCs.

Deputy Governor M Rajeshwar Rao also contributed to the discourse by shedding light on contextual issues relevant to assurance functions. He discussed topics such as third-party dependencies, operational risks, customer conduct, and transparency in operations. Rao elaborated on the transformative journey witnessed in the Indian financial landscape and the significant contribution of the NBFC sector to this evolution.

The conference, attended by senior officials including Executive Directors S C Murmu, Saurav Sinha, J K Dash, and Rohit Jain, alongside representatives from the Regulation and Supervision departments of the RBI, featured technical sessions on the three Assurance Functions led by Chief General Managers of the RBI. These sessions aimed to delve into the nuances of governance, risk management, and internal audit within the NBFC sector.

Additionally, presentations were made by Heads of Assurance Functions from select NBFCs, offering insights into best practices and challenges encountered in their operational domains. The overarching theme of the event, ‘Resilient Financial System – Role of Effective Assurance Functions’, underscored the pivotal role of these functions in fostering stability and resilience within the financial ecosystem.

The conference, part of a series of supervisory engagements organized by the RBI over the past year with its regulated entities, exemplified the central bank’s commitment to proactive regulatory oversight. By facilitating dialogue and knowledge-sharing among stakeholders, such initiatives aim to enhance risk awareness, promote adherence to regulatory standards, and fortify the overall integrity of the financial system.

Previous iterations of this series included a conference for Heads of Assurance Functions of Scheduled Commercial Banks held in January 2024. The recurrence of such engagements underscores the regulatory focus on fostering robust governance frameworks and risk management practices across diverse segments of the financial sector.

In summary, the interaction between RBI Deputy Governors and Heads of Assurance Functions of NBFCs served as a platform to underscore the importance of governance, risk management, and internal audit in safeguarding the stability and resilience of the financial system. Through collaborative efforts and proactive engagement, regulators and industry stakeholders endeavour to promote a sound and resilient financial ecosystem conducive to sustainable growth and stability.

The central government has implemented a reduction in the windfall tax imposed on crude petroleum, as per a recent government notification. Effective immediately, the special additional excise duty (SAED) on crude petroleum has been decreased from Rs 8,400 per tonne to Rs 5,700 per tonne.

This adjustment in taxation, which is subject to revision every fortnight, maintains the special additional excise duty (SAED) at zero for diesel and aviation turbine fuel, keeping it unchanged.

The government’s decision to lower the windfall tax on petroleum crude follows a series of adjustments in recent weeks. On May 1, the windfall tax on petroleum crude was set at Rs 8,400 per ton, down from its previous level of Rs 9,600 per ton. However, just earlier on April 16, the government had raised the windfall tax on petroleum crude to Rs 9,600 per ton from Rs 6,800.

A windfall tax is levied on unexpectedly large profits, aiming to regulate situations where companies experience unforeseen or unusually high gains. In India, this tax was introduced in July 2022, targeting crude oil producers and exports of gasoline, diesel, and aviation fuel. Its implementation was reportedly in response to efforts by private refiners to prioritize overseas sales over domestic distribution, seeking to capitalize on favourable refining margins.

The rationale behind the windfall tax lies in its role as a mechanism to mitigate potential distortions in the market and ensure a level playing field among industry participants. By imposing taxes on windfall profits, the government aims to discourage excessive gains resulting from exceptional market conditions, thereby promoting fair and equitable economic outcomes.

The reduction in the windfall tax on crude petroleum signifies a nuanced approach by the government to balance revenue generation with industry dynamics. While the tax reduction may provide some relief to petroleum producers, it also reflects the government’s responsiveness to evolving market conditions and its commitment to fostering a conducive environment for economic growth.

Furthermore, the decision to maintain the special additional excise duty (SAED) at zero for diesel and aviation turbine fuel underscores the government’s strategic considerations in addressing sector-specific challenges and priorities. By refraining from imposing additional taxes on these essential fuels, the government aims to support sectors critical to sustaining economic activities and ensuring smooth transportation networks.

Looking ahead, the trajectory of the windfall tax on petroleum crude is likely to remain contingent on various factors, including global market dynamics, domestic demand-supply dynamics, and fiscal considerations. As the government continues to monitor these variables, future adjustments in taxation policies may be warranted to align with broader economic objectives and industry imperatives.

In summary, the central government’s decision to reduce the windfall tax on crude petroleum reflects a nuanced approach to taxation and economic management. While aimed at ensuring fairness and stability in the petroleum sector, this measure also underscores the government’s responsiveness to changing market conditions and its commitment to fostering a conducive environment for sustainable economic growth.

The Choose France Summit strengthens economic ties between India and France through significant investment commitments by Indian companies, highlighting their growing partnership.

Indian companies made significant commitments at the Choose France Summit held in Paris this week, signaling a deepening of economic ties between the two nations. Motherson, a prominent player in manufacturing, announced its investment to acquire a French company, positioning France as the central hub for its global aerospace strategy. Additionally, IT services giant TCS pledged to establish a Global Artificial Intelligence Centre in Paris.

The French Embassy in India shared these developments on its social media platform, highlighting the importance of these investments. Overall, about Rs 1.35 lakh crore of new investments were announced at this year’s summit, with the Indian projects contributing substantially to this figure.

President Emmanuel Macron met with Indian CEOs during a special session dedicated to India, underscoring the growing partnership between the two countries. He welcomed the increasing Indian investments in France and emphasized the potential for further collaboration.

The Choose France Summit, an annual flagship business event hosted by President Macron, aims to promote France’s economic attractiveness and encourage international investment. This year, India was honored as the first-ever country of focus, with a dedicated roundtable and participation from leading Indian CEOs.

Among the Indian business leaders present at the summit were Sunil Bharti Mittal, Chairman of Bharti Enterprises, N Chandrasekaran, Chairman of Tata Sons, and Pankaj Munjal, Chairman and MD of Hero Cycles, among others. Their presence underscored India’s keen interest in expanding its footprint in France.

France has positioned itself as the most attractive European economy for foreign investments, with favorable economic conditions such as lower inflation, ongoing reforms, and reduced tax rates. This has made the country an appealing destination for foreign investors, including Indian companies like L&T Technology, TCS, and Tata Tech, which have already established a presence in France.

Since its inception in 2018, the Choose France Summit has played a pivotal role in promoting France’s economic attractiveness on the global stage. Convened by the President and members of the Government, the summit brings together leaders from multinational corporations to explore investment opportunities across France.

Last year’s summit witnessed substantial investment commitments totaling over 13 billion Euros for 28 projects, highlighting the event’s effectiveness in attracting international capital. With the continued success of the Choose France Summit and the deepening economic partnership between India and France, both countries stand to benefit from enhanced collaboration and investment opportunities in the years to come.

The Choose France Summit serves as a platform for fostering dialogue and cooperation between France and its international partners. With India being honored as the country of focus this year, the summit has further solidified the bilateral ties between the two nations. The presence of prominent Indian CEOs underscores the mutual interest in exploring opportunities for investment and collaboration. As France continues to enhance its economic attractiveness through reforms and favorable policies, Indian companies are increasingly looking to leverage these opportunities for growth and expansion in the European market.

The Choose France Summit plays a crucial role in facilitating this exchange and driving economic cooperation.

The Minister of Ports, Shipping, and Waterways, Sarbananda Sonowal, is currently visiting Tehran for the signing ceremony of a long-term cooperation agreement between Iran and India, engaged in discussions with Iranian Foreign Minister Hossein Amirabdollahian. According to an official release from Iran’s Ministry of Foreign Affairs, Amirabdollahian emphasized Iran’s strategic approach to its relations with India, expressing readiness to enhance cooperation bilaterally, multilaterally, and within frameworks such as BRICS and the Shanghai Cooperation Organization (SCO).

Iran’s Foreign Minister described India as a reliable partner, emphasizing Iran’s commitment to long-term cooperation with India. The discussions also highlighted the signing of a contract to equip and operate terminals at the Shahid Beheshti Port in Chabahar, along with enhancing cooperation in both the north and south corridors. Amirabdollahian emphasized the significance of these developments in boosting trade between the two nations and the wider region.

Moreover, the Iranian government expressed readiness to support the implementation of the contract through various departments. Sonowal, in response, expressed satisfaction with the agreement, labeling it as a significant and historic milestone in bilateral relations and regional ties. He emphasized the potential for business development opportunities arising from the contract’s implementation.

Sonowal highlighted the importance of the signed agreement in strengthening ties between Iran and India, as well as positioning India within the global supply chain and maritime sector. He stressed that the deal aligns with India’s business plans, offering an alternative trade corridor for India, Iran, Afghanistan, and Central Asian countries.

The agreement underscores India’s commitment to deepening economic and strategic ties with Iran, particularly in the context of the Chabahar Port project, which holds immense significance for regional connectivity and trade. By investing in the development of Chabahar Port, India aims to bypass Pakistan and establish a direct trade route to Afghanistan and Central Asia, reducing dependency on traditional routes.

The cooperation between India and Iran in the maritime domain is viewed as a strategic move to counter China’s expanding influence in the Indian Ocean region through its Belt and Road Initiative (BRI). India’s involvement in the Chabahar Port project not only enhances its regional connectivity but also serves as a counterbalance to China’s growing presence in neighboring Pakistan’s Gwadar Port.

Furthermore, the signing of the long-term cooperation agreement reflects the mutual trust and confidence between Iran and India, paving the way for deeper economic engagement and collaboration in various sectors. The agreement holds significant potential for enhancing bilateral trade, facilitating smoother logistics, and promoting economic growth in both countries.

In conclusion, the meeting between Sarbananda Sonowal and Hossein Amirabdollahian underscores the mutual commitment of India and Iran to strengthen their strategic partnership and enhance economic cooperation, particularly in the maritime domain. The signing of the long-term cooperation agreement marks a significant milestone in bilateral relations, offering promising opportunities for both nations to leverage their strengths and foster mutual prosperity.

Merchandise exports charted a very mild growth amidst global challenges with electronic goods, drugs & pharmaceuticals, organic & inorganic chemicals and petroleum products keeping India’s outbound shipments on positive trajectory.

Amidst a ballooning trade deficit of USD 19.1 billion in April 2024, India’s exports increased sluggishly by 1.08 per cent year-on-year at USD 34.99 billion last month — as compared to USD 34.62 billion in April 2023 – with electronic goods, organic and inorganic chemicals, petroleum products and drugs and pharmaceuticals acting as main drivers of merchandise exports growth during April 2024. Merchandise imports in April 2024 were USD 54.09 billion, as compared to USD 49.06 billion in April 2023.

Commerce Secretary Sunil Barthwal said the new fiscal year had started on a good note and hoped that it continues. Aditi Nayar, Chief Economist ICRA notes that this was the highest merchandise trade deficit print in four months and was also much higher than ICRA’s expectations. “Notably, the widening in the non-oil deficit in April 2024 vis-à-vis April 2023 was entirely driven by a tripling in gold imports, partly aided by the surge in gold prices.

The total exports of merchandise and services in the first month of FY 2024-25 show strong growth of 6.88 per cent at USD 64.56 billion compared to USD 60.40 billion in April 2023. The total imports of merchandise and services combined in April 2024 is estimated to be USD 71.07 billion, exhibiting a positive growth of 12.78 per cent over April 2023. Ashwani Kumar, FIEO president, views the USD 34.62 billion exports in April 2023 as a positive start to the new financial year 2024-25 even during challenging times. “The ongoing Russia-Ukraine war coupled with various major geo-political tensions including the Red Sea crisis and Israel-Hamas conflict has also made the international trade scenario much tougher for the Indian exporters,” says Kumar.

Sectorally, export of non-petroleum and non-gems and jewellery which comprises the basket of gold, silver and precious metals, registered increase of 1.32 per cent to USD 26.11 billion in April 2024 from USD 25.77 billion in April 2023. Import of gold, silver and precious metals in April 2024 were USD 32.72 billion, compared to USD 32.13 billion in April 2023.

Electronic goods exports increased by 25.8 per cent from USD 2.11 billion in April 2023 to USD 2.65 billion in April 2024, organic and inorganic chemicals increased by 16.75 per cent from USD 2.14 billion in April 2023 to USD 2.50 billion in April 2024. Drugs and pharmaceuticals exports increased by 7.36 per cent from USD 2.26 billion in April 2023 to USD 2.43 billion in April 2024. Petroleum products exports were up by 3.10 per cent from USD 6.42 billion in April 2023 to USD 6.62 billion in April 2024.

In merchandise exports, 13 of the 30 key sectors exhibited positive growth in April 2024 as compared to same period last year (April 2023). These include coffee, tobacco, spices, cotton Yarn/Fabs./Made-Ups, handloom products etc, carpet, cereal preparations and miscellaneous processed items, petroleum products, plastic and linoleum and handicrafts excluding handmade carpet.

In merchandise imports, 14 out of 30 key sectors exhibited negative growth in April 2024. These include sulphur and unroasted iron pyrites, pearls, precious and semi-precious stones, cotton raw and waste, wood and wood products, coal, coke and briquettes, artificial resins, plastic materials, fertilisers, crude and manufactured, iron and steel, chemical material and products, organic and inorganic chemicals, machinery, electrical and non-electrical, dyeing/tanning/colouring materials, pulp and waste paper and transport equipment.

Services export for April 2024 also fell to USD 29.57 billion, as compared to USD 25.78 billion in April 2023. Services import for April 2024 stood at USD 16.97 billion as compared to USD 13.96 billion in April 2023.