FOREIGN TRADE . EXPORTS . IMPORTS

While GST has become popular as a 'One Nation-One Tax' formulation, the realities of implementation may be more complicated than political

negotiations in the Parliament. Will reorganisation of the complex

indirect tax structure of the country augment India's GDP, inspire

Make In India and boost exports? The Dollar Business analyses

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w.thedollarbusiness.com

Vol.3 Issue 09 September 2016

100 $2 RNI: APENG/2014/54643

GOODS & SERVICES TAX (GST)

IS GST SIMPLY OVERRATED?

BumpersTime to bump up your profits

They are in for a smooth ride, globally

DatesWriting a mouth-watering script

What makes India its largest importer

Cotton handbagIt's all about style!

Double-digit profits are not a big deal

www.thedollarbusiness.com Vol.3 Issue 09 September 2016 100 $2

RICHARD R. VERMAUS Ambassador to India

ARUN MALHOTRAManaging Director,Nissan Motor India

KIRAN V.GM, International Marketing,

Bharat Electronics Ltd.KUNWER SACHDEV

Founder & MD, Su-Kam Power Systems Ltd.

VIKAS ANAND Managing Director,

DHL Supply Chain IndiaSANJEEV AGARWAL

CEO, Gitanjali Exports Corp Ltd....AND MORE!

EXCLUSIVE INSIDE

8 THE DOLLAR BUSINESS II SEPTEMBER 2016

Volume: 3 Issue: 09 September 2016

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COVER STORY 22

The Goods & Services Tax (GST) Bill was finally passed in the Upper House of the Parliament in early August. It has been touted by many to be the catalyst that India requires to grow – create a sustainable economy, generate employment,

promote ease of doing business and make Indian goods more competitive in global markets, thus

providing a boost to exports. The all-important rate though still needs to be decided. But will GST

really able to live up to India’s expectations? The Dollar Business analyses

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© Copyright 2016No part of this magazine may be reproduced in whole or in part without an ex-pressed permission of the publisher. The information on this magazine is for information purpose only. Manish K. Pandey, Editor, The Dollar Business, is re-sponsible for the selection of news and content under PRB Act. Vimbri Media Pvt. Ltd. assumes no liability or responsibility for any inaccurate, delayed or incomplete information, or for any actions taken in reliance thereon. The information contained about each individual, event or organisation has been provided by such individual, event organisers or organisation without verification by us. All disputes are subject to exclusive jurisdiction of competent courts and forums in Hyderabad, Telangana.Printed and published by Avnish Goyal for Vimbri Media Pvt. Ltd. Published at 5-2-198/4, Distillery Road, Ranigunj, Secunderabad - 500 003, Telangana.

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GOODS & SERVICES TAX (GST)

FINAL PIECE OR

A NEW PUZZLE?

SEPTEMBER 2016 II THE DOLLAR BUSINESS 9

TDB POWER SERIES CONCLAVE 2016-17

Glimpses of the Monsoon Edition of The Dollar Business Power Series Conclave, held at New Delhi, on August 24, 2016

INBOX LETTERS TO THE EDITORReaders’ feedback, criticism, and appreciation that hit our mailbox in August 2016

MONOLOGUE PEOPLE SPEAKFrom Narendra Modi on GST, to Theresa May on life after Brexit, to Barack Obama on TPP& more

GLOBAL TRADE Hillary Clinton turning her back on TPP, impact of Brexit on Ireland, oil exports from Libya and more...

INDIA TRADE India’s changed stance on RCEP, to Goan Feni being granted the heritage tag & more...

SPOTLIGHTUNITED STATES OF AMERICAThe economic powerhouse is fac-ing a challenge from China

SECRET INGREDIENTBUMPERSThe growing global aftermarket for bumpers promise generous profits for Indian exporters

IMPORT’ONOMICSDATESZealous Indian importers of this de-lectable fruit may make some good bucks this season

THE MIDAS TOUCHCOTTON BAGS These dainty little bags offer big opportunities to exporters

CASE STUDYORGANIC HARVESTThe company is slowly and surely making its presence felt overseas

DOCKYARDVISAKHAPATNAM PORTThis port will play a pivotal role in the East Coast in the coming times.

TDB FORUMQuestions about foreign trade that hit our mail box in August 2016

DATEBOOKSome must visit trade shows

ARUN MALHOTRAMANAGING DIRECTOR, NISSAN MOTOR INDIATalks about the company’s stellar export performance, and his faith in ‘Make in India’

KIRAN V.GM – INTERNATIONAL MARKETING, BHARAT ELECTRONICS LTD.Unravels the opportunities in India’s defence sector

RICHARD R. VERMAUS AMBASSADOR TO INDIATalks about the strengthening relationship between US and India and the need to create consensus on bilateral trade issues

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KUNWER SACHDEVFOUNDER & MD, SU-KAM POWER SYSTEMS LTD.On how the homegrown company has expanded its footprint across the globe

M. RAFEEQUE AHMEDCHAIRMAN, COUNCIL FOR LEATHER EXPORTSDiscusses the issues affect-ing the Indian leather industry

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22 THE DOLLAR BUSINESS II SEPTEMBER 2016

COVER STORY GOODS & SERVICES TAX (GST)

BY TDB INTELLIGENCE UNIT

Prime Minister Narendra Modi was in his element when he congratulated the country on the passage of the much-touted Goods and Services Tax (GST) Bill in the Upper House of the Parliament, claiming that the new tax regime will rid the country of tax-terrorism. The tax regime which was proposed about a decade back as the panacea that would clean up the messy and complex indirect tax structure of the country, is expected to give India's GDP a fillip, apart from boosting exports. "Expected" is the word. While GST has become popular as a 'One Nation-One Tax' formulation, the realities of implementation may be more complicated than political negotiations in the Parliament. Truth is GST, for which the ruling administration has set a go-live date of April 1, 2017, is in no way a one-tax rule. As things stand, the Centre has agreed to subsume excise duty, additional excise duty, service tax, countervailing duty, surcharge and cess, and central sales tax into the waiting arms of GST. The States have agreed to give up VAT (sales tax), entertainment tax, luxury tax, taxes on gambling, octroi and entry taxes, cess and purchase tax. GST will thus replace all of these taxes. The all-important tax rate though remains to be agreed upon. The Dollar Business analyses the impact of GST on the Indian economy and its foreign trade.

GOODS AND SERVICES TAX

A PANACEA FOR ALL WOES?

SEPTEMBER 2016 II THE DOLLAR BUSINESS 23

BY TDB INTELLIGENCE UNIT

Await of more than a decade came to an end on August 3, 2016, when the 122nd Con-stitution Amendment Bill,

2014 (popularly known as GST Bill) was passed by the Upper House of the Par-liament of India. This is apparently the country's biggest tax reform since Inde-pendence. Some achievement therefore for the Indian democracy. The new tax regime, which subsumes all indirect tax-es such as sales tax and excise tax, is ex-pected to bring down tax rates in India, while converting the country into a big single market. In short, now, seamless flow of goods and services will occur across 29 states and 7 union territories!

Many believe the landmark Goods and Services Tax Bill (GST) passed by the two houses of the Parliament – after years of back and forth by the ruling par-ty and main opposition (both the present ruling and main opposition parties have supported and opposed the Bill depend-ing on whether they were in power or in the opposition) – is a key step that would

catapult India into the big league in glob-al supply chain. The implementation of the Bill is expected to ease India's cum-bersome tax system, help goods move seamlessly across state borders, curb tax evasion, improve compliance, increase revenues, spur growth, boost exports, and attract investments by improving ease of doing business in India.

In short, GST when implemented, is expected to perform miracles. But, can it really? And considering that the Bill still needs to be ratified by at least 13 more state legislatures (over and above the three states Assam, Bihar and Jharkhand, which had already passed the bill, as on August 22, 2016) before the President of India can notify the GST Council to de-cide on the new tax rate and other issues with respect to GST, will it be a easy jour-ney for the GST to the finish line?

India is by no means the first country to experiment with a unified tax regime. 160 countries already have some form of GST or a value added tax. What makes GST in India special is that as opposed

to a federally administered regime, the Union and state governments will jointly administer India’s dual GST. This means it will be a set of many different taxes – a GST for each of the 29 states and two union territories (SGST), a Central GST (CGST), and an Integrated GST (IGST; which will be a combine of CGST and SGST on inter-state supplies of goods and services). That surely is not as uni-fied as it seems.

Interestingly, India will be one of the very few countries with a dual GST re-gime alongside Canada and Brazil. The all-important rate is yet to be finalised, with the final standard rate possibly ly-ing between 15% to 27%, though 18% is the rate that seems to be gaining a sort of consensus amongst pundits. The prob-lem though is that the pundits won’t de-cide the rate!

GST rate will be decided in the com-ing months by a GST Council that will prise the Finance Minister with a repre-sentative from each state government. As such it will be negotiated amongst