India Market Watch: GST Deadline Looks Increasingly Improbable, India and UK Sign Ease of Doing Business MoU
Goods and Services Tax (GST) Regime Looks Set to Miss April 1 Deadline
A direct fallout from Prime Minister Narendra Modi’s shock demonetization announcement on November 8, rising acrimony from the political opposition threatens to block any progress towards implementing the GST regime. A major obstacle is reaching an agreement between central and state financial officials over the administration of the GST. Some states are also holding their ground over the issue of compensation for revenues they fear will be lost once the GST gets launched. On the other hand, the government is of the firm view that a central agency must audit and scrutinize taxpayers; dual agencies for the same would result in discrepancies, and be at cross-purposes with the reformed tax regime.
The three revised GST enabling bills – Central GST, Integrated GST and State GST – need to be passed before December 16, the last working day of the winter session of parliament, in order for the GST to be effectively rolled out on April 1, 2017. Given that Monday and Tuesday were holidays for parliament for Eid Milad-un-Nabi, only three working days remain. Moreover, the most recent meeting of federal and state officials of the GST Council on December 11 ended without resolution. However, without a green light from the GST Council, no legislative discussion can move forward in parliament. Another GST Council meeting is now scheduled for December 22.
India’s E-Commerce Market Forecast to Overtake US by 2034
A report by global payments firm Wordplay foresees India overtaking the US in terms of its exponential growth in e-commerce by 2034. The online shopping segment is expected to grow by 28 percent year on year from 2016 to 2020 for India, opening up vast opportunities for firms operating in the online world. Wordplay bases its projections off the rapidly increasing internet penetration in the country, a burgeoning millennial population, and the continued rise of mobile phones. According to the ‘Household Survey on India’s Citizen Environment & Consumer Economy’ (ICE 360° survey) for 2016, 88 percent of Indian households now own a mobile phone. Further, India’s online population is already about 350 million strong and is touted to reach 600 million by 2020. Finally, 70 percent of the country’s population is below the age of 35 and millenials are currently driving the jump in mobile and e-commerce, both of which have enormous implications for increases in India’s future online spend.
Collectively, these high-growth enablers explain Wordplay’s optimistic forecast for India’s online commerce market, which is expected to reach US$ 63.7 billion by 2020, and become the second largest in the world by 2034. The momentum and scale of growth potential is not lost on major firms, reflected in the heated competition between homegrown companies like Flipkart and Snapdeal versus global heavyweights like Amazon and Alibaba.
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India and UK Sign Ease of Doing Business in India MoU
India and the United Kingdom recently signed an MoU to support ease of doing business in India. The agreement will enable the exchange of officials from both Governments to facilitate the sharing of best practices. The UK government will also be able to offer technical assistance and advice on the enhanced implementation of reforms, which are vital for India’s efforts to achieve a more conducive business climate.
Under the MoU, various government agencies from the UK will be able to offer professional courses on regulation drafting for officials, capacity building of frontline inspectors, and promote the adoption of innovative practices by India’s central and state governments and their agencies. The UK government has also offered to share its expertise on several key areas, which include establishing support for small businesses and startups; starting a business and its registration; payment of taxes and tax administration; insolvency; and risk based framework for inspection and regulatory regimes.
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