India Regulatory Brief: Indian Mines Open up to Auction, India-ASEAN FTA from July
India to begin auctions for iron ore, bauxite, zinc and copper mines
On January 12, the Indian government issued an executive order for the auction of iron ore, bauxite, zinc, copper, and a number of other mines. The announcement follows similar directives made in October last year, when India’s coal mining industry was denationalized and opened up to the private sector.
The announcement will end almost 60 years of central and provincial governments’ complete control of India’s mines. Previously, licenses were sold to firms without any competitive bidding, which led to allegations of corruption and resulted in bad performance levels for numerous important mines. The new policy is therefore intended to enhance transparency and boost productivity. Licenses will be issued for a period of up to fifty years, with provincial governments selecting which mines go up for auction and central government setting the rules for bidding.
India-ASEAN services FTA to be in Force from July 2015
India’s free trade agreement (FTA) in services and investments with the Association of Southeast Asian Nations (ASEAN) will come into force from July 1, 2015. Signed in September last year, the FTA will reduce tariffs on trade to bolster the services sector and encourage investment.
India signed an FTA in goods with ASEAN in 2009, but existing low tariffs meant growth remained static. Bilateral trade between India and ASEAN reached US$56 billion in 2013, and ambitious targets have been set for the end of 2015 in line full free trade compliance of the ASEAN Economic Community when members Cambodia, Laos, Myanmar and Vietnam come fully into line.
Indian industry body pushes for jewelry trade regulation reform
Last week, All India Gems and Jewelry Trade Federation (GJF) urged the Finance Minister of India to bring down the import duty on gold from 10 percent to two percent. A recommendation to the Union Finance Ministry stated that the existing import duty was harmful to the country’s trade and mostly benefitted smugglers. The GJF also recommended that jewelry be excluded from all bilateral or multilateral FTAs and that the government create a more comprehensive gold policy for India. The GJF is the largest single trade body in the country for the promotion and growth of trade in gems and jewelry.
Corporate fraud in India rises by 45 percent: Study
Corporate fraud has risen by over 45 percent over the last two years in India, according to a study by Assocham and Grant Thornton released last week. The report shows that corporate frauds arose out of corruption, money laundering, tax evasion, window dressing, financial reporting fraud and bribery due to weaknesses in internal controls, scarcity of resources, and over-riding powers of senior management.
Companies related to the real estate and infrastructure sector (52 percent) and financial services (34 percent) were said to be the most vulnerable to fraud-related incidents. In addition, 71 percent of survey respondents believed incidents of fraud would continue to rise over the next five years, with bribery, corruption, and regulatory noncompliance being the most common frauds experienced.
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