India is currently ranked 100th on the World Bank’s “ease of doing business” scale, an impressive rise from its130th position in 2016. USINPAC interviewed Mr. Shashank Priya, an officer at India’s Goods and Service Tax (GST) office, to discuss India’s current ranking and to talk about the steps that are still needed for its continued improvement. Mr. Priya is one of the architects of India’s recent tax changes, a primary component of India’s rise on the ranking scale.

Mr. Priya recently attended a World Bank conference on the topic of improving a country’s ranking. The World Bank assesses a country’s “ease of doing business” on ten parameters. These are: Starting a Business, Obtaining Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading Across Borders, Enforcing Contracts, and Resolving Insolvency. According to Mr. Priya, the Government of India has been working on reforms in every parameter. Some of the factors responsible for India’s rise are the improvements that India made in procedures relating to starting a business and obtaining construction permits. In this regard, India has made doing business easier by providing for similar applications for procuring a Permanent Account Number (PAN) and a Tax Account Number (TAN), and by improving the online application system. For construction permits, India has streamlined the process by implementing an online system, thereby reducing the number of procedures required and the time involved to obtain a building permit.

As another step, India strengthened access to credit by adopting a new law on insolvency and amending the rules on the priority of secured creditors outside reorganization proceedings. For the payment of taxes, India introduced administrative measures that made it easier to comply with corporate income tax provisions and that allowed for payments to be made electronically to the Employees’ Provident Fund. India also eliminated the Merchant Overtime Fee, typically collected for inspections of export cargo done outside office hours, thus reducing the time it takes to comply with import regulations. All these factors have contributed to bringing more multinational corporations to India, leading to improving its rankings as well as boosting its economy.

According to Mr. Priya, the major tax reform happened in July of 2017 when a new indirect tax, GST, was introduced across India subsuming the then existing 15 central and state taxes and a plethora of other charges. Before the implementation of GST, taxpayers had to maintain multiple accounts, file multiple returns, pay multiple taxes, and face multiple audits from different authorities. Mr. Priya explained that GST, in subsuming all these taxes, now needs only one CGST (Central Goods and Services Tax) and one SGST (State Goods and Services Tax) to be paid on each transaction. This system simplified the taxes for consumers and businesses and has made it easier to do business.

Although India has undertaken consistent efforts in the last four years to reform the business climate, there is still a lot more to do. According to Mr. Priya, one of the factors holding India’s ranking down is the speed of the implementation of these reforms. He opined that “Reforms are to be carried out in a phased manner. There is a time lag between actual implementation and their appreciation by the majority of respondents.” Even though all these reforms require time, resources and money, Mr. Priya underlined India’s commitment to this process thus: “The implementation of reforms, whether of indirect or direct tax or new norms for registering companies or improving the environment for trading across the borders, are all aimed to improve the trade facilitation and business climate in India, which would help spur economic activity and investment. All this will help with the economic development of the country.”

From climbing up the World Bank rankings to becoming the sixth largest economy in the world, India is continuously progressing. It expects its ranking to improve as a result of its sustained efforts and commitment.

About Mr. Shashank Priya:

Mr. Shashank Priya is an officer of the Indian Revenue Service and serves the Government of India as Joint Secretary in the Goods and Services Tax (GST) Council, a Constitutional body with the mandate to recommend all tax rates, laws and rules and regulations thereunder, to the Union Parliament and the State Legislatures. For the last three years Mr. Priya has worked in various capacities of GST, such as Commissioner, GST, Additional Director General, GST and now as Joint Secretary, GST Council. He has contributed to legislative activities relating to the GST like the Constitution Amendment Bill, the Model GST Law and the GST Rules. He has also prepared the GST training materials and put together outreach programs for the Central and State Government officers. He recently participated in the deliberations of the World Bank team on the Ease of Doing Business Report, particularly relating to the ‘Paying Taxes’ Section.

Mr. Priya has 30 years of work experience on matters relating to indirect tax and the World Trade Organization. He served as a Professor in the Centre for WTO Studies in the Indian Institute of Foreign Trade and dealt extensively with issues relating to the WTO and Trade Facilitation. He worked for five years in the Trade Policy Division of the Department of Commerce as Deputy Secretary/Director. In these roles, he has represented India in negotiations in the WTO Ministerial Conferences in Cancun, Geneva and Hong Kong as well as in numerous WTO Committee meetings. He was the prime negotiator for bilateral trade agreements with SAFTA, Chile, Mercosur and ASEAN. He also has worked in different fields of Customs, Central Excise and Service Tax such as Central Excise Division, Anti-Smuggling, Appraising, Vigilance, Export Promotion and Service Tax.

He has contributed articles on WTO issues in newspapers/journals like the Economic Times, The Hindu Businessline, and eSocial Sciences and is the author of two books, namely ‘Review of Trade Policies of India’s Major Trading Partners’ and ‘Trade Facilitation Gap Analysis for Border Clearance Procedures in India.’ He has also authored a paper for UN ESCAP, Bangkok on ‘Cross-Border Paperless Trade’. Mr. Priya currently resides in New Delhi.

Electric vehicle (EV) use has been on the rise in recent years, but in India that market has started to stagnate. Previous attempts from the government have proven to be unfruitful at stimulating the EV industry in India. In this blog, we look at a study done by the International Energy Agency about how to implement effective policy. There are four pillars that the International Energy Agency accredits to successful policy: research and development support, achievable goals, financial incentives, and increasing overall value of EVs.

1.RESEARCH AND DEVELOPMENT SUPPORT FROM THE GOVERNMENT

There are currently only two companies manufacturing electric vehicles in India, TATA and Mahindra. For the EV industry to grow, there must be sufficient competition between manufacturers. Such competition would increase the quality of products and decrease the prices for buyers. However, considering the relatively new technology that EVs rely on, companies must first invest significant time and money into research and development to produce efficient cars that can compete in a market dominated by petrol and diesel-powered vehicles. If the Indian government were to fund manufacturers’ research on the subject, it would drastically increase the quality of the products and the number of competitors in the market. In early 2017, the government announced plans to fund up to 60% of R&D for electric two-wheelers, three-wheelers, and commercial vehicles. If such plans are carried out, companies would, with support from the government, be able to manufacture EVs that can compete with petrol and diesel powered vehicles.

2.ACHIEVABLE GOALS

Originally, the Indian government had set an ambitious goal of having only electric vehicles on the road by the year 2030. This perfectly exemplifies the overzealous and unattainable targets that are detrimental to the industry. Seeing as only two car manufacturers in India currently produce electric vehicles, claiming that the entire population will use EVs by 2030 exposes the Indian government is naiveté on the subject. Such goals fail to serve as motivation for manufacturers because they know the targets cannot be reached anyway, and therefore do not even attempt to achieve them. The CEO of Mercedes Benz India, Roland Folger, believes that the Indian government should not “rush with the all-EV push,” demonstrating the lack of belief in such goals from a company that is a significant part of the industry. Recently, the government announced that it is revising its goal to 30% electric cars by 2030 – a far more achievable target. This revised goal is likely to engender motivation in manufacturers, potentially helping the industry. However, smaller-scale goals – such as individual sales targets for companies – would also help drive manufacturers towards more precise targets.

3.FINANCIAL INCENTIVES

India could use the example set by the United States and implement policies that would incentivize the purchase of EVs by consumers. Tax credits and tax exemptions could be granted, potentially stimulating demand. Standard tax exemptions could be implemented for the purchase of new cars, and additional exemptions could be applied for vehicles with larger batteries or houses that install charging stations. If demand increases as a result of these incentives, domestic manufacturers will be forced to increase production. Furthermore, automobile companies that were otherwise not manufacturing EVs will recognize the vast potential for profits and will, therefore, enter the industry, increasing competition and reducing prices.

4.INCREASE THE OVERALL VALUE OF OWNING AN ELECTRIC VEHICLE

Considering the high property rates in most Indian cities, rates for parking spots in housing societies could be reduced for owners of electric vehicles. EV owners could be exempt from toll fees and the proposed road tax (the road tax is not yet in place). Companies and businesses could also be offered tax exemptions for installing charging stations in office parking spaces. In all, several policies could be implemented to increase the value, both monetary and non-monetary, of electric vehicle ownership.

Indian’s government could learn from other countries in the field of electric vehicle policy. The stuttering Indian EV industry could undoubtedly benefit from policy changes that have proven successful in countries such as the United States and Germany. However, arguably the most important lesson to be learned from other countries is not from their success, but from their failures. Even the United States, which has one of the largest EV industries in the world, was unable to reach its goal of selling 1 million electric vehicles by 2015. The goal, set by President Obama, proved to be far too ambitious as the United States had only achieved about 400,000 electric vehicle sales by the end of 2015. Thus, India must recognize that the transition to electric vehicles will be a slow one, as both consumers and producers collectively and steadily commit to the cause. Indeed, the success of the EV industry does not solely depend on the production and purchase of vehicles, but on a large scale structural change to the Indian economy. Small steps must be taken in order to change the transportation infrastructure in the country entirely, that will eventually result in a transition towards electric vehicles. Recognizing the magnitude of this task is the first step to shaping a successful EV industry.

To say that India’s relationship with its neighbors has never been fraught with tension, would be an understatement. While India has been a major power in South Asia due to its strategic position, China’s increasing presence and influence in South Asia has led to concerns about New Delhi’s rising presence in the region. Another important player in South Asia—the United States—has its own concerns about China and considers India as an important strategic partner.

India – U.S. relations have recently turned sour on matters of trade. Furthermore, several South Asian countries have been strengthening their relationship with China. In an interview with Akshobh Giridharadas, a consultant with the South Asia Center at the Atlantic Council, USINPAC discussed India’s foreign policy vis-à-vis its neighbors and analyzed the U.S. – India relationship and its impact on India’s diplomatic position in South Asia.

India’s Foreign Policy Vis-à-Vis its Neighbors

The Modi Doctrine or the Foreign Policy of the Modi government, has had its fair share of ups and downs. Recent events in the Maldives, as well as Nepal’s overtures to China, have concerned India watchers, who believe that Indian influence is being challenged in its own neighborhood. However, the picture is much more complicated.

Akshobh Giridharadas explains that although there have been several challenges in India’s foreign policy towards its neighboring countries, the Modi Government has been cognizant of the importance of India’s neighborhood. “One of the things that Modi mentioned was that neighborhood was his first priority,” Girdharadas said, “Modi’s first visits after taking office were to Nepal and Bhutan and not to the US or the UK.”

However, Giridharadas stressed that the Indo-Nepal Relationship does require special care. He said that India and Nepal’s relationship is often overlooked for several reasons. First and foremost, the South Asian Association for Regional Cooperation (SAARC) is one of the least integrated areas in the world. An economic and geopolitical union of South Asian nations, SAARC has been encumbered by water disputes, trade disputes and even problems of security. India and Nepal, both happen to be members of SAARC. Furthermore, the presence of nuclear states such as Pakistan and China, in India’s neighborhood often overshadows other relations.

Although India’s foreign policy may understand the importance of its neighborhood, it does not always cater to them. “It is often said that SAARC as a region is very big brother dominated neighborhood and smaller countries like Nepal, Bhutan and Maldives don’t necessarily get a chance to voice their concerns,” Girdharadas said.

“In this context, India’s relationship with Nepal is often haloed, and it looks like everything is going very well, although the relationship with Nepal needs special care,” Giridharadas said.

Giridharadas also talked about India’s relationship with its other neighbors including Sri Lanka and Bangladesh. He commented that although India and Sri Lanka have a special relationship, recent and past events, such as the new Chinese ran Hambantota Port in Sri Lanka, have affected the relationship. Giridharadas also noted that under the Awami League, Bangladesh has pursued closer relations with India. However, the Indo-Bangladesh dispute over sharing the waters of transboundary river Teesta caused an “overall belief that India needs to engage more with Bangladesh,” Giridharadas stated.

The Dragon in the Room

The importance of Chinese influence in South Asia cannot be underestimated, neither can the importance of India’s relationship with China. Both countries are rapidly growing economies, members of the G20, and both are nuclear powers. Additionally, “Modi and Xi are some of the most popular and influential leaders in India and China respectively.” Giridharadas said, “So, both Modi and Xi have been making their presence felt on the foreign stage.”

The Indian Prime Minister Narendra Modi has been very keen on pursuing closer economic ties with China. Giridharadas looked back on Modi’s visits to China when he was still the Chief Minister of Gujarat. As the Chief Minister, Modi visited several Chinese provinces and invited several Chinese companies to contribute to his Vibrant Gujarat Summits. However, other aspects of the Sino-Indo relationship have made New Delhi wary of Beijing. “Of course you have the Doklam standoff of 2017, which evoked memories of the 1962 war.” Giridharadas said, “ Thus, there has been an overhanging cloud as to whether China can be trusted.”

India has been very concerned about China’s Belt and Road Initiative and a Chinese “String of Pearls” The String of Pearls theory refers to a network of Chinese developed and run facilities in strategic locations in the Indian Ocean. The Hambantota Port is seen as one such strategic facility. Another controversial project, part of China’s Belt and Road Initiative has been the China Pakistan Economic Corridor (CPEC), which runs through the contentious Kashmir region.
Girdharadas noted that while New Delhi is not too happy with the China – Pakistan collusively, India has its own trade relations and barriers with China. Furthermore, “the Wuhan summit has helped in resetting the relationship.” Giridharadas said.

India’s willingness to work on Sino-Indian ties was demonstrated during the Shangri La Summit. “Even though James Mattis tore into China during the Shangri – La summit, Modi reiterated that he was optimistic about working with China,” Girdharadas said.

Where does the U.S. Fit In?

In addition to big brothers like China and India, South Asia has been of considerable interest to the United States as well. “The U.S. looks at India as a democratic counterweight to China, even though experts in India and China do not see India as a counterweight to China in the same sense,” Giridharadas said. Giridharadas expanded on this by explaining that the foreign policy coming out of India has always included unilateral engagement with everyone, including countries such as the United States, China, and Russia without being subversive to anyone. In fact, India has always been wary of power blocs given its legacy of the Non-Alignment Movement. “The fact that India is developing its unilateral relationship with China should not be seen as a snub to America and vice-versa,” Giridharadas said.

However, the U.S.-India trade relations have been frosty, but Girdharadas believes that matters of trade aside, the U.S. continues to view India as a strong strategic partner since both countries share some common ideas, concerns, and democratic ideals and values as well. Giridharadas stated the example of Canada and the recent U.S.-Canada trade disputes. “It is not a Washington-Delhi problem, but a Washington problem,” Giridharadas said. “Yes, India and the U.S. will disagree on various aspects of trade, but this will not stop a robust India – US relationship.”

India and the U.S. have become increasingly concerned about China’s influence in South Asia and the Indo-Pacific. Other common interests include security and defense. Thus, in recent years India has been purchasing more weapons and increasing military cooperation with the U.S.

Giridharadas credited the Indian diplomacy for maintaining a strong U.S.-India relationship. “India’s diplomacy has always been that we will work with whoever is in power and it is a credit to them and Prime Minister Modi that they have continued to work very well with the US under two very different administrations – i.e., the Obama Administration and the Trump Administration,” Giridharadas said.

An improved US- India relationship and India’s Neighborhood

Having a paramount relationship with the U.S. can definitely help India gain diplomatic ground in its neighborhood, especially amongst smaller countries in the region. However, Giridharadas cautioned that a strong U.S.-India relationship would propel Pakistan closer to China.

“There is a saying, ‘Everyone wants the U.S. as its friends, but no one wants China as its enemy,” Girdhardas said. Yet, the Indian diplomacy has the potential to dispel tensions with China caused by a close U.S.-India strategic partnership. India believes in unilateral engagement with everyone in the region without compromising on its own interests.

“There will be no adverse effects or long-term setbacks to the strategic partnership between the U.S. and India,” Giridharadas said.

Akshobh Giridharadas is a consultant for the South Asia Center at the Atlantic Council. A journalist by profession, Giridharadas was based out of Singapore as a reporter and producer with Channel News Asia, Singapore covering international business news. He writes on diverse topics such as geopolitics, business, tech and sports. His previous endeavors include working at ESPN STAR and FOX networks. He is a TEDx and Toastmasters public speaker and is currently at the Fletcher School of Law & Diplomacy, Tufts specializing in international affairs.

Last week USINPAC covered the problem many Indian-American children face with aging out of their H-4 visas before their high-skilled professional parents can gain green card status. Unfortunately, spouses of H1-B visa holders who hold H4 EAD visas may also start facing problems soon because of the “Buy American and Hire American” executive order President Trump signed April of last year to protect the interest of US workers while also preventing fraud or abuse of working visas. With the “Buy American and Hire American” order signed, the Department of Homeland Security has stated plans to end the H4 EAD work permit program to comply with President Trump’s executive order.

The H4 EAD work permit program was put into place by President Obama in 2015 to allow spouses of high-skilled workers to seek and hold employment of their own. Since 2015 there have been a little over 100,000 H4 EAD visas given out, mostly to women, but currently, only 41,500 holders of H4 EAD visas are in the workforce. With H4 EAD visa holders just making up 3 percent of the total amount of foreign workers with visas, it seems more like a form of bullying on the Department of Homeland Security’s part than trying to prevent fraud or abuse of the system. Over half of the owners of H4 EAD visas are not currently in the workforce, and with the other 41,500 making up only 3 percent of foreign workers with visas, it seems like there is little fraudulent or abusive activity going on.

With the current labor shortage in the United States, H4 EAD visa holders should be welcomed, not prevented from working. According to the Bureau of Labor Statistics there are currently 6.7 million unfilled positions in the United States and an unemployment rate of just 3.8 percent. H4 EAD visa holders are not “stealing” jobs from Americans, they are helping fill in spots where labor is needed. Taking the ability for spouses of H1-B visas away will hurt families and may cause some to have to rethink settling in the United States for financial reasons.

Taking away the ability to work for H4 EAD visa holders seems to be more of a ply for praise from the Trump administration rather than complying with the “Buy American and Hire American” executive order. A small group of working immigrants and their families will be hurt if the Department of Homeland Security follows through with putting an end to allowing spouses of highly-skilled workers to gain a working visa of their own.

Department of Homeland Security was supposed to have a ruling about the H4 EAD visas by June 2018, but as June has come and gone H4 EAD visa holders continue to wait as their fate is decided for them.

For years the United States has seen an influx of students from around the world seeking the benefits of one of the world’s best higher education systems. For the last decade and a half, this wave of Saudi Arabians, Chinese and African students has been accompanied by a growing number of eager Indians. However, even with the large Indian student population in this country, there is still almost no diversity in their educational and career goals. Indian undergraduates and postgraduates are focusing solely on STEM subjects (Science, Technology, Engineering, Math, and Business), and leaving other specialties (social science, humanities, education, etc.) to the wayside. This narrow focus on education is systematic. It is engrained in the very nature of a country that does not currently show the balanced, well-rounded academics required to become an educational power.

For the last few years, the United States embassy in Delhi, as well as its consulates in various cities around the subcontinent have opened their doors to Indian students looking to study abroad in what has been named “Visa Day.” During this year’s event, more than 4,000 students from around India arrived in the hopes of receiving visas to study in the United States. With 186,000 Indian students already in the United States, India boasts the second largest contingent of study abroad students, behind only China. In fact, this population of students is more than double the amount from just one decade ago.

However, more than 70% of these students are choosing a STEM path, leaving only a small percentage to pursue other educational fields. Further, the percentages of Indian students undertaking subjects such as fine arts, humanities, and social sciences are far below the global average of international students from other countries. Clearly, Indian students traveling to the United States do not value the American educational focus on these social and cultural fields of study. This is an issue not only for those students who come to the US seeking higher education but also for those students back in India. Indian students simply remain enthralled with and focused on pursuing STEM subjects. This needs to change.

It is important for Indians, both abroad and within the subcontinent, to realize that there is valuable education to be had beyond a STEM program. Other subjects can go a long way in not only diversifying the educational system in India but in making its student’s more well-rounded and complete individuals.

Very recently, USINPAC hosted a delegation from India, consisting of professionals and experts of the Indian education system. Most, if not all of them, echoed the same sentiment. It is time for Indians at home and abroad to embrace a diverse system of education. It will only benefit its students in the long run.

There is no denying the strength of Indian students studying science or technology or business. India boasts one of, if not the world’s strongest student and professional networks in these fields. However, it is in these other aspects of education (social science, art, culture, politics) that India has fallen behind. If the subcontinent wants to offer the most balanced, educated and diverse candidates, it is important that it begins to promote these other subjects as equally important to a STEM curriculum.

It is about time for Indian generations to realize that studying social science or a humanity does not hinder job opportunities. It provides Indian students with a more worldly and balanced education. Students in most other successful countries have already started to accept and embrace this diverse education system. India needs to catch up. It will make Indian students more competitive and prepared for jobs not only in the United States but also everywhere else in the world, no matter the field of study. Education is more than an investment into getting a job in and making the most money in a STEM field. It is about preparing students for success in the real world, whether it be in a job or in a social setting. It is about time that Indian students embrace this, be it in the United States or in India. It starts with a systematic change in mindset.

All statistics courtesy of:

https://factly.in/texas-california-new-york-still-favourite-states-indian-students/