India's Trade Deficit and Export-Import Overview

India's trade deficit for December widened to $21.94 billion, compared to $18.76 billion in the previous year, with merchandise exports contracting for the second consecutive month, showing a 0.99% year-on-year decline to $38.01 billion.

• Gold imports in December were valued at $4.7 billion.
• Merchandise trade deficit showed a reduction compared to November.
• The government's revision of November's gold import values, due to a double counting issue, brought down the trade deficit to $32.8 billion from an earlier $37.8 billion.
• December 2023 saw gold imports worth $3 billion, with overall imports increasing by 5% year-on-year to $59.95 billion.

Export Growth and Challenges

Commerce Secretary Sunil Barthwal expressed optimism about export growth, suggesting that exports could exceed $800 billion, with current figures nearing $200 billion per quarter.

• India's goods and services exports for October-December totaled $208 billion.
• Key sectors like petroleum, gems and jewellery, and chemicals saw a contraction in December.
• Pertinent challenges included commodity and metal price volatility, trade disruptions, and geopolitical tensions affecting logistics.

Specific Export Sector Insights

• Petroleum product exports fell by 28.62% in December, with a 20.84% decline year-on-year for the fiscal year-to-date.
• Electronics goods exports reached a 24-month high of $3.5 billion in December.
• Readymade garments exports grew by 12.8%, reaching $1.46 billion.

International Trade Agreements

India is actively engaging in discussions to strengthen international trade agreements.

• Talks with the UK on a proposed foreign trade agreement are scheduled for early February.
• Negotiations to review the free trade agreement with ASEAN commence on February 10 in Indonesia.
• The next round of FTA talks with the EU is scheduled for March 10-14 in Brussels.
• India and the Eurasian Economic Union, comprising Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia, are finalizing terms for a free trade agreement.

Faceless Appeal Scheme (FAS)

In 2020, the Government of India introduced the Faceless Appeal Scheme (FAS) to automate tax administration at the I-T commissioners (appeal) level. 

Challenges and Issues

• Huge Pendency: As of April 1, 2024, there were 5.5 lakh pending appeals, with over 3 lakh filed more than two years ago.
• Repeat Notices: Taxpayers face repeated requests for written support, yet no notice for a hearing is issued. Virtual hearing requests are often ignored.
• Blockage of Working Capital:
  • Taxpayers must deposit 20% of disputed tax demands when filing appeals.
  • Delays in resolving appeals financially strain taxpayers, affecting operations, particularly for MSMEs.
• Multiple Appeals: Delays cause tax officers to make similar assessments in subsequent years, escalating disputes and increasing pendency.

Steps Taken

• New Authority: The Finance Act 2023 introduced the joint commissioner of I-T (appeals) (JCIT(A)) to alleviate NFAC/CIT(A) burdens. However, progress has been minimal.

Recommendations

• A specific, mandatory time limit for appeal disposal is suggested, similar to the Dispute Resolution Panel (DRP) mechanism's nine-month timeframe.
• A proposed amendment could set a 15-month limit for NFAC/CIT(A) to resolve appeals.

Redefining Job Definitions in India

India needs to redefine the concept of a 'job' to include self-employed individuals and women engaged in household chores, as stated by Labour and Employment ministry. This change aims to enhance the female labour force participation rate in the country.

Key Points and Proposals

• Synergy in Thoughts and Actions: Mandaviya emphasized the need for the government and industry to work in concert to meet future workforce requirements.
• Taskforce for Workforce Analysis: A proposal to establish a taskforce to analyze sector-specific skilled worker requirements in India.
• Industry as a Skill Training Establishment: Suggestion to grant industries the status of an establishment to provide skill training tailored to their needs, thus creating demand-driven trained manpower.
• Impact of High Growth Rate: India's growth rate of 7-8% is expected to increase purchasing power, thereby boosting consumption, manufacturing, and demand for skilled workers.
• Mindset and Skill Enhancement: There is a need to change the youth's mindset and align skill enhancement programs with industry requirements.

Employment-linked Incentive Scheme

• The scheme, announced in the budget for 2024-25, involves cluster-wise mapping of manpower needs.
• Hub and Spoke Model: Skills training will be delivered through this model, with courses tailored to specific requirements in each cluster.