International Economy - Current Affairs for October, 2015

Nepal on 28th October 2015 has signed an MoU with China to ease fuel crisis through important of different fuel types. MoU was signed between PetroChina and Nepal Oil Corporation and marks the first time that China will be supplying petrol to Nepal. Indian monopoly of providing fuel to Nepal ends with this.

As per the pact, the AP Investment Task Force will be established in Japan for the acceleration of industrial development in the state. Japan State METI minister Y. Takagi and Andhra Pradesh CM N. Chandrababu Naidu signed the Memorandum of Cooperation. As per the MoC, there will be further investments by Japanese companies in the state. Some of the agencies which have partnered with METI include JBIC, JETRO, JICA and NEDO.

Pakistan and Russia on 16th October 2015 signed a major agreement for building a 1,100 km gas pipeline from Karachi to Lahore taking cooperation between the two nations to a new level. The 1,100 km long pipeline with capacity of 12.4 billion cubic metre per annum is set to connect Karachi LNG terminals with those in Lahore. Russia will invest USD 2 billion in the project, first phase of which is slated for completion in December 2017. Russia’s RT Global Resources under the aegis of Rostec will be building North-South gas pipeline project. Project will be completed in BOOT mode (Build, Own, Operate, Transfer).

Union Cabinet has given approval for an MoU between the India-Taipei Association (ITA) in Taipei and Taipei Economic and Cultural Centre (TECC) in India to promote cooperation in the field of MSMEs. The MoU also provides enabling environment to the medium and small scale industries of the two nations apart from regular bilateral exchanges in this field through JVs, sharing of best practices and technology collaborations. MoU does not involve financial, political or legal commitment of any kind.

Government of India on 14th October 2015 approved an agreement between India and Mozambique for bilateral cooperation and investment promotion in field of new and renewable energy. MoU was signed between the Ministry of New and Renewable Energy and Mozambique's Ministry of Mineral Resources and Energy on August 5 during the visit of Mozambique President Filipe Nyusi to India. This MoU will strengthen bilateral cooperation between the two nations. India has established a target of 175 GW of renewable energy capacity by 2022. This comprises 100 GW solar power, 60 GW wind power, 10 GW biomass-fired power and 5 GW small hydro power.

Indian Investment Initiative/III was launched on October 10, 2015 in collaboration with USAID and Calvert Foundation as we'll as the US State department. This initiative makes it easier for Indian Americans to invest in SMBs back home. III offers a tool for Indian Americans to attain goals of leveraging close relations between India and the US. One of the first investments is IntelleGrow which focused on investment in key areas such as education, sustainable livelihoods and health. US based retail investors will support the initiative through the purchase of Community Investment Notes by Calvert Foundation. USAID will also provide Development Credit Guarantee for supporting Indian financial institutions contributing to social enterprises.

Measures to enhance bilateral trade and investment relations between the two nations were initiated with the signing of the Protocol for establishment of India Ecuador Joint Economic and Trade Committee/JETCO. JETCO will function as forum for discussion and promotional activities for trade and investment issues. During the year 2014-2015, the bilateral trade between the two nations stood at USD 1290.77 million.

The declaration entitled Joint Declaration of the Heads of the Migration Authorities of the BRICS guided by the Ufa Declaration is a major milestone so far as orderly and legal migration among these nations is concerned. The declaration also vowed to combat transnational organised crime in line with the declaration.

Prize was awarded to the Tunis group for decisive contribution towards founding pluralistic democracy in Tunisia in the wake of 2011 Jasmine Revolution. This quartet consists of 4 organisations namely the Tunisian General Labour Union (UGTT, Union Générale Tunisienne du Travail), the Tunisian Confederation of Industry, Trade and Handicrafts (UTICA, Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat), the Tunisian Human Rights League (LTDH, La Ligue Tunisienne pour la Défense des Droits de l’Homme), and the Tunisian Order of Lawyers (Ordre National des Avocats de Tunisie). Following the Tunis Arab Spring. Quartet led the way for peaceful dialogue among citizens. This quartet was formed in 2013.

UNCTAD released the Trade and Development Report 2015 at its Geneva HQ which found that the global economy is growing at 2.5% following 2008 financial meltdown and rebound in 2010. The growth rate for 2015 is expected to remain more or less unchanged from last year, at 2.5 per cent and developed nations are projected to grow at around 1.9 per cent, compared with 1.6 per cent in 2014. The reasons for this include growth in the eurozone and Japan’s moderate acceleration, although from very low rates. US is expected to continue post crisis growth trajectory and between 2012 and 2014, world merchandise trade increased between 2 to 2.5%.The report expects that India’s gross domestic product (GDP) is projected to grow at 7.5 per cent in 2015 as the pressure on current account deficit has been easing due to the lowering oil prices in the international market. India’s exports fell from 8.5% in 2013 to 3.2% in 2014 on account of negative trend in international economy.

Union Cabinet has provided ex post facto approval for protocol for cooperation in the field of blue economy signed between the two nations in August 26, 2015. Protocol lays down the modalities and mechanism of cooperation between the two parties for ocean studies as well as scientific exploration and exploitation of sea based resources, for sustainable development and economic purposes. It will enhance strategic cooperation in the field of blue economy while increasing commercial benefits from human resources expertise and technology export. Cooperation with Seychelles in the blue economy will provide data on ocean based resources as well as technology and expertise sharing in the field of R&D apart from furthering domestic innovation in ocean research and technology.

Currently, the DTAA between Indian and Vietnam was signed in 1994 and is undergoing amendment to meet internationally accepted standards. These include updation of A27 on Exchange of Information, addition of a new article on Assistance in Collection of Taxes and entry into Amending Protocol for this purpose. The agreement between the two nations will be amended for avoidance of double taxation and prevention of fiscal evasion regarding taxes on income.

Union Cabinet has approved an amendment to the Convention and Protocol between India and Israel for avoidance of DTAA and fiscal evasion regarding taxes on income and capital. Protocol provides globally accepted standards for effective exchange of information on tax matters such as bank data without domestic tax interest. It also holds that data provided from Israel regarding Indian residents can be shared with law enforcement agencies with authorisation from Competent Authority of Israel and vice versa. Existing DTAC between the two nations was signed in the 1990s.

GoI and Federal Republic of Germany have signed 2 loan agreements totalling 125 million euros for financing projects under Green Energy corridor programme in HP and AP. 57 million Euros will be allocated to HP and 68 million Euros for AP. Green Energy corridor programme seeks promotion of renewable energy into national grid. Renewable energy is one of the key areas of Indo German partnership indicated in the Joint Statement of Hannover in April 2015.

United States, Japan and 10 Pacific Rim nations on 5th October 2015 have signed the TPP/Trans Pacific Partnership agreement for facilitating trade between US and the states. The agreement aims to lower trade barriers and increase worker protections besides standard setting for industries. 10 other countries which signed the agreement included Brunei, Australia, Chile, Canada, Mexico, Malaysia, New Zealand, Peru, Vietnam and Singapore. China was a notable absentee in the partnership. TPP agreement includes close to 40% of the global economy.

Number of persons living in extreme poverty will fall below 10% of the world’s population in 2015, according to World Bank’s revised benchmark for measuring the problem. The definition of extreme poverty is living on or less than USD 1.25 per day though the WB’s adjustment has set the poverty line at USD 1.90 per day. New data shows differences in cost of living across nations. World Bank projects 702 million persons or 9.6% of the world’s population will be in extreme poverty in 2015 down from 12.8% in 2012. Fall in poverty is an account of robust economic growth rates in emerging markets and investments in social, health and education safety nets. The bank has also said that half of those living in extreme poverty by 2020 will be from fragile, conflict ridden states.

WTO on 30th September released a 2015 Annual Report providing overview of WTO activities in 2014 and 2015. According to the report, world trade will grow by 2.8 percent in 2015 against 2.5 percent growth in 2014. In 2016, world trade is expected to increase by 3.9%. The most recent entrant to this world grouping is 161st member Seychelles which joined in April 2015. Report also indicated India was involved in 43 trade disputes between 1995 and 2014 and undertook second highest dumping initiations. Since 2014, the only Indian in the 7 member Appellate Body of the WTO is U. S. Bhatia.