Rakesh Sharma | Harish Puppala
- TRUMP AND INDIA TARIFFS
It’s happened again. US President Donald Trump has criticised India’s “big tariffs” on American paper products and the iconic Harley-Davidson bikes, claiming his country has been losing billions of dollars to countries like India, China and Japan.
Speaking at a Republican political rally in Green Bay, Wisconsin on Sunday, Trump said every country has been ripping off America for years.
After taking aim at the high tariffs India charges on the import of Harley-Davidson motorbikes, Trump has now targeted India a second time for high import duties on paper and paper products.
He said, “We charge other countries zero tariffs on foreign paper products. When Wisconsin companies exported abroad … China charged us big tariffs, India charged us big tariffs. Vietnam charged us massive tariffs. Unfair.” He added that the common people in the US demanded a government that puts America first. Trump claimed, “And we’re doing that with China, we’re doing that with India, we’re doing that with Japan, we’re doing it with a great new trade deal, that hopefully will get approved in the house.”
India has, more than once, countered allegations by Trump that India is a “tariff king”, claiming that its tariffs are within its commitments under the rules of the World Trade Organisation. In fact, according to a report by Mint earlier this month that quoted commerce ministry sources, the US too charges high tariffs on products such as tobacco, peanuts, and footwear. The highest tariffs imposed – 736 percent by Japan, 807 percent by South Korea, 350 percent by USA, and 163 percent by Australia – are far higher than that of India, which charges 150 percent.
India imposes high duties on several items such as whiskey and wines at 150 percent, automobiles at 60-100 percent, mango juices at 50 percent, and marble blocks at 40 percent. India’s average tariff, at 13.8 percent, may be higher than that of the US’s 3.4 percent, but it is nearly at par with South Korea’s 13.7 percent. Developing countries enjoy longer phase-out periods and higher bound rates of tariffs, a concession they received in return for ceding ground on intellectual property rights and services to the developed countries when WTO rules were formulated.
In any case, early in 2019 at a White House event to announce his support for reciprocal tax, Trump had said he was satisfied with India’s decision to reduce import tariff on high-end Harley-Davidson motorcycles from 100 percent to 50 percent.
The Economic Times reported that India is pressing for exemption from the high duty imposed by USA on certain steel and aluminium products; resumption of export benefits to certain domestic products under the Generalised System of Preferences or GSP programme; greater market access for its products from agriculture, automobile, automobile components and engineering sectors.
Similarly, the US is demanding greater market access through a cut in import duties for its agriculture goods, dairy products, medical devices, as well as IT and communication items. India has stated that it would be difficult to cut duties on IT products. India’s exports to the US in 2017-18 was estimated at $47.9 billion, while imports stood at $26.7 billion. The trade balance is in favour of India.
- YES BANK’S Q1 LOSSES – AND A NEW DIRECTION
A quick word now on the developments at YES Bank in the last few days. Economic Times claimed today that shares of YES Bank may tumble by as much as 10 percent tomorrow after it reported its first ever quarterly loss for the three months ended March. The loss was amplified by provisions against bad loans to infrastructure conglomerate IL&FS Group as well as to the struggling Jet Airways. Now, the lender’s first non-founder chief executive Ravneet Gill has begun a clean-up act.
The bank reported a loss of Rs 1,507 crore in the March quarter compared to profit of Rs 1,180 crore a year earlier. It made total non-tax provisions of Rs 3,662 crore – that’s nine times more than the Rs 400 crore reported a year earlier, and nearly seven times the 550 crores reported in December 2018.
This, even as gross NPAs rose to 3.22 percent of loans from 2.1 percent in December. Moreover, the RBI had reportedly found serious lapses in governance and poor compliance culture at Yes Bank under Rana Kapoor, who was a co-promoter and chief executive, and the central bank then demanded that Kapoor leave by the end of January due to a regulatory discomfort.
Some analysts told ET the 11 percent fall in the stock over the last two weeks indicates that some investors may have got wind of the weak results that were to be announced. The stock ended down 0.1 percent ahead of the result on Friday, which was announced after market hours. Digant Haria, AVP Research at Antique Stock Broking, told the newspaper, “There will be near-term challenges for the stock till it is able to raise fresh capital and resolution is found for the Reliance Group issue.” The rating downgrades of Anil Ambani’s companies by various agencies ,might have also weighed down the stock as YES Bank has exposure to the group.
In light of these developments, YES Bank has shifted, according to a Moneycontrol report, to a calibrated growth model with modest growth targets and preemptive provisioning against bad loans. Ravneet Gill, the new MD & CEO of the bank, said that apart from some senior hirings, the bank also plans to increase its headcount by 2600 in FY20. He said the bank is currently looking to fill a senior position who will drive the retail liabilities growth for the bank.
CNBCTV18 reported that Gill is looking to replace the top management of the bank. Within two weeks, around 14 top executives have been listed by Yes Bank for a likely replacement, the report claimed. The new chief told Moneycontrol that only 30 percent of YES Bank’s 1,100 branches are profitable, and the company has initiated a branch-wise review that entails detailing key performance indicators and the business to be targeted. The aim is to make 80 percent of branches profitable by 2023 and achieve 100 percent profitability by 2025, GIll explained