High Level Advisory Group (HLAG) Report
- Recently, Ministry of Commerce and Industry released the report of the High Level Advisory Group (HLAG).
- The HLAG was constituted in September, 2018, led by the economist Surjit S. Bhalla, to identify and pursue opportunities and address challenges in the current global trade scenario.
- Subramaniam Jaishankar, Rajeev Kher, Sanjeev Sanyal, Adil Zainulbhai, Harsha Vardhana Singh, Shekhar Shah, Vijay Chauthaiwale, Pulok Ghosh, Jayant Dasgupta, Rajiv K Luthra, Chandrajit Banerjee
- To assess the global environment and make recommendations for boosting India’s share and importance in global merchandise and services trade
- Managing pressing bilateral trade relations and mainstreaming new age policy making.
EXIM Bank and Credit Insurance for Exports
- Enhance capital base of the EXIM Bank by another INR 20,000 crores by 2022 and infusethe balance capital in a sustained manner.
- Increase the Bank’s borrowing limit to 20 times Net Owned Funds (the current limit is 10 times).
- Enhance capital base of the Export Credit Guarantee Corporation (ECGC) by INR 350 crores.
- Exempt the ECGC from Insurance Regulatory and Development Authority (IRDA) regulations.
To make Effective Corporate Tax Rates more Competitive
- India should cut corporate tax rate to 22% (with exemptions). This will yield an effective corporate tax rate of 18%.
Policy Rates Alignment with Competitors
- India should aim to bring down the cost of capital to the average of 10 best performing OECD countries.
- Policy operation should now fully incorporate the technology of Direct Benefit Transfers (DBT).
- To re-establish linking of government savings schemes to repo rates.
To Build a Comprehensive Export Strategy
- Create a database that details the utilisation of various FTAs, RTAs, CEPAs etc.
- Use big-data analytics for identifying items at the 4-digitHarmonised System(HS)level where India has an export advantage and building up domestic competitiveness in these products.
Strengthening Investment Promotion Agency (Invest India ++)
- Make Invest India the centralised authority for issuing licenses and empower it to grant incentives in cases meeting pre-defined criteria
- Create one apex trade promotion organization established as a separate entity (replacing DGFT,ITPO, TCPI).
- Create a world-class ‘war room’ to realize single-window clearance.
Optimising Free Trade Agreements (FTA) Negotiations
- Begin process of identifying and resolving non-tariff barriers which prevent Indian exports from accessing key importing nations – begin with major countries with which India has FTAs.
- Undertake sectoral analysis to assess price competitiveness of Indian products in markets of choice to help better negotiate FTAs.
- Launch a five-year program for negotiation of FTAs identified based on complementarity and long-term sustainability.
Issuing Elephant Bonds
- By issuing Elephant Bonds, India could recover up to $500 billion of black money stashed overseas.
- People declaring undisclosed income will be bound to invest 40% with a coupon rate of 5% for a period of 20-30 years. The fund will be utilised only for infrastructure projects.
Reforming the Financial Services Sector
- Simplify regulatory and tax framework for foreign investment funds and individual investors to enable on-shoring of fund management activity of India.
India must Join RCEP
- The panel favours India joining Regional Comprehensive Economic Partnership(RCEP)
- India gains even more from joining the RCEP-like free trade area when the USA and China are indulging in bilateral trade war.
- The report will strengthen the NarendraModi government's resolve to go ahead with negotiations for the proposed Regional Comprehensive Economic Partnership (RCEP).
Sector Specific Recommendations
Pharmaceuticals, Biotechnology and Medical Devices
Textiles and Garments
Tourism and Hospitality
- Pathway to Economic Growth:It shows the way forward for India to become an attractive investment destination by grasping all the opportunities available so that India is able to achieve the target of exports contributing $1 trillion to the gross domestic product (GDP).
- Boosting Indian Export:The recommendations of the HLAG will help government doubling India's exports of goods and services from $500 billion in 2018 to over $1,000 billion in 2025.
- Push to Significant Policies:The report is concerned with policies which are needed, macro and micro, regulatory and taxation, infrastructure development, bureaucratic interference and ease of doing business to get India to aggressively move towards its potential of export growth (and indirectly GDP growth).