black money and fake notes circulating in the market ineffective
Plans of Government to render black money and fake notes circulating in the market ineffective
The Government has not issued any guidelines regarding minimising daily financial transactions in cash to curb money laundering, black money and so on. However, the plans of Government to render black money and fake notes circulating in the market ineffective are as under: -
• Appropriate action against evasion of taxes, including black money circulating in the market, is an on-going process. Such action under the laws includes searches, surveys, enquiries, assessment of income, levy of taxes, penalties, etc. and filing of prosecution complaints in criminal courts, wherever applicable. Such taxes, penalties, etc. form part of the total tax liability of each assessee and is enforced accordingly. The Government has taken several measures to effectively deal with the issue of black money. Such measures include policy-level initiatives, more effective enforcement action on the ground, putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration of information and its mining through increasing use of information technology. Recent major initiatives of the Government in this regard include – (i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former Judges of Hon’ble Supreme Court, (ii) Enactment of a comprehensive new law - The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 which has come into force w.e.f. 01.07.2015 to specifically and more effectively deal with the issue of black money stashed away abroad, (iii) Introduction of the Benami Transactions (Prohibition) Amendment Bill, 2015 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of Benami property and provide for prosecution, (iv) While focusing upon non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest for credible deterrence against tax evasion/black money, (v) Proactively furthering global efforts to combat tax evasion/black money, inter-alia, by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA).
• Appropriate action against evasion of taxes, including black money circulating in the market, is an on-going process. Such action under the laws includes searches, surveys, enquiries, assessment of income, levy of taxes, penalties, etc. and filing of prosecution complaints in criminal courts, wherever applicable. Such taxes, penalties, etc. form part of the total tax liability of each assessee and is enforced accordingly. The Government has taken several measures to effectively deal with the issue of black money. Such measures include policy-level initiatives, more effective enforcement action on the ground, putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration of information and its mining through increasing use of information technology. Recent major initiatives of the Government in this regard include – (i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former Judges of Hon’ble Supreme Court, (ii) Enactment of a comprehensive new law - The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 which has come into force w.e.f. 01.07.2015 to specifically and more effectively deal with the issue of black money stashed away abroad, (iii) Introduction of the Benami Transactions (Prohibition) Amendment Bill, 2015 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of Benami property and provide for prosecution, (iv) While focusing upon non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest for credible deterrence against tax evasion/black money, (v) Proactively furthering global efforts to combat tax evasion/black money, inter-alia, by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA).
• Looking at the multi-dimensional aspects of the Fake Indian Currency Notes (FICNs) menace, several stakeholders like the Ministry of Finance, Ministry of Home Affairs, Reserve Bank of India, Security and Intelligence Agencies at the Centre and States are making efforts to curb the illegal activities related to FICNs.
*****
Government takes various steps in last two years to curb the menace of Black Money both within and outside the country.
The present Government has taken various decisions and steps to curb the menace of black money both within and outside the country in last two years. Some of the major decisions and actions taken in this regard are given below:
1. Sustained steps taken for curbing black money:-
(a) A new Black Money Act has been enacted with strict penalty provisions.
(b) Special Investigation Team has been constituted which is chaired by ex-Supreme Court Judge Justice M.B. Shah vide notification dated 29th May, 2014.. Many recommendations of SIT have been implemented since then.
(c) A new Income Disclosure Scheme is formulated for domestic black money.
(d) Enhanced enforcement measures have resulted in un-earthing of tax evasion of approximately Rs 50,000 Crore of indirect taxes and undisclosed income of Rs 21,000 Crore (Prov.). The value of goods seized on account of smuggling activities has increased to Rs 3,963 Crore in the last two years (32% increase over corresponding two previous years).
(e) Prosecution has been launched in 1466 cases as against 1169 cases in the previous two years (25% increase).
2. Amendments made in Prevention of Money-laundering Act, 2002, vide Finance Act, 2015 :
· The definition of proceeds of crime under PMLA has been amended to enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited.
· Section 8(8) has been inserted in PMLA providing for restoring confiscated property or part thereof, on the directions of Special Court to claimants with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offences of money laundering.
· Section 132 of Customs Act which deals with offence relating to false declaration / documents in the transaction of any business relating to Customs has been made predicate offence under PMLA to curb trade based money laundering.
· The offence of willful attempt to evade any tax, penalty or interest referred to in section 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 has been made a scheduled offence under PMLA.
3. Recent Notification under PMLA
In connection with risk mitigation in DNFBP Sector, Revenue Department has taken some steps, which are described as below:
· Insurance Broker has been notified on 15.4.2015 under Section 2(1)(sa)(vi) of PMLA as person carrying on designated business or profession.
· Registrar or Sub-registrar has been notified on 17.4.2015 under Section 2(1)(sa)(ii) of PMLA as person carrying on designated business or profession.
4. Foreign Exchange Management Act (FEMA), 1999 has been amended vide Finance Act, 2015. The amendments provide for seizure and confiscation of value equivalent, situated in India, in case any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, in contravention of Section 4 of FEMA.
*********
India
and Mauritius sign the Protocol for amendment of the Convention for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
The Protocol for amendment of the
Convention for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income and capital gains between India and
Mauritius was signed by both countries today at Port Louis, Mauritius. The key
features of the Protocol are as under:
i. Source-based taxation of capital gains on shares: With
this Protocol, India gets taxation rights on capital gains arising from
alienation of shares acquired on or after 1st April, 2017 in a company resident
in India with effect from financial year 2017-18, while simultaneously
protection to investments in shares acquired before 1st April, 2017 has also
been provided. Further, in respect of such capital gains arising during the
transition period from 1st April, 2017 to 31st March, 2019, the tax rate will
be limited to 50% of the domestic tax rate of India, subject to the fulfillment
of the conditions in the Limitation
of Benefits Article. Taxation in India at full
domestic tax rate will take place from financial year 2019-20 onwards.
ii. Limitation of Benefits (LOB):
The benefit of 50% reduction in tax rate during the transition period
from 1st April, 2017 to 31st March, 2019 shall be subject to LOB Article, whereby a resident of
Mauritius (including a shell / conduit company) will not be entitled to
benefits of 50% reduction in tax rate, if it fails the main purpose test and
bonafide business test. A resident is deemed to be a shell/ conduit company, if
its total expenditure on operations in Mauritius is less than Rs. 2,700,000
(Mauritian Rupees 1,500,000) in the immediately preceding 12 months.
Iii Source-based taxation of interest
income of banks: Interest arising in India to Mauritian resident banks
will be subject to withholding tax in India at the rate of 7.5% in respect of
debt claims or loans made after 31st March, 2017. However, interest income of
Mauritian resident banks in respect of debt-claims existing on or before 31st
March, 2017 shall be exempt from tax in India.
iv The Protocol also provides for updation of
Exchange of Information Article as per international standard, provision for
assistance in collection of taxes, source-based taxation of other income,
amongst other changes.
Major
impact: The Protocol will tackle the long pending issues of treaty abuse
and round tripping of funds attributed to the India-Mauritius treaty, curb
revenue loss, prevent double non-taxation, streamline the flow of investment
and stimulate the flow of exchange of information between India and Mauritius.
It will improve transparency in tax matters and will help curb tax evasion and
tax avoidance. At the same time, existing investments, i.e. investments made
before 1.4.2017 have been grand-fathered and will not be subject to capital
gains taxation in India.
*******
Debt owed by various states to international banks and financial institutions
The
total debt owed to Multilateral Development Banks (MDBs) by various State
Governments are as under.
Sr.No.
|
Name
of the State
|
Name
of the Multilateral Development Banks (MDBs)
|
Debt Outstanding on Date (DoD)
(INR) as on 31.03.2016
|
1
|
Andhra Pradesh
|
World
Bank (IBRD)
|
39,376,498,939
|
World
Bank (IDA)
|
21,007,272,647
|
||
Asian
Development Bank (ADB)
|
0
|
||
IFAD
|
0
|
||
2
|
Bihar
|
World
Bank (IBRD)
|
8,599,174,320
|
World
Bank (IDA)
|
20,701,974,181
|
||
Asian
Development Bank (ADB)
|
40,561,212,811
|
||
IFAD
|
0
|
||
3
|
Chhattisgarh
|
World
Bank (IBRD)
|
490,939,055
|
World
Bank (IDA)
|
0
|
||
Asian
Development Bank (ADB)
|
3,346,204,800
|
||
IFAD
|
0
|
||
4
|
Goa
|
World
Bank (IBRD)
|
128,878,917
|
World
Bank (IDA)
|
0
|
||
Asian
Development Bank (ADB)
|
0
|
||
IFAD
|
0
|
||
5
|
Gujarat
|
World
Bank (IBRD)
|
3,066,223,335
|
World
Bank (IDA)
|
0
|
||
Asian
Development Bank (ADB)
|
3,600,084,520
|
||
IFAD
|
0
|
||
6
|
Haryana
|
World
Bank (IBRD)
|
13,632,488,070
|
World
Bank (IDA)
|
0
|
||
Asian
Development Bank (ADB)
|
0
|
||
IFAD
|
0
|
||
7
|
Jharkhand
|
World
Bank (IBRD)
|
0
|
World
Bank (IDA)
|
0
|
||
Asian
Development Bank (ADB)
|
8,659,055,746
|
||
IFAD
|
217,319,831
|
||
8
|
Karnataka
|
World
Bank (IBRD)
|
20,111,943,885
|
World
Bank (IDA)
|
26,332,020,138
|
||
Asian
Development Bank (ADB)
|
18,321,602,437
|
||
IFAD
|
0
|
||
9
|
Kerala
|
World
Bank (IBRD)
|
2,879,468,355
|
World
Bank (IDA)
|
11,561,344,626
|
||
Asian
Development Bank (ADB)
|
11,568,676,355
|
||
IFAD
|
0
|
||
10
|
Maharashtra
|
World
Bank (IBRD)
|
24,072,497,226
|
World
Bank (IDA)
|
3,177,079,041
|
||
Asian
Development Bank (ADB)
|
177,643,814
|
||
IFAD
|
2,301,490,199
|
||
11
|
Madhya Pradesh
|
World
Bank (IBRD)
|
99,278,526
|
World
Bank (IDA)
|
5,624,925,586
|
||
Asian
Development Bank (ADB)
|
85,235,438,967
|
||
IFAD
|
833,747,008
|
||
12
|
Orissa
|
World
Bank (IBRD)
|
13,112,695,284
|
World
Bank (IDA)
|
12,246,360,723
|
||
Asian
Development Bank (ADB)
|
1,087,250,875
|
||
IFAD
|
596,834,569
|
||
13
|
Punjab
|
World
Bank (IBRD)
|
12,021,864,572
|
World
Bank (IDA)
|
7,866,506,751
|
||
Asian
Development Bank (ADB)
|
4,106,688,777
|
||
IFAD
|
0
|
||
14
|
Rajasthan
|
World
Bank (IBRD)
|
0
|
World
Bank (IDA)
|
8,849,373,279
|
||
Asian
Development Bank (ADB)
|
24,247,854,109
|
||
IFAD
|
878,098,868
|
||
15
|
Tamil Nadu
|
World
Bank (IBRD)
|
32,922,525,412
|
World
Bank (IDA)
|
43,738,200,890
|
||
Asian
Development Bank (ADB)
|
4,495,960,936
|
||
IFAD
|
1,460,562,053
|
||
16
|
Telangana
|
World
Bank (IBRD)
|
2,669,989,972
|
World
Bank (IDA)
|
931,437,975
|
||
Asian
Development Bank (ADB)
|
0
|
||
IFAD
|
0
|
||
17
|
Uttar Pradesh
|
World
Bank (IBRD)
|
0
|
World
Bank (IDA)
|
13,206,267,153
|
||
Asian
Development Bank (ADB)
|
0
|
||
IFAD
|
0
|
||
18
|
West Bengal
|
World
Bank (IBRD)
|
3,381,237,063
|
World
Bank (IDA)
|
14,412,086,645
|
||
Asian
Development Bank (ADB)
|
31,484,068,380
|
||
IFAD
|
0
|
This was stated by Shri Jayant
Sinha, Minister of State in the Ministry of Finance in written reply to a
question in Rajya Sabha today.
**********
Recommendations of Tax Administration Reform Commission (TARC) in all the four Reports submitted to Government
The Tax
Administration Reforms Commission (TARC) headed by Dr. Parthasarathi
Shome submitted its report in four volumes containing a total of 385
recommendations that pertain to Central Board of Direct Taxes (CBDT) and
201 recommendations that pertain to Central Board of Excise and Customs
(CBEC). The broad recommendations inter-alia include changes in
structure, improvement in taxpayers service, enhanced use of information
and Communication Technology, exchange of information with other
agencies, strengthening of human resource management, Key Internal
Processes, Customs Capacity Building, Impact assessment, Expansion of
Base, Compliance Management, Revenue Forecasting, Predictive Analysis
and Research for tax Governance etc.
Two new bodies namely Tax Policy Council (TPC) and Tax Policy Research Unit (TPRU) have been set up for making recommendations on tax policies and other policy matters. Vide the Department of Revenue’s Office Order dated 02.02.2016, the Government has set up a ten Member Tax Policy Council (TPC) under the Chairmanship of Hon’ble Finance Minister with an aim to have a consistent and coherent approach to the issue of tax policy and having regard for need to have an inter-disciplinary approach. The Council will look into all research finding of the Tax Policy Research Unit (TPRU) and suggest broad policy measures for taxation. The Council will be advisory in nature and will help the Government in identifying key policy decisions for taxation.
Vide the Department of Revenue’s Office Order dated 02.02.2016, the Government has also created the Tax Policy Research Unit (TPRU) under the direct supervision of Revenue Secretary to carry out the research on the basis of empirical data. The TPRU will carry out studies on various topics of fiscal and tax policies referred to it by CBDT and CBEC and will provide independent analysis on such topics, prepare and disseminate policy papers and background papers on various tax policy issues, assist TPC in taking appropriate tax policy decisions and liaise with State Commercial Tax Departments.
As per the terms of reference, these bodies are permanent bodies and no periodic reports are expected.
Two new bodies namely Tax Policy Council (TPC) and Tax Policy Research Unit (TPRU) have been set up for making recommendations on tax policies and other policy matters. Vide the Department of Revenue’s Office Order dated 02.02.2016, the Government has set up a ten Member Tax Policy Council (TPC) under the Chairmanship of Hon’ble Finance Minister with an aim to have a consistent and coherent approach to the issue of tax policy and having regard for need to have an inter-disciplinary approach. The Council will look into all research finding of the Tax Policy Research Unit (TPRU) and suggest broad policy measures for taxation. The Council will be advisory in nature and will help the Government in identifying key policy decisions for taxation.
Vide the Department of Revenue’s Office Order dated 02.02.2016, the Government has also created the Tax Policy Research Unit (TPRU) under the direct supervision of Revenue Secretary to carry out the research on the basis of empirical data. The TPRU will carry out studies on various topics of fiscal and tax policies referred to it by CBDT and CBEC and will provide independent analysis on such topics, prepare and disseminate policy papers and background papers on various tax policy issues, assist TPC in taking appropriate tax policy decisions and liaise with State Commercial Tax Departments.
As per the terms of reference, these bodies are permanent bodies and no periodic reports are expected.
This was stated by Shri Jayant Sinha, Minister of State in the Ministry
of Finance in written reply to a question in Rajya Sabha today.
********
Speech of the Secretary, Economic Affairs at the South Asia Subregional
Economic Cooperation (SASEC) 2025 – Second Regional Consultation
Workshop
Following
is the text of the Inaugural Address made by Shri Shaktikanta Das,
Secretary, Department of Economic Affairs (DEA), Ministry of Finance at
the South Asia Sub-regional Economic Cooperation (SASEC) 2025 – Second
Regional Consultation Workshop here today.
“Distinguished Heads and members of delegations from the SASEC countries; Mr. Hun Kim, Director General, South Asia Department; my colleagues from different Ministries of the Government of India, ladies and gentlemen.
It gives me pleasure to be with you in this Second Regional Consultation Workshop on SASEC 2025. Today’s Workshop will discuss a long-term vision and a ten-year roadmap that will help our sub-region attain new heights of growth, development and prosperity. Let me compliment ADB for facilitating this event and preparing inputs to guide in our deliberations.
In the last week, we met in Frankfurt for the annual meeting of the ADB where all of us acknowledged that Asia will be the biggest driver of growth in coming years. It will definitely attract bigger investment.
SASEC’s success as a regional cooperation program can be attributed in large part to its strategy of pursuing hardware and software initiatives in tandem. Cross border infrastructure projects are complemented with the necessary simplification and harmonization of procedures at the borders and improvements in testing and measurement facilities. To support trade facilitation, we build capacity to apply the latest technological interventions, and comply with international standards and best practices. We do this through periodic training of our human resources.
India has always engaged with its neighbours in addressing common challenges --- economic vulnerability, social deprivation, environmental degradation. We have also engaged with them in the pursuit of common goals --- sustainable growth, inclusiveness, prosperity. We have always believed that mutual support of each other’s endeavours can add impetus to individual country initiatives. In SASEC, we have long held the principle that regional cooperation complements domestic undertakings. National and regional initiatives are very much interrelated. Over the past 15 years, through ADB, we have seen the interrelatedness by uncovering the regional spillovers of national initiatives, and realizing the benefits of positive externalities by financing cross-border projects and national projects with regional dimensions.
The SASEC initiative supported by ADB assists the six participating countries in the sub-region to address many issues that impede growth and development. By providing a platform for dialogue and cooperation, SASEC helps participating countries to develop a better understanding of each other’s strengths and weaknesses. Over the last two decades, SASEC has helped craft solutions to cross-border issues. I thank ADB for making SASEC a project- driven initiative that looks beyond the bilateral bottlenecks.
Recently, SASEC has also established specialised forums on customs and electricity transmission to provide more focused technical support to national and bilateral efforts in these areas. The Bangladesh Bhutan India Nepal (BBIN) Motor Vehicles Agreement (MVA) is a shining example of cross-border cooperation among four countries to ease movement of vehicles and goods transiting through third countries. India is also involved in the negotiation of the India-Myanmar-Thailand (IMT) MVA which will boost South Asia's connectivity eastward. .
With ADB support, India is presently developing two priority road corridors. The first road corridor will connect India with Bangladesh, Nepal and Bhutan through the “chicken neck” area of North Bengal. The second road corridor will establish India-Myanmar connectivity in the state of Manipur. Other projects are being simultaneously pursued to complement these two road corridors. Integrated Check Posts (ICPs) at Agartala and Petrapole on the India-Bangladesh border will be operationalized. Another ICP at Moreh on the India-Myanmar border will be developed. We are also planning to establish ICPs and improved Land Customs Stations (LCS) at key border points with Bangladesh, Nepal and Bhutan to ease the movement of goods and people within the subregion. India is planning to develop regional connectivity projects worth almost $5 billion in SASEC.
India is also developing the East Coast Economic Corridor (ECEC), with ADB as our lead partner. Phase1 of the ECEC will be implemented as the Vizag Chennai Industrial Corridor (VCIC) project. The ECEC covers some of the existing growth centres, but it also has the potential to develop other centres that can be linked through efficient multi-modal transport systems and infrastructure services. Growth in the corridor would be distributed spatially within the region and have significant implications in connecting to global production networks and value chains in ASEAN, in line with our Government’s 'Act East' policy. The goal of the ECEC is not only to generate domestic output and employment, but more importantly, to create a more competitive environment for the development of trade and industry in the region.
The ECEC will facilitate the movement of the bulk of India’s major natural resources like coal and iron ore and can serve as a node for extractive and downstream value-added industries. Creation of world-class infrastructure supported by transport corridors, logistics services, development of human capital and skills, communications, energy grids and institutional policies that support trade both within the region and outside will be a significant addition to the stock of public capital and lift major constraints to growth nationally and regionally.
I am happy to note that SASEC programme has accorded priority to trade facilitation. It is imperative to recognize the challenges and opportunities of this region and to realise its potential. It is a fact that South Asia is among the least integrated region in the world. Problems in trade facilitation, non-tariff barriers (NTBs) and infrastructure deficit hindered intra-regional trade in South Asia. In the World Bank’s ‘ease of doing business’ ranking SASEC countries generally occupies lower positions in trade facilitation. Four SASEC countries have long coastline that could be developed to its full potential to integrate this sub-region with global production centres.
Recently, India launched a major port-led development initiative called “Sagarmala”, which will help modernize India's Ports and coastlines to contribute more in India's growth. About 90% of India’s trade by volume and 70% by value are moved through ports. The major ports thus play a key role in facilitating external trade. The focus has been on improving the port infrastructure, modernization of existing facilities and increasing the capacity and draught at ports. The Government of India has been promoting capacity enhancement of major ports through PPP projects for the construction of berths/terminals/jetties and mechanization of berths for cargo handling. Apart from the modernization of the existing ports in the east coast, India is developing two new ports on the same coast line at Dugarajapatnam in Andhra Pradesh and at Sagar Island in West Bengal. These ports will further enhance our trade with our neighbours and ASEAN countries.
India has also been assisting its neighbours in the sub-continent to improve their power situation. The India-Bangladesh transmission line is providing safe and reliable interconnection of the power grids to supply of 500 MW of power from India to Bangladesh. A 1320 MW Maitri Thermal Power Project, a joint venture of India’s NTPC Ltd and the Bangladesh Power Development Board, will be developed. The Power Grid Corporation of India is also engaged in developing three 230 kv transmission lines in Myanmar with the support of a credit line of US $ 64 million between the Exim Bank of India and the Myanmar Foreign Trade Bank. India is also investing to develop hydroelectric projects in Nepal and Bhutan.India is currently engaged in discussions for a mega gas pipeline project linking Turkmenistan, Afghanistan and Pakistan with India. Under this project, a 1,680 km long pipeline would be constructed. At the request of the four participating countries, ADB has agreed to house the secretariat of this project.
Ladies and gentlemen.
India is committed to continue its close relations with countries of South Asia and South East Asia. We are presently engaged in a number of regional initiatives that includes SAARC, BIMSTEC, the Mekong-Ganga initiative, India-ASEAN Partnership, and the East Asia Summit, among others. These initiatives provide a much wider space to pursue the many possibilities that an expansive and vibrant Asian landscape has to offer. Asia’s dynamism is an excellent opportunity for all of us, to further intensify our drive towards the common goal of sustainable and inclusive growth. It is in this context that we welcome ADB’s proposal to develop a SASEC Vision document and a comprehensive long-term operational plan to guide our efforts more deliberately and resolutely into the future.
In conclusion, let me once again compliment the ADB for organizing this workshop. I hope that country delegations will contribute their ideas to help shape a well-rounded vision document and operational plan. The need of the hour is to acknowledge our strengths and weaknesses and, through cooperation, develop synergies through mutual support. The ADB is in a unique position to take a neutral view and to play a very good role as facilitator, advisor and catalyst in the SASEC region.
“Distinguished Heads and members of delegations from the SASEC countries; Mr. Hun Kim, Director General, South Asia Department; my colleagues from different Ministries of the Government of India, ladies and gentlemen.
It gives me pleasure to be with you in this Second Regional Consultation Workshop on SASEC 2025. Today’s Workshop will discuss a long-term vision and a ten-year roadmap that will help our sub-region attain new heights of growth, development and prosperity. Let me compliment ADB for facilitating this event and preparing inputs to guide in our deliberations.
In the last week, we met in Frankfurt for the annual meeting of the ADB where all of us acknowledged that Asia will be the biggest driver of growth in coming years. It will definitely attract bigger investment.
SASEC’s success as a regional cooperation program can be attributed in large part to its strategy of pursuing hardware and software initiatives in tandem. Cross border infrastructure projects are complemented with the necessary simplification and harmonization of procedures at the borders and improvements in testing and measurement facilities. To support trade facilitation, we build capacity to apply the latest technological interventions, and comply with international standards and best practices. We do this through periodic training of our human resources.
India has always engaged with its neighbours in addressing common challenges --- economic vulnerability, social deprivation, environmental degradation. We have also engaged with them in the pursuit of common goals --- sustainable growth, inclusiveness, prosperity. We have always believed that mutual support of each other’s endeavours can add impetus to individual country initiatives. In SASEC, we have long held the principle that regional cooperation complements domestic undertakings. National and regional initiatives are very much interrelated. Over the past 15 years, through ADB, we have seen the interrelatedness by uncovering the regional spillovers of national initiatives, and realizing the benefits of positive externalities by financing cross-border projects and national projects with regional dimensions.
The SASEC initiative supported by ADB assists the six participating countries in the sub-region to address many issues that impede growth and development. By providing a platform for dialogue and cooperation, SASEC helps participating countries to develop a better understanding of each other’s strengths and weaknesses. Over the last two decades, SASEC has helped craft solutions to cross-border issues. I thank ADB for making SASEC a project- driven initiative that looks beyond the bilateral bottlenecks.
Recently, SASEC has also established specialised forums on customs and electricity transmission to provide more focused technical support to national and bilateral efforts in these areas. The Bangladesh Bhutan India Nepal (BBIN) Motor Vehicles Agreement (MVA) is a shining example of cross-border cooperation among four countries to ease movement of vehicles and goods transiting through third countries. India is also involved in the negotiation of the India-Myanmar-Thailand (IMT) MVA which will boost South Asia's connectivity eastward. .
With ADB support, India is presently developing two priority road corridors. The first road corridor will connect India with Bangladesh, Nepal and Bhutan through the “chicken neck” area of North Bengal. The second road corridor will establish India-Myanmar connectivity in the state of Manipur. Other projects are being simultaneously pursued to complement these two road corridors. Integrated Check Posts (ICPs) at Agartala and Petrapole on the India-Bangladesh border will be operationalized. Another ICP at Moreh on the India-Myanmar border will be developed. We are also planning to establish ICPs and improved Land Customs Stations (LCS) at key border points with Bangladesh, Nepal and Bhutan to ease the movement of goods and people within the subregion. India is planning to develop regional connectivity projects worth almost $5 billion in SASEC.
India is also developing the East Coast Economic Corridor (ECEC), with ADB as our lead partner. Phase1 of the ECEC will be implemented as the Vizag Chennai Industrial Corridor (VCIC) project. The ECEC covers some of the existing growth centres, but it also has the potential to develop other centres that can be linked through efficient multi-modal transport systems and infrastructure services. Growth in the corridor would be distributed spatially within the region and have significant implications in connecting to global production networks and value chains in ASEAN, in line with our Government’s 'Act East' policy. The goal of the ECEC is not only to generate domestic output and employment, but more importantly, to create a more competitive environment for the development of trade and industry in the region.
The ECEC will facilitate the movement of the bulk of India’s major natural resources like coal and iron ore and can serve as a node for extractive and downstream value-added industries. Creation of world-class infrastructure supported by transport corridors, logistics services, development of human capital and skills, communications, energy grids and institutional policies that support trade both within the region and outside will be a significant addition to the stock of public capital and lift major constraints to growth nationally and regionally.
I am happy to note that SASEC programme has accorded priority to trade facilitation. It is imperative to recognize the challenges and opportunities of this region and to realise its potential. It is a fact that South Asia is among the least integrated region in the world. Problems in trade facilitation, non-tariff barriers (NTBs) and infrastructure deficit hindered intra-regional trade in South Asia. In the World Bank’s ‘ease of doing business’ ranking SASEC countries generally occupies lower positions in trade facilitation. Four SASEC countries have long coastline that could be developed to its full potential to integrate this sub-region with global production centres.
Recently, India launched a major port-led development initiative called “Sagarmala”, which will help modernize India's Ports and coastlines to contribute more in India's growth. About 90% of India’s trade by volume and 70% by value are moved through ports. The major ports thus play a key role in facilitating external trade. The focus has been on improving the port infrastructure, modernization of existing facilities and increasing the capacity and draught at ports. The Government of India has been promoting capacity enhancement of major ports through PPP projects for the construction of berths/terminals/jetties and mechanization of berths for cargo handling. Apart from the modernization of the existing ports in the east coast, India is developing two new ports on the same coast line at Dugarajapatnam in Andhra Pradesh and at Sagar Island in West Bengal. These ports will further enhance our trade with our neighbours and ASEAN countries.
India has also been assisting its neighbours in the sub-continent to improve their power situation. The India-Bangladesh transmission line is providing safe and reliable interconnection of the power grids to supply of 500 MW of power from India to Bangladesh. A 1320 MW Maitri Thermal Power Project, a joint venture of India’s NTPC Ltd and the Bangladesh Power Development Board, will be developed. The Power Grid Corporation of India is also engaged in developing three 230 kv transmission lines in Myanmar with the support of a credit line of US $ 64 million between the Exim Bank of India and the Myanmar Foreign Trade Bank. India is also investing to develop hydroelectric projects in Nepal and Bhutan.India is currently engaged in discussions for a mega gas pipeline project linking Turkmenistan, Afghanistan and Pakistan with India. Under this project, a 1,680 km long pipeline would be constructed. At the request of the four participating countries, ADB has agreed to house the secretariat of this project.
Ladies and gentlemen.
India is committed to continue its close relations with countries of South Asia and South East Asia. We are presently engaged in a number of regional initiatives that includes SAARC, BIMSTEC, the Mekong-Ganga initiative, India-ASEAN Partnership, and the East Asia Summit, among others. These initiatives provide a much wider space to pursue the many possibilities that an expansive and vibrant Asian landscape has to offer. Asia’s dynamism is an excellent opportunity for all of us, to further intensify our drive towards the common goal of sustainable and inclusive growth. It is in this context that we welcome ADB’s proposal to develop a SASEC Vision document and a comprehensive long-term operational plan to guide our efforts more deliberately and resolutely into the future.
In conclusion, let me once again compliment the ADB for organizing this workshop. I hope that country delegations will contribute their ideas to help shape a well-rounded vision document and operational plan. The need of the hour is to acknowledge our strengths and weaknesses and, through cooperation, develop synergies through mutual support. The ADB is in a unique position to take a neutral view and to play a very good role as facilitator, advisor and catalyst in the SASEC region.
I wish the workshop all success and look forward to fruitful deliberations on SASEC 2025. Thank you.”
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