NewsBytes

Eyeing to conclude their ambitious free trade deal soon, India and European Union will hold two rounds of crucial negotiations in next one month to overcome differences in areas of rules of origin, market access and duties on wine and dairy products, authoritative sources said on Sunday. European Commission's agriculture commissioner Christophe Hansen and trade chief Maros Sefcovic are visiting India this week to hold talks with their Indian interlocutors as both sides look to seal the free trade agreement (FTA) by end of this year. The European Union is India's biggest trade partner with bilateral trade in goods recording $135 billion in the financial year 2023-24. Besides the trade deal, India and the EU are also in the process of firming up a series of transformative initiatives including a new politico-strategic vision and key foundational frameworks to expand defence ties -- moves that came against the backdrop of increasing geopolitical uncertainty. Significantly, the EU will unveil its new strategic vision for ties with India on September 17 that will comprise key elements of its futuristic outlook for relations with New Delhi. The new measures are expected to be unveiled at the India-EU annual summit that is likely to be held in India within the first few months of next year.

Japan's Prime Minister Shigeru Ishiba announced on Sunday that he will resign following growing calls from within his party to take responsibility for a historic defeat in July's parliamentary election. Ishiba, who took office in October, said he was stepping down as prime minister and as the head of his conservative Liberal Democratic Party. Ishiba, a 68-year-old moderate centrist, had resisted demands from opponents further to the right within his own party to resign. He argued that he wanted to avoid a political vacuum at a time when Japan faces key domestic and international challenges, including US tariffs, rising prices and growing tensions in the Asia-Pacific. The resignation came one day before his party was to decide whether to hold an early leadership election, which would have amounted to a virtual no-confidence motion against him if approved.

Keeping detergents and cosmetics under 18 per cent tax rate with zero savings on these daily-use items for households under the government's sweeping GST restructuring move is surprising, say industry players and analysts. The all-powerful GST Council last week decided to reduce taxes on most of the common-use goods as part of the government's measure to boost consumer spending. The new structure of goods and services tax (GST), which comes into effect on September 22, will have two slabs of 5 per cent and 18 per cent instead of the current four slabs of 5, 12, 18 and 28 per cent. Fast-moving consumer goods (FMCG) products such as hair oil, soap, face powders, shampoos, toothbrushes, and toothpaste have come under the lower slab of 5 per cent from 18 per cent. However along with detergents and cosmetics, duty on several items such as hair dye and household insecticides has not been reduced. FMCG companies say they are ready to pass on the benefits of the duty cuts to consumers, even though they will have to face challenges on the existing stock at retail stores.

Finance Minister Nirmala Sitharaman has expressed confidence that revenue buoyancy driven by spurt in consumption will take care of the estimated GST shortfall of Rs 48,000 crore following reduction in tax rates on a host of items, and hence there will be no impact on public finances but definitely bolster GDP growth. She also emphasised that consumption boost to be provided by landmark GST reform and better-than-expected first quarter GDP growth number may help in exceeding the projected pace of 6.3-6.8 per cent for FY26. Asked about impact of GST rate cuts on fiscal deficit, Sitharaman said, Rs 48,000 crore financial implication is a static number based on a base year, but when it gets implemented, base situation changes. The Centre estimates the fiscal deficit during 2025-26 at 4.4 per cent of the GDP, or Rs 15.69 lakh crore. Last week, the all-powerful GST Council headed by Sitharaman approved a two-tier structure of 5 per cent and 18 per cent taxes, as well as a 40 per cent slab. Nearly 400 products - from soaps to cars, shampoos to tractors and air conditioners - will cost less when the rejig of the GST is effective from the first day of Navaratri on September 22. Premiums paid on individual health and life insurance will be tax-free.