‘Import-export data will help solve issue of over-invoicing and under-invoicing’
When the iron is hot: The move will protect the domestic industry, says a Ministry official. Reuters
In a bid to clamp down on the dumping of iron and steel imports, and also the over-and under-invoicing of these products, the government has removed these items from the ‘free’ category and has made it mandatory for importers to apply in advance for a registration of their import.
The new system will come into effect from November 1.
This comes at a time when India has been at the receiving end of large amounts of steel dumping due to the ongoing trade war between the U.S. and China.
According to a notification issued by the Directorate General of Foreign Trade, the import of 284 item lines under the steel and iron category has been re-designated from ‘free’ to ‘free subject to compulsory registration under Steel Import Monitoring System’.
This Steel Import Monitoring System (SIMS) will require the importer to submit advance information on an online portal for the import of the items mentioned in the notification and obtain an automatic registration number. This number can be obtained by paying a minimum fee of ₹500 and maximum of ₹1 lakh, depending on the value of the imports.
The importer can apply for registration not earlier than 60 days before and not later than 15 days before the expected date of arrival of the import, and the registration number will remain valid for 75 days. “This import-export data will bring transparency and will help solve the issue of over-invoicing and under-invoicing,” an official in the Ministry of Commerce said. “It will also protect the domestic industry and help in taking anti-dumping actions.”
‘Imports shrank in FY17’
The Indian steel and aluminium industries have raised concerns that the trade war between the U.S. and China was leading to the dumping of steel and aluminium products in India that were originally meant for the other two countries.
According to the data with the Ministry of Commerce, Indian imports of steel and iron had contracted 31% in 2016-17, the financial year before U.S. President Donald Trump imposed higher import duties on steel.
Regulator couldn’t establish fraud: SAT
The Securities Appellate Tribunal (SAT) has quashed the capital markets regulator’s order that barred Price Waterhouse (PW) from auditing listed entities for two years for its alleged role in the fraud committed at the erstwhile Satyam Computer Services.
In January 2018, the Securities and Exchange Board of India (SEBI) barred PW for two years, while directing the audit firm to disgorge ₹13.09 crore along with 12% interest per annum since January 2009.
“The direction to debar the auditor from auditing the books of a listed company is neither remedial nor preventive. In fact, the direction is clearly punitive and violative of Article 19(1)(g) of the Constitution of India as it takes away the fundamental right to carry on its business,” the 125-page order by SAT said.
More importantly, the tribunal highlighted the jurisdiction issue while observing that there was no need for SEBI to act against the auditor after the Institute of Chartered Accountants of India (ICAI) initiated proceedings and even cancelled the registration of the auditing firm.
“We may further point out that ICAI had initiated proceedings against the auditors under the CA Act and cancelled their licence to practice as CA. Once their licence has been cancelled, there was no need for SEBI to issue an order of debarment,” it added.
The tribunal further said that the capital markets watchdog acted against PW even though it was not able to establish any fraud or connivance on the part of the auditing firm or its partners.
“There is not even a whisper of a finding in the impugned order... about any connivance or collusion or intention or knowledge on their part... No evidence of any misconduct of any kind has surfaced with regard to any member of the engagement team,” it said.
“SAT has held that there is no shred of evidence to show that Price Waterhouse had fabricated or falsified or fudged the books of account of Satyam in collusion with its top management,” said Sumit Agrawal, founder, Regstreet Law Advisors and a former SEBI law officer.
“This judgment is likely to have impact on cases where an intermediary is charged for not doing its ‘due diligence’ or the cases where SEBI routinely questions the accounting and fundamentals of companies and directs forensic audit in its discretion. Threshold of proof for charging a person for fraud is at the root of controversy,” he added.
The tribunal has, however, upheld the disgorgement order that was passed against Price Waterhouse.
Total assets rise, aided by strong flows into liquid schemes
Mutual fund assets registered a rise in the month of August, largely aided by strong flows in liquid schemes even as retail flows remained flat and that of systematic investment plans (SIPs) witnessed a marginal dip.
According to the Association of Mutual Funds in India (AMFI), the total assets under management (AUM) of the mutual fund industry was pegged at ₹2.81 lakh crore, marginally higher than July’s ₹2.78 lakh crore.
Among the different categories of funds, liquid funds registered the highest quantum of inflows at nearly ₹79,500 crore, while the overall debt/income category saw net inflows of nearly ₹91,127 crore, higher than the previous month’s flows of ₹61,845.54 crore.
Equity funds also witnessed a rise in terms of inflows with August net flows pegged at ₹9,152.43 crore as against July’s ₹8,112.52 crore.
“Retail investor interest in equity mutual funds, for the fourth time in succession, continues to be steady, displaying maturity, despite uncertain economic and volatile market situation,” said N.S. Venkatesh, CEO, AMFI.
Flows through SIPs, however, were pegged at ₹8,230.76 crore in August, lower than the previous month’s net flows of ₹8,324.28 crore. Further, the SIP AUM, which largely includes retail money, stood at ₹2.71 lakh crore in August compared with July’s nearly ₹2.69 lakh crore.
Figures for retail AUM came in at ₹10.71 lakh crore in August, almost unchanged compared to the previous month’s ₹10.70 lakh crore.
The total number of folios rose to 8.54 crore in August, from July’s 8.48 crore. The folio count has risen 11% from a year earlier.
On the outlook for September, Mr. Venkatesh said that while liquid funds might see little volatility due to quarter-end phenomenon, other categories of funds should see a positive trend with SIP numbers also expected to be robust.