Index of Eight Core Industries shows 4.6% May growth, mixed sector performance with notable declines in natural gas and fertilizers.
The May 2012 Index of Eight Core Industries (weight 37.90% in IIP) was 150.9, up 4.6% in May with cumulative April-May 2012-13 growth 4.2%. Sectoral May 2012 changes: coal +8.0%, crude oil +0.5%, natural gas -10.8%, refinery products +2.9%, fertilizers -15.1%, steel +4.9%, cement +22.1%, electricity +5.2%. Cumulative Apr-May shifts include coal +5.9%, crude oil -0.4%, natural gas -11.1%, fertilizers -12.4%, and cement +20.3%. Data are provisional; detailed index and growth tables are in the annexure.

Bilateral Investment and Trade Agreement negotiations set to conclude by Oct-Nov, focusing on market access and service mobility.
Roadmap agreed to conclude a Bilateral Investment and Trade Agreement by October-November, concentrating on reciprocal market access, recognition of India as data secure for Mode 1 access, expanded Mode 4 commitments for movement of natural persons with removal of safeguard clauses, enhanced access for domestic industry and agricultural products, and addressing EU concerns on market access and patent issues; fifteen negotiation rounds have been held.

FII investment limits expanded and maturity requirements reduced, plus new ECB facility for eligible exporters to refinance rupee capital expenditure.
FII investment limits in government securities were increased and residual maturity requirements reduced while registration of long term non resident investors was permitted to access the enhanced ceiling. A new approved route ECB facility allows eligible manufacturing and infrastructure companies to refinance rupee capital expenditure loans or fund fresh rupee capital expenditure subject to export earnings, non default, drawdown and servicing conditions and prescribed overall and company level ceilings. Rationalisation of FII access to long term infrastructure bonds modified lock in and residual maturity minima across sub allocations and defined QFI qualification thresholds for mutual fund debt schemes; withholding tax was to be liberalised and implementing circulars issued.

Place of supply rules for freight: customer location determines VAT treatment, affecting zero-rating and reverse charge application.
Determine VAT by assessing (1) whether the customer is in business, (2) the place of supply-for customers in business the place is where the customer belongs regardless of physical performance-and (3) the VAT liability that follows that place of supply. Supplies with a UK place of supply are generally standard rated except for specified zero-rated transport and handling connected with imports/exports and certain ship or aircraft cargo services; supplies outside the UK are outside UK VAT scope though input tax recovery and other member-state obligations may arise.

Zero rating of passenger transport: UK supplies may be zero rated subject to place of supply, capacity and exception rules.
This guidance explains VAT treatment and place of supply for passenger transport in the UK: supplies comprising a vehicle, ship or aircraft with driver or crew may be zero-rated or standard rated depending on physical place of transport, vehicle carrying capacity, scheduled stops, exceptions such as transport including rights of admission or airport car parking connected to the supplier, and special rules for scheduled flights, cruises, disabled passenger vehicles, incidental versus ancillary services, and the Tour Operators' Margin Scheme.

Foreign direct investment proposal: single brand retailer to use wholly owned subsidiary and address local sourcing norms in India.
A single brand retailer applied to invest in India via a wholly owned subsidiary to open an initial network of retail outlets and to scale up sourcing from India, raising and resolving questions about domestic sourcing norms with DIPP officials. The proposal engages FDI ownership and entry rules for single brand retail and compliance with sourcing requirements.

Pharma export facilitation pursued to enable joint production and streamlined registration, enhancing trade and investment cooperation.
Facilitation of Indian pharma participation in Russia's Pharma 2020 programme through joint ventures and in-country production, coupled with streamlined registration and data-sharing on imports and assessed production volumes of targeted medicines. Establishment of a PPP-format Joint Working Group on Modernization and Industrial Cooperation with sub-groups, including aviation to consider joint production of civilian aircraft. Russia raised concerns about investor impact from an Indian Supreme Court judgment in the telecom sector and sought amicable resolution via continued dialogue; both sides agreed to pursue specific measures to boost bilateral trade and investment.

Import of sensitive items rose 42.8% in April-March 2012, driven mainly by edible oil and automobile imports.
Total imports of sensitive items in April-March 2011-12 were Rs.100,911 crore, up 42.8% from Rs.70,656 crore and constituting 4.3% of total merchandise imports. Major contributors to the rise were edible oils (notably crude palm oil and its fractions) and automobile imports and parts; other increases occurred across rubber, cotton and silk, spices, tea and coffee, marble & granite, milk products, pulses, fruits & vegetables and SSI products, while food grains declined. The note includes country wise shifts and item level highlights supporting the provisional estimates.

Compulsory licensing under TRIPS highlighted as tool to improve access and bolster India-Brazil pharmaceutical cooperation.
India and Brazil agreed to deepen pharmaceutical cooperation to improve access to affordable medicines, highlighting the TRIPS compulsory licensing mechanism as a means to secure cheaper drugs and citing an Indian compulsory licence as an example. Parties recognised regulatory and market-access obstacles-duplicate testing, registration and import delays, port clearances, and pricing reference issues-and agreed to form an industry-level working group to identify hurdles and submit concrete suggestions through governmental channels, alongside broader trade, investment and finance cooperation and a new CEOs Forum.

Fiscal consolidation in state budgets emphasised to restore revenue balances and reduce debt while trade and savings present macro risks.
The Bulletin presents four analyses: merchandise trade in 2011-12 showing import-led growth, export deceleration and a widening trade deficit; State finances for 2011-12 emphasising expenditure-led fiscal consolidation, amended FRBM paths, a budgeted revenue surplus and declining state debt-GSDP ratios alongside the Reserve Bank's banker, debt-manager and advisory roles; Working Group savings projections for the Twelfth Plan under three macro scenarios with associated CAD and credit flow estimates and risks; and 2010-11 financial results for select public companies showing higher sales but moderated profits and increased external funding.

External Commercial Borrowings list of borrower approvals, end uses and maturities under automatic and approval routes.
Listing of borrower-wise approvals for External Commercial Borrowings and one FCCB redemption for April 2012, specifying equivalent USD amounts, declared end-uses (import of capital goods, modernisation, new projects, rupee expenditure/local capital goods, infrastructure, FCCB redemption) and approximate maturities. Entries are categorised under the automatic route and the approval route, with totals for each route and a grand total; several entries are noted as requiring company clarification to confirm end-use conformity and borrower eligibility, and entries are based on Form 83 for Loan Registration Number allotment.

Trade deficit contraction: exports fell while imports declined more, narrowing India's merchandise trade gap.
India's merchandise trade in May 2012 showed exports declining year over year and imports declining by a larger margin, narrowing the negative Balance of Trade; April-May cumulative exports registered slight negative growth while imports contracted modestly. Sectoral shifts included declines in engineering goods and readymade garments, positive growth in drugs and pharmaceuticals, rising mineral oil imports, a sharp fall in gold and silver imports, and growth in vegetable oils and certain chemicals. The figures are provisional and subject to revision.

International investment invitation: Brazil urged to invest in Indian infrastructure and collaborate on pharmaceuticals and scientific R&D.
India invited Brazilian investment in the National Infrastructure and Manufacturing Special Economic Zone and food processing, identifying infrastructure as a key bilateral opportunity. The parties agreed to establish a Pharmaceuticals and Life Sciences Working Group for joint production of essential drugs, to reconvene the Joint Working Group on Hydrocarbons, to re launch the India Brazil CEOs Forum, and signed an MoU between CSIR/NPL and INMETRO for scientific and technological cooperation in measurement sciences, nanometrology, biofuels and biotechnology.

Foreign Trade Policy stability supports exporters through market diversification and scheme extensions amid mounting trade deficit concerns.
The Foreign Trade Policy emphasizes a stable policy regime and added market access, combined with transparency in domestic procurement, extension and expansion of interest subvention coverage, and a one-year extension and scope enlargement of the zero duty EPCG scheme to support exporters and catalyze technological upgradation; these measures are paired with initiatives to attract investment and strengthen manufacturing through removal of bottlenecks, a functioning National Manufacturing Policy, and a separate Investment Promotion Board, while acknowledging mounting trade deficit concerns.