India has completed agreements for civil nuclear cooperation with 11 countries so far, including the U.S., Russia, Australia, Canada and South Korea, but the upcoming agreement with Japan could be the most significant.
Japan is the only country to have been the victim of a nuclear attack, and its decision to sign an agreement with India, a country that has not signed the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), would be a first.
Reservations in Japan against nuclear energy have hardened after the Fukushima accident. Tokyo’s support to the deal so far is therefore an indication of the importance it accords to relations with India.
For India, the civil nuclear agreement with Japan is especially important for the message of trust it would convey to Nuclear Suppliers Group members in a year the country hopes to have its admission accepted.
Japan’s support at the NSG has been particularly marked. In fact, India and Japan share many multilateral platforms, including membership of the G-4 group that is knocking at the UN Security Council’s door for reform.
Beyond symbolic reasons, Japanese nuclear energy technology and safety parameters are widely considered to be cutting-edge, and many critical parts needed for Indian reactors are made by Japanese manufacturers. These will not be available to India until the agreement is done.
Although India has even considered trying to manufacture them locally, there won’t be alternatives to Japan for several years. Even the U.S. civil nuclear deal, that is yet to be actualised, is contingent on the deal with Japan, given that the current discussions for six reactors in Andhra Pradesh are with Westinghouse, which is owned by the Japanese company Toshiba.
It may appear baffling why the deal has taken so long to negotiate. The main sticking point has been India’s refusal to sign the NPT, as it considers the treaty unfair to the developing world.
This is why New Delhi is keen on ensuring that in the haste to seal the deal by the time Prime Minister Narendra Modi visits Japan this winter, it doesn’t give in to pressure to adhere to anything more than its own self-declared moratorium on testing.
The Japanese insistence on a “nullification” clause that the agreement would cease as soon as India tests, will be judged with this balance in mind. Particularly post-Fukushima, Japanese manufacturers will also be expected to be more generous with India on the liability issue, given their own experience with the enormous cost of cleaning up. As always, and even more so than with the India-U.S. agreement, the devil will be in the detail of the final draft.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.