Afghanistan is hopeful that India, under the Modi government, will emerge as a major player in filling the military vacuum left behind by US troops. A prominent military dimension will raise the profile of the relationship between the two SAARC countries. 

With the Americans expected to leave behind only 10,000 troops by 2014-end, the Afghan government is looking to bolster its armed forces with big-ticket military hardware from India including used MiG-21 fighters, T-72 tanks, Bofors howitzers and equipment vital for command and control.

But wary of upsetting Pakistan, the UPA-II government had told the Afghans that India would not be in a position to fly these equipment over Pakistani airspace for any repairs in Indian military establishments, sources said.

Consequently, the Afghans approached the problem in a larger geopolitical perspective, involving a deeper and simultaneous engagement with India, Russia and China. Russia was approached to supply Indian-funded military hardware to Afghanistan, resulting in the establishment of a complex triangular partnership. New Delhi had held talks with China, Japan and Iran to find ways to fund Afghan security demands, with a price tag of around $4 billion a year.

Seeking a special relationship with China, the Afghans want Beijing to invest heavily in their country, hoping that the Chinese will pour in enough economic and commercial stakes in Afghanistan, persuading them to play a stabilising role in the country. Analysts point out that the focus of Afghanistan on India, Russia and China to fortify its strategic interests comes at a time of a sharp deterioration of ties between Washington and Moscow, and Russia’s growing relationship with China, anchored by a recent $400-billion gas deal.

Obama leads emotional tribute on D-Day

A “humbled” U.S. President Barack Obama led an emotional tribute on Friday to the thousands of troops who gave their lives to liberate Europe from Nazism, on the 70th anniversary of the D-Day landings that “shaped the security and well-being of all posterity.”

The Normandy landings, codenamed Operation Neptune, were the landing operations on 6 June 1944 (termed D-Day) of the Allied invasion of Normandy(France) during World War II. The largest seaborne invasion in history, the operation began the invasion of German-occupied western Europe, led to the restoration of the French Republic, and contributed to an Allied victory in the war.
As early as July 1941, Stalin had asked  the Western Allies to open a second front —which finally occurred on D-Day, June 6, 1944. This delay was perceived by Stalin as a deliberate attempt to weaken the Soviet Union. This mistrust laid the foundation for the Cold War.

India Inc looks for conducive tax environment, bold reforms

In a pre-budget consultative meeting with the Finance Minister, captains of industry listed out a host of demands, including:
  • Reviving the investment sentiment
  • Lowering of tax rates: The government should move away from the aggressive revenue approach and provide a genuine non-adversarial and conducive tax environment.
  • Easing of gold import curbs
  • Clarity on retrospective tax law amendment:  Industry pressed for an amendment to the Income Tax Act, to promulgate the reversal of retrospective amendment and make all taxation prospective.
  • Early roll out of the GST and DTC: A simple, transparent and non-adversarial tax regime bereft of complexities and ambiguities 
  • Reviving the investment sentiment
  • Renewal energy needed priority attention and the industry had sought FDI exemption in renewal energy project

India, U.S. trade officials to start work on policy forum meet

The U.S.-India Trade Policy Forum (TPF) is an inter-agency collaboration led by the USTR. It is the principal trade dialogue between the countries. It has five focus groups:
  1. Agriculture
  2. Investment
  3. Innovation and Creativity (IPRs)
  4. Services
  5. Tariff and Non-Tariff Barriers.
Issues:The American pharma sector had alleged that the Indian IPR laws discriminate against U.S. companies and violate global norms. USFDA has shown concerns over safety of Indian Pharmaceuticals.
The USTR in its Special 301 report had kept India out of the priority list, but has said that they would do an ‘out-of-cycle’ review of India’s IPR regime.
At present, bilateral trade is around $100 billion. The U.S.-India Business Council had said bilateral trade between the countries could touch $500-billion mark over the next one decade.

Forex reserves drop to $312 billion


India's foreign exchange reserves comprise: 
  1. Foreign currency assets (FCA)
  2. Gold
  3. Special Drawing Rights (SDRs)
  4. Reserve tranche position (RTP) in the International Monetary Fund (IMF).
The level of foreign exchange reserves is largely the outcome of:
  • The RBI intervention in the foreign exchange market to smoothen exchange rate volatility 
  • Valuation changes due to movement of the US dollar against other major currencies of the world
Foreign currency assets are maintained in major currencies like the US dollar, euro, pound sterling, Canadian dollar, Australian dollar and Japanese yen etc. Both the US dollar and the Euro are intervention currencies, though the reserves are denominated and expressed in the US dollar only, which is the international numeraire for the purpose