India set to raise tariffs on some US goods

US goods and services trade with India stood at an estimated $142.1 billion in 2018. (File/AFP)
Updated 15 June 2019

India set to raise tariffs on some US goods

  • The government had said last June it would raise import taxes on a slew of US goods including almonds and apples
  • It delayed raising tariffs several times as trade talks between the world’s two biggest democracies raised hopes of a resolution

NEW DELHI: India has decided to raise tariffs on imports of 29 goods from the US after having deferred the move several times since announcing it last year, media reported Saturday.
The government had said last June it would raise import taxes on a slew of US goods including almonds and apples, apparently irked by Washington’s refusal to exempt New Delhi from higher steel and aluminum tariffs.
But it delayed raising tariffs several times as trade talks between the world’s two biggest democracies raised hopes of a resolution.
However President Donald Trump’s decision to strip New Delhi of its preferential trade status earlier this month appears to have triggered the latest Indian move.
There would be no further delays in imposing the retaliatory tariffs, the Economic Times reported, quoting a government official, with the new taxes due to take effect from Sunday.
The Press Trust of India news agency said the finance ministry would make a formal announcement soon, although it had already conveyed its decision to the United States.
The trade tensions come despite Washington’s effort to boost ties with India as a counterweight to China and Trump’s stated good relations with Prime Minister Narendra Modi.
Trump and Modi are set to meet at the G20 summit on June 28-29 in Osaka where the sticky trade issue is likely to be taken up.
It is also likely to figure during talks with US Secretary of State Mike Pompeo who is set to visit India for talks later this month.
On Wednesday Pompeo had said the US was open to dialogue with India and would “broach some tough topics.”
US goods and services trade with India stood at an estimated $142.1 billion in 2018. The US trade deficit with India was $24.2 billion, according to official data.
Washington is already engaged in a full-blown trade war with India’s regional rival China.


Saudi central bank ready for any Aramco-related liquidity squeeze

Updated 23 min 30 sec ago

Saudi central bank ready for any Aramco-related liquidity squeeze

  • Aramco’s long-awaited listing on the Saudi Arabian stock exchange is due on Wednesday
  • The central bank has set up a team to closely monitor all indicators in the banking system during the IPO

RIYADH: Saudi Arabia’s central bank is ready for any liquidity squeeze from Saudi Aramco’s initial public offering (IPO) and is closely monitoring local banks, its governor said, after heavy demand for loans to buy the stock.
Aramco’s long-awaited listing on the Saudi Arabian stock exchange is due on Wednesday, completing the largest IPO on record and raising $25.6 billion from retail and institutional buyers who took on debt to back their orders.
“We don’t rule out that there might be squeeze of liquidity later on, that’s why I am ready and stand ready to intervene,” Ahmed Al-Kholifey told Reuters.
Saudis had clamoured to own part of the “crown jewel” of the world’s top oil exporter in the lead up to its IPO, with Aramco’s institutional tranche 6.2 times oversubscribed, while more than 5 million individuals subscribed to a retail tranche.
The Aramco IPO is the centerpiece of the Saudi crown prince’s plans to diversify the economy away from a reliance on oil, as the money will be reinvested by the Saudi Public Investment Fund (PIF) to promote growth in other sectors.
During the IPO process, the loan-to-deposit ratio (LDR) at some banks had exceeded a 90% “soft guideline” set by the regulator, but the ratio improved after the allocation process ended, Kholifey said in an interview.
“So far no bank has come to ask for liquidity from the central bank. We are ready to intervene in case there is a squeeze of liquidity but most of the indicators right now are not worrying,” Kholifey added.
MONITORING TEAM
The central bank has set up a team specifically to closely monitor all indicators in the banking system during the IPO process, and it held meetings on a daily basis.
“I don’t think in the near future they will settle, we have to keep monitoring the situation until we see things are normal, especially the LDR,” he said.
Saudi corporates snapped up the biggest percentage of allocations to the Aramco IPO at 37.5% and Saudi government institutions were allocated 13.2% of the institutional tranche, the latest figures issued by the deal’s lead bank showed.
Kholifey said that less than 2% of retail subscriptions were leveraged, and most of the bank financing went to high-net-worth individuals and institutional buyers.
He expects most of the IPO proceeds to be invested locally by the PIF, given that most of subscription were internal.
Riyadh scaled back its original IPO plans, scrapping an international roadshow to focus on marketing Aramco to Saudi investors and Gulf Arab allies. It has remained silent on when or where it might list Aramco stock abroad.