An APPLE A Day - EU & Ireland (Tax)

 A huge tax recovery to the tune of 13 billion Euros is what the EU official says that  Ireland must recover. Not taken warmly the US cries "Wolf". Unfair it says the retroactive tax against the global giant APPLE Inc.

The fallout is just not tax alone it is also looked at the way the EU treats American businesses. The anomaly is a result of illegal aid granted to Apple for a period of twenty years. This helped the company lower its tax assessment and hence save.

According to the EU members cannot accord benefits to selected companies. The US says that this will undermine the business environment as far as Europe is concerned. The massive retroactive tax could result in the growth potential of the company as well as reduce employment.  

The drastically lower tax rate applicable to Apple subsidiaries in Ireland was to increase jobs in that country. About 1 percent tax is far lower than US's 35% and Ireland's 12.5%. This is an unfair cry the lawmakers in Europe and US as well.

Logically Apple is going to appeal the decision as have Starbucks and Fiat Chrysler. There are many US companies under the tax authorities' scanner hence more are yet to come.

This ruling may be technically right but then the retroactive enforcement would be a big discouragement for investment due to uncertainty whence the country's taxation arrangements could be undermined by the European Commission.  

Steel No More Steel

After a lull in steel prices, the market seems to be picking up and a brighter forecast spells a steady rise in the segment. This is also the same with iron ore partly due to the rise in demand from the Chinese market. The demand from China seems to be improving steadily as demands arise from its infrastructure development projects. 

There has been an improvement in steel demands in US and Europe as well. The imposition of anti-dumping duty has also benefited concerns like Arcelor Mittal.  

But the biggest concern in news is the Tata's Steel concerns in the UK. Due to hurdles regarding the pension fund which has created a liability of seven hundred million pounds, it seems a sell-off is unlikely. A potential strategic partnership seems to be a better bet for the ailing business.  But this is a tardy process and is at a preliminary stage.  Another recourse is to cut costs as much as possible. How this will be brought is not clear.     

The problem has arisen due to low prices in the steel market. This was in making as the World was oversupplied with steel. The China-driven demand faced a standoff due to slack in its industries. To make matters worse the local production of Chinese arose significantly. Excess production was dumped outside the country triggering stiff competition from global manufacturers. 

The rising prices have raised some hopes till the Chinese concerns raise their output to offset the gain in prices. 

Modi US Visit: An Eminent Journalist Writes

Shekhar Gupta very well known journalist and TV anchor write on Modi's visit to US on UN Annual General Assembly Meet. 

In my own words..... 

The crux of the visit for the first time has shifted to business rather then petty issues. The euphoria created by his visit should be tempered stating the fact the globally stronger country leaders get more attention...as was the case with the Chinese and Russian heads of states.  Hence we have to be an economic powerhouse in order to come closer to them. Though highly successful, his achievement were much appreciated by Indian diaspora and those with interest in the country economically.       

Further Mr.Gupta states that we declare ourselves victorious in haste.  We are inclined to lay too much stress on few failures and suffer from depression as well as get elated by little bit of success. 

Since Indira Gandhi he is our globally best leader. Albeit India is growing fast the economy is minuscule compared to major power and on per capita basis it is dismal. 

The greatest threat that India is facing now is not the tilt to the left but more so because messy politics and the emergence of right wing. Both are antithesis for the goals which we wish to achieve. All the best India big brand, modern technology, education and entrepreneurship.      

I would further add that for US we have become a major arm purchase which is not the make in India campaign aims for.

But remember with the rising popularity as Mr.Gupta states, the warts gets publicity too, corruption of sickening level, crime against women, pollution, caste based discrimination, poor hygiene and yes our ban culture.

Global Economic Scenario - Banks

US economy leaping far ahead of the World crumbles and many banking institutions pack up overnight. The economists are stunned no one could peep through the curtains of corporate offices. What happened?

Bolstered by a strong economy and upward trends, the banking institutions fed the public on easily available loans under presumption that return is no big issue. It was! The country had begun facing the heat with most of the manufacturing moving to Asia, competition in service sector and competition from rising economy like India and China.   

These factors have severely affected the developed World especially Europe. For the banking sector a new paradigm has to emerge in order to manage cash adequacy and mitigate risk factors. This means more regulatory norms and stringent compliance.

Capital Flow inwards is crucial for smaller banks to retain fund adequacy. Sound financial strategies are the order of the day.  For small sized large amount of capital input is a necessity if they have to grow bigger.

Opportunities for US

For slowdown in economic growth and poor employment rate solution can be found elsewhere in China and India suggests Business Week. The economy news magazine sees opportunities for American products in under developed countries.

The key to success is niche products with a greater degree of difficulty in the manufacturing process. Hence these products cannot be replicated or discounted. Cutting edge technology can yield robust order from less developed countries. 

Countries like India and China will always maintain economic growth in the near future. Setting up plants in these countries will be an effective cost cutting exercise. The strategy will result is  robust growth for the US concerns.