Defense Committee Meeting with Mr. Rajib Kumar Sen, Economic Advisor and In-Charge, DOMW 26th July 2018
Defense Committee Meeting with Mr. Rajib Kumar Sen, Economic Advisor and In-Charge, DOMW – 26th July 2018
AMCHAM’s Defense Committee met with Mr. Rajib Kumar Sen, Economic Advisor and In-Charge, DOMW, on 26th July 2018, for further discussions on AMCHAM’s recommendations submitted on the request for comments on the draft modifications to Defence Offset Guidelines on 15th May 2018.
Mr. Sen clarified that the thrust of the new guidelines would be on investments as proposed in the draft circulated earlier with focus on special projects, joint ventures as well as funds. While updating the group on the key aspects of the new policy being structured, he assured that the suggestions sent in by AMCHAM were also considered while formulating the new policy. He also offered AMCHAM to come back with more observations and comments once the policy is rolled out preferably by next month. He agreed that there were functionality issues in the electronic submissions and these were being worked upon.
Pharmaceuticals Committee Meeting – 25th July 2018
AMCHAM members of the Pharmaceuticals Committee met on 25th July, 2018 at the MSD office in Gurugram. The meeting was chaired by Mr. Sanjiv Navangul, Chairman – Pharmaceuticals Committee, AMCHAM and Managing Director, Janssen and Ms. Jyotsna Ghoshal, Co-Chair – Pharmaceuticals Committee, AMCHAM and Executive Director, Public Policy and Corporate Affairs, MSD. Other members present included Mr. Vivek Vasudev Kamath (via video conferencing), MD, MSD, Mr. Dibakar Bhattacharya, Director Corporate Affairs and PRA, Eli Lilly, Ms. Priya Hingorani, VP, Janssen, Mr. Sampathkumar, Director, Par Formulations, Mr. Balinder Singh, Dua Associates, Mr. Rajii Chibber, Associate Director, MSD, Ms. Nahid Zaman, Assistant Manager, MSD and Mr. Rajiv Arora, Senior Manager, MSD. Mr. Chad Norberg, Trade and Technology Unit Chief, U.S. Embassy, and Ms. Komal Kalha (via phone), USPTO from the U.S. Embassy joined the meeting. AMCHAM was represented by Mr. Gaurav Mendiratta.
Members deliberated and suggested their ideas on reviving the committee, which has struggled to get participation from members in the past, and agreed to leverage the AMCHAM platform which enjoys a strong connection with the U.S. Embassy. It was also suggested to strengthen the engagement with the U.S. Embassy and increase the frequency of interactions of members and the Embassy. The committee decided to work on increasing the membership of the committee by reaching out to U.S. based companies not yet members of AMCHAM.
Members also took the opportunity to highlight concerns regarding issues such as clinical trials and IPR related issues and it was decided that AMCHAM could focus on these two issues for advocacy with the government. It was also decided to create 3 sub-groups namely – clinical trials, IPR and pricing which will start to work on a position paper for each of the shortlisted areas. Mr. Chad Norberg shared an update on the ongoing bilateral talks between India and the U.S. as well as Embassy engagement on several issues with their Indian counterparts.
Cyber Security Committee Meeting – 24th July 2018
AMCHAM India held its first Cyber Security Committee meeting for the year 2018-19 on 24th July under the Chairmanship of Mr. Rakesh Kharwal, Country Lead, IBM. Members discussed key issues around data localisation, U.S. Cloud Act, Preferential Market Access in cyber security products, skill set in cyber security and Artificial Intelligence. After consolidating inputs from members, the committee would raise concerns to the relevant stakeholders in the government.
Breakfast Meeting on the Changing Landscape on Accounting for Leases – 24th July 2018
AMCHAM’s Tamil Nadu Chapter breakfast meeting for July was held on the 24th in Chennai on the ‘Changing Landscape on Accounting for Leases’ featuring guest speaker Mr. Sandip Khetan, Partner, Assurance – EY. Mr. Sandip Khetan set the context for the meeting by saying that the international statutory bodies responsible for financial accounting have decided to put the leash on leasing. The Institute of Chartered Accountants of India recently issued a new accounting standard – IndAS 19 on leases. The EY presentation detailed the various challenges and solutions in the new accounting standards that must be followed. The new leasing standards will pose a number of challenges for businesses with a substantial number of operating leases even before the effective date.
IFRS 16 – leases (applicable from January 1st, 2019) will change the accounting treatment of leases significantly and will require lessees to recognize assets and liabilities for most leases on their balance sheet at present value of lease payments. This will result in higher EITDA as the lease expense will now be split as amortization and interest cost in the statement of profit and loss.
The key challenge for lessees will be identifying all the lease arrangements that exist and gathering all the required data to get the leases to the balance sheet. The new standard will affect many activities across the organization like procurement, IT, internal audit and finance functions. Since inventory of all leases has to be created on transition, significant changes to systems and processes may be required. There are some impacts which cannot be quantified yet like changes to the tax treatment of leases until the tax department comes up with regulatory guidance.
The new lease standard under US GAAP (ASC 842) is also applicable from January 1st, 2019 for public business entities (January 1st, 2020 for other entities). The ‘Day 1’ accounting for leases under US GAAP (ASC 842 – Leases) is similar to IFRS 16 where most of the leases are recognised in the balance sheet. However, there are significant differences in ‘Day 2’ accounting. The major difference is that under ASC 842, lessee is still required to classify the leases as either operating lease or finance lease and the operating leases expense will continue to be straight lined in the income statement.
In a nutshell, the above changes will pose a significant challenge for companies reporting under both IFRS and US GAAP. In summing up, it is important for all corporate business houses to first get an inventory of all leases that they have, both financial leases and operating leases. This would be the first step and this is the biggest challenge. The meeting came to an end with an interactive session with all the participants.
U.S. Defense Industry Engagement with Ms. Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment (A&S), U.S. Department of Defense 19th July 2018
U.S. Defense Industry Engagement with Ms. Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment (A&S), U.S. Department of Defense – 19th July 2018
AMCHAM hosted Ms. Ellen Lord, Under Secretary of Defense (Acquisition and Sustainment) and her delegation for a closed door interactive session with U.S. defense industry participation during her visit to India for the Defense Technology and Trade Initiative dialogue.
Ms. Lord and Mr. Matthew Warren, Acting Director, International Cooperation had candid conversations with the group on their engagement with her counterpart at the DTTI dialogue, about the restructuring of the DTTI Joint Working Groups into 5 groups down from previously 8 Joint Working Groups, namely Army Working Group, Navy Working Group, Airforce Working Group, Aircraft Working Group and Other Working Group, with specific leads to take up the discussions on behalf of the U.S. Government. DTTI Joint Working Groups were earlier based on projects but with the restructuring they have been streamlined into domain working groups.
They also updated the group on the objectives of the National Defense Strategy, which amongst other items, focuses on strengthening alliances and partnership and formulating business cases. It was mentioned that the Indian Embassy in Washington was considering placing an individual in Washington D.C. to only focus on DTTI and enable facilitation.
They also urged industry to provide inputs on significant business cases that could be adopted and significant road blocks that companies were facing to take matters up for discussions. They also requested for proposals on inputs on behalf of industry that the U.S. Government could provide to the Government of India for better Defence Technology and Trade Initiative dialogues in the future.