A high level government-appointed committee on trade and industry has suggested it to issue ‘Elephant Bonds’ to people for declaring undisclosed income to mandatorily invest 50%.

Elephant Bonds

• These are the 25-year sovereign bonds in which people declaring undisclosed income will be bound to invest 50 per cent.
• The fund, made from these bonds, will be utilised only for infrastructure projects.
• It is like an Amnesty scheme to help State treasury raising tax revenues, adding beneficiaries in tax base who have not declared their assets previously.
• These bonds will also reduce corporate tax rate, drop tit for tat approach on tariff wars with other countries, and set a target to double the exports (goods and services) to $1,000 billion by 2025.

Other Recommendations:

• The group recommended increasing capital base of EXIM Bank by another Rs 20,000 crore by 2022, setting up of empowered investment promotion agency and seeking inputs from industry and MSMEs before signing free trade agreements (FTAs) and sensitising them of its benefits.
• Further, the seven industry specific suggestion includes separate regulation for medical devices and a single ministry for the sector.
• For textiles and garments sector, it suggested modification in labour laws (like the Industrial Disputes Act, 1947) to remove limitation on firm size and allow manufacturing firms to grow.
• To promote tourism and medical value tourism, the group recommended simplification in medical visa regime, setting up of a pan-India tourism board.
• Similarly, to promote agriculture exports, it has asked for abolishing Essential Commodities Act and the APMC (Agricultural Produce Market Committee).

Features of this bond:

• This bond will allow joint ventures and wholly owned subsidiaries of Indian parties to invest money in India as foreign direct investment (FDI) through funds earned overseas, under automatic route.
• This will simplify regulatory and tax framework for foreign investment funds and individual investors to enable the on-shoring of fund management activity of India-dedicated offshore funds and attract foreign individual investment into capital markets.
• The other key recommendations include lowering effective corporate tax rate and bringing down cost of capital and simplifying regulatory.
• The report argued that India's competitors have less than 20 per cent effective tax rates.
• These recommendations are part of a report prepared by the 12-member group, set up by the commerce ministry in September last year to look into the challenges arising from the current global trade scenario and suggest ways to boost the country's goods and services exports.

• As this bond promotes exports, so it will help a country to create jobs, boost manufacturing and earn more foreign exchange.
• State governments need to be closely involved in improving the competitiveness of exports by providing support measures in a WTO (World Trade Organisation) consistent manner.