Cabinet clears reforms in Indian Army, GST compensation ordinance to levy more cess on luxury cars

The Union Cabinet chaired by Prime Minister Narendra Modi today approved wide ranging reforms in Indian army to enbace its combat capability and efficiency. It also decided to promulgate an Ordinance to enable the levy of up to 25 percent compensation cess on luxury vehicles.
 
The first phase of the reforms will see redeployment and restructuring of about 57,000 military and civilian posts. It will result in the optimisation of Signals Establishments by including Radio Monitoring Companies, Corps Air Support Signal Regiments, Air Formation Signal Regiments, Composite Signal Regiments and merger of Corps Operating and Engineering Signal Regiments. Restructuring of repair echelons in the Army to include Base Workshops, Advance Base Workshops and Static/Station Workshops in the field Army.

The decision is based on a set of recommendations made by a Committee of Experts under the Chairmanship of Lt Gen (Retd) (Dr.) DB Shekatkar to the defence ministry. The committee's mandate was to recommend measures for enhancing of combat capability and rebalancing defence expenditure of the armed forces with an aim to increase "teeth to tail  ratio".
 
The Committee of experts had submitted its report to the Ministry in December, 2016, which was considered by the Ministry of Defence and 99 recommendations were sent to the armed forces for making an implementation plan. The Cabinet has cleared 65 of these recommendations.
 
These reforms will be completed in all respects by 31 December 2019.

Meanwhile, the Ordinance to  amend the Goods and Services Tax (Compensation to States) Act, 2017 will see the  maximum permissible rate at which the Compensation Cess can be levied on luxury cars to go up from 15 percent to 25 percent. The issue regarding the increase in effective rate of Compensation Cess on motor vehicles will be examined by the GST Council in due course.

The Cabinet also approved a Memorandum of Understanding (MoU) between India and Israel on "India-Israel Industrial R&D and Technological Innovation Fund (I4F)". According to the MoU, signed in July, 2017, India and Israel will make an contribution of $ 4 million each for the Fund, both equivalent amount, annually for five years.