Goa scraps 12 exclusive SEZs, faces legal tangle

Even as the Goa government decided to scrap all 12 exclusive special economic zones (SEZs) in the state and recommended to the Centre the denotification of three zones, the commerce ministry officials warned that the state government would have to deal with the probable “legal” consequences of the decision.

“We will write to the Centre to scrap the eight proposals pending for approval while we will not notify the four (SEZs) that are already approved. About the rest three, we will take up the matter with the Centre to denotify them,” said Chief Minister Digamber Kamat.

The recommendation means that investments worth more than Rs 4,600 crore in seven formally approved zones will not come in. These zones have land in their possession.

“It is for the state government to decide and face consequences. The Board of Approval (for SEZs) gave its nod only after the state government’s recommendations. Some developers have already started construction and may want their money back,” said a commerce ministry official.

Significantly, Goa is the first Congress-ruled state to go back on SEZs. Other states which have seen trouble over SEZs include West Bengal, Maharashtra and Haryana, mainly because land-owners protested against land acquisition for the zones.

In contrast, the protests in Goa are spearheaded by ordinary citizens who fear for the future of a territory that is an idyllic tourist getaway.

“The citizens of Goa, bothered by the infrastructure crunch, took forward the anti-SEZ movement, while in Maharashtra and Haryana, it’s the land-owners who are leading the protests,” said Manshi Asher, a civil activist and an independent researcher on SEZ-related issues.

According to Asher, the genesis of the movement lay in the Goa Regional Plan of 2011, which was criticised widely and led to the resignation of Town and Country Planning Minister Atanasio Monserrate in January 2007.

“Subsequently, Goan citizen groups, which were vocal against the regional plan, focused on SEZs and their impact on infrastructure and environment, which were already under pressure because of tourism and mining,” added Asher.

Over and above, there were concerns on immigration of people from other states, he said.

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Commerce Dept leaves basmati rice definition to Agri Ministry

New Delhi, Dec 13 The Department of Commerce has come to an “understanding” with the Ministry of Agriculture on the definition issue of basmati rice with the task now falling on the latter so that the new appellation for basmati would be in conformity with international agreements and the Indian Seeds Act.

On geographic indication

Official sources told here that at a recent meeting held under the Chairmanship of Commerce Secretary, Mr Gopal K. Pillai, it was made clear that there should not be any compromise on the geographic indication (GI) protection of basmati rice, while determining the definition so as to obviate the needless controversy.

The meeting was attended by representatives of the Commerce Ministry, the Agriculture Ministry, the Indian Council of Agricultural Research and the Agricultural and Processed Food Products Development Authority (APEDA).

The Agriculture Ministry made it clear that the GI region for basmati, i.e., the Indo Gangetic plain falls in both India and Pakistan. It was also pointed out that the basmati definition is currently not notified under the Seeds Act and it should be done forthwith.

Clarification

The representative of the Commerce Ministry clarified that the definition of basmati rice was framed under the Export of Basmati Rice (Quality Control of Inspection) Rules, 2003 since there was no definition of basmati rice in vogue at that point of time.

When contacted, Mr Pillai clarified that once the definition of basmati rice is in place by the Agriculture Ministry incorporating the essential components of GI, International agreements and Seeds Act, “we will get our definition modified” to reflect the new elements of the definition.

Definition task

Scientists at farm research centres are overly happy that the definition task has now rightly come to the Agriculture Ministry and hope that the emerging definition would definitely factor in all the relevant materials encompassing pedigree of rice, international agreements and Seeds Act.

The sources further contend that since the onus is now on the Agriculture Ministry for ensuring the supply of authentic basmati paddy and protection of GI for basmati, the Farm Ministry might have to draw blueprint and norms for supply of authentic basmati paddy seed to the growers.

To frame licensing norms

The Agriculture Ministry might toy with the proposal to frame licensing procedure on sale of basmati paddy seed to the growers to regulate and promote the authentic seed variety so that genuine basmati rice is produced.

The objective is to prevent sale of spurious seeds by vested interests which have developed stakes in the export of dubious basmati or basmati of questionable parentage. How far this could be implemented before the next sowing season which begins in April-May 2008 depends on how fast the official machinery is geared to the task on hand.

Exact geographical area

Trade policy analysts say that it is important to capture precisely the basmati paddy growing area in line with the GI of TRIPs (trade-related intellectual property rights) Agreement, since leaving the entire Indo-Gangetic plain would make basmati rice generic as there are wide variations in climate in this vast region. Hence, the task of defining the exact geographical area for basmati falls squarely on the Agriculture Ministry, entailing the sensitivities of other basmati rice growing States of Central and Eastern Uttar Pradesh, Bihar, West Bengal, Orissa, Rajasthan, Madhya Pradesh, Maharashtra, Andhra Pradesh, Karnataka and Kerala.

This is important because the reference in various raging legal battles on IRR over basmati clearly is to Punjab, Haryana, Western UP and Uttaranchal as unique to basmati rice in India.

Traceability mechanism

This also raises larger issue of establishing the traceability mechanism in basmati rice supply chain to verify the authenticity of the product as enjoined in the implementation of GI. Every transaction in basmati rice supply chain is required to be documented from the seed to store to ensure the GI and to justify the premium price being charged to the ultimate consumers. Hence, basmati rice exporters would do well to initiate a process in this regard for ascertaining traceability, before the importing countries insist on such information before long, the sources added.

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Pakistan Allows Import of 500,000 Bales of Cotton From India

Dec. 12 (Bloomberg) -- Pakistan, the fourth-largest cotton producer, allowed the import of 500,000 bales of the fiber from India to help boost stocks, after poor weather and pest attacks damaged the crop.

"The import of short-staple cotton has been allowed through land routes via the Wagah border," Ashfaque H. Khan, the government's economic adviser told reporters in Islamabad today.

Pakistan's textile makers, who provide 60 percent of the nation's overseas shipments, need cotton to help meet export targets. The South Asian nation will harvest 9.9 percent less cotton than previously estimated after poor weather and bugs hurt the crop this year, according to the U.S. Department of Agriculture.

The government will ensure that the imported cotton is sprayed so that the local crop isn't contaminated, Khan said.

Cotton production in the year that started Aug. 1 will be 2.04 million metric tons, down from 2.27 million forecast in May, said a Nov. 13 report by the U.S. Department of Agriculture. Consumption is expected to be unchanged at 2.74 million tons.

The production forecast was cut because of "poor germination following heavy rainfall during the sowing season, late planting due to water shortage and high temperatures in August and September resulting in shedding of fruit (bolls)," according to the report. The crop also endured "severe and widespread attack" of the cotton leaf curl virus and mealybugs, it said.

Pakistan will be a net importer of cotton for a seventh straight year, according to a U.S. Foreign Agricultural Service report on Oct. 9. Pakistan imports cotton from the U.S., Brazil, India and Uzbekistan.

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Asia Sugar-Australia, Thailand, braced for Indian onslaught

SYDNEY/BANGKOK, Dec 12 (Reuters) - Australia and Thailand are preparing themselves for a flood of sugar exports -- as much as 4 million tonnes worldwide -- from an India bent on penetrating their traditional Asian markets.

Leading figures in the Australian and Thai sugar industries told Reuters that India was already muscling sugar into East Asian countries, including China, Malaysia and Indonesia.

But an Australian trader said: "We haven't been hearing of anything in bulk. Nothing in any great volume."

That said, more Indian exports could begin to move into East Asia after world sugar prices this week rose to a level where India has said it is keen to export.

Indian exporters were aiming to sell raw sugar on the world market at slightly over 10 cents a pound (lb), S. L. Jain, a committee member of India's sugar export corporation recently said.

After hovering between 9 cents and 10 cents a lb for months, New York sugar prices this week rose to a four-month high of 10.30 cents a lb, right in India's stated selling zone.

Australia and Thailand share the Asian market as the two biggest producers and exporters in the region. Both strongly oppose Indian export subsidies and raised complaints to the World Trade Organisation.

But both know that an Indian sugar export surplus of over 10 million tonnes in 2007/08, for the second year in a row, will lead to Indian penetration the Asian market.

THAIS FEEL THE HEAT

Indian sales in East Asia will have the biggest impact on Thailand, which is the region's leading exporter from big crops, overshadowing Australia's small, weather-affected crop.

The United States Department of Agriculture forecasts that Thailand will export 5.3 million tonnes in 2007/08 from production of 7.2 million tonnes, while Australia will export 3.7 million tonnes from production of 4.7 million tonnes.

India is forecast to export 3.0 million tonnes from production of 31.8 million tonnes and from a huge stockpile of 11.5 million tonnes. Traders believe India's exports could be as much as 4 million tonnes.

Vichai Rojlertchanya, general manager of Thai Cane and Sugar Corp. Ltd., said: "I'm sure that India will share some of Thai markets next year, especially Indonesia due to competitive freight cost".

Australia is also in the ring, competing especially for the Indonesian market, after boosting exports to nearly 500,000 tonnes of raws in 2006 from virtually nil in 2000.

Indonesia should be in the market for more raws after its agriculture minister, Anton Apriyantono, recently said that white sugar imports were unlikely next year because of higher domestic stocks, the Australian trader said.

"The statement means more demand for raws, and that's good for us," he said, adding that Indonesia should be able to produce sufficient whites from its growing number of refineries.

Thailand's Vichai believes Indonesia will import raw and white sugar next year, mostly from Thailand, given low Australian supplies.

India might also be happy to oblige.

So far Indian exports have been mainly displacing Brazilian sugar in the Middle East and West Asia, where it was most competitive, with some sales to the east coast of Africa and to Indonesia, said Australian and Thai traders and millers.

Dubai's Al Khaleej Sugar Co. refinery last month concluded a deal to buy 500,000 tonnes of Indian raw sugar, bringing its total purchases from India to 1 million tonnes, and with the prospect of buying more.

Up to now, Australia has been more concerned about the effect of India's surplus on world prices than about direct competition. But if prices stay above 10 cents, things might start to change.

(Editing by Ben Tan)
By Michael Byrnes and Apornrath Phoonphongphiphat

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Duty cut on palm oil hits vanaspati units in Lanka

The reduction in customs duty of crude palm oil (CPO) by India has severely hit the 12 vanaspati units set up by Indian companies in Sri Lanka to take advantage of the low duty on CPO there and export duty-free to India under the free trade agreement (FTA) quota. However, the move has helped the domestic vanaspati industry.

The import duty on CPO has come down from 88.8 per cent in August 2006 to 46.35 per cent. Moreover, the government’s decision to keep the tariff value (the base price at which import duty is calculated) of CPO frozen at $447 a tonne implies an effective duty of around 23 per cent.

This means that even if the CPO is imported at $910 a tonne, the 46.35 per cent duty is paid on a price of $447. The tariff has been kept frozen to contain inflation.

“These units were set up in Sri Lanka to take advantage of the low CPO import duty ($25 a tonne). Indian agents of these units imported the vanaspati duty-free under the 1998 FTA arrangement. As a result, the imported vanaspati was cheaper by almost 10 per cent than Indian vanaspati and was affecting the domestic producers,” said Sat Narain Agarwal, senior vice-president, Central Organisation for Oil Industry and Trade.

Now, the trend has reversed in favour of local vanaspati units. With the reduction in CPO import duty, the domestic producers would be able to sell vanaspati at a price similar (about Rs 800 per 15 kg jar) or even lower than the imported product.

This has helped the domestic units, which were operating below capacity, while the Lankan units are already on the verge of closure.

The 250,000 tonnes annual quota given to these units in Sri Lanka was increased to 312,500 tonnes for the current year. These units, set up with a total investment of Rs 250-300 crore, have a capacity of 25,000 tonnes each.

However, none of these units have been able to exhaust their full quota in the first two quarters of this financial year and the unused quota has got expired.

“We can revive our units only if the customs duty on CPO goes up in India. Otherwise, we will have to shut down,” said an official from the Lankan vanaspati unit.

SLIPPERY GROUND

# The import duty on crude palm oil (CPO) has come down from 88.8 per cent in August 2006 to 46.35 per cent

# The government’s decision to keep the tariff value of CPO frozen at $447 a tonne implies an effective duty of around 23 per cent

# With the reduction in CPO import duty, domestic producers would be able to sell vanaspati at a price similar to (about Rs 800 per 15 kg jar) or even lower than the imported product

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PM's intervention sought for rupee-hit exporters

New Delhi, Dec 11 In an effort to hasten relief to exporters facing huge losses due to rupee's rise against the US dollar, the commerce and industry ministry is seeking the intervention of Prime Minister Manmohan Singh.

The rupee has surged by about 15 percent this year, which has led to big losses by exporters, who in turn have cut jobs in large numbers.

'This is being examined by the prime minister, who will take a decision on what's to be done or the cabinet will take a view. We must have complete remission and refund of duties,' Commerce and Industry Minister Kamal Nath told reporters Tuesday on the sidelines of the TiE Entrepreneurial Summit currently underway here.

Earlier this year, the finance ministry raised tax refund rates, reduced lending rates for exporters, and cut import duties as measures to help the sector.

Kamal Nath had written a letter to the prime minister for more relief measures.

On the issue of the government's decision to relax the ceiling on the size of multi-product special economic zones (SEZs) from the current permissible limit of 5,000 hectares, the minister said: 'The government is not considering any proposal to relax the 5,000 hectare cap on the land size for SEZs.'

'There cannot be a one-size-fits-all policy for all the states,' he, however, added.

He also reiterated that the review of foreign direct investment was likely to come up before the cabinet next week.

-IANS

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No proposal to change ceiling for SEZs

NEW DELHI: Continuing with the guessing game over the possible relaxation of cap on the land size for Special Economic Zones (SEZs), Union Commerce and Industry Minister, Kamal Nath, on Tuesday said there was no proposal to change the 5,000 hectares ceiling prescribed by the Group of Ministers (GoM).

It was only a fortnight ago that the Commerce Secretary, G. K. Pillai, had talked about possible relaxation of cap on land size for SEZs. The Commerce Secretary had stated on December 2 that the Government might relax the 5,000 hectare ceiling on land for multi-product SEZs once amendments to the Land Acquisition Act along with the Re-settlement and Rehabilitation (RR) policy was passed by Parliament.

“The Union Government is not considering any proposal to relax the 5,000 hectare cap on land size for Special Economic Zones (SEZs),” Mr. Kamal Nath told newsmen on the sidelines of the TiE Entrepreneurial Summit here.

The Indus Entrepreneurs (TiE) is a global not-for-profit organisation focussed on promoting entrepreneurship. However, the Centre would look at specific proposals from the States once the RR policy was implemented, he said. “There cannot be a one-size-fits-all policy for all the States. The Commerce Ministry was examining all these issues,” Mr. Kamal Nath said. He said the much-delayed review of foreign direct investment was likely to come up before the Union Cabinet next week.

As regards demand for further relief for exporters hit by rupee rise, the Union Commerce and Industry Minister said, “The matter is being examined by the Prime Minister.”

He said there had to be complete remission of duty. It had to be ensured that no taxes were imposed and exporters had a level-playing field. The Rural Development Ministry has introduced the twin Bills in Parliament in the just-concluded winter session. The ceiling had forced Reliance Industries and real estate majors DLF and Omaxe to cut the size of their mega SEZs to 5,000 hectares.

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