Thursday, January 24, 2008

Export promotion schemes face axe

NEW DELHI: The government on Wednesday indicated that some export promotion schemes that have outlived their utility may be scrapped. Commerce secretary GK Pillai said schemes of marginal use and low utility would be done away with in the annual review of the foreign trade policy this year.

He said exports were certain to hit the $150-billion mark this year, and may even touch $155 billion, just falling short of the $160-billion target for the year. “Exports worth $150 billion are certain this year. If there is a surge, shipments could even go up to $155 billion,” Mr Pillai told reporters on the sidelines of a CII meet on Foreign Trade Policy. He added that an export target of $200 billion for fiscal year 2008-09 seemed feasible.

Clarifying that the schemes to be put on the chopping block are yet to be identified, the commerce secretary pointed out that incentives such as the export promotion capital goods scheme (EPCG) spelt more trouble for exporters, with minimal benefits. He said every year, several exporters received notices for failing to meet export obligations.

Mr Pillai sought inputs from the industry for the Krishnamurty committee, which is likely to submit its report to Prime Minister Manmohan Singh on January 31. The committee is examining ways to help export-oriented manufacturing sectors such as textiles, leather and handicraft, which are suffering from a slowdown in growth.

The commerce ministry would submit its first draft of the trade policy to the revenue department within 10 days, Mr Pillai said. India’s exports for April-November 2007 amounted to $98.38 billion, growing at 22.08% over the previous year.

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Russia suspends import of Indian plant products

MOSCOW: Russia will suspend import of plant products from India from January 28 after apparently finding one of the most dangerous grain pest in a batch of Indian beniseed.

"Restrictions will also apply to plant products from third countries which were supplied under phytosanitary certificates issued by India's national plant protection organisation," Rosselkhoznadzor Federal Service for Veterinary and Phytosantiary Supervision spokesman Alexei Alexeyenko said.

Russia adopted restricting measures because "inspectors at a border checkpoint in Novorossiisk found Khapra beetle in a batch of Indian beniseed." It is one of the most dangerous grain pests, the spokesman was quoted as saying by Itar-Tass news agency.

Beniseed is a common oil seed. "On the whole, this case questions the effectiveness of the phytosanitary certification, as well as control and safety of plant products in India," Alexeyenko said.

Last year, Russia placed similar restrictions on Indian plant products imports.

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Merchandise exports may not meet $160 b target

New Delhi, Jan. 23; The Government expects merchandise exports for the current fiscal to be in the $150-$155 billion range, lower than the targeted $160 billion for the year.

The US slowdown and rupee appreciation against the dollar are seen as important reasons for the likely shortfall in export target.

“Exports of $150 billion look a certainty. If there is a surge it may even go near the target. In next year, merchandise exports of $200 billion looks feasible”, Mr G.K. Pillai, Commerce Secretary, told reporters on sidelines of CII meeting here.

Till end-November this fiscal, the country’s merchandise exports stood at $98.38 billion.

The Commerce Secretary also indicated at the meeting that the forthcoming annual supplement to the foreign trade policy would do away with a number of export incentive schemes that have marginal utility, besides simplifying procedures and encouraging self-certification by exporters.

“We will try to go in for a lighter policy with simplified procedures,” he said.

In the next 10 days, the Commerce Ministry plans to send first draft of the proposed annual supplement to the revenue department in the Finance Ministry for its perusal and comments.

Meanwhile, Mr Pillai has asked industry to submit their inputs to the Krishnamurthy Committee soon, which has been set up by the Prime Minister, Dr Manmohan Singh, to go into the problems faced by certain export-oriented manufacturing sectors such as textiles, leather and handicrafts.

Mr V. Krishnamurthy is likely to submit the committee report to the Prime Minister by end January.

On free trade agreement (FTA) with Asean, Mr Pillai said that negotiations on the trade pact are likely to be completed by March, and the agreement would be signed subsequently.

“The FTA with Asean will most likely come into force from January 1, 2009,” he added.

He said that negotiations for similar pacts are on with the European Union (EU), Japan and Korea.

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Govt mulls another round of export sops

The government is considering another set of measures — the fourth this financial year — to help exporters cope with a rupee that has strengthened 13 per cent since April.

The measures range from scrapping import duty under the Export Promotion Capital Goods (EPCG) scheme to a percentage point increase in duty remission schemes.

These measures are part of a package of nine concessions that were suggested by the commerce ministry around eight weeks ago and are awaiting cabinet approval.

Meanwhile, the finance ministry took the initiative to offer exporters concessions on November 29 last year.

Those measures included lower interest rates on pre- and post-shipment credit, interest payment for delays in reimbursement of terminal excise duty and central sales tax and remission of service tax payments on three services used by exporters.

Among the proposals pending with Cabinet is one to review export sops, which have already been granted, after September 30 this year. In effect, this is an indication of the continuing impact of a strong rupee on Indian exporters.

Between April and November 2007, exports in dollar terms grew at 22.06 per cent against 26.6 per cent in the same period last year. In rupee terms, exports grew at 8.02 per cent, against 31.42 per cent a year ago.

The commerce ministry feels that scrapping duty for imports under the EPCG scheme would encourage technology infusion in export oriented industries.

Exporters are currently allowed to import capital goods under the scheme at a concessional import duty of 5 per cent against the peak duty of around 7.5 per cent.

The commerce ministry has also suggested that rebated state taxes can be adjusted from Plan funds provided by the central government. State levies account for 6 to 7 per cent of the value of Indian exports.

The other proposals include a one-year extension of tax benefits enjoyed by 100 per cent Export Oriented Units and Software Technology Parks of India under Section 10A and 10B of the Income Tax Act, 1961. These benefits are set to expire in March 2009.

Finance Minister P Chidambaram had announced three export relief packages in July, October and November last year. These packages included service tax exemption for 10 services used by exporters against a demand of more than 20 by the commerce ministry.


EXPORT SOPS — IV
(What the commerce ministry proposes)

# Capital goods imports through EPCG scheme should be allowed at zero import duty.

# In-principle approval for adjusting Centre’s allocation to states for reimbursing state taxes to exporters.

# DEPB/duty drawback like duty remission benefits for SEZs, EoUs through tradable scrips at 2 per cent of export value.

# Extension of tax benefits to EoUs, STPIs for one more year from 31/3/2009.

# Review of export sops in September, 2008.

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Export-import control over dual-use chemicals may ease

NEW DELHI: Expect the proposed export-import control over dual use chemicals to be less rigorous. The government is planning to bring down the number of chemicals in the list that it drew up a couple of months ago for strict export-import control. The present thinking in the government is that legitimate trade of these commercially important chemicals should not suffer where we do not have an international obligation to restrict them.

The Ministry of External Affairs and the Ministry of Chemicals had in November agreed to subject international trade in 24 products known as the Australian group of chemicals and many other items in the same class to greater scrutiny.

The Australian group, an association of countries, has a larger list of 63 items as chemical weapons precursors that need stricter licensing. The initial move was aimed at preventing the proliferation of dual use materials from India.

Now, the take of various government departments is all these chemicals should not be subjected to rigorous licensing norms. The chemical and fertiliser department has told the commerce ministry that only five chemicals from the initial list should be subjected to intense regulation. There is no legally binding international obligation on the part of the government to regulate all the chemicals, the department has argued.

While India is not a member of this association of nations called the Australia group, America is. The chemical industry, which is not in favour of any controls, will be asked to support their demand with data, government sources said.

The Ministry of External Affairs has, in the meantime, decided to move a proposal to the director general of foreign trade to introduce a system of intercepting consignments marked to certain customers. The plan is to draw up a list of ‘end users of concern’.

This will be based on global trends in proliferation of weapons of mass destruction, information from other countries and UN Security Council resolutions. The government will authorise the Customs department through a notification to stop any export consignment to these business houses.

Once intercepted, the exporter would be told that he should seek a licence to go ahead with the export. The move has implications for the export of chemicals and allied products, biotechnology materials and products of the aerospace industry.

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Wednesday, January 23, 2008

GCC to sign FTA with India this year

DUBAI: The six-member Gulf Cooperation Council (GCC) will sign Free Trade Agreements with India, China and European Union this year, a senior minister has said.

UAE's State Minister for Financial and Industrial Affairs, Mohammed Khalfan bin Kharbash told this to the GCC 11th Conference on 'Future of Gulf Petrochemicals in Abu Dhabi' on Sunday.

At the India-GCC Industrial Forum in Mumbai last year, Minister of Commerce and Industry Kamal Nath had said that India was in the process of negotiating an FTA with the Gulf countries and talks in this regard were likely to be concluded soon.

In the last five years, India's total trade with the Gulf Cooperation Council (GCC) countries has risen more than four-fold from $5.55 billion in 2000-01 to $23.42 billion in 2005-06.

"The period witnessed buoyancy in exports and imports. Signing of the Framework Agreement on Economic Cooperation between India and GCC countries in 2004 was another milestone in the Indo-GCC economic relations," Nath had said.

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Monday, January 21, 2008

Peak customs duty may stay intact in Budget 08

NEW DELHI: Peak Customs duty, which stand at 10%, is unlikely to be cut in Budget 2008 following slowdown in the manufacturing sector and negative growth in labour-intensive exports.

Senior officials said while the Centre wanted to reduce duties for the fourth successive year to meet the self-imposed target of achieving Asean levels by 2009, the Prime Minister’s Office (PMO) had asked the finance ministry to look into the industry’s request of a status quo. The industry has said a reduction in peak duties will spell more trouble as it was already grappling with a steadily-appreciating rupee.

It is understood prime minister’s economic advisory council (EAC) has also favoured the continuation of the Customs duty structure to give relief to the domestic industry.

While peak duty stands at 10% today, the target is to bring it down to 4.5-5% by 2010. Duty on a large number of items like polyester products and certain metals have been reduced to 5%. However, if the government decides not to deviate from its planned strategy of bringing average peak down to 5% by 2010, the duty cuts on most products will have to be much sharper in the following year.

Domestic sectors that would get a reprieve if further import duty cuts are not implemented include airconditioners, refrigerators, washing machines, picture tubes, specified plastics and other capital goods that have been witnessing a slowdown. Import duties on all the products are at the present peak duty of 10%.

Lack of buoyancy in indirect tax collections could also act as a deterrent against Customs reduction as it would have an adverse impact on collections. However, a final decision on peak Customs duty will be taken by the Centre after several more rounds of discussions at the highest level.

It would be a difficult decision for a prime minister and finance minister who are acknowledged as reformists globally but have to face elections the following year.

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Sunday, January 20, 2008

ASEAN softens approach to strike FTA with India

NEW DELHI: After a series of compromises made by India to remove the hitches blocking the India-Asean free trade agreement (FTA), Asean too seems to be doing its bit in the last leg of the negotiations. In its fresh proposals on duty cuts for the five crucial agricultural products holding up the agreement, it has gone down considerably from its earlier demands.

The issue will be resolved as soon as India gives its nod after suggesting “minor” changes in the Asean’s latest proposal. There would be two more meetings between officials––in February and April this year–– following which the agreement is expected to be formally signed by the two sides.

Speaking to ET, official sources said Asean’s new proposal was more acceptable to India than the previous one as it was more or less in line with what was feasible for the country. As per the new demands, import duties on crude palm oil has to be brought down by India to 43% while that on refined palm oil has to be reduced to 51%. Earlier, the Asean had proposed 30% duty for crude and 40% for refined palm oil.

The Asean has also toned down its demands for pepper, tea and coffee where it has asked for duties to be brought down to 50%, 45% and 45%, respectively. “We may ask for some minor changes in the proposed duties, but the agreement is more or less in place,” an official said. The two sides have also come to a compromise on the end date for implementing tariff cuts for the five products.

While India wanted the end date to be December 2018, the Asean wanted the complete tariff cuts by January 2018. “The two sides have decided on a middle date of July 2018,” the official said.

The FTA will include cut in tariffs for all products except a small negative list of items which will be insulated from tariff cuts. India has 489 items in its negative list, the lowest maintained by the country in any bilateral agreement it has entered into so far.

Indian Prime Minister Manmohan Singh is keen to have the FTA in place as it would serve to consolidate India’s position in South and South-East Asia.

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Friday, January 18, 2008

India, Asean free trade deal likely by July

ndia and the 10-member trade bloc Asean may sign the ambitious free trade agreement (FTA) by July 2008, a year later than one of the several deadlines, which have been missed.

Prime Minister Manmohan Singh, during his visit to the 6th India-Asean summit held at Singapore in November 2007, had indicated that India would take a flexible stand in the FTA talks.

According to sources in the know, negotiators from both sides, who met in Bhopal last week, were able to break the deadlock in contentious issues on duty cuts in five highly sensitive farm products of Refined Palm Oil, Crude Palm Oil, Black Tea, Pepper and Coffee as well as the negative list of the Asean countries. I

“Negotiators from India and Asean will meet again in February and April to take forward the progress in the latest round of talks. If all goes well, the treaty could be signed by July this year,” said the source. Negotiators exchanged offers and counter-offers during the Bhopal meet, which will be discussed further.

India had signed a framework agreement on comprehensive economic cooperation with the Asean bloc in October 2003, according to which, negotiations were to conclude by June 2006. With differences remaining unresolved, July 2007 was taken as another deadline, which too did not work out.

India has almost but accepted ASEAN's request on Palm Oils and on other three products - Black Tea, Pepper and Coffee ASEAN is likely to accept India's revised offer.

Another contentious issue was the highly negative list of Asean countries, which exceed 1,200 items against India’s 489. The list is large because the Asean members have individual negative lists. While Vietnam has more than 400 items in its negative list, Malaysia has more than 200 items.

Till recently, Asean has not finalised the list, while India had been progressively pruning it to show its keenness in the FTA. Negotiators from India had objected to a large negative list. According to sources, the Asean bloc is likely to take a softer view on its large negative list and may cut it down.

During the course of the negotiations, India has given several concessions to Asean, which included pruning of its sensitive list to 550 items from the earlier 709, in which import duties would be reduced over a period of time. Most of these products belong to sectors like textiles, machinery and auto as well as chemicals and plastic.

Moreover, India also agreed to compromise on the crucial clause on rules of origin, which provides protection against trade diversion from other countries, with which Asean members have trade ties. Next meeting would be in Lao PDR and it may be the final meeting after which countries would do legals crubbing to ink the deal.

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India asks Indonesia to remove non-tariff barriers on Indian pharma products news

India has asked Indonesia to consider removing Non-Tariff Barriers (NTBs) on the import of Indian pharma products into Indonesia.

Union minister of commerce and industry Kamal Nath during a bilateral meeting with Indonesian trade minister Mari Elka Pangestu, said that such a step would be beneficial for Indonesia to source cost-effective Indian drugs and pharmaceutical products. He further stated that the Indian pharmaceutical products are being exported to several countries including the highly regulated markets of US, Europe, Japan and Australia.

The two sides discussed issues regarding non-tariff barriers on carbon black, wheat flour, uncoated writing and printing paper and milk products and ascertained the concerns of each other to remove barriers to free flow of trade in these goods.

Nath also underlined the potential of small and medium enterprises (SMEs) in both the countries and stressed the need to explore the opportunities in the each other's countries.

"The Indian small and medium sector is quite strong and would welcome engagement with the Indonesian counterparts and some of the Indonesian products such as wood furniture, handicrafts, traditional textile (batik), food processing, etc, that can find good market opportunities in India," he added.

The commerce minister said there was scope for widening the trade basket between the two countries, particularly in the services sector and highlighted the strengths of financial and banking sector.

He said that Indian banks were interested in taking up stakes in Indonesian banks, with State Bank of India and Bank of India having already started operations there. He also suggested that Indonesia too could think about investing in the Indian banking sector, which would enhance the confidence of Indonesian businessmen and investors to do business with India.

In October 2007 the first meeting of the India-Indonesia joint study group was held in Jakarta, which had agreed to submit a report by June 2008. The next meeting of the group is expected in February in New Delhi.

Bilateral trade between India and Indonesia rose to $6.20 billion in 2006-07, a massive jump of 41.22 per cent over the previous year. The share of India's exports to Indonesia was $2.03 billion and Indonesia's exports to India were $4.17 billion with the balance of trade in favour of Indonesia.

Bilateral trade has shown impressive growth over the last five years with Indian exports growing at a compounded annual growth rate (CAGR) of 30.6 per cent and Indian imports growing at 32 per cent.

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India-China FTA not in near future: Nath

Negotiations on the proposed India-China free trade agreement will have to wait, as a final decision in this regard will be taken only after a meeting between Commerce Minister Kamal Nath and his Chinese counterpart.

A joint task force report, prepared by officials of both the countries, has recommended the feasibility of an FTA between both the countries.

"Negotiations on free trade agreement (FTA) between India and China will not start in the near future this year. The Prime Ministers of both India and China in their recent meeting had decided to recommend the report of the joint task force to the commerce ministers of both the countries. We will be holding a meeting on this to decide what we should do," said Nath, at the sidelines of the CII partnership summit held in Gurgaon.

Nath said he would consult industry before going ahead with FTA negotiations. Indian industry is against an FTA with China, unless the country conforms to the WTO norms, abolishes an controlled exchange rate and stops subsidising exports.

In 2004, Indian exports exceeded Chinese imports by $ 400 million. Chinese imports are likely to exceed Indian exports by $ 12 billion by end of fiscal.

Currently, India-China bilateral trade is worth $ 38.6 billion and is likely to exceed $ 40 billion by this fiscal end. The two countries have set a bilateral trade target of $ 60 billion by 2010.

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Australia raises concern on India's sugar export sops

NEW DELHI: After raising the sugar export subsidy issue in WTO, Australia has taken it up with India saying the sops distort a competitive global market for the sweetener.

The issue was raised by the Australian Trade Minister, Mr Simon Crean with Agriculture Minister Mr Sharad Pawar at their meeting here today.

India, on its part, has informed Australia that the subsidy given to sugar exporters was in compliance with the guidelines of the World Trade Organisation.

"There is the issue about concessions given to the sugar exporters. I have explained (to the Australian Minister) about the background ... And how it fits into the WTO guidelines," Mr Pawar said after his meeting with Mr Crean.

The Indian Government has been giving subsidy to sugar exporters at the rate of Rs 1,350 per tonne for coastal states and Rs 1,450 per tonne for non-coastal states in the backdrop of a glut in the industry.

Besides, Mr Pawar also said India was eager to export mangoes to Australia from April 2008.

"There is some problem from their side. They have assured us that they will look into the matter," he said.

India has started exporting mangoes to the US last year after the ban was lifted. The Government is trying to push export of the fruit in several other countries. - PTI

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Indian apparel exports drop 14 pct in 2007; seen 8 pct down in 2008 - trade body

Indian apparel exports declined by 14 pct in 2007 due to rupee appreciation and are expected to drop by about 8 pct in 2008, according to a national trade body.

The Confederation of Indian Apparel Exporters (CIAe) said the export of readymade garments to the US alone declined by 10 pct in rupee terms during April-Nov 2007, and added that exporters have already started to feel the heat from a possible recession in the US coupled with competition from neighbouring countries.

'This is only the beginning, and if the government does not seriously look into the plight of the exporters this industry could be heading for a disaster,' CIAe's president Amit Goyal said.

The threat of a US recession and competition from China, Vietnam and Bangladesh will remain the dominant concerns in 2008, he said.

The cost of production is believed to be 20 pct lower in these countries compared with India's, where costs rise by 5 pct each year.

Even exports to the European Union have declined by around 4 pct as most volume-based business has gone to Bangladesh due to the duty-free concessions enjoyed by it, and only small orders with a quick turnaround are coming to India, he said.

'Unless the government doesn't increase the drawback rates as demanded by the industry and stabilise the rupee exports will continue to show a downtrend,' said JB Jain, a leading garment exporter.

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NDIA SEEKS MARKET ACCESS TO EXPORT AGRI PRODUCTS TO AUSTRALIA

India is keen to export agricultural products and dairy & poultry products to Australia and has asked Australia to facilitate these exports through appropriate market access initiatives and removing non-tariff barriers. This was conveyed by Shri Kamal Nath, Union Minister of Commerce and Industry, during his bilateral talks with the Trade Minister Mr. Simon Crean, here today. India is also looking forward to exporting mangoes from April 2008, the Minister added. The meeting was attended by the Commerce Secretary Shri G.K. Pillai; Secretary (DIPP) Shri Ajay Shankar; Director General of Foreign Trade Shri R.S. Gujral and senior officials from various Ministries from both the countries.

Shri Kamal Nath stated that “India is growing and a stable investment climate presents huge opportunities for Australian companies, particularly in energy and infrastructure sectors. Some of the major Australian companies, which have invested in India are BHP Petroleum Pty. Ltd., Telstra Corporation Ltd., Telstra Holding Pty. Ltd., Australian India Resources N.L.., BHP Steel, BHP Billiton, Rio Tinto, MIM Holdings, Snowy Mountains Engineering Corporation etc. Australia’s investments in India have been US $ 1.92 billion since 1991. Indian investments in Australia are now well over US $ 1 billion and most of these are in the IT sector”.

The bilateral trade between India and Australia has seen a growth of 37.50% between 2005-06 and 2006-07, and the total bilateral trade during 2006-07 is US $ 7932.79 million. Bilateral trade from April to September 2007 is US $ 4967.27 million recording a growth of 29.41% for the same period in 2006. The compounded Annual Growth Rate during 2001-02 and 2006-07 is 14.14% for exports and 32.31% for imports. For total trade during the same period, the CAGR is 28.96%.

India’s exports to Australia in 2006-07 were US $ 924.78 million, an increase of 12.61% from 2005-06. India’s imports in 2006-07 was US $ 7008.01 million, an increase of 41.64% over 2005-06. Australia’s trade in services with India during 2006-07 was US $ 1895 million. Of this, the import of services was US $ 360 million and the export was US $ 1536 million.

The major items of India’s exports are gems & jewellery, metals, machinery & instruments, cotton yarn, fabrics, drugs & pharmaceuticals. The major imports consists of gold, coal, coke and briquettes, metal ore, metal scraps and non-ferrous metals.

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Friday, January 4, 2008

China may ask PM for FTA on his Beijing visit

NEW DELHI: China is expected to step up pressure on India to negotiate a bilateral free trade agreement (FTA) during Prime Minister Manmohan Singh’s visit to Beijing later this month. The trade and economic relations committee (TERC) headed by the PM will meet soon to finalise India’s agenda for the three-day visit beginning January 13. While India may not agree on FTA negotiations before China gets market economy status, it will try to convince Beijing to lower barriers to trade, mostly non-tariff in nature, for products such as coke and agricultural items.

The joint task force, set up to look into the possibility of an FTA, is expected to hand over its report during Mr Singh’s visit. According to sources, the joint task force will not rule out an FTA, but defer it. “India will not like to completely rule out an FTA as it might hurt its relations with China. However, it will certainly be deferred,” a source said.

India has not yet granted market economy status to China as it fears the move may result in large-scale dumping of Chinese products. Once the status is granted, India will compulsorily have to accept numbers supplied by China in all anti-dumping cases initiated by it against the country.

Since the Chinese pricing and accounting systems are still opaque, accepting their prices for anti-dumping calculations could result in a situation where India will not be able to establish dumping at all. This will prevent India from taking action against dumping of Chinese goods.

During Mr Singh’s visit, India plans to ask China to remove the export duty on coke as it was affecting India’s steel industry, which prefers to use high-quality coke from China. The country will also urge Beijing to remove restrictions on import of most agriculture products from India.

According to statistics released by China, India’s trade with the country touched $14.7 billion in the first five months of 2007 –– registering a 50% growth over the previous year. Bilateral trade is expected to cross $35 billion by the year-end.

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Centre can scrap notified Goa SEZs, Nath tells CM

PANAJI/NEW DELHI: Adopting a conciliatory stand in the stand-off with Goa over scrapping of special economic zones (SEZs) in the state, Union commerce & industry minister Kamal Nath said that the Centre can review all SEZs in Goa — irrespective of whether they have been notified or not. In a meeting with Goa chief minister Digambar Kamat on Thursday, Mr Kamal Nath asked him to give in writing the reasons for scrapping all SEZs in the state and promised to take necessary action.

The minister’s statement is in stark contrast to commerce secretary GK Pillai’s comment on Wednesday that notified SEZs cannot be denotified as they were legal entities.Speaking to reporters after the meet, Mr Kamal Nath said there was “absolute provision” in the SEZ Act for everything, including review of the notified zones. “Centre can review all Goa SEZs,” he said.

“We have been assured that no SEZ, including those notified, will be allowed in Goa, if the state does not want it. The minister is very concerned and cooperative on this issue,” said Mr Kamat who along with north Goa MP Shantaram Naik and state secretary JP Singh held an hour-long meeting with the Union minister.

The Centre’s decision to back off from a confrontation could be to avoid more controversies related to SEZs, especially in the light of the violence in Nandigram which lasted for months after a decision to scrap the Salim Group SEZ project was taken.

In the meeting, the Goa CM presented three points against the proposed SEZs. Besides highlighting public sentiment against developing such zones, he is understood to have shown facts to prove that SEZs to be a deterrent to the state’s growth; and as such would not generate any income or employment for the locals here, apart from posing grave environment concerns. Mr Kamat also brought to the Centre’s notice that the claims of employment generation by SEZ developers were far fetched.

“The companies’ have misrepresented facts to us while applying for SEZs. They are unable to prove that they can generate large-scale employment. That is how we got cheated into giving permissions,” said Congress MP from north Goa Shantaram Naik.

The Centre is likely to wait for the SEZ board to examine the points made by the Goa CM, before deciding its next course of action.A day before new year, Goa had decided to ‘do away’ with setting up SEZs and wanted central government to denotify the three approved zones.

Meanwhile, the issue took a political twist with the opposition alleging that Mr Kamat is only ‘buying time’ to dampen the anti-SEZ protests in the state. “If I come to power, these SEZs will never come. I doubt if the CM is serious about the issue, I have questions about his intention,” said leader of opposition and senior BJP leader

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Thursday, January 3, 2008

India slashes customs duties on 4800 items from SAARC

NEW DELHI: India has scrapped import duty and reduced customs tariff on more than 4,800 items from neighbouring least developed countries (LDCs) like Pakistan and Sri Lanka in order to boost trade in South Asia. All countries are members of the South Asia Free Trade Agreement (Safta) which came into force in January 2006.

The import duty has been reduced from 16-40% to zero level on items like meat, fish, milk, dairy products and dry fruits from Bangladesh, Nepal, Bhutan and Maldives. However, the duty rates on these items have been reduced to 12% from 20% on goods imported from Pakistan and Sri Lanka. The new rates have come into effect from January 1.

All pharmaceutical products and drugs can now be imported at 10% duty from LDCs, as against 12.5% earlier. However, tariff on drugs has not been cut in case of Pakistan and Sri Lanka, a Central Board of Excise and Customs notification said. Customs duty on fertiliser, lime and cement items has been cut to 10% in case of LDCs, but it would remain at 12.5% for Pakistan and Sri Lanka. Dairy products, excluding milk powder, and butter oil can also be imported from Bangladesh, Nepal, Bhutan and Maldives at zero duty.

The decision to abolish duty on dairy products from these countries is unlikely to impact the domestic market or benefit these countries as they are not major players in milk market. Pakistan and Sri Lanka, which can export dairy products to India, would have to pay 20% duty on these.

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Wednesday, January 2, 2008

Indian November imports grow faster than exports

NEW DELHI: Indian imports grew faster than exports in November, data showed on Tuesday, and analysts expect the trade deficit could widen further on a mix of record oil prices, a fast-growing economy and a strong rupee.

Exports in November rose 26.8 percent from a year earlier to $12.4 billion in November, while imports rose an annual 29.3 percent to $19.8 billion, government data showed on Tuesday. That left a trade deficit of $7.4 billion for November, larger than $5.5 billion a year earlier.

The rupee rose 12.3 percent against the dollar last year, denting exporters’ competitiveness in foreign markets but offering some cushion against high oil prices.

“There could be some moderation in export growth in the coming months. The annual export target is difficult to meet,” said DK Joshi, principal economist at rating agency Crisil.

Last April, the government set an export target of $160 billion for the fiscal year ending in March 2008. In December, Commerce Secretary GK Pillai said exports were likely to be $140 billion. Tuesday’s data showed exports of $98.4 billion for the eight months ended November, up 22.1 percent from a year earlier.

High oil prices were a threat to domestic inflation, especially if the rupee’s rise stalled, Joshi said. However, he also said a 10.2 percent annual rise in the oil import bill to $43.3 billion for April to November was ‘not a concern’.

India’s trade deficit widened to $52.8 billion in the first eight months of 2007/08, up from $38.5 billion a year earlier, boosted mainly by non-oil imports, the data showed.

The Indian economy has grown at an average of 8.6 percent over the last four fiscal years, and is expected to grow at a similar rate in 2007/08, boosting demand for capital goods both from domestic and overseas markets. “Non-oil imports are reflective of a strong economic growth,” Joshi said. reuters

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Centre dares Goa, says SEZs once notified cannoat be cancelled

NEW DELHI: In a move that could lead to a direct confrontation with the Goa government over the special economic zone (SEZ) policy, the Centre has said that the three SEZs notified in the state –– pharma major Cipla’s Meidtab Specialities, Raheja’s IT/ITeS SEZ and Peninsula Pharma’s biotech SEZ –– cannot be denotified.

The Goa government that has decided not to house any SEZs is sure to find the Centre’s stand unpalatable. Moreover, the Centre also feels that the onus is on state governments to compensate promoters of notified SEZs if the door is shut on their projects. Goa chief minister Digambar Kamath is expected in New Delhi on Thursday and he is likely to meet commerce & industry minister Kamal Nath to discuss the row over SEZs.

Following a meeting of the board of approval (BoA) of SEZs, which granted formal approval to 24 proposals and in-principle clearance to four, commerce secretary G K Pillai said on Wednesday that there was no provision under law to denotify SEZs. “The SEZs that have been notified have become legal entities and cannot be denotified,” Mr Pillai said.

Mr Pillai said there could be legal consequences if the attempts were made to denotify the notified SEZs as investments has already been made in the zones. Meditab has invested more than Rs 500 crore in its SEZ. "Duty-free equipment has also started coming in. How will the state government compensate the developers," Mr Pillai said. Developers may even approach the court against the decision of the Goa government, he added.

Mr Pillai said the four remaining SEZs, which had been formally approved but not notified, could be cancelled. The ones in danger of cancellation include Inox Mercantile’s biotech SEZ, Paradigm Logistics IT/ITeS SEZ, Panchbhoomi Infrastructure’s IT SEZ and Planetview Mercantile’s gems & jewellery SEZ.

The Goa government had decided to scrap all SEZs in the state following widespread political protests initiated by the BJP and subsequently endorsed by the Congress, NCP and the Catholic Church. There have been protests against individual SEZs in a number of states including West Bengal, Maharashtra and Haryana. However, Goa is the first state where the entire policy is being challenged.

The 24 proposals given formal approval on Wednesday include Steel Authority of India (SAIL)’s SEZ at Salem in Tamil Nadu, Iffco’s multi-product SEZ in Andhra Pradesh, Dr Reddy’s pharma SEZ in AP and Orion’s IT SEZ in West Bengal.

The Centre has formally approved 404 SEZs out of which 187 have been notified. SEZs enjoy several tax sops including income tax exemption for a specified period under the SEZ Act 2005 and SEZ rules notified in 2006.

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