EOUs, SEZs seek clarification on ending discriminatory taxes

New Delhi, Feb. 24 The Export Promotion Council for EOUs and SEZs (EPCES) on Tuesday hailed the Government decision to end discriminatory tax treatment in respect of those exporters with a unit outside the SEZ as well as a unit in the SEZ, vis-À-vis those operating only in the SEZ. However, it sought a clarification through a circular from the revenue department.

In his reply to the Interim Budget in Parliament the Finance Minister, Mr Pranab Mukherjee, said “it has been decided to remove this anomaly through necessary changes in the Act”.

In a statement issued here, the Director General of the Council said after almost three years of operation of SEZ Act, this discrimination in tax treatment has been recognised by Parliament. However, he said, the SEZ units would still have to wait till an actual amendment is carried out.

Meanwhile, the Federation of Indian Export Organisation President, Mr A. Sakthivel, hailed the cut in service tax from 12 to 10 per cent, continuance of 4 per cent reduction in central excise duty beyond March 31, 2009 and cut in central excise duty on cement from 10 to 8 per cent. He said this would help boost domestic economy albeit on a limited basis. He said that cut in service tax rates would add to export competitiveness by about 0.25 per cent, as refund of service tax is a long drawn out process and only a few exporters obtain refunds while a majority of them wait for more than a year.

Read More......

Govt cuts excise, service tax; revenue loss at Rs 30,000 cr

New Delhi, Feb. 24 The Finance Minister, Mr Pranab Mukherjee, today gave up Rs 30,000 crore of revenue on an annual basis when he announced a slew of indirect tax concessions to bolster sagging demand for industrial goods and services.

This revenue foregone has not been factored in the Budget estimates for 2009-10.

He has also allowed the States to borrow more in 2009-10 for investing in infrastructure and help spur employment generation. Accordingly, States would not lose their debt relief facility in 2009-10 even if they were to exceed their fiscal deficit target by upto 0.5 per cent of Gross State Domestic Product (GSDP).

During the day, Standard & Poor’s (S&P) changed its outlook on India’s long-term sovereign credit rating from stable to negative. Mr Mukherjee said that this was “not unexpected. You have a global meltdown and it has its consequences”.

The latest stimulus, which could be the last one from the UPA Government before the general elections, includes the reduction of the cenvat rate to 8 per cent from the existing 10 per cent. About 96 per cent of the country’s excise revenues hitherto came under the 14 per cent rate, which was recently lowered to 10 per cent and now to 8 per cent.

The changes made in excise duty rates as part of the stimulus packages are now being extended beyond March 31, 2009. Service tax rate on taxable services have been brought down from 12 per cent to 10 per cent.

Also, excise duty on bulk cement has been reduced from 10 per cent or Rs 290 a tonne, whichever is higher, to 8 per cent or Rs 230 a tonne, whichever is higher.

However, the Government has decided to retain the rate of Central excise duty on goods currently attracting ad valorem rates of 8 per cent and 4 per cent respectively.

“It is another stimulus to the economy. I hope it will have beneficial impact. This will also help boost exports. The tax concessions would entail revenue sacrifice of Rs 30,000 crore (for a financial year)”, Mr Mukherjee told reporters after the Lok Sabha passed the Interim Budget 2009. The Finance Bill 2009 and the relevant appropriation Bill for the vote-on-account for the first four months of 2009-10 was also passed by the House.

In his reply to the debate in the Lok Sabha, Mr Mukherjee said that the latest figures confirm that the two fiscal packages (December 2008 and January 2009) were steps in the right direction. “Some of the key sectors of manufacture like cement and steel are exhibiting early signs of recovery”, he said.

Meanwhile, IT companies welcomed Mr Mukherjee’s announcement on Section 10AA of the Income-Tax Act. They hoped that the removal of the anomaly would help them get full tax benefits as had been originally envisaged in the SEZ scheme.

Read More......

FURTHER CONCESSIONS IN CENTRAL EXCISE & SERVICE TAX ANNOUNCED. CUSTOMS DUTY EXEMPTION ON NAPTHA EXTENDED BEYOND THIS FISCAL

Following are the extracts from the reply of Finance Minister, Shri Pranab Mukhejee on Interim Budget 2009-10, in Lok Sabha, on 24.2.2009 related to new concessions on Excise duties and Service Tax:

Within the constitutional constraints, I have some flexibility which I want to use to provide further stimulus to the economy.

Even though the signals are encouraging, the full impact of the recession in other parts of the world specially Europe and Asia is yet to unfold. Due to the strong export linkages with these economies, it is likely that the Indian economy may feel further impact in coming months. To counter any such effects, the UPA Government has taken the following decisions:

Central Excise

• General reduction in Excise Duty rates by 4 per cent points was made with effect from 7.12.2008. It is now being extended beyond 31 March, 2009. In addition, it has now been decided to:

• reduce the general rate of Central Excise duty from 10 per cent to 8 per cent.

• retain the rate of central excise duty on goods currently attracting ad valorem rates of 8 per cent and 4 per cent respectively;

• reduce the rate of central excise duty on bulk cement from 10 per cent or Rs. 290 PMT, whichever is higher to 8 per cent or Rs.230 PMT, whichever is higher.

Service Tax

The Government is keen that the business confidence in the Services sector is restored. It is also our objective that the dispersal between CENVAT rate and the Service Tax rate is reduced with a view to move towards the stated goal of a Uniform Goods and Service Tax. In line with this objective, it has been decided to reduce the rate of service tax on taxable services from 12 percent to 10 per cent.

To provide relief to the power sector, Naptha imported for generation of electric energy has been fully exempted from basic Customs Duty. This exemption which was available upto 31 March 2009, is now being extended beyond that date.

Section 10 AA of the Income Tax provides for exemption in respect of export profits of a unit located in a Special Economic Zone (SEZ). The export profits are required to be computed with reference to the total turn over of the assessee. This has resulted in discriminatory treatment of assessees having units located both in SEZ and the Domestic Tariff Area (DTA) vis-à-vis assessees having units located only within the SEZs. It has now been decided to remove this anomaly through necessary changes in the Act.

Read More......

FICCI seeks separate export promotion council for auto sector

NEW DELHI: Industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI) Monday urged the government to set up a separate export promotion council (EPC) for India's automotive industry to help it achieve higher share in the global market.

"A separate EPC with the primary objective of helping the Indian auto sector to achieve 5 percent share in global trade in the next 10 years needs to be created," the chamber said in a statement.

According to UN estimates, India currently accounts for about 0.5 percent of the gross annual auto exports, marginally up from 0.2 percent in 2000.

Among developing countries, India stands sixth in the global auto exports, trailing behind China, Mexico, Brazil, Turkey and Thailand.

China is leading the market among developing countries with 4.4 percent share.

India has recently undertaken mass export activities with South Korean carmaker Hyundai's Indian operations leading the bunch as the biggest exporter.

"Indian automotive industry needs to diversify its destinations of exports for which this council would be instrumental. Currently, India does not export significant amount of automotive items to some of the major importing countries like Australia, Canada, Russia and Saudi Arabia," it added.

Read More......

Interim trade policy may make rules easier for exporters

NEW DELHI,: The government is likely to remove several procedural bottlenecks for exporters in the interim foreign trade policy to be unveiled by Commerce and Industry Minister Kamal Nath here on February 26.

The policy, though interim in nature, will address immediate concerns of exporters who are facing shortfall in demand for Indian goods in the recession-hit overseas markets like the US, a Commerce Ministry official said.

Exporters may be given more time to meet their export obligations in return for duty-free import of machinery and reimbursement of taxes without waiting for export proceeds.

The interim measures would be announced as an annual supplement to the five-year policy 2004-09 that was unveiled by the UPA Government at the beginning of its tenure.

The foreign trade policy lists the procedures, incentives for exports as also import rules. Though the policy has a five -year tenure, the government keeps changing the rules depending on the fast-changing trade scenario. For instance, the government had banned export of wheat and other food articles last year in the wake of high inflation.

It would be up to the new government to announce a full- fledged trade policy, the official said.

India's exports would be growing at lesser pace this fiscal as demand in the buying markets is slowing. Exports totalled USD 162 billion in 2008-09.

Read More......

Downturn may force India to postpone trade pact with ASEAN

The deal between ASEAN and India, which was under negotiations for the last six years, was expected to be signed between the two sides on 27 February in Thailand.

New Delhi: The unexpected setback to exports and the associated problem of domestic unemployment may yet spike the government’s plans to sign a free trade agreement (FTA) with the Association of Southeast Asian Nations (ASEAN), a powerful trade block of 10 countries.

With general election due in the next two months, the Congress-led United Progressive Alliance government may find it difficult to justify a freer trade regime at a time when industry is reeling under the impact of a global recession and contracting domestic demand.

Two senior government officials, in separate interviews, confirmed on the condition of anonymity that FTA with ASEAN along with similar agreements with Thailand and South Korea had been readied and put up to the cabinet for approval. “It is now a political decision,” one of the officials said.

Indian exports contracted for the third consecutive month, declining by 1.1% in December, even as a survey by the labour ministry found that 500,000 people had lost their jobs in export-oriented sectors such as gems and jewellery, back-office services, textiles and handicraft.

Talks were on for the last six years and the deal was expected to be signed on 27 Feb in Thailand. The ASEAN FTA was due to be inked in December, but was put off following political instability in Thailand. However, since then, the global economy has contracted even more sharply, forcing India to scale down estimates of its growth to 7.1% in 2008-09, from at least 9% in the previous three years.

In addition, the agreement has run into a procedural problem. According to the original schedule, the first round of tariff cuts was to come into effect on 1 January. If the deal is signed now, then this will come into effect on 1 June. According to the existing schedule, the second round of tariff cuts is due on 1 January 2010 and India has reservations with this, as it would mean effecting two rounds of tariff cuts in six months.

One of the officials disclosed that some kind of “compromise” would be worked out if the cabinet did indeed clear the agreement. ASEAN’s secretariat could not be immediately reached for comment, and a spokesperson for the Thai embassy could not be reached because he was travelling. According to the agreement between ASEAN and India arrived at after negotiations concluded in August, both sides have agreed to reduce or eliminate tariffs on 95% of the commodities in the trade basket over the next nine years. India had agreed to do this in three phases starting from 1 June 2009 and ending between 2012 and 2018.

For the so-called sensitive items for which tariffs need to reduced to 5%, the agreed time line is 2018, while for other items the tariff elimination was to happen in two phases, by 2012 and 2015. Now, ASEAN has demanded the whole process be completed in two phases.

A commerce ministry official, who, too, declined to be identified, confirmed the development. “There is some talk. We have a viewpoint. They have a viewpoint. However, we are firm on our standpoint.” However, he tried to play down the issue and said it was a “minor” one that would “be resolved”. The deal between ASEAN and India, which was under negotiations for the last six years, was expected to be signed between the two sides on 27 February in Thailand.

Both sides had agreed to reduce tariffs to zero for nearly 4,000 of the 5,000 items that are traded. A negative list of 489 items (where import tariffs would not be cut) across sectors such as agriculture, textiles, machinery and automobiles was also agreed upon. According to the terms finalized, India will also maintain a so-called highly sensitive list for five products: crude palm oil, refined palm oil, black tea, pepper and coffee. By 2018, tariffs for refined palm oil will be reduced by 60%, while those for the remaining four items will be halved.

India remains the seventh largest trading partner of ASEAN, with trade between the two being worth $38.37 billion (Rs1.9 trillion today) in 2007-08. Trade between India and ASEAN has been growing at a compounded annual growth rate of 27% since 2000; it is projected to touch $48 billion in 2008-09. India’s main trading partners in ASEAN are Singapore, Malaysia, Indonesia and Thailand, which account for 90% of the trade. India and ASEAN together have a population of 1.7 billion and a combined GDP (gross domestic product) of $2.4 trillion.

The two sides had also agreed to commence negotiations on trade in services and investment and to work towards the conclusion of substantive discussions on these two agreements by 2009, to bring about a complete ASEAN-India Comprehensive Economic Cooperation Agreement. Asked whether India should open up at a faster rate at a time when the industry is reeling under the impact of a severe slowdown, Nagesh Kumar, director general at think tank Research and Information System for Developing Countries, said, “The current slowdown is a shorter phenomenon whereas such trade agreements looks for long-term gains. By the time the impact of the ASEAN FTA is felt on Indian industry, the current downturn would be over.”

Arguing similarly, Manav Majumdar, who heads the international trade desk at industry lobby Federation of Indian Chambers of Commerce and Industry, said: “Because of the zero duty, if there is a surge in imports, there are safeguard measures available to check that from happening.”

Read More......

Strong case for boosting external trade to combat slowdown: Pranab

NEW DELHI: External Affairs Minister Pranab Mukherjee acting as the finance minister said on Thursday that there is a strong case for stimulating
domestic demand and boosting external trade to combat economic slowdown and poverty.

The statement comes three days ahead of the country's interim budget. Mr Mukherjee is slated to present the interim budget in the Lok Sabha on Monday.

"There is a need to sustain our foreign trade, revive foreign investment and generate domestic demand in order to maintain our growth rates, which are essential for the uplift of the multitudes below the poverty line," Pranab Mukherjee said at the annual meeting of industry body Federation of Indian Chambers of Commerce and Industry.

The global financial crisis and the subsequent slowdown has reduced the country's exports and domestic industrial output. The economy is expected to grow at 7.1% in the 2008/09 fiscal year, down from 9% last year.

On Thursday, data showed that industrial production contracted 2% in December from a year earlier, as firms cut production fearing lower sales and inventory pile ups.

The minister, however, expressed optimism that the country, would still perform much better than most other nations in the world. "I am happy to say that in 2008/09 India will still grow by around 7%," he said.

"As we stand out in the world as one of the key growth centres, I remain confident that we will be able to attract more foreign direct investment (FDI) and that foreign institutional investment (FII) flows will return to our markets because this is where growth is happening and this is where profits can be made," Mr Mukherjee said.

Read More......

Domestic drug makers will not need GMP certificate

NEW DELHI: Domestic drug makers will no longer need a certificate of good manufacturing practice (GMP) from the World Health Organisation (WHO)
to sell their medicines within India.

The Drug Controller General of India (DCGI) has asked state drug controllers to let companies sell their brands in the country without the WHO s quality certificate, provided they comply with the quality norms set out in the Indian law.

That is, if they produce the DCGI's Certificate of Pharmaceutical Products (COPP), they can sell their brands in India. COPP and WHO certification are compulsory if the company wants to export, a government official, who asked not to be named, said. The DCGI would not issue WHO-GMP certificate to any company from now on.

"For marketing medicines within the country, only schedule M certification under the Drugs and Cosmetics Act (DCA) is required. State regulators have been directed that they no longer need to insist for a WHO-GMP certificate from manufacturers while giving them marketing permissions," the official said.

GMP is aimed at diminishing the risks inherent in pharmaceutical production. WHO GMP certificate is given based on certain guidelines laid down by WHO through which the regulator ensures that medicines and other medical products are consistently produced and controlled to the quality standards required for their best use.

The WHO-GMP certificate is a mandatory requirement in most global markets for companies to be able to sell their medicines. It is also required for specific drugs being supplied under the global disease control project to treat diseases like tuberculosis, malaria and AIDS.

However, the government claims that the Indian norms laid in the drug law is at par with the WHO-GMP guidelines and therefore there is no need to endorse the WHO norms. "We are also in talks with several international agencies in order to ensure that companies holding the COPP do not face problems in exports. It is important for the government as well to ensure that our own regulations find enough recognition in the international markets," the official said.

The drug regulator gives a COPP after conducting an inspection of the manufacturing plant. The certificate is valid for a period of two years. The Indian pharmaceutical market is estimated to be at around Rs 65,000 crore. Out of this, export accounts for around Rs 30,000 crore.

Read More......

STPIs, 100% EOUs may enjoy tax holiday for 3 more years

NEW DELHI: The government plans to extend the tax concessions enjoyed by technology parks and 100% export-oriented units (EOUs) beyond March
2010, a government official said.

The commerce department and the IT ministry are jointly lobbying for a three-year extension of the tax concessions offered to the software & technology parks of India (STPI) to ensure a steady flow of investments into the sector. A case is also being made for the continuation of sops to 100% EOUs to make the country’s exports more competitive in the global market.

“We are hoping that the extension of sops to both STPIs and 100% EOUs will be made in the interim Budget,” said the official who asked not to be named. The interim Budget will be presented on February 16. The tax sops given to both STPIs and 100% EOUs were to end on March 31, 2009. Last year, the government extended the concession for another year to ensure that both STPIs and EOUs continued to enjoy tax benefits even if the interim Budget failed to provide an extension.

While there is ample time for giving another extension to the sops, the government wants to make room for it in this Budget to ensure continuity, the official said. “We have learnt from EOUs and STPIs that fresh investments have dried up since the tax benefits are slated to be removed. We want the extension in sops to be announced early so that it gives confidence to investors to carry on with their investment plans,” the official added.

Units in STPIs and 100% EOUs enjoy tax exemption on profits under section 10A and 10B of the Income-Tax Act. While section 10A of the Act provides for deduction of profits and gains derived by an enterprise from the export of any good and computer software, section 10B provides for deduction of profits and gains derived by a 100% EOU from the export of any good or computer software.

The global recession has started taking a toll on exports with total exports falling 22% in January 2009. Exports of IT and software services too are witnessing a slowdown. Nasscom has brought down its growth projection for software and services exports from 21-24% to 16-17%.

Read More......

Vietnam to surpass India’s share in apparel exports

VietNamNet Bridge – Vietnam is going to pip India in the world apparel trade, as Vietnamese exporters are projected to surpass the share of the Indian competitors in the global market in 2009, said The Economic Times.

India this year is expected to export apparels worth 9.2 billion USD against 8.78 billion USD in 2008, while shipments from Vietnam are likely to increase from 8.4 billion USD last year to 10.08 billion USD in 2009, according to Apparel Export Promotion Council (AEPC) estimates.

Bangladesh, which has already overtaken India to hold the fifth position in the world textile trade, is projected to reach 12 billion USD in apparel exports, the AEPC said.

Major markets like the US and European Union, which are reeling under deep financial crisis, would prefer countries like Bangladesh, Vietnam and China over India, as they are sources of cheap imports, AEPC said.

Between January and October 2008, Vietnam exported 1.04 billion EUR of apparels to the EU, against India's 3.38 billion EUR. However, in terms of growth, Vietnam's shipments increased by 10.25 percent, while India posted a marginal increase in the period.

Vietnam's share to the US increased despite exports from the Southeast Asian nation have been put under the US scanner of anti-dumping mechanism.

With the monitoring programme having ended, the exporters from Vietnam would have unrestricted access to US stores, the AEPC said.

Read More......

China’s Imports, Exports Plunge on Global Recession

Feb. 11 (Bloomberg) -- China’s exports fell by the most in almost 13 years as demand dried up in the U.S. and Europe and imports plunged by a record, signaling a deepening slump in the world’s third-biggest economy.

Outbound shipments declined 17.5 percent in January from a year earlier and imports fell 43.1 percent, the customs bureau said on its Web site today. Both numbers were worse than economists’ forecasts.

The $39.1 billion trade surplus, the second biggest on record, may add to international tensions as global leaders warn of the risk of protectionism amid the worst financial crisis since World War II. China’s economic growth is likely to cool to 6.1 percent this quarter, the least since 1999, according to a Bloomberg News survey. The slowdown has cost 20 million jobs and increased the risk of falling prices, profits and consumption.

“It’s a very eye-catching trade surplus and people will ask how it can be so high at a time that everybody else’s economy is suffering,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd in Hong Kong. “What’s happening here is really dramatic, underscoring plunging global demand.”

The yuan traded at 6.8331 per dollar as of 5:20 p.m. in Shanghai from 6.8342 before the announcement.

Falling commodity prices drove down import costs as China’s demand for raw materials also faltered because of the export slowdown and a property slump. The value of crude-oil imports fell 57 percent from a year earlier.

Toys, Electronics, Steel

Exports to the European Union, China’s biggest market, fell 17.4 percent. Those to the U.S. slid 9.8 percent. Shipments of machinery and electronics dropped 21 percent. Steel slid 32.5 percent and toys declined 14.7 percent.

The trade slump was likely exacerbated by a week-long Lunar New Year holiday, which occurred in January this year and February last year.

China’s economy grew 6.8 percent from a year earlier in the fourth quarter, the weakest pace since 2001. Producer prices fell the most in almost seven years in January, data released yesterday showed.

The trade collapse adds pressure on the government to expand a 4 trillion yuan ($585 billion) stimulus package as factories close and millions of migrant workers return to the countryside, adding to the risk of social unrest.

U.S. Consumer Spending

Mattel Inc., the world’s biggest toymaker, said this month that fourth-quarter profit plunged as consumers cut spending on Barbie dolls and Hot Wheels cars during the worst U.S. holiday- shopping season in 40 years.

Mattel imports from China, where more than 4,000 toy companies closed last year as demand fell and countries tightened safety standards, according to the official Xinhua News Agency.

“Policy makers should continue to ease monetary policy and to come out with policies to stimulate consumption and stimulate property transactions,” said Frank Gong, head of China research at JPMorgan Chase & Co. in Hong Kong.

The government should cut the key one-year lending rate by more than 100 basis points this year from 5.31 percent, reduce taxes and distribute discount coupons to encourage spending, Gong said. Export demand is out of its control and wouldn’t be revived by depreciating the nation’s currency, he said.

Government researchers have advocated weakening the yuan to support exports. China should “actively guide” the yuan to about 6.93 against the dollar to aid growth and bolster employment, according to a report by the Ministry of Finance’s research institute published Feb. 7.

Currency Manipulator?

U.S. Treasury Secretary Timothy Geithner said yesterday that the new administration is yet to decide whether China is manipulating its currency. He added that China was an important force for global economic stability and “it is in the interests of the United States to work closely with them.”

Rising protectionism may make it “even more difficult for China to have an export recovery any time soon,” according to Isaac Meng, a senior economist at BNP Paribas SA in Beijing.

He cited “Buy American” provisions in a U.S. economic stimulus package, watered down after warnings from President Barack Obama and foreign leaders that they risked triggering a trade war.

British Prime Minister Gordon Brown last week described “a retreat into protectionism” as the biggest danger facing the world economy.

Ban on Chinese Toys

India imposed a six-month ban on imports of Chinese toys last month, citing product-safety concerns. China may ask the World Trade Organization to investigate, the official China Daily newspaper reported last week.

China is relying on a stimulus package spanning spending through 2010 on public housing, railways, highways, airports, and power grids to revive growth. The plan helped to drive bank lending to a record in January, according to the official China Securities Journal.

A revival of import demand will be “one of the tests of whether China’s fiscal package is successful or not,” said Stephen Green, a Shanghai-based economist at Standard Chartered Bank Plc.

The government invested 100 billion yuan of the stimulus money in the fourth quarter and is spending 130 billion yuan this quarter, the official Xinhua News Agency reported Feb. 3.

Read More......

India says it’s open to talks with China over toy imports

New Delhi: India is ready to hold talks with Beijing over New Delhi’s decision to ban toy imports from China, Commerce and Industry minister Kamal Nath told reporters on Tuesday.

Last month, India banned imports of several types of toys from China for six months on grounds that they were a hazard to public health and safety. On Monday, China’s ministry of commerce urged India to exercise restraint in applying trade restrictions against Chinese products, warning that a failure to do so would affect trade ties.

“We are open to any discussions on this matter and until the government of India is satisfied we will not be able to lift this ban,” Nath said. Separately, Nath said the government is committed to taking more stimulus measures to prevent job losses. Export lobby groups anticipate job losses of 10 million by March-end, as the global recession crimps demand for Indian merchandise.

The government has already announced two stimulus packages since December, which included a 4 percentage points cut in factory gate duties and Rs20,000 crore of extra spending to increase demand and prop up a slowing economy. The government will ensure that calibrated steps are taken to stimulate the economy and curb job losses, Nath said.

Data on Monday showed the economy is estimated to grow 7.1% in the year to March, down from 9% last year.

India’s automobile and steel industries, which had shown a downturn in November, are recovering, the minister said.

The country has successfully contained inflation, he said. Lending by Indian banks is rising and will contribute to improved liquidity, he added.

Interest rates are still high and the Reserve Bank of India needs to cut them further to free up the availability of cash and shore up the slowing economy, the minister said.

“My own view is that interest rates are very high. They need to be reduced,” Nath said. “We are operating under tight liquidity conditions and tight discipline on credit.”

Read More......

Dutch govt in patent row, seeks clarity on EU rules

NEW DELHI: The Dutch government has asked the European Commission (EU) for a review of the EU Customs regulations, based on which a consignment
of high blood pressure drugs from India being exported to Brazil, was seized and sent back, while transiting through the Dutch ports. It had been challenged by Merck Dupont which claimed that the medicine was being imported despite the company having a patent on it.

Visiting Dutch minister of foreign trade Frank Heemskerk has said his country wanted to “avoid” such incidents in future and had written to the European Commission seeking clarity on how the EU Customs regulations could be brought in sync with the international Trips regulations which gave concessions to poor countries on the ground of public health. “My country is very much in favour of providing generic medicines, especially to the very poor,” Mr Heemskerk said in an interview to ET.

While the Netherlands is on the backfoot on the issue of seizure of drugs as the move is seen as going against the international Trips agreement, India, which recently placed a six-month ban on import of toys from China, maintained that its decision was consistent with World Trade Organisation (WTO) rules and it had taken the decision on health grounds. Addressing a press conference on Tuesday, commerce and industry minister Kamal Nath said it was open to any discussions with China on the matter. “Till the government is satisfied, the ban will not be lifted,” the minister said.

Elaborating on what led to the seizure of consignments at the Rotterdam airport, Mr Heemskerk said the Customs officials had acted on complaints of violation of intellectual property by a company not based on domestic policies, but based on European regulations. “We have asked the EU to look into the interaction between the Trips agreement, which the Netherlands fully supports, on one hand, and the European Customs regulations on the other hand. We should try to avoid these incidents,” Mr Heemskerk said.

The Dutch government has taken up this damage control exercise after developing countries strongly criticised the seizure of consignments of Losartan, a high blood pressure generic or off-patent drug manufactured by Dr Reddy's Laboratory, late last year in Rotterdam which was sent back to India.

India and Brazil criticised the incident heavily at the World Trade Organisation last week stating that the incident showed that the developed countries were circumventing global trade rules and trying to force their own tough intellectual property rules on developing countries. The Trips regulations, which are mandatory for all the 150-member countries of the WTO including the European ones, allow developing countries to source generic drugs from third countries (non-patent holding countries) on the ground of public health. Mr Heemskerk is heading a 40-member Dutch business delegation to India which will visit Delhi, Mumbai and Pune.

Read More......

China warns India on banning toy imports

Beijing, Feb 9: China today voiced "serious concern" to India over its blanket ban on importing Chinese toys, asking New Delhi to show "prudence", since its intensive use of trade remedies could pose a "serious threat" to booming bilateral trade ties.

"China hoped that India could show prudence and restraint in using trade remedies in the face of the global economic situation, as it could pose a threat to bilateral trade," the Chinese Ministry of Commerce (MoC) said in a statement.

The statement came after Chinese Deputy Commerce Minister Zhong Shan met Indian Ambassador to China Nirupama Rao here on February 3 here on the issue.

Expressing "serious concern" over India's intensive trade probes, the ministry said it hopes to avoid substantial impacts on bilateral trade.

On January 23, India announced a six-month ban on all imports of Chinese-made toys.

The Indian commerce ministry has alerted the customs authorities to ensure that Chinese toys do not enter the Indian ports through a third-country route. Prohibition shall be applicable on all such toys that have originated from China, irrespective of the country of import. - PTI

Read More......

Hit by slowdown, developers put SEZs on hold

Slowdown woes are hitting special economic zones (SEZs), which were much in vogue until a year or two ago. Many SEZ projects across the country are being put on the backburner.

Two weeks ago, the board of approvals had allowed an extension to two developers who could not get their SEZ project going on time. Many such SEZ developers have been forced to delay their projects since companies have put off their expansion plans. Out of 552 approved SEZs across the country, only 274 have been notified so far. In Karnataka, only half of the 50 approved SEZs have been notified so far.

Bhaskar N Raju, Executive Director, Divyasree Developers, says, “The frenzy with which people were going ahead with SEZs two years ago — applying for six-seve SEZs — they are now now re-looking at those options. We have four SEZs. One is 60 acres and the other is 70 acres. The 60-acre plot is done with approval and going through notification. We're thinking of slowing it down or even withdrawing the application.”

Approved SEZs have three years to get notified and implemented. There are around 179 such pending SEZs across India. Some big developers are now asking for extension. But experts feel it may not be practically feasible to extend the deadline for all developers.

Mahesh Jaisingh, Director, BMR Advisors, Bangalore, says, “The criterion would be whether the net worth is above the threshold prescribed and approved at the time of application itself. Also what's going to be looked at is the repute of the developer, examination of what work has been done in the last three years.”

But for the two SEZ projects that were given extension — the period is one and two years respectively — sources say might get further extended if there is a valid reason to do so.

Read More......

Ban on Chinese toys made fool-proof, action compliant with WTO rules

NEW DELHI: Ignoring a threat of being dragged to WTO on ban on import of Chinese toys, India on Friday plugged loopholes in the rules that could
have allowed manufacturers in China to dispatch toys into a vast Indian market.

The Commerce Ministry has alerted the customs authorities to ensure that Chinese toys do not enter the Indian ports through a third country route.

"Prohibition shall be applicable on all such toys which have originated from China, irrespective of the country of import. 'Originated' shall mean 'manufactured' in China," the Directorate General of Foreign Trade said in a directive to all commissioners of customs and the licensing authorities.

Commerce and Industry Minister Kamal Nath said the ban on Chinese toys was on ground of public health and safety and the action was compliant with the rules of the World Trade Organisation. "India is a responsible country and before we take any action we make sure that it should be WTO compatible," Nath told reporters here.

However, the minister said banning imports of toys would not sour India's commercial ties with China because "this (ban) is a matter of public ... rather than commercial concern".

After India slapped ban on import of toys from China on January 23, Chinese official media reported that Beijing was contemplating a WTO action against New Delhi.

Read More......

Scheme to promote tuna exports gets a good start

KOCHI: The scheme to promote tuna exports from the country launched by the Marine Products Export Development Authority (MPEDA) seems to have got
off to a good start.

The export of tuna, which stood at US $ 13 million 2 years back when the scheme was announced, has registered a 307 % increase to touch US $ 53 million last year. This year the export is likely to increase to US $ 70 million though the target was around $ 100 million.

MPEDA has set a target of US $ 500 million by the end of the 11 th plan period. To achieve this target the agency under the Commerce Ministry has drawn up a plan to convert 1000 fishing vessels into tuna long liners.

Despite the global recession, the price of special grade tuna has not registered any major decline. The price of canning grade tuna has registered a fall while that of sashimi grade and loins grade tuna has not seen any significant fall. "The export of higher grade tuna is also in line with the policy of promoting value added exports", Mr Kuruvila Thomas, director marketing, MPEDA said.

As part of the new scheme, 20 fishing vessels were converted to tuna long liners in Kochi. However, the breakthrough for MPEDA was when the south Indian federation of fishermen societies came forward for converting fishing vessels to tuna long liners. MPEDA plans to convert 100 vessels of the organization to tuna monofilament long liners. In Chennai also close to 100 vessels will be converted into tuna vessels this way. Port Blair is the other major centre of tuna fishing.

Tuna fishing has become a major activity in some areas like Vizag. Tuna landings in a few villages like Podimodukka, near Vizag, have touched nearly 100 tonnes. MPEDA plans to convert 100 boats here. In such places, the skills in catching, onboard handling and processing would be upgraded.

Subsidy to the extent of 50 % would be given for 300 boats in these villages to upgrade them to tuna vessels for better catch and better value realization, it was pointed out. The fishing gear includes four insulated fish box and vertical long liners.

Read More......

Commerce ministry mulls 3-yr extension of EoU tax breaks

The commerce ministry has proposed a three-year extension of tax benefits given to Export-oriented Units (EoUs) in an attempt to encourage export industries at a time when global demand is expected to slump further.

The move will benefit more than 2,700 companies operating within the EoUs, like the Reliance Industries Ltd’s (RIL’s) 33-million-tonne-per-year petroleum refinery in Jamnagar, Gujarat.

Under Section 10(B) of the Income Tax Act, EoUs do not need to pay tax on profits provided they fulfil some conditions, including exporting not less than 50 per cent of their total production. This benefit is to expire at the end of next fiscal 2009-10.

“We have taken up the issue of extending the sunset clause by another three years,” said Commerce Minister Kamal Nath at the annual award function of Export Promotion Council for EoUs and Special Economic Zones (EPCES) here today. Sunset clause refers to a law that expires at a specified point of time.

Exports by these EoUs stood at Rs 1,54,428 crore in 2007-08, about 24.7 per cent of the total exports (in rupee terms). Chemical and pharmaceutical units account for about 18 per cent of the exports from the EoUs, followed by engineering companies at about 10 per cent.

Experts say the proposed extension will enable units in EoUs to plan better. “EoU exports have been increasing at an average rate of 20 per cent in the past 10 years, generating manufacturing activity and employment. Extending the scheme will add clarity to these units’ expansion plans, which will lead to additional manufacturing and exports as well as employment,” said L B Singhal, director general of EPCES.

Government sources, however, said a decision on this will probably be finalised only after a new government takes over after the general elections, likely to take place after April.

The EoU tax benefits were originally scheduled to expire on March 31, 2009. Last year, while releasing the foreign trade policy, Nath had announced that the scheme would be extended till March 31, 2010. This was after a committee headed by National Manufacturing Competitiveness Council headed by V Krishnamurthy had recommended the extension of the tax benefits to EoUs. A finance ministry-sponsored study, conducted by economic think-tank Indian Council for Research on International Economic Relations (Icrier) made a similar recommendation.

The EoU scheme, introduced in December, 1980, allows manufacturing units in the zones to enjoy 100 per cent income tax exemption on profits from overseas sale and also get to import raw materials duty free.

EoUs differ from Special Economic Zones (SEZs) in terms of the level and time-period of tax breaks to which they are entitled. SEZs get income-tax breaks for 15 years. They are also exempt from sales tax and excise, among other local imposts. The SEZs are governed by the SEZ Act of 2005.

EoUs are governed by the Foreign Trade Policy, which is supervised by the commerce ministry. Existing factories can be converted to EoUs, but not into SEZs.

Experts maintain that the extension of EoU benefits will not impact SEZs. “SEZs have their own benefits, which include a more comprehensive package of tax benefits as well as procedural benefits like single-window clearances. The extension will not have any impact on the zones,” Singhal added.

Read More......

China mulling WTO case over India toy ban - Report

BEIJING: China may ask the World Trade Organisation (WTO) to investigate a six-month import ban slapped on its toys last month by India, the
official China Daily reported on Wednesday, citing a source close to the matter.

Worries about protectionism are rising as the impact of the global financial crisis spreads, increasing the temptation for governments to bring in measures that will help their firms in the short-term but worsen the overall economic pain.

India last month banned imports of several types of toys from China for six months "in the public interest," without giving any further details of why.

The Toy Association of India's president, Raj Kumar, said India had likely taken the step in the interest of the economy and consumer safety.

The Chinese government will proably ask the global trade regulator to look into whether the move violates its laws, the state-owned paper said, quoting a source who asked not to be named.

China's manufacturing industry -- a key supplier of toys, apparel and food to much of the world -- has faced a wave of complaints in recent years, most recently as thousands of people have fallen ill as a result of consuming milk powder tainted with melamine, a chemical used to make plastics.

The world's leading toymaker Mattel recalled over 21 million Chinese-made toys worldwide in 2007 due to excessive levels of lead paint and other unsafe components.

But the Chinese report quoted a trade lawyer saying that the Indian policy was an illegal and protectionist.

"The ban cannot hold water. The Indian side is doomed to lose in the court if the Chinese government appealed to the WTO Dispute Settlement Body," said Fu Donghui, managing director of Allbright Law Firm Beijing, which deals with WTO-related cases.

Beijing had already said last month that it was "strongly dissatisfied" with the European Union's imposition of duties on its screws and fasteners, which it said had obvious protectionist intentions and harmed the rights of Chinese manufacturers

Read More......

China may contest India's toy import ban in WTO: Report

BEIJING: China is likely to drag India to the World Trade Organisation challenging the ban by New Delhi on Chinese toys, a media report said on
Wednesday.

"The Chinese government is mulling a response to India's recent ban on Chinese toy imports and will probably ask the World Trade Organisation to investigate whether the ban violates WTO laws," the China Daily said quoting an anonymous source close to the issue.

India had banned import of Chinese toys on January 23 for six months. While the Directorate General of Foreign Trade (DGFT) in the Indian Commerce Ministry did not cite any reason for the ban, officials said the prohibition was necessary to protect kids from toxic hazards that may be associated with Chinese toys.

However, it is perceived here that ban by New Delhi was aimed at providing protection to the domestic industry from the Chinese manufacturers which claimed at least half of Rs 2,500 crore Indian toy market.

"It is a sign that China will be leveraging WTO rules to help protect its manufacturers from illegal trade barriers and punitive measures by its trading partners at a time when protectionism is growing amid the global economic recession," the newspaper said.

Read More......

Exports take hard knock in Jan, recovery hopes dash

NEW DELHI: Taking a hard knock in the recession-hit US and other major markets, India's exports nosedived by 22 per cent in January, dashing all
hopes of a recovery riding on the December figures.

After the official figures for December showed exports declining by just about 1.1 per cent, Commerce Secretary G K Pillai came out with "unexpected" trends of overseas shipments taking a plunge in January in the face of a slump in demand for Indian goods in the global market.

"It is little unexpected. There were not many orders in the last quarter," Pillai told PTI.

Pillai said India would at best achieve USD 170 bilion exports in the current fiscal. The government had set a target of USD 200 billion on the back of USD 162 billion achieved in 2007-08.

"Exports are going to come down and we have to live with it," he added.

Declining by 1.1 per cent in December, exports showed negative growth for the third month running, but the sharp fall since October was arrested giving hopes of a recovery.

Exports dropped to USD 12.6 billion in December this fiscal, from USD 12.8 billion a year ago.

A sharp correction in the crude oil prices led to the country's imports growing by a modest 8.8 per cent to USD 20.2 billion in December.

With a reduction of 30.9 per cent in oil imports, the trade gap narrowed to USD 7.56 billion in December against USD 10 billion in November.

Global research and financial services major Goldman Sachs says the prospects would remain negative even in the next fiscal. "Going forward, we expect exports to remain sluggish in FY'10."

Read More......

India, Asean likely to ink free-trade pact on Feb 26

NEW DELHI: India and the Asean, a grouping of 10 southeast Asian nations, are expected to sign a free-trade agreement on February 26 to eliminate tariffs on around 4,000 products traded between the two sides.

Commerce and industry minister Kamal Nath has been invited by the economic ministers of Asean to sign the pact, provided it is approved by all 10 Asean countries. The signing will take place at the Hua Hin beach resort, 130 kilometres southwest of Thailand’s capital Bangkok, a day before the 14th Asean summit begins there.

The treaty will result in the abolition of tariffs on a variety of manufactured items ranging from consumer electronics and farm products to metals and chemicals. A commerce department official said the Asean members will have to get the agreement ratified by their respective parliaments before the trade ministers sign it. He said the Asean countries are expected to get their domestic clearances by February 10.

“India will try its best to ensure that the FTA is signed next month as it will be the last chance for the current government to conclude the pact,” the official said. Asean is India’s fourth-largest trading partner after the EU, US and China. Indo-Asean trade, which has been growing at a compounded annual rate of 27%, stood at $38.37 billion in 2007-08. It is projected to reach $48 billion in 2008-09.

The FTA provides for the elimination of tariffs on 80% of the items traded between the sides in a phased manner by 2015. For about 10% of additional items on the sensitive track, the tariffs will not be eliminated, but brought down to 5%. India has 489 items, mostly farm products, on the sensitive list which will not be subject to tariff cuts.

The 10 Asean members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Asean and India will gradually turn their free-trade agreement into a comprehensive economic cooperation agreement that will also include services and investment.

India already has a comprehensive economic cooperation agreement with Singapore and an early harvest programme with Thailand wherein the two sides have reduced duties on 82 products.

Read More......

India to move WTO on Dutch drug seizure

NEW DELHI: India and Brazil have decided to mount a joint offensive at the World Trade Organisation against the Netherlands for seizing a consignment in transit, which was on its way from India to Brazil.

The cargo, containing a generic drug for high blood pressure, was impounded by Dutch officials on a complaint by a local firm that had claimed it had the patent for high blood pressure drugs in the Netherlands.

Commerce minister Kamal Nath and his Brazilian counterpart Celso Amorim met on the sidelines of the World Economic Forum at Davos, and decided to take up the matter with the WTO at its general council meeting next week.

According to a joint press release, such measures have a highly negative systemic impact on legitimate trade of generic medicines, South-South commerce, and national public health policies.

Losartan, the generic drug for treating high blood pressure, manufactured by Dr Reddy’s Laboratory, was seized in Rotterdam and was sent back to India.

The Dutch company that claimed it had patent for a similar drug in The Netherlands does not have patent protection in India or Brazil.

The Indo-Brazil joint statement emphasised that the move was a setback for the internationally guaranteed principle of universal access to medicine, running against the spirit of resolution 2002/31 of the Commission on Human Rights on the right to enjoy the highest standards of physical and mental health.

Read More......

MoF, commerce dept clash on tax refund to exporters

NEW DELHI: The finance and commerce ministries have locked horns yet again on the issue of reimbursement of service tax to exporters. The
commerce ministry has demanded details of all clearances made so far by the tax authorities after exporters complained that finance ministry has cleared less than 5% of refund claims and rejected the rest for flimsy grounds.

A commerce department official told ET exporters had complained that even though the finance ministry allowed service tax reimbursement on paper, very little was actually being refunded as the rules for making claims were ambiguous and unrealistic. “We have asked the finance ministry to give us details of the claims made and the refunds given. Wherever we find that claims have been rejected on unrealistic grounds, we are going to contest that,” the official said.

The finance ministry has allowed exporters to claim refunds on 19 services. It also recently amended a rule that prevented exporters claiming duty drawback (refund of taxes on inputs) from claiming service tax refund. However, exporters say there were so many problem areas in the rules that they were discouraged from filing claims. “To my knowledge, about 26 cases were filed for drawback. Of these, only one actually got refund and that too was restricted to 40% of the claim amount filed for,” Federation of Indian Export Organisations director general Ajay Sahai said.

The procedure for filing refunds is unclear as there is lack of clarity about where to claim refunds in case a company had a factory located at one place and branch offices at another, Mr Sahai said.

A stress on linkage between service availed and exports made was also making things difficult for exporters, as for a number of services it was very difficult to directly link it to exports. “For instance, for payment made to customs house agents, it is not possible for one to conclusively prove that it was for exports and not for imports.

One has to understand that service is a non-tangible and cannot be treated like goods,” Mr Sahai added.

Another rule slowing down refund claims was the finance ministry’s insistence that refunds would be made only after proof of realisation of exports was given. Exporters claim often there was a time lag between shipments and payments. It was unfair to keep exporters hanging till they realise payment, they argue.

Read More......

Govt changes raw sugar import norms

NEW DELHI: The government has approved changes in norms for import of raw sugar under the advanced licence (AL) scheme to keep local prices under
check as production falls.

The decision was taken at a meeting of the Cabinet committee on economic affairs (CCEA) on Wednesday night, but no official announcement has been made. Government officials told that it was decided to hold the announcement until commerce minister Kamal Nath, who is attending the World Economic Forum in Davos, returns to the country.

Officials in the know of the development said the change would involve switching to a tonne-to-tonne import policy compared to the prevailing grain-to-grain policy. This means while earlier mills had to refine and export the same consignment of raw sugar that they had imported, now they can use imported cargo for domestic sale provided they export a similar quantity within two years.

The commerce ministry had objected to the suggestion of a policy change in sugar imports under AL and had, instead, proposed that white or refined sugar be imported under zero duty for sale in the local market.

While the decision may not significantly bring down retail prices from the prevailing Rs 23/kg, it is expected to impact wholesale prices and keep consumer prices relatively static through the 2008-09 season. This is despite a projected output of 180 lakh tonnes, which along with the carryover stock would just clear the domestic demand of 230 lakh tonnes by about a 15 lakh tonnes, thus bringing down the carryover for the 2009-10 season.

The proposal by the commerce ministry would have meant liberalisation of sugar imports. The CCEA decision means sugar imports will be liberalised in a limited manner. According to the change, there will be no quantum loss involved and sugar mills that import raw sugar can re-export, unlike now, from any port instead of from specific port.

The raw sugar imported now under AL has to be exported by mills by 2011. Instead of favouring select mills whose refineries are located close to key access ports such as Haldia, this would mean all mills will have a level-playing field in accessing imports.

In the last three months, sugar prices have shot up on the back of speculation following indications from the government that a quick decision would be taken on the issue of boosting domestic supplies through imports with a view to check prices.

As the ministry kept any decision pending, speculative buying pushed up sugar prices. Trade circles have maintained if the government did not import sugar by the first fortnight of February, wholesale prices would shoot up by another Rs 200/quintal.

A recent study by Indian Sugar Mills Association also has estimated retail price of sugar will remain around Rs 25-26/kg. Retail prices have shot up from only Rs 17/kg in the first quarter of 2008 to Rs 24/kg currently.

Read More......

Import duty hike on stainless steel to hit utensil makers

MUMBAI: The apex body of the country's stainless steel utensil and cutlery manufacturers has said that any import duty hike on stainless steel will have a huge hit on the industry, which employs three lakh people.

"Stainless steel attracts 5 per cent import duty now. Domestic stainless steel manufacturers are lobbying with the Government to increase that to 15-20 per cent to protect their interests. It will have a major impact on our industry, if the Government go by their demand," All India Stainless Steel Industries Association's Secretary Paresh Mehta told media.

The demand for stainless steel, the basic raw material for the utensil and cutlery industry, is around 1.4 million tonnes per annum.

"Out of that, we import around 0.4 mtpa mainly from China, Japan, Ukraine, Korea and Thailand. The rest is supllied by the domestic manufacturers of stainless steel," he said.

The domestic manufacturers do not make high grade stainless steel which are needed in some cases of specialised applications for fabrication jobs of hotel and catering equipment.

"This necessities to import stainless steel as per customers' demand," he said, adding that overseas buyers were particularly pertinent about the quality, failing of which could see the end of export business.

The utensil and cutlery industry exports materials worth Rs 1,800 crore, he said.

Meanwhile, the import of stainless steel dipped by 70 per cent to 6,000 tonnes in December last year from 20,000 tonnes a month back.

Read More......