Iran has started placing orders with Pakistan for basmati rice, raising concerns of Indian basmati rice exporters who have stalled exports to the Gulf nation due to non-payment of their dues worth Rs 1,700 crore. However, exporters see this merely as a temporary blip.
“Yes, we have heard that Iran has placed some order with Pakistan recently. It is nothing unusual. However, Pakistan exports 6 lakh tonnes of basmati rice in the world markets whereas India’s exports stands at 4.4 - 4.5 millon tonnes,” said Vinod Kaul, executive director, All India Rice Exporters’ Association (AIREA).
Kaul said that it is a temporary phenomenon and once Iran clears its dues, India will again start exporting to the nation. Iran accounts for 34% of India’s basmati exports to the overseas markets.
Kaul said exporters are anxious about when they get their money back.
“They are extremely worried. Also, if Pakistan gradually increases its presence in Iran, then may be in the long term, it may create some problems for Indian exporters,” he said.
A Crisil study has stated that Iran, which imports around 1.3 million tonne of basmati rice annually, is expected to register 20 per cent lower volume from India as payment-related issues continue from last fiscal because of US sanctions.
India and Iran have been discussing the barter trading system for nearly a year now, ever since the Trump administration began imposing tough economic sanctions on Tehran. Iran has said it will buy basmati rice, sugar and medicines from India in lieu of fertilisers. A final decision is yet to be taken.
Exports with Iran need to be resumed soon as basmati production is expected to be higher this year. In the last kharif season, India produced 7.5 million tonnes of basmati rice. “This year, the acreage has increased and we are expecting 8 million tonnes of rice,” said AIREA’s Kaul.
Gurnam Arora, joint managing director, Kohinoor Foods said Pakistan has been sending basmati rice to Iran through some convoluted business route. “The payment was being made in cash. But with India, Iran has a transparent business model. The buyers may have placed some order with Pakistan to meet temporary demand. This will no way impact Indian exports going ahead.”
Arora added that Iran’s own crop will start coming by October and then the country will not require imported basmati. “Moreover, Indian basmati is superior than basmati from our neighbouring nation,” he added.
Thursday, September 24, 2020
Indian rice exporters raise concerns after Iran starts placing orders for basmati from Pakistan
Onion exports to Bangladesh to resume
The government is working on resuming onion supplies to Bangladesh with certain conditions within days of imposing a ban. The move follows diplomatic intervention which resulted in the consignment in transit to be exported.
Senior commerce ministry officials said the ministry was considering imposing a minimum export price and also allowing certain varieties of onion such as Bangalore rose and Krishnapuram, that have insignificant domestic demand.
They said the issue was being discussed at the highest level so that the relaxation in export does not result in a spike in domestic prices.
Sources said the government plans to move cautiously on this issue, especially at a time the country is witnessing growing peasant unrest over the farm bill, and this can add fuel to farmers’ ire. Sources said the government would be keen to allow exports to neighbouring countries given the border tension so that the immediate markets in the neighbourhood are not captured by Pakistan and China.
India is the biggest exporter of onions to Bangladesh, Nepal, Malaysia and Sri Lanka. However, traders in Bangladesh have been tapping various countries to import onion.
According to the information provided by Chittagong Plant Quarantine Station (Sea Port), as many as 274 import permits were issued for 118,727 tonnes of onion between September 3 and September 21, the Dhaka Tribune said.
These permits indicate that 17,365 tonnes of onion will come from China apart from shipments from Pakistan, Myanmar, Egypt, Turkey, the Netherlands, Malaysia and New Zealand.
Container shortage crisis spreads to India delaying exports
A container shortage in India is causing long delays for exporters, especially on US trades.
Earlier this month, the operational impact from the creeping equipment shortage in Asia – dominant headhaul traffic has caused empties to pile-up at ports in the US and Australia, for example, prompting carriers to plead for the swift return of used import boxes.
According to New Jersey-based Worldwide Logistics (WL), the equipment shortage has spread to India, partly due to a drop in import volumes from China after trade restrictions were imposed by the government.
“The shortage is most critical at Inland Container Depots (ICD) but also evident at port-side locations,” the forwarder noted.
“Cargo volume from India to the US is extremely strong, as US importers look to replenish inventory depleted during the shutdown period in India, in response to Covid-19.”
WL said most direct and transhipment services to the US east and west coasts from the major gateway ports of Nhava Sheva (Mumbai) and Mundra were impacted, with transhipment further exacerbated by the tight space from Asian transhipment hubs.
“There is limited new container manufacturing in India which would otherwise serve to alleviate some of this pressure,” it added.
As a result, WL said carriers had begun to offer guaranteed space surcharges of US$750 per container, similar to the ‘no-roll’ premiums found on the deepsea trades over the past couple of months.
Rakesh Pandit, CEO of Conbox Logistics, agreed the container shortage was particularly acute at inland terminals.
“The shortages are bigger if shippers have to plan their cargo from dry-ports of central and western India,” he told The Loadstar.
“There is waiting period to get bookings and containers for one or two weeks on certain sectors, such as pharmaceutical companies who have to wait almost two weeks to get bookings for US ports.
“Shipments planned in large volumes like marble, rice and other agro commodities are also getting delayed,” Mr Prakash added.
He said the current ocean freight market was experiencing spiralling costs caused by shipping lines implementing increased surcharges, blank sailings and rolled cargo. For example, reefer rates to the US have increased 25%-30% to $4,000-$4,500, and, with further increases expected in October, the rate could soon breach $5,000.
“Shipping lines are also changing ocean freight rates very frequently – within seven days, instead of maintaining them for a month which was the case previously,” he explained.
Furthermore, he said there was a lack of government support for exporters rocked by lockdowns.
“Exporters are finding it hard to execute orders due to a lack of government support in the form of stimulus or financial aid. They’re also at the mercy of bankers, who aren’t supportive in the current market situation,” Mr Prakash claimed.
On the import side, he noted the market sentiment in India is very negative, with many businesses afraid the Covid situation will continue for another year.
“There is low demand for almost all products within India, so import growth will not be huge in coming months,” said Mr Prakash.
Indeed, according to the Indian Ports Association, port volumes between April and August plummeted 25% year-on-year to 3.2m teu. And, similar to India’s airfreight market, export volumes are gaining in share over imports.
Wednesday, September 23, 2020
Delhi Police busts gang involved in stealing licences of export firms
The Delhi Police''s Cyber Cell has busted a gang involved in allegedly stealing licences of multiple export companies by fraudulently using their information, officials said on Monday.
The police had initiated a probe after receiving complaints last year from four different garment export firms alleging that their licences of duty rebate on garment exports (RoSCTL) had been stolen from the Directorate General of Foreign Trade (DGFT) website and transferred to multiple beneficiaries using fake Digital Signature Certificate (DSC) keys, they said.
The accused made DSC keys of more than 100 export firms and licences worth Rs 3.4 crore were siphoned off from multiple export firms, the police said.
As per government guidelines, export firms are entitled to certain benefits which are offered as incentives for encouraging inflow of foreign exchange and the same can be claimed by the exporter.
The entire process is done online on DGFT''s website.
"Based on the technical analysis, we have arrested seven people. One of the accused, a certified chartered accountant, who operates from Pune, was arrested from Balaghat in Madhya Pradesh while others are residents of Delhi-NCR," Deputy Commissioner of Police (Cyber Cell) Anyesh Roy said.
The gang operated across the country through a network of Export-Import Bank of India agents and around 107 instances of generating DSC key by fraudulent means have been observed during investigation, he said.
Elaborating on the modus operandi, the officer said the accused used the Import Export Code (IEC Code) of a firm to extract information about the company''s directors, its activities and the duty rebate due. Using the details, they applied for DSC key of the company.
"They used fake documents and during video verification, impersonated the company directors to get the key. The fraudulently obtained DSC key was used to log into the DGFT website and generate the rebate licence. This licence was then transferred to fictitious firms," he added. PTI AMP IJT
Friday, September 18, 2020
India seeks market concession for rice, access for grapes, pomegranates from South Korea.
At present, India does not export any non-Basmati rice to South Korea and the country imports rice from the US, China, Australia, Vietnam and Thailand. It levies 513% duty and maintains a tariff rate quota of 408,700 tonne.
India will seek concessions for its rice exports to South Korea as Seoul levies a whopping 513% tariff on imported rice and buys rice from only five countries under its tariff rate quota regime. New Delhi will also push for Seoul to allow imports of grapes and pomegranates and eggplant, and do away with the requirement of sending inspectors before importing mangoes.
At present, India does not export any non-Basmati rice to South Korea and the country imports rice from the US, China, Australia, Vietnam and Thailand. It levies 513% duty and maintains a tariff rate quota of 408,700 tonne.
The issue came up at a recent meeting that the commerce and industry ministry had with industry and exporters on the India-Korea Comprehensive Economic Partnership Agreement (CEPA) on reviewing the pact.
“We are in the process of reviewing the agreement and are looking at tariff and non-tariff barriers that could be taken up,” said an official.
Seeking-Access:
India’s trade deficit with South Korea was $10.8 billion in FY20. In the first quarter of FY21, India’s exports to the East Asian country were $943.4 million and imports were $2.4 billion. Major items of India’s exports to Korea are mineral fuels/oil distillates such as naphtha, cereals, iron and steel while imports are automobile parts, telecommunication equipment, hot rolled iron products, petroleum refined products, base lubricating oils, nuclear reactors, mechanical appliances, electrical machinery and parts, and products of iron and steel.
Industry also pushed for exports of bovine meat to the country. “We export bovine meat to Asean countries. We have sought market access in South Korea as well,” said an industry representative who attended the meeting.
South Korea is part of the Regional Comprehensive Economic Partnership (RCEP) trade agreement that India exited last year on concerns related to its burgeoning trade deficit with many members.
Wednesday, September 16, 2020
US restrictions on textile imports from China may benefit India: Icra
While there were speculations of a more broad-based ban on the products originating from the Xinjiang Autonomous Region in China, the restrictions have been limited to a few entities, for now, rating agency Icra said.
The US restrictions on some textile imports from Xinjiang in China is likely to augur well for the Indian textile exporters, according to a report.
On September 14, the US imposed restrictions on the import of certain products originating from the Xinjiang Autonomous Region in China, citing concerns on illegal and inhumane forced labour in the region, rating agency Icra said in a report.
The agency said it expects this development to benefit domestic textile exporters.
While there were speculations of a more broad-based ban on the products originating from the region, the restrictions have been limited to a few entities, for now, it said.
Besides banning imports of other product categories, including hair products and computer parts, it also includes restrictions on some entities from the region involved in manufacturing apparels and producing and processing cotton.
Xinjiang is a major cotton-producing belt, which accounts for an estimated 80-85 per cent of China’s cotton output.
“While the immediate impact, in terms of the market catered to by the identified entities, is not quantifiable, this development could have major repercussions for the global textile trade.
“With China being the leading apparel exporter, accounting for more than 35 per cent of the global trade and more than three-fourths of China’s cotton originating from the Xinjiang region, any extension of the ban to a wider base in China could trigger a material shift in global apparel trade in coming years,” Icra Ratings Senior VP and Group Head Jayanta Roy said.
Amid concerns on origination of the coronavirus from China, there have already been reports of several international buyers looking at diversifying their sourcing base across countries, the report opined.
Several major apparel exporters from India have either already started receiving increased orders or are in active discussions with large international buyers, looking at increasing their sourcing from India. The shift, which was previously expected to take place gradually over the medium term, could be expedited in the light of this recent development, the report added.
“While over the past few years, Vietnam and Bangladesh have been the key beneficiaries for a shift away from China, India also stands to gain from any such market opportunity which may arise, given its strong presence in the cotton-based apparels,” Roy added.
Widening of the scope of the ban could, however, be practically challenging as the existing systems are not adequate to track the origin of the raw material.
Accordingly, cotton originating in the Xinjiang region could end up as yarn or fabric in another region/ country, which could be processed further to manufacture apparels.
Further, there could be likely retaliatory actions by China, as seen over the past couple of years amid the ongoing US-China trade war, which could prevent widening of the scope of the ban, Icra report added.
India’s exports dip by 12.66%, imports by 26% in August, trade deficit at $6.77 billion
The contraction in August was higher than in July (10.21 per cent) and June (12.41 per cent). Oil imports also declined by 41.62 per cent to $6.42 billion in the month. Contracting for the sixth straight month, India’s exports slipped 12.66 per cent year-on-year to USD 22.7 billion in August, on account of fall in the shipments of petroleum, leather, engineering goods and gems and jewellery items, as per the government data released on Tuesday.
The contraction in August was higher as compared to 10.21 per cent in July and 12.41 per cent in June.
Exports stood at USD 25.99 billion in August 2019.
The country’s imports too declined 26 per cent to USD 29.47 billion in August, leaving a trade deficit of USD 6.77 billion, compared to a shortfall of USD 13.86 billion in the same month last year, as per the data. The deficit (the difference between imports and exports) was USD 4.83 billion in July. Oil imports declined by 41.62 per cent to USD 6.42 billion in the month under review.
Gold imports jumped to USD 3.7 billion in August as against USD 1.36 billion in the same month last year.
During the April-August period, exports declined by 26.65 per cent to USD 97.66 billion, while imports fell 43.73 per cent to USD 118.38 billion.
Trade deficit during the period stood at USD 20.72 billion.
Major export commodities that have recorded negative growth during August include petroleum products (-40 per cent), gems and jewellery (-43.28 per cent), leather (-16.82 per cent), man-made yarn/fabs/made-ups (-24.23 per cent), ready-made garments of all textiles (-14 per cent), and engineering (-7.69 per cent).
Sectors with positive growth during the month include rice, coffee, tobacco, iron ore, oil seeds, oil meals, meat, dairy and poultry products, pharmaceuticals, and plastic.
Import segments that showed negative growth in August include machinery, electrical and non-electrical; chemicals; wood and electronic goods.
During the April-August period, oil imports dipped by 53.61 per cent to USD 26 billion. Non-oil imports declined by 40 per cent to USD 92.35 billion.
Commenting on the numbers, Federation of Indian Exports Organisations (FIEO) President Sharad Kumar Saraf expressed concern on the dip in figures from labour-intensive sectors of exports, which directly or indirectly impacts employment generation in the country.
“There is a need to analyse imports as well, as such a steep decline in imports may hamper the industrial recovery in the coming months,” he said.
Trade Promotion Council of India (TPCI) Chairman Mohit Singla said that there was a 22 per cent growth in the processed food sector apart from sustained and robust buying on account of rice, cereals and oilseeds.
“Indian processed food industry is geared to witness an upward trend in future,” he said.
Aditi Nayar, Principal Economist, Icra Ltd, said that “we expect the current account balance to post a surplus of USD 7-10 billion in Q2 FY2021”.
India’s service sector exports dipped by 10.76 per cent in July to USD 17.03 billion, the RBI data showed on Tuesday.
Services payments or imports in July too declined by 21.69 per cent to USD 10 billion.
Meanwhile, in a webinar Commerce and Industry Minister Piyush Goyal said exports during the second week of September (8-14) grew by 10.73 per cent to USD 6.88 billion.
“…. but we have a lot of ground to make up on several sectors like textiles, gems and jewellery. But in an overall perspective, the mood is very positive amongst the industry,” he said.
Imports during the period are down 22 per cent to USD 6.6 billion. “So effectively, we are net exporter in the second week of September,” the minister added.
Monday, September 14, 2020
Move to cap incentives may impact about 700 exporters.
NEW DELHI: Around 700 exporters of engineering items, automobiles, chemicals, pharmaceuticals, oil and gas, and textiles are likely to get impacted by the government’s move to cap incentives under the Merchandise Exports from India Scheme (MEIS) at Rs 2 crore per exporter for four months till December 31.
Besides these industries, marine products, dairy and processed foods and fruit, vegetables, spices and cereals are the largest beneficiaries of the scheme. The top 50 exporters from these sectors account for around 20% of the benefits under the scheme, the outgo under which was `45,000 crore in fiscal 2020.
“There are around 700-750 exporters who will get impacted by the ceiling on incentives,” said an official. More than 35,000 exporters claim benefit under the MEIS.
The cap was introduced as the government found MEIS to have failed to deliver the desired result of boosting exports, which have hovered around $300 billion in the last five years despite its liberal application across sectors. The government has said that 98% of the exporters who claim MEIS would be unaffected by the changes as per an analysis of claims in the same period of 2018-19.
It also said the new Import Export Code obtained on or after September 1 would be ineligible to submit any MEIS claim for exports, and the ceiling would be subject to a downward revision to ensure that the total claim didn’t exceed the allocated Rs 5,000 crore for the period.
“Unaffected exporters who have already factored in MEIS in the pricing of their products do Junot face any change or uncertainty since neither coverage of products nor rates of MEIS will be changed,” said another official.
However, industry said though the allocation might cover 98% of beneficiary exporters in numbers, in terms of value of exports covered, the percentage would be much less.
“The large exporters which have high-value exports would get adversely impacted. We also fear that this might act as a disincentive for exporters to become large,” the Confederation of Indian Industry (CII) said in a letter to the ministries of finance, and commerce and industry.
Friday, September 11, 2020
India's new quality checks for imported parts will hurt sales, say foreign automakers.
Foreign automakers are seeking delays and exemptions to India's planned new quality rules for imported auto parts, arguing the regulations will increase costs, hurt sales and disrupt supply chains, sources with direct knowledge of the matter told Reuters.
Prime Minister Narendra Modi is keen to reduce imports to boost local manufacturing to make India more self-sufficient and enable it to play a bigger role in the global supply chain. That said, the move is seen mainly aimed at slashing the amount of lower-quality imports from China.
"There is short term pain but there is long term gain," Commerce Minister Piyush Goyal told an auto convention last week, saying India has become a dumping ground for low-quality goods by not having standards similar to other countries.
New rules mandating stricter quality checks have been flagged in stages for various auto parts since early this year and tighter regulations for wheel rims could be introduced as soon as October, according to a draft government notice.
All automakers will have to comply, but foreign premium brands such as Daimler's Mercedes-Benz, BMW and Audi will suffer most as they have the highest ratio of imported parts, four auto executives told Reuters.
"It's just an additional compliance burden and will not lead to higher local production because the volumes for luxury are too small to achieve economies of scale," said one of the executives.
The sources declined to be identified, citing sensitive negotiations with the government.
Luxury carmakers account for less than 1 per cent of India's annual passenger car sales in terms of volume although they contribute roughly 10 per cent in terms of revenue. Executives from premium German brands as well as Volkswagen AG, Ford Motor Co and Toyota Motor Corp have held several rounds of talks with government officials in recent weeks, sources said.
Martin Schwenk, head of Mercedes-Benz India, said in a statement to Reuters that additional requirements "will make low volume business unviable". His company is requesting a "reasonable time line for mid to long term implementation, and exemptions for low volume manufacturers in the short-term."
Volkswagen Group's India unit also said in a statement that for premium vehicles it was not possible to localise a "majority of components or spares as the total size of market is marginal."
Other automakers named in this article did not respond to Reuters requests for comment.
Automakers are also lobbying through the Society of Indian Automobile Manufacturers (SIAM) which sources say is seeking up to a year to comply with the rules for higher-volume vehicles where parts can be sourced locally.
The industry body is also seeking exemptions for low volume cars such as luxury models and for parts which automakers directly import as opposed to parts imported by trading companies and by vendors in the after-sales market, the sources said.
Mercedes' Schwenk said the company had addressed its concerns through SIAM to relevant authorities and was "hopeful of a positive outcome".
In addition to those lobbying efforts, Volkswagen, Mercedes and BMW also held a meeting with the German ambassador in New Delhi in July to apprise him of the issue, sources said.
UNWELCOME COMPLEXITY
The draft government notice for wheel rims calls for new rules to go into effect from October 1 and includes a requirement that there be an audit of the plant where the rims are made. That would be difficult with current travel restrictions in place due to the coronavirus pandemic, sources said.
It was not clear when the draft notice might be finalised.
To receive a shipment of imported cars or knocked-down car kits an order needs to be placed with global headquarters at least four months in advance, executives at two automakers said.
"If there is no clarity, the headquarters will not take new orders and sales will suffer," said one of the executives.
From April 1, 2021 similar rules will apply to windshields and other safety glass. In June, India also made it mandatory for companies to get a licence to import certain types of tyres.
"This is against every tenet of ease of doing business," said a senior auto executive, noting the new rules come at a time when the pandemic has hit revenue and demand, and could discourage further investment in India.
"Much more than the cost it is the complexity which affects the willingness of global companies to continue selling affected car models in India," the executive said.
India Likely To Screen Aluminium And Copper Imports, Aimed At Curbing Imports From China
India is planning greater screening of copper and aluminium imports in a bid to curb the shipments of the two metals from China and other Asian countries to help the domestic producers.
According to the report, as a first step towards tightening controls over imports, the importers may soon be asked by the officials to register with authorities. Under the plan, the importers would require permits for individual shipments of the two metals, government sources were quoted as saying.
Earlier last month, the Union Mines Ministry had sent a letter to the Commerce Ministry, in which the former had said that the move for greater screening was aimed at pushing economic self-reliance. The letter reportedly referred to Prime Minister Narendra Modi's push to reduce imports and increase exports of value-added products.
In the letter, the ministry said that the purpose of the system was to have adequate information, so that appropriate policy intervention could be devised.
The increased surveillance will provide enough data to see what is being dumped into the country.
The aim of the greater screening would be to add copper and aluminium imports onto a restricted items list, which would require importers to get a government-issued license for every shipment, government sources were cited in the report as saying.
It should be noted that copper import from China, Japan, Malaysia, Vietnam and Thailand accounts for 45 per cent of India's $5 billion imports for 2019-20.
Similarly, the government is also planning to put in place a mechanism to reduce aluminium imports, which mainly comes from China.
Around $4.4 billion worth of aluminium was imported to India in 2019-20, according to government data. China was the biggest supplier of aluminium to India, shipping over $1 billion worth of metal to India.
India to implement ‘rules of origin’ norms for imports from 21 September
MUMBAI (ICIS)--India ‘rules of origin’ norms, which are expected to come into force on 21 September, will help reduce the dumping of goods and stop imports of low quality products, a government official said on Tuesday.
The Department of Revenue under the Ministry of Finance issued the notification on the new provisions on 21 August.
The new norms are expected to check low quality imports and to prevent the dumping of goods by a third country by routing them through one of India’s free trade agreement (FTA) partner countries.
These rules “will apply to imports of goods into India where the importer makes a claim of preferential rate of duty in terms of a trade agreement,” as per the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020.
Countries that have trade pacts with India get the benefit of lesser or zero trade barriers, as well as a concessional tariff regime. Some countries, which do not have trade pacts with India, try to take advantage of these benefits by routing their products through India’s partner countries.
The ‘rules of origin’ provisions prescribe the minimal processing that should happen in the partner country so that the final manufactured product may be termed as originating from that particular country.
As per the new provision, a country which has an FTA with India cannot dump goods from a third country into the Indian market. It has to provide credible proof that it has made a value add to the product that is being exported to India.
Indian importers will have to produce certificates of origin to claim preferential rates of duty for the imported goods.
Customs officers can now ask for further details and documents to determine the origin of imported goods and whether the imports are eligible to avail the concessional duty.
For import of goods produced in a partner country, officers may demand documents substantiating the manufacturing or production process.
Concerned officers can deny the claim to preferential rates in case the certificate of origin is incomplete or has any alterations that have not been officially authenticated.
Claims can also be denied if the validity of the certificate of origin has expired.
Indian customs authorities have been authorised to directly request data from their foreign counterparts in case their doubts are not cleared at the local level.
Benefits can also be denied if the customs officers feel that the documents produced by an importer do not satisfactorily meet the prescribed origin criteria.
“These rules will help businesses in India and abroad to know the exact procedures that will be used for evaluating the preferential rate of duty under trade agreements and the process for verification of certificate of origin,” the government official said.
Importers will now find it difficult to avail preferential rates if the goods are not imported from India’s partner countries, he added.
India has FTAs with more than 30 countries including Japan, South Korea and Singapore, and is in the process of negotiating trade agreements with the USA, Australia, Switzerland, Norway and Iceland among others.
Food ministry seeks Rs 5,600 crore to pay export subsidy dues of sugar mills.
New Delhi: The food ministry has sought Rs 5,600 crore to clear export subsidy dues of sugar mills. The government gives a subsidy of Rs 10,448 for the export of every tonne of sugar.
Exports in the current season are estimated to be 5.7 million tonnes, but officials said very little subsidy has been paid out so far.
“So far subsidy of only Rs 600 crore has been disbursed. We need Rs 5,600 crore more to clear dues. The money will help millers clear can arrears to farmers which have been mounted to around Rs 16,000 crore,” said a senior food ministry official.
He said that the ministry would need additional Rs 2,500 crore to settle buffer stock subsidy and interest subvention on soft loans given to millers.
“The government reimburses sugar mills Rs 1,674 crore for carrying buffer stock of 4 million tonnes. The government also provides soft loans to the extent of Rs. 7,900-10,540 crore to the sugar industry where in it (government) bears the interest subvention cost at 7-10% to the extent of Rs. 553 crore to Rs 1,054 crore for one year,” the official said.
He said that the ministry is likely to propose for providing the export subsidy to millers in the next season also as the export has risen by over 50% from last year due to this financial support.
“It is still under deliberation. The policy and subsidy amount is yet to be finalised,” the official said.
The government expects the production of sugar to be around 32.5 million tonnes in the next season (October 2020-September 2021) as against the annual domestic demand of 26 million tonnes.
There will be surplus of 6-6.5 million tonnes and we expect a carryover stock of another 1 million tonnes. Even if we divert 2 million tonnes to ethanol production, there will be need for exports aggressively,” he said.
India rice prices hit 18-month peak as coronavirus strains export logistics
Rice export prices in top hub India rose to their highest in nearly 18 months this week as supplies remained constrained due to pandemic-induced disruptions, while Bangladesh may have to import the staple after natural calamities damaged crops.
India's 5 percent broken parboiled rice prices climbed to $387-$394 per tonne from last week's $384-$390.
With the top exporter now behind only the United States in the tally of COVID-19 cases, exporters have been grappling with limited availability of containers and mill workers at its biggest rice handling port of Kakinada on the east coast.
"Coronavirus outbreak has affected rice milling in Andhra Pradesh and loading operations at Kakinada. Limited supplies are available for exports though demand is robust," said a Kakinada-based exporter.
In neighboring Bangladesh, domestic prices have risen up to 20 percent over a month amid fears of a production shortfall.
Excessive rainfall in March-April, cyclone Amphan in May and three spells of floods in June-July damaged most crops, of which 70 percent was paddy, according to agricultural ministry officials.
Bangladesh needs to start importing rice without any delay, sources familiar with the matter said.
In Vietnam too, low domestic supplies pushed prices for 5 percent broken rice to $490-$495 a tonne on Thursday from $490 last week.
"Domestic supplies are very low at the moment, while some exporters continue to fulfill their contracts signed earlier with customers from Malaysia, Timor-Leste and Africa," a trader in the Mekong Delta province of Tien Giang said.
Traders expect prices to come down in the coming weeks ahead of the autumn-winter harvest. Adding to demand woes, another trader said the Philippines could suspend rice purchases at least until November to support domestic prices of an ongoing harvest there.
In Thailand, benchmark 5 percent broken rice prices eased to $487-510 per tonne on Thursday from $500-$513 last week amid muted demand.
India’s defence exports increase by 700% in two years, ranks 19th among world’s defence exporters
The central government under Prime Minister Narendra Modi has had the long-standing ambition of making India one of the leading exporter of defence equipment and as per latest information, the Centre has indeed lived up to its promise on that front.
Chief of Defence Staff General Bipin Rawat on Wednesday said that India is currently ranked 19th in the list of top defence exporters in the world, as of 2019 data.
“We witnessed a staggering 700% growth in defence exports from Rs 1521 crores in 2016-17 to Rs 10,745 crores in 2018-19…an all-time high ranking of 19th in the list of defence exporters in 2019,” CDS Rawat said during an e-symposium on 'Catalysing Defence Exports' via video conferencing.
In order to boost PM Modi’s clarion call for ‘Atmanirbhar Bharat’, the Union Ministry of Defence in August formulated a draft Defence Production and Export Promotion Policy 2020 as an overarching guiding document to provide a focused, structured and significant thrust to defence production capabilities of the country for self-reliance and exports.
“The policy aims to achieve a turnover of Rs 1,75,000 crores, including export of Rs 35,000 crores, in aerospace and defence goods and services by 2025,” the Defence Ministry said in a statement on August 3.
Defence Minister Rajnath Singh had in August announced a major policy decision about the imposition of a phase-wise ban on the import of 101 military weapons systems and platforms in order to promote the domestic defence industry.
“We cannot depend on foreign governments, foreign suppliers and foreign defence products to meet our defence needs. It is not compatible with the objectives and feelings of a strong and ‘Atmanirbhar Bharat’,” he had said back then.
Wednesday, September 9, 2020
India’s global auto components trade likely to grow 5% by 2026: McKinsey
To grow trade, India could benefit from a targeted exports expansion and imports substitution programme, stated a news report by McKinsey on Indian auto component industry. For exports expansion, India has to learn from countries that are major exporters of auto components.
5% by 2026: McKinsey
To grow trade, India could benefit from a targeted exports expansion and imports substitution programme, stated a news report by McKinsey on Indian auto component industry. For exports expansion, India has to learn from countries that are major exporters of auto components.
India has the scope to expand its share in the global auto components trade to 4%-5% by 2026, riding on exports growth and the import substitution initiatives being taken by the industry in the wake of Covid-19-triggered supply chain disruptions as well as the Centre’s ‘Atmanirbar’ programme. As the supply chains shift, India will be in a position to increase its share in the global auto components trade. The country contributes only a small percentage of the total imports to its biggest buyers – 2.2% in the US, 1% in Europe and 0.6% in China. To grow trade, India could benefit from a targeted exports expansion and imports substitution programme, stated a news report by McKinsey on Indian auto component industry. For exports expansion, India has to learn from countries that are major exporters of auto components. Germany, for example, has a 15% share in the global exports market for auto components. China’s share is at 11% with Japan and Korea following at 7% and 6%, respectively, the report said.
While these countries also have a trade surplus in auto components, they achieved this market position due to advantages such as the presence of large original equipment manufacturers (OEMs) in the domestic market, greater ease of doing business, a significant spend on research and development – between 2% and 5% of GDP- and their top-25 rank in infrastructure. McKinsey said India could pursue higher exports in product categories where the country has a competitive edge, such as shafts, bearing and fasteners. At the same time, component manufacturers can continue to broaden their global export presence by building capabilities for high-value products such as gear-box parts, heating, ventilation and air-conditioning (HVAC) products.
The report said an analysis of the value that automotive parts add to India’s import bill while also featuring as major exports indicates scope to localise and substitute imports of up to $12 billion. One option is to be more focussed on manufacturing high-value parts such as engine and engine components, engine electricals, fuel systems and exhaust parts and gear box parts. India could also ramp up capabilities through recent innovations such as those made to match BS-VI standards that could help replace those imports with components made in the country. Possible collaborations with global suppliers, who are relocating manufacturing operations to India, could further reinforce these efforts and help build new capabilities, it said.
The after-market could be a growth engine during lockdown, with micro-market clusters driving the bulk of demand. India has 19,500 micro-markets, serving close to 30 million passenger cars and, of these, around 1,275 micro-markets (7%) contribute to half of all demand, the report said. Collaboration with non-automotive sectors is likely to unlock product opportunities for parts such as bearings, motors, engines and turbines, among others. In some cases the product or process capability overlap between auto and non-auto parts is more than 50%. A granular approach across 20 categories could help save 15% to 25% of hidden costs, it added.
Government asks auto industry to cut imports, raise exports
Citing examples of existing auto hubs, such as Sanand, Manesar, and Hosur, Piyush Goyal said India must look at boosting its domestic capabilities and expand its global economic engagement.
Senior ministers of the Union government took Prime Minister Narendra Modi’s clarion call of Atmanirbhar Bharat forward and urged automakers to reduce their dependence on imports, increase exports, and make India a global manufacturing hub for automobiles and auto components.
“I request the auto industry to not depend on imports, develop import substitutes, and expand its export business. The government will support you in increasing production and boosting employment potential,” said Nitin Gadkari, the Union minister for road transport and highways, and micro, small and medium enterprises.
Minister of railways, and commerce and industry Piyush Goyal and minister of environment, forest and climate change Prakash Javadekar also urged the auto sector to boost local manufacturing at the annual conventions organized by the Society of Indian Automobile Manufacturers (Siam) and the Automotive Component Manufacturers Association of India (ACMA), held on 4-5 September.
This is also likely to boost the economy by creating enormous job opportunities at a time that the country is struggling to shake off the adverse effect of the lockdown imposed to check the spread of coronavirus.
Gadkari urged the industry to develop import substitutes and increase investment in research and development (R and D) and export volumes and said that the government will set up industrial clusters along the 12-lane, 1,400km Mumbai-Delhi expressway. “The expressway passes through the backward tribal areas of Haryana, Rajasthan, Gujarat, Madhya Pradesh, and Maharashtra. Land acquisition cost in these areas is low. The land rate in Gurugram or any big city is ₹2-2.5 crore per acre. I am willing to give you land in these areas for ₹10-15 lakh per acre. I request the auto industry to develop industrial clusters on the land parcels,” the road transport and highways minister said. Gadkari said his ministry will take the responsibility for connectivity to ports, railway stations and airports.
Citing examples of existing auto hubs, such as Sanand, Manesar, and Hosur, Goyal said India must look at boosting its domestic capabilities and expand its global economic engagement.
“The auto industry should reduce dependence on imports, specifically in areas such as steel, tyres, and electronic parts,” Goyal said.
Goyal said he has requested the industry to come up with a viable model for setting up semiconductor fabrication units, which will help increase production of electronic components.
“India needs to focus immediately on setting up fabrication facilities because that is the root of the entire electronics chain. The government is willing to extend support to set these up,” Goyal said. One or more large automakers may look at setting up such units, and even consider moving existing fabrication units from other countries to India, he said. “I think it should be driven by the private sector and the government setting up a fabrication unit is not a good idea.” Goyal said. The industry must aim to become a global manufacturing hub for sunrise sectors, including electric and autonomous vehicles.
The government is working with other countries to sort out tariff and non-tariff barriers, including a free trade agreement with the European Union for India to become a preferred supplier. “We are also considering a credit guarantee model to help exporters. Under the model they may get insurance of up to 90% of their export value. The scheme should be finalized soon,” Goyal said.
Gadkari and Goyal also hinted that the government is considering an increase in duties on import of auto components. Javadekar said that the government was evaluating the possibility of reducing goods and services tax for two- and three-wheelers to revive local demand, while Gadkari said that the much awaited vehicle scrappage policy is in its final stages of approval and will be rolled out within a month.
Illegal cashew kernel imports a big worry
The Cashew Export Promotion Council of India (CEPCI) has raised serious concerns over rising illegal import of cashew kernels, saying this has hit the crisis-ridden domestic industry.
CEPCI pointed out that large scale imports of low-quality, plain cashew kernels from competing countries such as Vietnam, Mozambique and Ivory Coast have led to closure of several cashew factories that provides gainful employment to more than 10 lakh workers, majority of them are women.
According to R.K.Bhoodes, Chairman, CEPCI, plain cashew kernels that falls under chapter 8 of the customs tariff is levied a basic customs duty of 45 per cent. Also, the minimum import prices of ₹288/kg for broken grades and ₹400/kg for whole cashew are fixed and 45 per cent of the same is levied as the basic customs duty for imports .
However, roasted cashew kernels and further value-added cashew products which comes under chapter 20 of the customs tariff under various Free Trade Agreements have been fully exempted from payment of basic customs duty. Misusing these provisions, he pointed out, several importers ship large volumes of plain cashew kernels (mostly brokens), which are inferior in quality vis-a-vis Indian products. Since these countries do not have a domestic market, they sell it in the Indian market at throw-away prices.
As such low-quality and low-priced broken kernels are dumped in the domestic market evading customs duty, genuine processors are finding difficulties in selling their products. This has not only impacted prices in the domestic market but making domestic processing unviable as well.
Further, re-exporting of low-quality whole kernels of other countries with Indian label has tarnished the brand of Indian kernels. Exports of imported unpeeled cashew kernels can also avail of 5 per cent export incentive as applicable to fully processed cashew in India. “This is a big blow to the efforts of the CEPCI to promote Indian cashew as a brand,” Bhoodes said.
CEPCI also demanded that the import of cashew kernels (including the 12 categories of mis-declarations) should be subject to 100 per cent inspection by the Customs for sampling and testing. Fraudulent importers should be blacklisted and Cofeposa should be invoked against repeated importers.
India's sugar exports surge 50% to a record level of 5.7 million tonne this month.
New Delhi: India’s sugar exports will rise 50% to a record of over 5.7 million tonnes in the season ending this month, helped by the depreciated rupee, subsidy and lower output from rival suppliers.
The government expects the robust performance to continue in the next season also.
“We have contracted 5.7 million tonnes out of which 5.5 million tonnes have been already dispatched from mills. We expect contracts of further 5-6 lakh tonnes before the season ends,” said Subodh Kumar Singh, joint secretary, food ministry. India had a target to export 6 million tonnes.
He said that the record export has been possible due to better coordination between ministry, millers and transporters during Covid-19 pandemic.
“Export shot up due to sustained demand at global market,” Singh said.
The highest sugar export before this was in 2007-08 when India shipped 4.9 million tonnes.
Singh said sugar export was likely to be in the same range in the next season also.
“We expect production of 32.5 million tonnes of sugar next season (October 2020-September 2021) with surplus of 6-6.5 million tonnes. The carryover stock of 1 million tonnes will further raise need for exports,” he said.
The government’s decision to extend subsidy of Rs 6,268 crore for export of 6 million tonnes sugar also encouraged mills to ship excess sugar.
Exports have risen due to opening up of Indonesian market for the first time and Malaysian market after long time. The traditional markets like East Africa, Bangladesh and Middle East also reacted positively during Covid pandemic.
“Due to drastic drop of sugar output in Thailand owing to drought, Indonesia and Malaysia which are primarily served by Thailand, had to import sugar from India. Apart from that, Iran also imported sugar in large quantities. Iranian and Indonesian imports together comprise 1.2 million tonnes while Malaysia imported sweetener in small quantity,” said Abinash Verma, director general, ISMA, an industry body.
He said that the global price of imported sugar ranged between Rs 19-23 per kg ex mill making imports viable.
“Rupee deprecation also helped the cause. Now, India has been able to instil trust among global importers that the country can consistently import 5-6 million tonnes without putting pressure on prices,” Verma said.
Exports, imports are showing positive trends: Piyush Goyal
NEW DELHI: The country's exports as well as imports are showing positive trends as the outbound shipments are approaching the last year's levels, after making a sharp dip in April this year due to the COVID-19 pandemic, commerce and industry minister Piyush Goyal has said.
The minister said this during his meeting with various export promotion councils (EPCs) on September 3. The meeting was held to discuss the issues concerning the country's global trade, ground-level situation, and problems being faced by the exporters.
On imports, Goyal said that inbound shipments of capital goods have not declined, and the reduction has been seen mainly in crude, gold and fertilisers. He added that the trade deficit is reducing drastically and India's share in the global trade is improving due to resilient supply chains. He also said the ministry is trying to generate more reliable and better trade data so that the nation can do better planning and frame policies accordingly.
"The country's exports as well as imports are showing positive trends. The exports are approaching the last year's levels, after making a sharp dip in April this year due to the pandemic," an official statement said on Friday quoting the minister.
Further, Goyal said 24 focus manufacturing sectors have been identified that have the potential to expand, scale up operations, improve quality, and lead enhancement of Indian share in global trade and value chain. These sectors have capacity to do import substitution and push exports. On the issue of recent changes in the Merchandise Export from India Scheme (MEIS), the minister said that the capping of Rs 2 crore will not affect 98 per cent of the exporters who claim benefit under the scheme.
The government has already announced the Remission of Duties or Taxes on Export Products (RoDTEP) scheme for exporters to replace MEIS. This new scheme would reimburse the embedded taxes and duties already incurred by exporters. He said that special economic zone (SEZ) issues are being taken up with the finance ministry.
In a separate statement, export promotion council for SEZs and export-oriented units (EOU) said it raised matters such as resolution of incentives under the SEIS (Service Exports from India Scheme) for the exports made during 2019-20 and this financial year.
"In order to boost domestic manufacturing and check imports, there should be exemption from five per cent health cess on medical devices manufactured in SEZ/EOU units and supplied to the domestic market," it said.
Contracting for the fifth straight month, India's exports slipped 10.21 per cent to $23.64 billion in July, on account of decline in the shipments of petroleum, leather and gems and jewellery items.
Auto component firms eye higher exports, low imports to become self-reliant
Auto component makers are looking to shore up exports and cut down on imports as they seek to reduce vulnerability to currency swings and become self-reliant.
Top executives at various auto component firms said exports, which have been intrinsic to the overall strategy, will likely increase at a rapid pace over 2-5 years. These firms, however, will continue to import high volume, low-value parts, as making them in India is financially unviable given higher logistics and power costs.
F R Singhvi, joint managing director at Bengaluru-based Sansera Engineering, said his firm a manufacturer and supplier of critical engine parts, is looking to increase the share of exports in its revenue to a third by FY22, from the current 28 per cent.
“Being atmanirbhar means higher exports and less imports. You cannot make everything in India as it’s not viable,” said Singhvi. High volume, low-value parts — which can be sourced from countries like China at a cost which is significantly less than in India — will always be imported as India cannot match the scale and costs of that country, he pointed out, citing an example of alloy wheels, which are imported by automakers in large numbers.
“We would rather focus on developing know-how of local production of technology-intensive parts that are in high demand in both domestic and global markets,” said Singhvi.
The plans to accelerate local procurement and boost exports come amid Prime Minister Narendra Modi's clarion call for Atmanirbhar Bharat. It is also being fuelled by the geopolitical tensions with China, which has been one of the key sources for imports for manufacturers across several sectors.
India’s auto component industry imported parts worth Rs 1.09 trillion in FY20, against Rs 1.23 trillion a year ago. It constituted 31.2 per cent of the turnover, according to Auto Component Manufacturers Association (Acma). Exports for the same period stood at Rs 1.02 trillion, against Rs 1.06 trillion a year ago, accounting for 29.4 per cent of the turnover.
Ashok Taneja, president and MD at Shriram Pistons and Rings, says the company has been working towards becoming self-reliant for a while now.
At the crux of the strategy is to become a “globally competitive supplier and a supplier of choice for the OEMs (original equipment manufacturers) globally.” His firm that currently gets a fourth of its revenue from exports is looking at increasing it to 30 per cent in the next three years.
Shriram Pistons and Rings, he said, has been working towards achieving sustainable cost competitiveness. A sharper focus on R and D, design, development, and testing has helped the firm generate intellectual property rights (IPR).
India may expand its share in the global auto component trade to 4-5 per cent by 2026, emphasising a targeted export expansion and import substitution programme for key components, McKinsey said.
India doubles steel export, China major buyer
New Delhi: India’s export of finished steel grew over two-fold between April and July this year, while import of such products reduced by about 42%.
According to the latest Joint Plant Committee (JPC) report, between April and July, the country’s total export of finished steel stood at 4.64 million tonnes (MT), as against 1.93 MT in the same period a year ago. JPC, under the Union Ministry of Steel, collects and maintains data on the Indian steel and iron sector.
Out of the total 4.64 million tonnes of export, Vietnam and China bought 1.37 million tonnes and 1.3 million tonnes of steel, respectively. Sources said that though Vietnam has been buying Indian steel regularly, the fact that Chinese companies imported Indian steel in a big way despite growing tensions between the two countries has come as a surprise to many.
According to the JPC data, the country reduced its imports by 42% to 1.50 MT during the period under review from 2.59 MT a year ago. “Import of total finished steel from China declined by 21.7% during this period,” the JPC report said.
The production of finished steel fell 39.8% to 21.15 MT from 35.15 MT in April-July of 2019, the data showed. Steel consumption also fell 43.3% to 18.909 MT as against 33.34 MT in the same period of the last fiscal.
Overall, globally, the situation in the steel sector remained strained due to the Covid-19 pandemic. World crude steel production for the 64 countries under the World Steel Association stood at 152.7 MT in July 2020, a 2.5% decrease compared to July 2019.
China produced 93.4 MT of crude steel in July, an increase of 9.1% compared to July 2019. India produced 7.15 MT of crude steel in the same month compared to 9.48 MT in July 2019. Japan, on the other hand, produced 6.0 MT of crude steel in July, down 27.9% in July 2019. South Korea’s steel production was 5.5 MT, down by 8.3% in July 2019.
According to the report, Germany produced 2.4 MT of crude steel in July 2020, down 24.7% in July 2019. Production in the European Union overall is estimated to be 9.8 MT of crude steel in July 2020, down by 24.4% in July 2019. The United States produced 5.2 MT of crude steel in this month, a decrease of 29.4% compared to July 2019.
As reported earlier, India earned the distinction of becoming the world’s second largest steel producer, for the second consecutive year, in 2019, as per the WSA report. As per report, in 2019, the world crude steel production reached 1869.9 MT and showed a growth of 3.4% over 2018. China remained the world’s largest crude steel producer in 2019 with 996.3 MT, followed by India (111.2 MT), Japan (99.3 MT) and USA (86.9 MT).
Grappling with poor domestic demand, tile makers eye exports for near-term recovery
After a turbulent June quarter, tile and ceramic dealers are back in the business, showed recent channel checks by brokerages.
As per management commentaries of listed tile companies, capacity utilisations in July reached around 70% of their pre-covid levels. However, the lull in Indian real estate sector continues and demand for tiles and ceramics is directly co-related to the realty sector. So, tile and ceramic manufacturers are likely to bet on exports to boost near-term volumes growth. Channel checks show that export markets are recovering at a faster pace than domestic market.
As a short-term strategy to utilise capacity and keep manufacturing units running, Somany Ceramics Ltd would look at export orders. In a post earnings conference call, its management said, export demand is strong as lot of countries are looking away from China and there is pent up demand post opening of certain markets. Exports demand is healthy from the US, Europe, Australia, New Zealand and Indonesia. That said, the primary focus of the company will be domestic market where it earns premium realizations, the management added.
Latest analysis by rating agency ICRA Ltd showed that in the first two months of the fiscal 2021, exports sales of tiles and ceramics stood at around Rs 800 crore. However, the same jumped to around Rs.2500-2700 crore for June and July 2020, while monthly average for FY 2020 stood close to Rs.830 crore," it said in a note dated 7 September.
Export competitiveness of Indian tile manufacturers has improved in the recent years aided by various government measures. Recently, the Indian government imposed an anti-dumping duty of $1.37 per sq meter on vitrified tiles imported from China, which is the largest producer of tiles globally.
Analysts say, similar action on import of Chinese tiles are expected from Taiwan and South Korea. Thus, aiding Indian tile makers to benefit from the shifting global supply chains. Further, anti-China sentiments have opened doors for exports for listed as well as unorganised companies. Around 60% of the sector is unorganised with comprising players from Morbi, Rajkot and other clusters. However, since smaller companies are struggling to quickly restore supply chains due to cash and labour constraints, larger listed players such as Somany Ceramics Ltd, Kajaria Ceramics Ltd and Cera Sanitaryware can benefit in terms of gaining export market share.
In the backdrop of gloomy domestic demand scenario, faster recovery in exports is a silver lining. However, imposition of definitive anti-dumping duty by the Gulf Cooperation Council GCC) on Indian tiles and ceramics for a period of five years which started from June, is a dampener, Care Ratings Ltd said.
The GCC has announced the imposition of anti-dumping duty on imports of ceramic floor and wall tiles originating from India. The duty varies depending on the type of tiles and the average duty imposition works out to be 41.2%, analysts said. Saudi Arabia is the biggest ceramic export market for India. It is followed by UAE, Indonesia, Mexico Iraq.
"GCC has highest share in exports at 37% from India during FY20 Imposition of duty is envisaged to exert pressure on pricing and profitability from Q2FY21 as well as impact overall credit profile of the entities, which have a higher geographical concentration to GCC member countries," said the Care report on 7 September.
“Nevertheless, geographical diversification of exports in markets, which were earlier catered to, by China, is envisaged to mitigate the shortfall in exports to GCC to an extent," the report added.
What will drive India’s next economic transformation, writes Amitabh Kant
With global supply chains being reforged, India must position itself as a vital link in this new order. Governments across the world are encouraging countries to shift their manufacturing out of China. A strong export orientation, cost-competitive manufacturing and creation of domestic champions is the need of the hour. An Atmanirbhar Bharat (self-reliant India) will not be possible without growing exports to serve global markets. Therefore, global orientation is imperative.
At the same time, India imports a large number of commodities that are available in abundance within India itself. Take coal for instance. Despite having some of the largest reserves in the world, India still imported coal worth Rs 1.7 lakh crore in 2018-19. Now, with commercial coal mining a reality, we should see steady reductions in our import bills. Defence is another area where India has been a large importer. A gradual import substitution of 101 items worth Rs 3.5 lakh crore over the next five years has already been announced and a bold move of increasing FDI limits from 49% to 74% also announced. India has an abundance of minerals which can go into making metals like aluminium which has strategic future uses and super-alloys needed for defence production and in a range of industries. Providing a reform-based stimulus to the economy during the Covid-19-induced recession, historic reforms were announced in the agriculture sector and the coal sector was de-monopolised, paving the way for private sector investment. A conducive business environment will enable both domestic and foreign investment. However, there are a few critical elements that must be addressed to create a business environment that is the envy of the world.
Prime Minister (PM)?Narendra Modi’s vision for an Atmanirbhar Bharat hinges decisively on the success we are able to achieve in our manufacturing sector. We must move away from capital-linked subsidies to production-linked incentives. And this has been showing encouraging results. The production-linked incentive (PLI) scheme for mobile phone manufacturing has been showing impressive results. Several other PLI schemes have been announced. This is one of the vital cogs in enabling large-scale, low-cost manufacturing.
While imposing tariffs on imports seems like an easy solution to reducing imports, the effect is some time the opposite of what was expected. If duties are raised on critical inputs for exports, then the cost of exports would rise, making them uncompetitive in global markets. Even if duties are imposed on consumer goods, the duties should contain a sunset clause and be phased out in a clearly-defined timeline, allowing the domestic industry to grow.
Land and labour have been the traditional constraints in achieving scale in manufacturing. Multiple labour laws at the central government-level will be subsumed into four labour codes, with three set to be tabled in the coming monsoon session of Parliament.
Another vital element is that of easing the regulatory burden. India has already made progress in this regard, as evidenced by our jump of 79 positions in the World Bank’s Ease of Doing Business Rankings. Going forward, delays in clearances and multiple permissions must become a thing of the past. The states must take the lead and cooperate on this front.
India’s high cost of logistics relative to other competing nations has been a disadvantage. The central government will continue its push towards elevating India’s infrastructure to world-class standards through the National Infrastructure Pipeline. Our port turnaround time stands at approximately 60 hours, despite significant improvements in the past years. Digitisation of our ports will be critical in reducing our turnaround time.
India’s domestic market will serve as the base of an Atmanirbhar Bharat. Combined with world class infrastructure and a conducive business environment, India will attract both domestic and foreign investments in manufacturing. These investments will, in turn, promote high quality, cost-competitive manufacturing, leading to India taking its rightful place in global value chains.
Tuesday, September 8, 2020
MEIS cap will not affect exporters: Piyush Goyal
Goyal said the trade defcit is reducing drastically and India’s share in the global trade is improving, and that the government is trying to generate more reliable and better trade data for improved planning and policy making.
New Delhi: Commerce and industry minister Piyush Goyal said that India’s exports and imports are doing well, and the capping of eport incentives under the Merchandise Exports from India Scheme (MEIS) at Rs 2 crore will not affect 98% of the exporters who claim benet under the scheme.
In a meeting with export promotion councils, he also said that the ministry is taking up issues related to Special Economic Zones (SEZ) with the nance ministry and while certain sectors- which depend on discretionary spending- are under “severe stress”, India’s overall exports and imports are showing positive trends especially exports which are approaching last year’s levels. “The exports are approaching the last year’s levels, after making a sharp dip in April this year due to pandemic. Regarding imports, the positive thing is that the capital goods imports have not declined, and the reduction in imports has been seen mainly in crude, gold and fertilizers,” the ministry quoted Goyal in a statement.
As per the statement, Goyal added that the trade decit is reducing drastically and India’s share in the global trade is improving, and that the government is trying to generate more reliable and better trade data for improved planning and policy making.
The government has identied 24 focus manufacturing sectors which have the potential to expand, scale-up operations, improve quality, and lead enhancement of Indian share in global trade and value chain. These sectors have capacity to do import substitution and push exports,” he said, and called upon exporters to engage with the Steering Committee set up to promote Indian manufacturing.
Separately, the government has already announced Remission of Duties or Taxes on Export Products (RoDTEP) scheme for exporters to replace MEIS, and a committee has also been set upto determine the ceiling rates under the RoDTEP scheme. This new scheme would reimburse the embedded taxes and duties already incurred by exporters.