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.

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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.

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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).

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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.

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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.

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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.

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Sugar import duty hiked to 40 per cent

30th April 2015, New Delhi: The Union Cabinet on Wednesday decided to hike the import duty on sugar to 40 per cent from the current 25 per cent to check the slide in domestic prices of the sweetener and enable the industry to clear cane arrears to the tune of Rs. 20,099 crore. This is in line with the demand raised by the industry, cane growers and state governments with whom the government recently held a series of meetings. However, no decision was announced on the demand to create a buffer stock of sugar on government account and industry body ISMA urged the government to quickly decide on its request to buy out 10 per cent of current year's sugar production amounting to 3.5 million tonnes "to help the industry come out of the crisis in the short run and ensure that a major portion of cane price arrears of farmers are cleared before the start of the next sugar season."

The meeting, chaired by Prime Minister Narendra Modi, also decided to waive off 12.6 per cent excise duty on ethanol blending for the next sugar season. The saving will be passed on to the sugar industry/distilleries. It is mandatory for millers to produce five per cent ethanol from molasses for blending with petrol.

At the same time, the government has decided to end duty-free raw sugar imports. Under the Duty Free Import Authorisation (DFIA), exporters of sugar could import duty free, permissible quantities of raw sugar for subsequent processing and disposal. To prevent offloading of sugar made from such duty free imports in the domestic markets, the DFIA scheme for sugar would be withdrawn.

The government has reduced to six months the period for discharging export obligations under the Advanced Authorisation Scheme for Sugar to prevent possibility of any leakage of such sugar in the domestic market. The government steps are to improve the price sentiments relating to sugar, said an official spokesman.

The last few years have witnessed over-production of sugar as compared to domestic requirement. This has depressed sugar prices with the mills having been constrained for liquidity, facing difficulties in clearing cane dues owed to the farmers and impacting incomes of 50 million sugarcane farmers. Similar conditions of subdued prices prevail in the global markets.

Ex-factory prices of sugar have fallen to Rs 22-24/kg in the country, while the cost of production is over Rs 30/kg. Sugar production of India, the world's second largest producer, is estimated to be higher than the domestic consumption for the fifth year in a row this year.

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Strong India Rupee Stings PM Modi's Export Ambitions

New Delhi: Ajit Lakha, who runs a mid-sized garment export business in the north Indian textile hub of Ludhiana, prays daily before leaving for work that the rupee will weaken and the euro recover to cut the losses he is taking on his overseas sales.

"Perhaps God is not listening," he says. "Only a year ago, I was getting 80 rupees for each euro on garment exports to France. Now, I am getting just 67 or 68 rupees."

Thousands of garment, leather, handicraft, and gems and jewellery exporters have watched helplessly as the rupee has appreciated by a quarter against Europe's common currency over the past 12 months.

The result has been India's worst export performance since the global slump of 2009, an early setback to Prime Minister Narendra Modi's 'Make in India' campaign to launch an export-led boom as he approaches a year in power.

To counter slack external demand, PM Modi's government plans higher infrastructure spending in the budget now before parliament, but lacks the fiscal firepower for a China-style stimulus. Short of alternatives, New Delhi is starting to lean on the Reserve Bank of India to do more on the currency side to restore India's international competitiveness.

"A case is building for rupee depreciation. Otherwise, all indicators show we are entering another difficult year," a senior trade ministry official told Reuters, adding the government expected help from the central bank besides taking other measures.

Merchandise exports, which make up around 16 per cent of India's $2 trillion economy, shrank for the fourth month in March, with the 21 per cent annual decline the steepest since 2009. In part, that reflects the collapse in oil prices - India's main import is crude but its refiners also export petroleum products.

Exports to Europe shrank by near 2 per cent in the 11 months to February, reducing its share of total exports to 18 per cent and cancelling out gains to the Americas and Africa.

Sales of textiles - a major export to Europe - for instance, have slowed in the current fiscal year after growing 15 per cent in 2013/14 year to $6.38 billion.

Need Oxygen

To be sure, a stronger rupee is not all gloom for Asia's third-biggest economy which imports nearly $450 billion worth of goods a year. But the upshot for PM Modi is that his goal of doubling shipments to $900 billion in four years now looks very ambitious.

"India has become uncompetitive in some markets," said Gaurav Poddar, director at Limtex India, which exports tea to the oil-dependent economies of the Middle East and former Soviet Union. "The rouble has really hit us," said Mr Poddar, referring to the Russian currency's collapse last year.

Trade officials say exporters need a helping hand as they are fast losing competitiveness after the rupee appreciated by 11 per cent in real terms against a six-currency basket over the year to March.

"Indian exports are in intensive care and immediately need oxygen," said S.C. Ralhan, president, of the Federation of Indian Exporters Organisation (FIEO).

Yet economists say that the RBI already faces a tough task curbing the rupee, as enthusiasm over PM Modi's business-friendly policies sucks investment dollars into Indian financial markets.

In January and February, the Reserve Bank of India (RBI) bought a net $20 billion in the spot forex market.

Any acceleration in dollar-buying intervention would force the RBI to absorb, or 'sterilise,' more of the rupees that it prints lest they leak into the economy and undermine hard-won gains in cooling inflation.

"India can choose to join the global currency war by cutting interest rates - but that is not an option we have, given we are still fighting inflation," said Sonal Varma, an economist at Nomura in Mumbai.

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Commerce Ministry eases rules for preferential quota sugar sales

The Commerce Ministry on Tuesday liberalised the sales of preferential quota sugar to the European Union (CXL quota) and the US (TRQ quota), effectively allowing all exporters and not just State Trading Enterprises (STEs) to avail of the benefits of the quota.

Sales will be subject to a quantitative ceiling that will be reviewed by the Directorate-General of Foreign Trade (DGFT) periodically, said an official statement.

The quotas essentially allow a quantum of exports to these markets at low tariffs. Additional imports of the sweetener beyond the quota are subject to additional tariffs. The Indian Sugar Exim Corporation (ISEC) had been exporting sugar under this system since 1991.

“The change in the policy of the preferential sugar quota will enable all sugar industries in the country to export sugar subject to a minimal requirement of registration from APEDA or DGFT,” the Ministry said in a statement.

Traders will have to furnish details of exports to the Additional DGFT, Mumbai, as well as Agricultural & Processed Food Products Export Development Authority (Apeda). A certificate of origin, if required, will be issued by the former.

The quota for the EU at present is 10,000 tonnes while that for the US is 8,000 tonnes.

Few to benefit

Ostensibly to aid the struggling millers who owe as much as Rs. 20,000 crore as dues to sugarcane farmers as of last month, the Ministry’s decision has not gone down well with the industry.

“The decision to remove preferential sugar quota exports to the EU and the US from the sugar industry body, the ISEC, will benefit a few petty traders at the cost of the sugar industry,” said Abinash Verma, Director-General, Indian Sugar Mills Association (ISMA).

Verma said that ISEC’s funds have been used for the welfare of the domestic sugar sector and the move will see the profits being pocketed by a few.

“It is all the more surprising to note that this unilateral decision has been taken bypassing recommendations of the Food Ministry…we have already represented before the Prime Minister to investigate the matter and check the move behind the decision and whether it will benefit the country,” he said.

(This article was published in the Business Line print edition dated April 29, 2015)

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Textiles Ministry seeks export sops for yarn, fabric sectors

The Textiles Ministry has demanded sops for the yarn and fabric sectors, which it says were ignored in the five-year Foreign Trade Policy announced early this month.

It has also made a case for inclusion of garments in the interest subvention scheme being finalised by the Commerce Ministry to help the sector compete with Vietnam, Sri Lanka and Bangladesh, which get favourable access to developed markets.

“Officials from the Textiles Ministry have already held preliminary discussions on the matter with officials in the Commerce Ministry and the Directorate General of Foreign Trade. We have forwarded all the complaints that we had received from the industry. The Secretaries from the two ministries are also in touch,” an official told BusinessLine .

Flawed incentives

Man-made fibre yarn as well as woven and knitted fabrics, in addition to garments, have been extended a 2 per cent incentive (in the form of fully transferable duty scrips) in the EU, the US, Canada and Japan. However, sops in these markets do not help yarn and fabric producers as they export very little to these markets. The Merchandise Export Incentive Scheme (MEIS), however, ignores markets such as China, Bangladesh, Sri Lanka, Turkey, Vietnam and South Korea, which are major destinations for yarn and fabric from India.

“By excluding key markets, the policy has virtually ignored fabric and yarn producers, who also need support in the shrinking world market,” the official said.

The Textiles Ministry is also trying to persuade the Commerce Ministry to include garments and other sectors in the new interest subvention scheme being finalised by it. Under the scheme, exporters from select sectors will get credit at a 3 per cent subsidy for the next three years.

“The garments sector is facing a tough time competing with smaller economies such as Vietnam, Sri Lanka and Bangladesh, which get preferable access into the EU and US markets. Interest-rate subvention will give it some relief,” the official said.

The textile sector is the largest employment generating sector in the country, especially for low-skilled workers, and needs to be supported, he added.

The Merchandise Export Incentive Scheme ignores markets such as China, Bangladesh, Sri Lanka, Turkey, Vietnam and South Korea, which are major destinations for yarn and fabric from India.

(This article was published in the Business Line print edition dated April 29, 2015)

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