Indo-China trade has failed to gain momentum

SHIMLA: Indo-China trade through Shikpkila pass of Kinnaur district has failed to gain momentum over the years despite the fact that border trade through this point was resumed following the signing of protocol for extension of border trade to Shipkila pass in September 1993.

While last year around 19 traders had crossed over to China, this year only one trader has applied following the direction of union government to obtain import export code. According to sources, this is for the first time when traders have been directed to apply for the code that would help them to import or export goods without paying custom duty and without having any ceiling on the products.

Right now individual product worth Rs 25000 only could be imported or exported. "So far only one trader from Tashigang village has applied we hope in the coming days others too would apply for the code," added the officials. According to sources, last year around 18-19 traders had crossed over to China with their goods while from China side not even a single trader entered this side. "Indian traders are allowed to go upto Shipki village of China only from there it is Chinese villagers who travelled inside China to 200-250 km to bring the goods listed by Indian traders," sources said.

In past trade through Shipki La has remained very low with import turnover remaining around Rs 10 lakh while export turnover remaining between Rs 7 to 8 lakh. With the introduction of code system officials expect business across the border to rise as goods of large value would be exchanged. This year union government has added five more items in the import list while seven new items have been added in the export list. Kinnaur district industries corporation, general manager, Sarchander Negi said that once code is obtained, traders could import or export goods without any upper limit and without paying any custom duty.

"This would make the trade more lucrative and boost the trade prospect in future as more items have been added in the import and export list," he added. Trade between India and China is conducted through Namgya Shipki-la village in Pooh sub-division of Kinnaur along the Namgya-Shipkila-Shipki Jijubu land route. Traders mostly from border villages of Kinnaur district carry their stocks on mules to China.

While Indian traders carry items like agricultural implements, blankets, copper products, clothes, textiles, cycles, coffee, tea, barley, rice, flour, dry fruit, dry and fresh vegetables, vegetable oil, gur and tobacco, they return with items like jackets, shoes, crockery, flasks, goats and Chumurthi horses. Box: Trade across the border is allowed with prior permission from June 1 to November 30.

As initial three months are consumed in completing the formalities actual trade takes places in the months of September, October and November. Traders had to get border trade pass which is issued only after Special Investigation Bureau scrutinizes the applications.

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Indian investment in Bangladesh garment sector to zoom

The investment by Indian companies in Bangladesh garment sector is bound to surge as Indian firms try to take advantage of the lower production cost in the neighbouring country.

It is estimated that Indian textile and garment companies have already invested Rs. 30 billion (US$ 600 million) in Bangladesh during the current fiscal 2011-12, and this investment is likely to rise significantly.

Last year, the Indian Government took a decision to permit import of 48 textile and garment items from Bangladesh at zero-duty. This has also contributed to the increase in investment by Indian firms in Bangladesh. Some Indian companies are even or relocating their production base to Bangladesh.

A major advantage to Indian companies investing in Bangladesh would be with respect to the cost of labour, as minimum wage there is just Rs. 1,700 compared to the minimum wage of Rs. 5,000 in India.

Garment imports from Bangladesh to India increased around three-times to US$ 22 million during the first six months of current fiscal.

Speaking to fibre2fashion, Mr. A Sakthivel, Chairman of Apparel Export Promotion Council (AEPC), said, “A lot of Indian companies have already invested and are going to invest more money in Bangladesh garment sector, because producing goods from Bangladesh will work out 20 percent cheaper for them.”

“The rise in Indian investments in Bangladesh, along with a surge in garment imports from Bangladesh is likely to negatively impact India’s garment exports. Moreover, Bangladesh companies may also enter and compete in India’s domestic market,” he added.

To protect India’s interests, he suggested, “The Government of India can do two things. First, the 10 percent excise duty on branded garments should be removed immediately. Secondly, the Government should insist that Bangladesh should use only Indian origin yarn or fabric to produce the garments which come to India.”

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China's economic policies under fire from world deciders

DAVOS, Switzerland: Political leaders, central bankers and financiers at the World Economic Forum have attacked China's monetary and trade policy and questioned its ability to tackle an overheating economy.

Top Chinese officials face an increasingly difficult task insisting that Beijing is acting in the interest of the world economy by keeping its yuan currency weak against the dollar and maintaining a huge trade surplus - US$196.1 billion in 2009.

Even in a keynote speech on the first day of the Davos forum on Wednesday, French President Nicolas Sarkozy made a veiled attack against China, saying festering trade imbalances were harming economic recovery.

"Currency is central to these imbalances," he said.

"Exchange rate instability and the under-valuation of certain currencies militate against fair trade and honest competition," he stressed.

"Persistent external imbalances" was also raised by Ibrahim Dabdoub, who heads Kuwait's central bank.

"Somehow we have to tackle this part of the imbalances. We have to tackle the imbalances between China and the US, and the Gulf oil exporters and the US," he said.

Billionaire financier George Soros added to the calls from Europe and North America for China to allow its currency to appreciate.

"The case for revaluing the renminbi is getting stronger and stronger," he said, insisting that a stronger yuan would be "good for China and the rest of the world".

Soros also expressed scepticism about whether China would beat asset bubbles building up in its economy.

"The jury is out," he said of China's efforts to contain high property prices and credit. The campaign will be "a major test for the Chinese government".

China's economy has been expanding at red-hot pace, but the growth rate of the property and stock markets has heightened inflation fears which have already forced Beijing to cut bank lending to deter a consumer splurge on cars and property.

Ahead of a keynote speech Thursday on the financial crisis and reforms by Vice Premier Li Keqiang, defending China in Davos has been left to the deputy chief of the central bank Zhu Min.

"It is very important to have a stable yuan particularly in this very volatile market," he said. It was "good for China, it is also good for the world."

Zhu said the cheap US dollar was encouraging trading that could bring a repeat of attacks on Asian currencies during the region's financial crisis of the 1990s.

Investors are borrowing dollars and putting the borrowed funds into emerging markets, where interest rates are higher, generating a better return than saving in the dollars, said Zhu.

This phenomenon, called the "carry trade" is a "massive issue today", he added. "It is bigger than the Japanese yen carry trade 12 years ago."

He urged the United States to tighten its lax monetary policy, making borrowing more costly. Funds could then flow quickly out of emerging markets, back into the US market.

This could cause a collapse in emerging market currencies and spark a repeat of the 1997-1998 Asian financial crisis, some experts said.

Then, investors borrowed the cheap Japanese yen to put into Southeast Asian economies, fuelling strong growth before exports slumped amid a global demand slowdown.

Speculators attacked Southeast Asian currencies, believing they were overvalued. Thailand abandoned its fixed exchange rate to the dollar. Other currencies followed and crashed under crippling debt and soaring interest rates.

"It is what we learnt from the Asian financial crisis. Because the yen went back to the Tokyo market," said Zhu.

"Everyone is concerned about the direction which the capital flow will move. It is an absolute real risk for the year," he said.

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Dissatisfied with China on Indian exports, govt issues strong demarche

For the first time ever, India has issued a demarche to China on an economic issue. The stern diplomatic protest follows the dissatisfaction over the lack of specific commitments offered by the Chinese government to facilitate export of Indian goods and services to the latter, which are increasingly coming under various restrictions.

The unusual move was taken by India at the conclusion of the meeting of the Joint Economic Group of the two countries in Beijing on Tuesday. The Indian commerce ministry handed the demarche to its counterpart in China listing specific items on which India expects China to take urgent action soon.

Unlike official negotiations where documents are exchanged in advance, the contents of a demarche are unknown to the other side, until it is delivered.

The Chinese were, according to sources, taken by surprise by India’s move. At the base of India’s concern is the sharp rise in trade deficit with China from $1.08 billion in 2001-02 to $ 22.05 billion on 2008-09, that both industry and government believe is exacerbated by the barriers the Middle Kingdom has imposed on exports from India. The Indian government’s move shows that it is very serious about correcting the trade imbalance between India and China. The country is India’s top trading partner.

When contacted, commerce secretary Rahul Khullar confirmed that such a demarche had indeed been delivered to the Chinese ministry of commerce. Recently the US has issued a demarche to China on the Google issue, but India has never pursued its trade dispute with any country to this extent.

According to government sources, the following sector specific issues are listed in the demarche. In order of priority, right at the top is the demand to ‘allow immediate market access for all the remaining 14 fruits and vegetables’ whose import from India is still restricted. Next, is a demand to ‘lift the ban on Indian export of de-boned and de-glanded bovine meat’ and to ‘clear the way for Basmati rice exports’ from India.

The demarche also demands “removal of ‘local content requirement’ and recognition of the international IPR registration regime in order to create favourable investment environment in wind/non-conventional energy”. Suzlon in particular has expresses serious concern about barriers in this sector.

India has also requested landing rights and uplinking facilities for Indian TV channels. Zee TV is very keen on access to China. The document also urges greater access for Indian films in the Chinese market.

In pharma, another industry which has repeatedly expressed concern about problems in China, the commerce ministry wants ‘complete removal of procedural bottlenecks which delay introduction of Indian drugs in Chinese market.’ India also wants China to ‘remove tariff and non tariff barriers on import of power plant equipment and allow sufficient export of met-coke every year, without imposing any export duties, to meet requirement of Indian industry.’

In terms of general, non-sectoral action, the government of India wants China to ‘encourage state owned enterprises in that country to source more value added goods from India.’

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India refuses re-export provision Nepal may not sign treaty

KATHMANDU, Aug 17: Nepal could defer signing of the Treaty to Control Unauthorized Trade, which was scheduled during the Nepal's Prime Minister´s upcoming visit to India, after New Delhi declined Nepal´s request to recognize re-export of third country goods through the authorized agents in Nepal.

A high-level government source said if the two countries fail to iron out the differences over the treaty, it would adversely affect the renewal of the Nepal-India Trade Treaty.

Nepal has already agreed with India to allow the entry of third country goods imported from international agents based in India. "We want the provision in the renewed treaty to be reciprocal. We are still busy in negotiations through diplomatic channels," said the source in Nepal, but added that there was stiff resistance from India in this regard.

Previously, the two sides had agreed that the provision would be reciprocal. However, the problem surfaced after New Delhi pointed out the possibility of trans-shipment of goods to its territory from Nepal even if there were no official agents in Nepal.

Despite the latest problem, India has agreed to Nepal´s request to allow temporary re-export of machinery tools to India for repair and maintenance. This facility was absent in the previous bilateral treaties.

Bilateral trade treaty, which the two governments will update during the prime minister´s upcoming visit, is widely expected to boost Nepal´s export to India as it categorically binds India not to impose state duty and non-tariff barriers on Nepali goods. The proposed revised treaty will remain valid for the next seven years.

Imposition of non-tariff and extra-customs duties, which debilitated Nepal´s competitiveness, has badly been affecting Nepal on the exports front. Sharp rise in consumption, on the other hand, has caused its trade deficit to widen to more than Rs 108 billion.

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China warns of tit-for-tat over dairy ban

NEW DELHI: China has retaliated against India's ban on its dairy products, putting the two neighbours with a legacy of estrangement on the brink of a trade war.

China is annoyed with India's decision to extend the ban on its milk and milk products, which expired on June 24, by another six months until December 24. It has threatened to ban Indian products in retaliation.

In a letter to the Indian embassy, general administration of quality control bureau of China said, "During the period of financial crisis, we are strongly against trade protectionism of any form. As a member of BRIC and WTO, we hope your party determines the prohibition towards China's dairy products ASAP, in the spirit of safeguarding bilateral trade."

It added, "If India insists on this decision, China will respond to the safety and quality of imported products from India."

According to commerce ministry officials, China has raised doubts about food products imported from India, including seafood products, dairy products and sesame oil to pressurise India to lift the ban. "China has also taken a moral high ground by saying that it has not banned import of these Indian products," an official said.

Arguing for lifting the ban, China pointed out that after the milk scandal, it had taken several measures to deal with the problem and highlighted that these measures prompted countries like Singapore, Malaysia, Thailand and Chile to lift the ban on Chinese dairy products.

China has asked India to provide the scientific basis and risk assessment under the WTO/SPS agreement to enforce the ban on its products.

"The Chinese side shows grave concern because the ban is extended in India while it is removed in other countries. The reaction in India, regardless of the efforts and achievements by Chinese government, differ from good cooperation between both sides, lacking scientific ground and against scientific principle, the transparency principle and the minimum impact on foreign trade principle stipulated in WTO agreements," the letter said.

The ban on dairy products was extended for six months to ward off any threat of contaminated whitener which had caused deaths of several infants and made several thousands ill. A notification to this effect was issued by the Directorate General of Foreign Trade (DGFT).

India, in September 2008, had banned Chinese milk and its byproducts for three months which was later extended in December last year for six months. Melamine, used to make plastics and fertilisers, was found in infant milk and other dairy products of several Chinese firms. The dangerous chemical can cause kidney stones as well as failure of the organ.

More than a dozen countries in Asia and Africa had also banned milk and dairy product imports from China, while several others had recalled products suspected to be contaminated.

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Nepal asks India for trade treaty with longer shelf life

Kathmandu (IANS): India and Nepal are seeking to update their nearly 60-year-old trade treaty with the new draft expected to be ready before India goes to staggered polls from April 16.

The draft will be signed into a fresh agreement by the new federal government that comes into being in India in June, officials said.

At the end of the two-day bilateral talks in Kathmandu to review the 1950 treaty that has to be renewed in 2012, Nepal is seeking to increase its time span.

"Currently, the Treaty of Trade has to be renewed every five years," Surya Prasad Silwal, joint secretary at Nepal's commerce ministry who headed the Nepali delegations during the talks, told IANS.

"It was last renewed in 2007 and will continue for five years.

"However, Nepali investors feel five years is too short to gauge the investment climate and set up a venture, which takes nearly four years.

"Nepal is asking for the treaty to be extended to 10 years from now on."

The proposal will now be discussed by the commerce secretaries of both countries.

The talks that ended Friday have come up with other major agreements that are expected to boost Nepal's bilateral trade with India, reduce its ballooning deficit and curb the rampant smuggling due to the open border that causes both sides to lose billions of rupees in revenue every year.

The Agreement of Cooperation between India and Nepal signed in 1972 to control unauthorised trade is now poised for a sea change.

Till now, the pact prevented each from re-exporting third country goods imported from each other. But now, except for forbidden items, the curb will be lifted.

India and Nepal have also agreed to open new trade routes. Now India will throw open four air routes via airports at New Delhi, Mumbai, Chennai and Kolkata. In addition, two more land routes via Brahmadandi and Tanakpur in the west are also in the pipeline.

Nepal has won a significant victory with India agreeing to simplify the cumbersome duty refund procedure.

Now Nepal, which trades with India using mostly the Indian and Nepali rupee, will get the same benefits that India gets from its dollar trade with other countries, including zero excise duty and tax rebate.

India has also agreed to review its quota for three Nepali export items. In the past, these included vegetable ghee, acrylic yarn, copper and zinc oxide.

The changes started with vegetable ghee. Earlier, India's State Trading Corporation was fixed as the canalising agency that determined which Indian states would receive how much of the over 100,000 metric tonne of vegetable ghee that Nepal is allowed to export annually.

Now however, the canalising agent's place has been taken by a Nepal government body and exporters are free to choose the Indian states they want. A similar review of the other three products is also to begin.

The next meeting between the commerce secretaries of both countries will be held in Kathmandu, which will finalise the new draft of the revised treaty and forward it for the final assent to the commerce ministers.

India is land-locked Nepal's dominant trading partner, accounting for over 65 percent of Nepal's outside trade. But while the Himalayan republic exports goods worth about NRS 43-44 billion to India, the imports exceed NRS 100 billion.

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China gears up for heavy unemployment as it more than halves export target

BEIJING: China has revealed it is facing a stark employment situation with export oriented factories finding it difficult to survive the
financial crisis. The government has dramatically scaled down its target on foreign trade to eight per cent in 2009 against the 17.6 per cent achieved last year.

India has set an export target of 25 per cent for 2008-2009 and most economists say New Delhi will miss the target by five to 10 per cent. Though India's export base is much lower compared to China, it seems that the leadership is Beijing is much less confident about foreign trade than earlier years.

Export oriented companies employ between 70 million and 80 million people, the National Development and Reform Commission has said. There are indications of large unemployment loss this year on top of the 20 million job losses that has taken place by February.

A favourite theme of Chinese premier Wen Jiabao is to encourage domestic spending in order to support companies losing export orders and consequently shedding jobs.

He has now offered 103.3 billion yuan ($15 billion) to subsidize purchases of home appliances, vehicles, stocks of grain, petroleum, nonferrous metals and specialty steel products by the rural population.

Many Chinese exporters are nervous about taking fresh orders because foreign buyers have stopped paying in time. Uncollected bills from US buyers have gone up two to three times since January as compared to the same period last year.

The government has promised to create nine million new jobs and offered wide ranging sop to counter the political fallout of the economic slowdown. There will be a 20.2 per cent increase in allocation for assisting agriculture and farmers and a 29.9 per cent rise in the allocation on education, medical and health care, the social safety net, employment, low-income housing and culture.

An interesting aspect of the Chinese strategy against the crisis is to help companies equip themselves with the latest technology at a time when equipment and new technology is available in world markets at cheap rates. The government has raised the allocation on science and technology by 25.6 per cent. It is also offering 20 billion Yuan ($3 billion) in interest rate subsidy for companies buying new equipment.

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Education Tax on duty-free: RMG export to India from Bangladesh

(BSS, Dhaka); RMG exporters to India have complained of a number of impediments severely impacting the supply of 8.0 million pieces of duty-free garments started under SAFTA framework from the middle of last year.

Some exporters in writing informed the Export Promotion Bureau (EPB) of the snags recently, official sources here said adding the agency in turn has passed the complaints to the Ministry of Commerce seeking solution of the problems.

These exporters said India is collecting VAT and special VAT from what it declared duty free import in addition to education taxes on two counts and wondered how the merchandise remain duty free true to its purpose.

Under the circumstances, the EPB sources said exporters who initially showed great enthusiasm to RMG exports to India have already lost interest while new exporters are coming only in small numbers.

The situation indicates that the annual 8.0 million pieces export quota may thus remain largely unutilized and even come to slow death if the snags continue. The Indian government agreed to offer this special privilege to Bangladesh to help narrow its staggering trade imbalance with India.

RMG export figures from January 1 to February 23 showed that the so-called duty free export to India stood at around 1.56 lakhs during this time compared to 18.53 lakhs over the seven months from June to December.

In fact the snags hit the exports as soon as it started picking up following the Indian government application of internal duties; which altogether stood at 18 percent even minus the 10 percent duty exempted at import stage.

The sources said, last year exporters had applied for duty free quota certificates of 36.5 lakh pieces of garments but in reality collected only half of it as the Indian importers slowly become reluctant to secure supply having high internal duty on them. Sri Lanka witnessed similar snags, said an exporter questioning the Indian inward looking mind-frame. 'If you are not opening your mind, no duty free arrangement will work,' said an exporter explaining the situation.

So the new export initiatives under the scheme is only slowing down as only few new exporters are taking interest to export RMG to India while they have ready market in Europe and America, said a business source.

The Indian government is reportedly saying as information suggest, it has only removed the basic import duty at 10 percent on RMG import from Bangladesh. But other internal duties have remained in place.

Duties which the Indian government is collecting on Bangladesh apparels include central government VAT, Special central government SCVAT, secondary education tax (ETS) and higher secondary education tax (ETHS)- altogether 18 percent, exporters said.

"BGMEA president Anwarul Alam Chowdhury blamed poor negotiating capacity of the Bangladesh for the problem saying it should have made sure that duty free means no duty at all.

Now it appears that most duties have remain in place, he said. .

Exporters have also listed many non-tariff barriers. They alleged that customs officials on the Indian side raise question on the credibility of invoice value relating to export documents and often apply duty several times higher than the real value.

Very often they keep trucks loaded with export consignment stranded at the check post unattended for hours and exporters have to pay additional charges on hourly basis.

Indian government officials handling duty free export moreover, create unnecessary problems looking for small faults with export documents and sending it back to Dhaka for correction if they find some shortcoming.

Consequently the exporters have to pay demurrage charge bringing inconveniences to both exporters and importers, they said. Exporters said buyers at Hariyana, Mumbai, Kolkata and especially in northeastern states of India are taking big interest in knitwear, trousers, ladies shirts and pants made in Bangladesh.

But the question remains whether the Indian buyers can take this opportunity while the exporters are wondering whether the duty free scheme under SAFTA arrangement can over live the troubles.

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China’s Imports, Exports Plunge on Global Recession

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

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

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

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

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

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

Toys, Electronics, Steel

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

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

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

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

U.S. Consumer Spending

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

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

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

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

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

Currency Manipulator?

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

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

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

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

Ban on Chinese Toys

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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China warns India on banning toy imports

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

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

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

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

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

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

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Import of Indian drugs blocked by Pak govt

ISLAMABAD: Pakistan government has blocked a proposal for importing 400 medicines from India following intense lobbying against the move by the local pharmaceutical industry.

The proposal forwarded by Pakistan's commerce ministry was stalled ahead of an expected hike of upto 40 per cent in the prices of life-saving drugs in the country.

Prime Minister Yousuf Raza Gilani has reportedly issued a direction that no drug produced in Pakistan should be imported. Gilani also sought justification for importing from India 13 vaccines and some oncology drugs that are currently not produced in Pakistan, sources told a newspaper. However, the import of these vaccines and oncology products will continue.

Health Secretary Khushnood Lashari will meet Commerce Secretary Asif Shah to ensure that the proposal for importing Indian drugs is closed. Sources in the commerce ministry had leaked information about the proposal to import Indian drugs to the local pharmaceutical industry, which used its "contacts" to pre-empt the move, the daily said.

Local entrepreneurs contended that the proposed imports would threaten the jobs of over one million people, affect annual exports worth more than $120 million and compromise the availability of medicines during emergencies. Pakistan's pharmaceutical industry is worth Rs 83 billion and enjoys considerable political clout.

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Bangladesh exports garments to India duty free for first time

DHAKA: Bangladesh has exported garments to India for the first time under a duty-free access deal seen as a breakthrough for the country's fast-growing textile industry, an official said on Monday.

Neighbours Bangladesh and India signed the deal last September, allowing Dhaka to annually export eight million garments duty-free across the border, an agreement hailed by New Delhi as a "milestone" in trade relations.

"Our companies have for the first time in history shipped garments to India this month under a duty-free access deal," said Anwar-ul Alam Chowdhury Parvez, president of Bangladesh Garments Manufacturers and Exporters Association.

"We've exported a small quantity, but it's a giant leap for the industry. It is projected that India's ready-made garments market would top 100 billion dollars by 2012. Our target is to get a slice of this huge market," he added.

Bangladesh, which has a two-billion-dollar trade gap with India, last year exported more than nine billion dollars of textiles, mainly to the United States and the European Union.

The country's textile export market is growing rapidly, spurred by a weak Bangladeshi currency and a sharp increase in production costs in China and Vietnam, its main global rivals.

The improvement in trade relations comes against a backdrop of sometimes tense relations between the neighbours.
India helped Bangladesh win independence from Pakistan in 1971 but ties in recent years have often been soured by border skirmishes for which both sides blame the other.

Indian officials regularly accuse Bangladesh of harbouring militants fighting New Delhi's rule in India's far-flung northeast.

Dhaka denies the charge and says New Delhi allows Bangladeshi criminals to take refuge on its soil.

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India replaces China as top exporter to Bangladesh

DHAKA: India has regained its position as the number one import source for Bangladesh, beating China, in the first nine months of the financial year ending June 30, official figures said.

This is mainly due to large-scale imports of rice and onion from India after Bangladesh faced a series of natural calamities last year.

Besides, analysts said, India, as the current chair of the South Asian Association for Regional Cooperation (SAARC), has also gone out of its way to woo the least developed countries among the member-nations, of which Bangladesh is one.

China has been the number one import source for Bangladesh during 2005-06 and 2006-07.

"India is set to dominate the Bangladesh market as importers here are shifting from China," a senior commerce ministry official was quoted by the New Age newspaper as saying.

Bangladeshi importers find imports of essentials from the next-door neighbour convenient in many ways, he said.
Bangladesh Bank's figures showed the country imported Chinese goods worth $2,292.12 million during July-March of the current fiscal year that ends this month-end.

The amount was 15 percent of the country's total imports during the period.

But imports from India figured $2,454.83 million or 16 percent of overall imports.

Bangladesh imported $14.64 billion in merchandises in the nine months between last July and March this year.
Food items, especially rice, onions and fresh fruits accounted for the bulk of imports from India.

Traders said surging inflation in India and China were pushing up prices of imports from these two Asian giants, which account for more than 30 percent of Bangladesh's imports.

Indian annual inflation rose to a 14-year high of 11.42 percent for the week ended June 14, while Chinese annual price inflation hit 7.7 percent in May, a 12-year high.

Bangladeshi imports from India amounted to $2,226 million in 2006-07 fiscal year, against $2,537 million-worth imports from China during the same period.

In 2005-06 fiscal, Bangladesh imported Indian goods worth $1,846.91 million while imports from China stood at $2,050.99 million. Once again, the two countries shared about 30 percent of Bangladesh's total annual imports that year.

Until the 2004-05 fiscal, India had been traditionally the biggest source of Bangladesh's imports, mainly foods and raw materials for many industries, including apparels.

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Pak promises to expand list of items to be imported from India

NEW DELHI: Pakistan on Thursday promised to enhance the list of items that can be imported from India while making a case for level playing field for trade between the two countries.

"We have the request to increase the positive list... We will certainly be taking a positive view once we take a final position on enhancement of positive list (of trade with India)," Pakistan commerce secretary Syed Asif Shah said while addressing Ficci members here.

Underlining the need for a level playing field with regard to trade between the two countries, he said, even today 30 per cent of tariff lines are in the positive list and covering most of the products.

Quoting a World Bank report, Shah said that trade worth almost $1 billion between India and Pakistan was being routed through other countries. This circumvention of trade, he added, could be avoided to the mutual benefit of both the countries.

Replying questions on facilitating trade through land route, he said, facilities on the Pakistani side were almost ready while India would take about two years to build infrastructure to take load of increased trade.

Shah said a lot of progress have taken place since the beginning of composite dialogue between the two countries three-four years ago.

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India, Myanmar ink four pacts, including BIPA

NEW DELHI: India will finance power transmission lines in Myanmar, with which it has also signed an investment protection agreement to boost economic ties.

India and Myanmar signed four agreements today at Naypyidaw, including regular banking arrangement for border trade.

The two countries have entered into a Bilateral Investment Promotion Agreement (BIPA) to encourage flow of funds. The trade pact with Myanmar is India's 71st BIPA agreement.

It provides a framework for resolution of disputes, promotion and protection of investment, extending national and Most Favoured Nation treatment, repatriation of investment and returns and entry and sojourn of technical and managerial personnel, an official statement said here.

The agreements were signed in Myanmar in the presence of Minister of State for Commerce and Power Jairam Ramesh and Myanmar Minister for National Planning and Economic Development U Soe Tha.

Under another agreement, the Exim Bank of India would extend a credit line of 64 million dollars to the Myanmar Foreign Trade Bank for three 230 kv transmission lines. The project would be executed by Power Grid Corporation of India.

Exim Bank would also extend a credit line of 20 million dollars for financing establishment of an aluminium conductor steel reinforced (ACSR) wire manufacturing facility, which would be used for expansion of the power distribution network in Myanmar.

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Sino-India border trade at Nathu La postponed

GANGTOK: The annual Sino-India border trade at Nathu La, which was to be reopened for the traders of the two countries today, has been postponed following the Union Commerce ministry's communique to the Sikkim government authorities, official sources said here.

We have received a fax message from the Union Commerce ministry late last evening informing about the postponement of the re-opening of the border trade at Nathu La, the District Collector (East) Vishal Chauhan said.

The re-opening of annual trade at Nathu La may take place on May 19 next, he said.

The district administration would continue with the processing of the applications of the Indian traders for issuance of the travel and security passes to them in order to enable them to take part in the border trade this year, Chauhan said.

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Nathu la Sino-India trade to from May 1

The annual trade between the traders of India and China at Nathu La would start from May 1 this year, a Sikkim government official said today.

"We are in the process of verification of the applications of the traders before issuing them passes for participation in the trade at Nathu La," the District Collector (East) Vishal Chauhan told PTI here.

A function would be held at Nathu La frontier to mark the formal inauguration of the annual trade on May one and thereafter, the traders of the two countries would participate in trade of various commodities as per the list of goods released by the two countries for export and import, he said.

Meanwhile, the Indo-China Traders Association of Sikkim (ICTAS) demanded an upward revision in the number of items to be exported by the Indian traders at Nathu La mart in order to make the business financially viable for the traders.

"We had put up a demand with the union commerce ministry for an increase in the list of items from the present 29 to 100 in order to make the border trade more viable for our traders," the ICTAS president Anil Kumar Gupta said.

The low volume of business was the major concern of the Indian traders over the past two years which should be addressed by the concerned authorities by expanding the lists of items, he said.

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China may ask PM for FTA on his Beijing visit

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

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

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

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

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

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

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