New basmati definition to boost Indian exports

MUMBAI: India's proposal to expand the definition of basmati rice is likely to shore up India's position as the world's top basmati exporter and raise the number of varieties of aromatic rice exported, industry players said.Last week, junior federal farm minister Kanti Lal Bhuria said the new definition plans to do away with the condition that one of the parents should be a traditional basmati variety for the progeny to qualify as basmati. The proposal is with the commerce ministry for consideration. "There is a very strong possibility that India would be able to get an additional 10-15 per cent share in the international market after this move," said Gurnam Arora, joint managing director of basmati exporter, Kohinoor Foods Ltd .

The global market for basmati, a fragrant rice traditionally grown in the Himalayan foothills, is controlled by just two players, India and Pakistan. India has 67 per cent of the market. A re-definition could lead to more non-traditional varieties entering the basmati basket, giving consumers a wider choice of aromatic rice varieties and push demand, industry players said. "With more varieties available on the basmati front itself, the lower-end segment would probably move to these varieties," said Danish Beg, assistant financial controller at exporter REI Agro Ltd.

"A transition will happen from non-basmati to basmati." The non-traditional varieties will attract new buyers as they will be priced lower. The move is also likely to affect Pakistani exports, a large part of which are of the non-traditional variety, industry players said. "This gives India strength. We will be able to get into Pakistan's share," said Kohinoor's Arora.
Exporters expect such a move to provide higher revenue. For REI Agro, it could mean exports in 2007/08 forming a larger share of its sales, at 25 percent, from 18 percent last year, Beg said. Kohinoor, too, hopes to grow its branded basmati exports 20-22 per cent over last year's 1.1 billion rupees.

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Global automakers jostle for place in India's hot auto market

FRANKFURT, Germany: Global automakers on the hunt for new and lucrative markets are jostling for a place in India, where the car market is growing at an average of 20 percent a year, outpacing even China.

Getting a foothold in the giant country and economic powerhouse can be a tricky affair — the key to success lies in keeping the price ticket low, squeezing margins. Still, that is not deterring automakers like Renault, Hyundai and others from trying.

"Not being in India would be a huge strategic mistake," Nissan Motor Co. Executive Vice President Carlos Tavares told The Associated Press on the sidelines of the Frankfurt auto show. "It's an investment for the future."

Indian car sales totaled 1.1 million in the year ended in March, with compact hatchbacks accounting for nearly three-quarters of that. Though that number pales in comparison to China, the market is growing much faster.

India's demanding, frugal consumers want inexpensive and fuel-efficient cars, durable enough to withstand potholed roads and roomy enough to fit a family of five or six. Plus, of course, an arctic-level air conditioner.

Nissan has lagged behind its Japanese rivals in tapping opportunities in India, both as a market and as a manufacturing base.

Leading Japanese automakers, including Toyota Motor Corp., Honda Motor Co. and Suzuki Motor Corp., have significantly expanded their operations in India in recent years.

Nissan made its first move to enter India this year, signing up for a passenger car venture with its partner, Renault SA of France and Indian automaker Mahindra & Mahindra Ltd.

The three are building a large plant near the southern Indian city of Chennai, which Nissan would use to manufacture and export compact cars to Europe.

Renault CEO Carlos Ghosn said Tuesday that construction at the plant isn't likely to start before 2008, with production expected to begin in 2010.

Spurred by Tata's ambitions for a super-cheap car, Nissan and Renault also are exploring the viability of a sub-US$3,000 (€2,175) vehicle.

Renault is talking with Indian automaker Bajaj Auto Ltd. about a possible alliance to manufacture such ultra-cheap cars. Bajaj Auto, based in the western Indian city of Pune, is one of India's leading manufacturers of motorcycles and motorized rickshaws, but has no experience making cars.

Given import taxes that exceed 100 percent, carmakers looking to break into the Indian market need to think about producing locally.

India has a competitive advantage over China, as the Indian government allows carmakers to establish 100 percent owned local subsidiaries, an option chosen by companies like General Motors Corp., Hyundai Motor Co. and Ford Motor Co. In China, local partners are mandatory.

South Korea's Hyundai developed the Santro for the Indian market, designing extra head room for turbaned passengers and paying more attention to the back seat, where the owners of Indian cars often sit, Hyundai spokesman Thomas Rauh told The Associated Press,

Hyundai's Indian unit has shifted its entire production of the Santro, known outside India as the Atos Prime, to the southern Indian town of Sriperumbudur, just outside the port of Chennai.

A third of the cars produced at this plant are exported to 68 countries, from neighboring Sri Lanka to faraway Mexico. By October, Hyundai will complete a second factory nearby, doubling annual production to 600,000 cars — most of them compact hatchbacks that sell for about US$7,000 (€5,080).

Rauh said car makers once questioned whether Indians were interested in making quality cars, long considered a luxury in this once-socialist style economy. Now, Hyundai is focusing on making cars for affluent Indians and for export, leaving others to fight for the lower end of the market.

"It's a dogfight down there," he said. "It would not help us to go downmarket."

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US unlikely to withdraw WTO wine case soon

Unlike the EU, the US does not seem to be in a hurry to drop its case against India’s alleged high import duties on wines and spirits at the World Trade Organization (WTO).Although, India brought down import duties on foreign liquor in July this year to levels committed at the WTO, US officials say that the case would be dropped only after the country is satisfied that the local levies that state governments are planning to impose on imported liquor are not discriminatory. India, in the meanwhile, is planning to approach the WTO dispute settlement body with a written submission justifying the measures which the US has complained against.

Speaking to ET, sources from the commerce ministry said that there was no reason for the US to continue with its case against India at the WTO. “The EU and the US had a point when they complained that India’s import levies on liquor is higher than what the country’s commitment is at the WTO. That is why, after much deliberation, India removed all additional customs duties on wines and spirits. There is no reason why the US should continue with the case now,” an official said.

India removed additional Customs duties on wines and spirits in July following disputes filed by the EU and the US against the high duties at the WTO. The EU and the US had claimed that although India had bound its duties on wines and spirits at the WTO at 150%, the aggregate duties were much higher ranging from 177.33% to 264% for wines and from 252.22% to 550% for spirits.

The US, however, seems to be in a mood to wait and watch how things unfold. A US government official, who did not want to be named, told ET that the country had some apprehensions about the local taxes which the state governments were planning to impose on imported liquor.

So far, the local levies imposed by states on foreign liquor was just a fraction of the levies imposed on domestic liquor. However, now that the Centre has removed the ACD, the states have plans of imposing local levies on imported wines and spirits at par with domestic liquor.

Justifying the move, Indian officials say that as long as the state levies on imported and domestic liquor are the same, the criteria of national treatment was being maintained and there was nothing the exporting countries could complain against. US officials, on the other hand, maintain that they would first like to be sure that there is no discrimination against foreign liquor before taking back the case.

India now plans to send a written submission to the WTO, pointing out that the case filed by the US against India was not justified any more. The country is hoping that the WTO would convince the US to drop its case.

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India not reckless in CECA talks with ASEAN

NEW DELHI: New Delhi appears to have now responded to the ASEAN’s indifference to its perceived alacrity to conclude the Comprehensive Economic Cooperation Agreement (CECA) talks, commerce minister Kamal Nath stayed away, despite being an invitee, from the ASEAN+three economic ministers’ annual meeting held at Makati City, the Philippines, on August 26, even as Chinese, Korean and Japanese ministers participated to further their trade talks with the union.

Commerce ministry officials here say with Malaysia and Indonesia, two most influential ASEAN members, remaining firm in their opposition to India’s special list of five products for which it wants less rigorous tariff cuts, even the initial agreement of trade in goods was unlikely to be signed at the ASEAN-plus-one summit in Singapore this November.

“To be optimistic, there could be a joint statement at the summit that the talks have been concluded,” said an official. When asked how this statement would be different from the joint pronouncement earlier this year that talks would be concluded by July, he said, rather evasively, that this (the likely November statement) would be clearer, “the two sides would say the negotiations are through, the texts are ready...”

The possibility of even such joint statement, according to the official, however, hinges on both sides “showing a lot of intention to quickly wrap up things.” Of course, even if the heads of governments affirm their resolve, it would take at least a couple of months more for the governments to draft the agreement and get domestic approvals.

The differences are now over the extent of tariff cuts the agreement would mandate on palm oil (crude and refined), coffee, tea and pepper. India wants to treat these products as “special”, considering the domestic sensitivities. India’s plantation lobbies and their political patrons indeed wouldn’t tolerate tariffs on these items to fall sharply.

So what about the negative lists (for items that are to be wholly outside the free trade pact) which have so far kept the two sides not seeing each other eye to eye? Sources say the two have now more or less patched up on this front, thanks to India’s climbing down. Both sides would maintain negative lists of 490 items (for each ASEAN member, there would be separate lists of the same strength).

To be specific, ASEAN wants Customs duty on crude and palm oil to come down to 20-25% at least while New Delhi would not budge: it is firm on 50% (crude) and 60% (refined). Similarly, ASEAN says duty on coffee and tea should be pared to 20% from 100% now and that on pepper from 70% to 20% while, again, India asserts the duty can’t be cut to less than 50% in these cases.

In addition, when it comes to negotiating trade in services and investment liberalisation, the Indian interlocutors have become considerably more demanding. “We want Asean to be more accommodative in the financial sector, permission for our banks to establish/expand their presence by opening of branches, etc,” said the commerce ministry official.

India wants its medical, engineering, computer and para-medical professionals to benefit from the liberalisation while ASEAN’s interest is to get opening in India for their convention and exhibition firms and other contractors.

New Delhi has flagged the idea of the agreement on trade in goods immediately following the comprehensive pact covering services and investment. “The agreement in services should happen in a maximum of a few months after the pact on goods,” said the official.

The Indian policymakers reckon that in services, the country’s comparative advantage is rather widespread, from health and tourism to law and accounting. Attracting large amounts of foreign investments is considered to be vital for accelerating the now-handsome growth in manufacturing. So free trade in goods is not India’s priority while entering into bilateral agreements and this policy shift has apparently made India less obsequious in the talks with the ASEAN. It is not desperate for a deal.

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Govt to provide legal assistance to sea food exporters

NEW DELHI: The government on Wednesday said it would provide legal assistance to sea food exporters who have filed a suit with the WTO against dumping duties in the US on their exports.

"The matter has been referred to the Dispute Settlement Body of the WTO. Government has also approved engaging an advocate for this purpose," Minister of State for Commerce Jairam Ramesh said in a written reply to Rajya Sabha.

The Sea Food Exporters Association of India has filed suits against anti-dumping order of the US government and enhanced customs bond.

Additional customs bonds were imposed on Indian shrimp imports into the US Exporters from six countries - India, Thailand, Vietnam, China, Ecuador and Brazil - have to execute customs bonds over and above the anti-dumping/countervailing duty to the Customs and Border Protection (CBP) of the US for their shrimp export operations.

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Russia to sign draft rules today on Indian sesame seeds import

Kolkata, Sept. 6 The Export Inspection Council of India (EIC), set up primarily to facilitate development of exports through quality control and pre-shipment inspection, is learnt to have been nominated as the agency from the Indian side for signing the draft protocol with Russia for export of sesame seeds.

Sources said the Russian authorities have been urged to lift the restriction on import of sesame seeds from India, once the protocol is signed.

A team from Russia is also expected to visit India during the first week of October 2007 to inspect the laboratories and testing facilities.

The signing of the protocol, aimed at boosting co-operation between the Federal Service for Veterinary and Phytosanitary Surveillance (FSVPS), Russian Ministry of Agriculture and India, is expected to take place on Friday in Moscow.

It is learnt that detailed discussions will be held between the Indian delegation and Russian authorities to ensure quality and safety of sesame seeds exports.

The modalities for lifting the restriction may also figure in the talks.

Import of sesame seeds from India by Russia was restricted some months ago by Russian authorities, who claimed to have detected aflatoxin B1 contamination.

Trade sources said the Indian Embassy had pointed out that as per the contract, the Indian supplier was not asked for any test for aflatoxin B1 and that a copy of the certificate issued by SGS Vostok stating that no aflatoxin B1 was found was enclosed.

According to the Russian authorities, both aflatoxin B1and metallomagnetic admixture were detected.

The Indian side had said utmost care was being taken to ensure quality.

The sources also said that the Indian side has handed over a list of laboratories equipped with the required testing facilities and accredited by the National Accreditation Board for Laboratories (NABL).

It is learnt that in order to ensure safety of sesame seeds, each consignment would be accompanied with a quality certificate issued by a laboratory recognised by India.

The two sides are expected to discuss the detailed format of this certificate at a later stage.

According to the sources, the Indian side has proposed that quality certification by Vimta Specialities and Vimta Labs Ltd be accepted.

The companies had earlier been accredited by Russia in respect of export of sesame seeds.

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China may reduce iron ore imports from India

DALIAN (China): China's iron ore imports, including that from India, are expected to be sluggish this year due to rising domestic supply and decline in the growth of Chinese steel output capacity, industry insiders say.

The country's import of iron ore rose to 187.9 million tonnes in the first six months this year, up 16.46 per cent year-on-year.

Australia continues to be the biggest exporter to China, accounting for 37.95 per cent of the country's total imports, followed by India, Brazil and South Africa.

The output of large and medium-sized mines in China rose 29.28 per cent to 321.28 million tonnes in the first half while the output of small mines was around 50 million tonnes.

"The large scale of mining by domestic steel companies is expected to curb further rises in ore prices," China Daily quoted Mr Chen Xianwen, an official from the China Iron & Steel Association (CISA), as saying at the International Iron Ore Market Semina r in Shanghai yesterday.

"The domestic demand for iron ore is expected to increase around 70 million tonnes this year. Apart from the domestic output growth, of around 40 to 45 million tonnes, we need only 30 million tonnes more from overseas, which rose only nine per cent from last year," said Mr Zou Jian, chairman of the China Metallurgical Mining Enterprise Association, at the seminar.

China is the world's largest steel producer and biggest importer of iron ore. Iron ore is India's No.1 item in the export basket. "Large drops are expected in steel prices in 2009 because of the projected slowdown of world economic growth," Mr Chen said . - PTI

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Pak mills get stay against Indian sugar imports

New Delhi, Sept. 5 The saga involving detention of Indian sugar by Pakistani customs authorities on health grounds is getting more curious by the day.
Public health!

The Pakistan Sugar Mills Association (PSMA) has managed to obtain an interim injunction from a district court in Lahore against import of sugar from India on grounds that “it will cause harm to the health and safety (of) the public.”

But what is interesting is the evidence based on which the district civil judge concerned has issued the order, dated August 30. The order has cited an analytical test report of the Pakistan Council of Scientific & Industrial Research (PCSIR) in respect of a sample of “Indian sugar”, dating back to July 30, 1996.

The report had found the sulphur di-oxide (SO2) content in the said “Indian sugar” at 30 mg/kg, which was below the then European Economic Community (EEC) standard of 15 mg/kg. Further, the sample had an ICUMSA of 131, against the EEC standard of 50 (ICUMSA is a measure of whiteness; the higher the number, the lower the whiteness).
‘Bizarre’ evidence

“This is completely bizarre. First of all, how do you conclude that the product being exported now is sub-standard based on the test result for a sample of so-called Indian sugar of July 1996. The right procedure would be to t ake a sample of the present consignment and get it tested at the PCSIR or other accredited laboratory,” an industry source noted.

Secondly, the EEC standards pertain to refined sugar and not the plantation white sugar that is widely consumed in both in India and Pakistan. “Do the Pakistani authorities mandate the EEC standards for their own sugar? If they do not, then how can they claim that our sugar is hazardous for public health and safety?” the sources wondered.

Moreover, the Indian Sugar Exim Corporation had only last year exported four lakh tonnes (lt) of sugar through tenders floated by the Trading Corporation of Pakistan. “In their tenders, they asked for 100 ICUMSA and not 50 ICUMSA as per EEC standards. We accordingly supplied them 100 ICUMSA sugar. The tenders also mentioned an SO2 limit of 60 mg/kg, whereas we delivered at 25-35 mg/kg. If nothing short of EEC standard is acceptable, the four lt of our sugar consumed by them last year should have caused a health emergency there”, the sources added.

The Pakistani land customs had, late last month, detained the first rail rake consignment of 2,400 tonnes entering through the Wagah border. The sugar, from the Saraswati Sugar Mills at Yamunanagar (Haryana), was imported by Rana Brothers, a Lahore-based firm, which has now been restrained from marketing the consignment.
Stuck at Attari

A second rake, sourced by Swera Traders from the Seksaria Biswan factory at Sitapur (Uttar Pradesh), is stuck at the Attari check post of the Indian side for the last one week. In this case, the Pakistani rail authorities have not even facilitated interchange of the rake, because of other rakes, mainly carrying soyameal, have also been held up.

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HC quashes DGFT order

The Bombay High Court has quashed an order of the Director General of Foreign Trade (DGFT) that rejected a plea from a skimmed milk powder (SMP) exporter to fulfil its commitments to buyers abroad after the Centre imposed a ban on milk and SMP exports on February 9.

In its order, a bench comprising Mr Justice Swatanter Kumar and Mr Justice S.C. Dharmadhikari, asked the DGFT to hear the exporting firm Parag Milk and Milk Products again and allow the exports within three weeks. The Court was disposing of a writ filed by Parag Milk challenging the ban after the DGFT had rejected its plea on an earlier order asking it to consider the firm’s request.

Stating that the DGFT’s order was not in conformity with settled canons of law, the bench said the ban order was not retrospective and, therefore, the firm’s request should not have been turned down.

According to Parag Milk and Milk Products, it had open three irrevocable letters of credit for export of SMP to buyers in Thailand, France on January 24 and 31 this year. It had agreed to supply 1,000 tonnes of SMP each to these buyers every month until May 2007 and February 2008, respectively. Besides, the company said it had expanded its SMP business and it made up 12 per cent of its total exports.

When the company initially moved the Court, the Centre on March 16 was asked to hear the petitioner and pass an order. But the Commerce Ministry failed to pass any order and the court was approached again. This time, too, the court asked the Centre to examine the issue expeditiously following which the DGFT passed the order barring export.

(The ban on milk and SMP exports runs till September 30 but the Centre has eased it after milk prices stabilised.)

The bench said when the letters of intent were issued in favour of Parag Milk, there was no ban in force. Therefore, the petitioner had the right to export SMP. Stating that the expression “export obligation” as defined in the Foreign Trade Policy had to be given a cogent meaning, it said unnecessary restricted meaning should not be attached to it.

Also, the Union Cabinet Committee, while deciding to go for the ban on February 1, had given power to the authorities to examine case-by-case and permit discharge of existing export obligation.

“The authorities concerned in their wisdom retained unto themselves power to permit such export. This, it was not the intent of the authority to operate the absolute ban even in relation to the existing liability,” it said.

Stating that the Government has powers to decide policies and take action, it said these, however, were expected to be in conformity with law and not arbitrary or ultra vires.

The court said the DGFT had refused export permission, despite Parag Milk offering to restrict its shipments to 5,000 tonnes. It, however, did not make any comment on the ban order as the petitioner in his initial writ did not challenge it.

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Curbing DEPB misuse: Export valuation rules soon

New Delhi, Sept. 5 The Finance Ministry plans to soon come up with export valuation rules to ensure that there is no misuse of existing duty entitlement passbook (DEPB) or drawback schemes and also to curb money laundering through merchandise export activities.

Official sources said that the rule making process was at the last and final stage and they would soon be notified. The Central Board of Excise and Customs (CBEC) had in March this year come up with draft export valuation rules.

The exporting community had, however, opposed the introduction of such rules.
No EXISTING law Currently, the country does not have any specific export valuation rules under customs legislation. The Union Finance Minister, Mr P. Chidambaram, had in Budget 2007-08 announced that “transaction value” and “not deemed value” would be the basis for valuation of exports. The transaction value is to be determined in accordance with the rules to be framed in this regard.

India’s merchandise trade touched $125 billion in 2006-07. For 2007-08, the merchandise export target has been pegged at $160 billion.

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