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Chairman

Mr. Ravi Sehgal is the 24th Chairman of EEPC India

August 2019 has been an extremely eventful month for EEPC India. On 14 August 2019, the Commerce Secretary, Dr Anup Wadhawan, and Mr BS Bhalla, Additional Secretary, Department of Commerce, inaugurated the second Technology Centre of EEPC India in Kolkata.

This Centre will help in scaling up on the technology-led value chain to compete in the global market. EEPC India now has two Technology Centres; the first one being in Bengaluru, opened in 2017, which has already begun active collaboration with technology-related institutions in the country. EEPC India has enlisted the existing tie-ups with NID (National Institute of Design) for design, International Institute of Waste Management (IIWM) for capacity building, IP Attorney for IPR-related issues, CSIR (Council of Scientific & Industrial Research)-CMERI (Central Mechanical Engineering Research Institute), CSIR-NML (National Metallurgical Laboratory) and with CSIR-AMPRI (Advance Materials and Processes Research Institute), which would help the country’s engineering exports move up the value chain. Our Focus in this issue is on technology upgradation which provides more details on the Technology Centres’ work.

This was followed by an interaction with the Minister of State for Commerce and Industry, Mr Hardeep Singh Puri, on issues impacting engineering exporters. Representatives from apex industry bodies as also sectoral bodies participated in the meeting and presented a list of issues that requires immediate attention of the government: relatively, higher price of steel, stoppage of drawback and GST refunds of genuine exporters who are tagged as risky exporters, GST-related issues, stoppage of MEIS since 1 August 2019 as also foreign trade policy issues like average Export Obligation criteria for EPCG scheme, among others.

Our sense is that the government is active to the situation on the ground and perhaps some package for the benefit of exporters is being looked into and will soon be announced. However, for engineering exporters, there are other issues, apart from internal irritants. These include tariff preferential asymmetries faced by Indian exports in many countries of Africa and Latin America, existence of non-tariff and technical barriers to trade in the Southeast and Northeast Asian region as also in Latin America, among others. All this requires regular follow up with our partner countries and continuous inputs from exporters to the government on the situation on the ground. EEPC India will continue to be a platform for such an exchange of dialogue.

One area where we have not made headway is with regard to providing steel to engineering exporters at the international prices. We will continue to impress upon the government the need for providing raw material at global prices, given the fact that we compete against the Chinese in global markets.

A problem area today is Indonesia, with which Indian engineering has strong ties. Of late our exports are slowing down and our Commerce and Industry Minister, Mr Piyush Goyal, has been in touch with his Indonesian counterpart to boost our exports to this country. In our feedback from our members, NTBs are the main reason behind the slowing down of our value-added exports and we have raised these concerns with the Department of Commerce. We have suggested that Mutual Recognition Agreements should be signed with Indonesian agencies to lessen the problem of NTBs in not only Indonesia but also in other countries where we have enormous potential to export our goods.

As we enter the festival months, I do hope some amount of demand stimulus will come into play and this will help in all round economic activity in the country

This meeting delivered some results and the RBI caution listing date was postponed to 31 March 2019; the ‘pre-import’ condition was dropped vide DGFT Notification No.53 dated 10 January 2019 and efforts are now being made to educate the exporters with respect to using the UCO Bank mode for exports to Iran. I hope to continue this dialogue further during my meetings in the month of February 2019 when, among others, the Board of Trade Meeting is also scheduled.

 

As I write, the Interim Budget 2019-20 has been presented by the Union Finance Minister, MrPiyush Goyal. The fiscal deficit is expected to be around 3.4 percent of the GDP while the first step towards a Universal Basic Income (UBI) Scheme for smaller farmers has been initiated. Similarly, income tax exemption has been provided for incomes up to Rs5 lakh per annum. I understand that all the tax-related proposals are likely to be ratified when a full budget is presented by the newly-elected government in July 2019.

 

There is no doubt now that the pace of engineering exports growth has slowed down considerably and the third quarter has shown negative growth. While detailed analysis of the trend is provided in the following pages, three critical segments have held back the potential that is there: primary iron and steel exports; copper and copper products exports; and zinc and zinc products exports. Of the three, the first two are the result of market imperfections and an exogenous factor respectively. EEPC India has been continuously hammering the point that while most segments of engineering face the vagaries of the market, domestic steel prices are not ‘market determined,’ resulting in higher prices making downstream value added uncompetitive in global markets. The other impact, now that the international steel prices have fallen, is that the Indian steel majors are catering only to the domestic sector, cutting back on their exports.

 

With respect to copper products exports, the closure of the Tuticorin plant has led to 40 percent drop in production of copper products while imports of refined products have increased. From a net exporter of refined copper, we have now become a net importer. With respect to zinc, there was a fall in domestic production, which hopefully is a short-term phenomenon. Clearly, we need to work out alternatives and some of the suggestions that we have been making to the government, if implemented, can help to some extent in the promotion of the rest of the engineering products. These are products where domestic production and external conditions do not face such negative externalities.

 

On our part, we will continue to promote engineering goods and the eighth edition of the International Engineering Sourcing Show, IESS VIII, scheduled over 14-16 March 2019, will be one such effort to give a major thrust to the promotion of sourcing of engineering products from India, showcasing technological advancement and future technologies, especially for our MSME units.

 

Malaysia is the Partner Country in IESS VIII being held in Chennai. Malaysia, with Asia’s eighth best and the world’s 25th best overall infrastructure, Southeast Asia’s fourth-largest and world’s 38th-largest economy, has one of the best economic records in Asia since its independence with its GDP growing at an average of 6.5 percent per annum for almost 50 years.

 

As both Malaysia and India are moving towards a technology-driven automotive industry equipped with shared mobility, connectivity, electrification, and autonomous driving, this is the most appropriate time for Malaysia Automotive, Robotics and IoT Institute (MARii) to play a lead role to participate in a global forum like IESS.

 

Malaysia’s participation is expected to be a major game changer at IESS 2019, anticipating greater collaborations between MARii and Indian companies and the creation of a technology ecosystem between the two countries.

 

I urge our readers to join us in IESS VIII and benefit from the bouquet of the programmes we are going to present at this mega show.
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