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HIGHLIGHTS OF THE FOREIGN TRADE POLICY 2015-2020



1.      Free trade pacts: India to move away from ‘zero-duty’ model

NEW DELHI, DECEMBER 9

 

India will move away from a ‘zero-duty’ model in future free trade agreements (FTAs) it negotiates as it is not very comfortable with arrangements where tariffs have to be eliminated.

“We are doing some restructuring on how we negotiate. Territorial Joint Secretaries have been asked to examine how to fast-track potential trade agreements in a manner that India is comfortable with. We are not very comfortable with zero and this is a clear signal we are giving to our trade partners,” a Commerce Ministry official told BusinessLine.

India is examining possible FTAs with a host of countries, including Russia, Canada, Peru, Chile, Iran, New Zealand, Australia and the European Union. “The idea is to either not move to zero duties on any item in such pacts or keep such items to the bare minimum,” the official said.

Where it is a legacy of the past and commitments have been made, it would not be possible to backtrack, the official said.

“We have already agreed to zero duties for a substantial number of items in our FTAs with Japan and Korea and the Asean. In the Regional Comprehensive Economic Partnership (RCEP) structure, too, the architecture is towards zero. So, those are the givens that we can’t do much about,” the official said.

For both Japan and South Korea, tariffs have to be eliminated by India on about 70 per cent of tariff lines over 10 years of implementation. In the RCEP being negotiated, New Delhi has agreed to eliminate duties on more than 40 per cent of items with China — the country Indian industry is most apprehensive about.

The Prime Minister’s Office and the Finance Ministry, too, support the strategy of moving away from zero duties. “The overall thinking in the government is that the FTAs should be structured such that the Indian industry and farmers should not have major issues with it,” the official added.

Low utilisation

 

Interestingly, despite India signing a large number of FTAs with individual countries and groups, industry is yet to utilise them properly. A study carried out by the Commerce Ministry earlier this year showed that Indian exporters preferred the normal route for exports to FTA partner countries, paying higher duties, rather than using the FTA route and paying lower duties as they found procedures difficult to comprehend.

According to estimates, the utilisation rate of India’s FTAs varies between 5 per cent and 25 per cent — which is one of the lowest in Asia.

http://www.thehindubusinessline.com/economy/free-trade-pacts-india-to-move-away-from-zeroduty-model/article7966864.ece 

 

 

2.     India, EU to meet in January to take stock of FTA talks

 DECEMBER 11, 2015

India will hold consultations with the European Union (EU) in January, 2016 to discuss the future of the proposed free trade agreement (FTA), Commerce Secretary Rita Teaotia said on recently.

The meeting, which will take place after a gap of 30 months, will not be a negotiation but a continuation of talks that had been deferred after the EU banned the sale of around 700 pharmaceutical products, clinically tested by Indian company GVK Biosciences, on grounds of being unsafe.

Launched in June 2007, the negotiations for the proposed Broad-based Trade and Investment Agreement (BTIA), also known as FTA, have witnessed many hurdles with both sides expressing differences on crucial issues.

Chief negotiators on both sides were scheduled to meet in August, but India had cancelled talks after the impasse over the ban on pharma products could not be broken.

The January meeting is set to determine the future of the FTA as the issue has dragged on for far more time than both sides had hoped.

“We are going to meet in January to do a stocktaking and see if this negotiation has a future”, Teaotia said. In May 2013, India and the EU failed to bridge substantial gaps on crucial issues, including data security status for the information technology sector.

The recent thaw in India-EU relations reportedly started after German Chancellor Angela Merkel’s visit to India in October. Maintaining that India perceived the GVK incident as an “extremely disproportionate reaction to the perceived infringement”, Teotia said the government was disappointed and sought a transparent, open and fair position on the issue.
http://www.business-standard.com/article/economy-policy/india-eu-to-meet-in-january-to-take-stock-of-fta-talks-115121001293_1.html

 

 

 3.     Peru eyes Free Trade agreement with India

NOVEMBER 30, 2015 

 

Hoping to increase bilateral trade with India, South American nation Peru is looking to sign a Free Trade Agreement (FTA) with India in the next three to four years, a successful achievement of which will make it the first Latin American country to have an FTA with India.

Peru`s Ambassador to India Jose JG Betancourt said on Monday: "The FTA will just not be for goods and services, it will be a comprehensive one that will have a holistic impact with even movement of people eased."

He added that Peru will also support the global solar alliance being launched by India and France. In his first official visit to any state in the country, Jose, who only took charge two months ago, said: "...And in this regard (improvement of trade and relations) I told the external affairs ministry that Karnataka has to be the first state I visit officially. The state not only has a great history and culture but has also move along at a swift pace in the fields of science and technology and other businesses."

Anne Maeda from the Embassy of Peru in-charge of Economic and Commercial affairs added that the country is looking at getting more Indians to invite in Peru, especially in the mining sector, while Vikram Vishwanath, the Honourary Consul in Bengaluru said they have already met people from the Kudhremukh and Hatti Gold Mines.

Jose said that he also met with home minister G Parameshwar and is going to meet industry bodies and other government officials on recently.

 

Anne reiterated that the FTA will be crucial and will focus on trade, investment, mining, energy besides IT and pharma sectors. Peruvian media had reported last month that the FTA is being pushed for aiming to to increase the bilateral from $1.5 billion to$2 billion.

 

http://timesofindia.indiatimes.com/business/india-business/Peru-eyes-Free-Trade-agreement-with-India/articleshow/49987218.cms 

 

 

 4.     3 ASEAN nations to ratify FTA with India on services soon

 

ASEAN member nations Indonesia, Philippines and Cambodia are likely to ratify the long-pending FTA on services and investment with India by next month that will pave way for its full implementation by the 10-nation bloc, considered one of the world`s fastest growing regions.

Many Association of Southeast Asian Nations (ASEAN) member countries including Singapore have been impressing upon the three nations to ratify the agreement at the earliest and India has been conveyed that the process will be completed by December, government sources said.


The free trade agreement (FTA) in services and investments came into force from July in countries which have ratified it.


Besides the three countries, other members of ASEAN are Brunei, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam. Laos has ratified the services part of the pact but it is yet to clear the investment component.


ASEAN is India`s fourth largest trading partner and India in turn is sixth largest trading partner for the bloc. The combined GDP of both sides is USD 2.57 trillion. Both India and ASEAN have been seeking greater economic engagement and set a target of USD 100 billion in trade by 2015.


"We are confident that Indonesia, Philippines and Cambodia will ratify the pact by December. Laos is yet to implement the investment part of the pact and we are hopeful it will be done soon," said a senior External Affairs Ministry official handling issues relating to ASEAN.

Full implementation of the FTA on Services and Investment is likely to scale up economic engagement between the two sides significantly.


India had signed a FTA in goods with the ASEAN in 2009. New Delhi was keen on the services deal as it did not gain much from the pact on goods due to already lower tariffs in the region.


India is also part of the RCEP which is negotiating a mega FTA.


The 16-member RCEP comprises 10 ASEAN members and its six FTA partners namely India, China, Japan, Korea, Australia and New Zealand. The 16 economies account for over a quarter of the world economy.


The mega pact, expected to be finalised by 2016, will open door for Indian business in the RCEP countries having combined GDP of USD 17 trillion.

 

http://www.business-standard.com/article/pti-stories/3-asean-nations-to-ratify-fta-with-india-on-services-soon-115112200079_1.html 

 

 

 

5.     Modi’s Moscow visit likely to propel free trade agreement talks

 

DECember 4, 2015

 


India and Russia are likely to announce commencement of formal negotiations on a free trade agreement (FTA) when Prime Minister Narendra Modi meets Russian President Vladimir Putin in Moscow later this month — a step that could strengthen bilateral trade ties that have languished over the past two decades.

A joint study group (JSG), set up earlier this year to examine the feasibility of an FTA between India and the Eurasian Economic Union (EEU) — comprising Russia, Belarus, Armenia, Kyrgyzstan, and Kazakhstan — has been asked to expedite its work and submit its report before the Prime Minister’s visit so that appropriate announcements can be made during the tour, a Commerce Ministry official toldBusinessLine.

“Although the Indians and Russians are separately preparing their inputs for the JSG report, there are indications that both sides would favour an FTA provided some vulnerable sectors are taken care of. The inputs would be combined in a single document and presented to the leaders,” the official said.

Modi will visit Moscow on December 24-25 for the 16th India-Russian annual summit talks with President Vladimir Putin. Established in January this year, the EEU offers India access to a huge market with a population of over 180 million with a joint GDP of an estimated $2.7 trillion.

“With India’s traditional markets such as the US, the EU and Japan facing continued economic uncertainty, it is vital for India to explore alternative markets. The EEU offers a wonderful opportunity for the country’s exporters and investors to diversify, and we are trying to grab it,” the official said. Since India’s exports to the EEU countries is less than $3 billion annually — with over $2 billion exported to Russia alone — and is just a small fraction of the region’s total imports, there is a huge potential of growth.

According to exporters’ body FIEO, India stands to gain substantially in areas such as pharmaceuticals, agriculture products, fertilisers, leather, and oil and gas if an FTA, formally called a comprehensive economic cooperation agreement, is signed with the EEU.

“As the EEU aims to set up a common pharmaceuticals zone, India’s generic exporters could have easy access to the entire region,” the official said. With Russia continuing its ban against European Union farm imports, Indian exporters stand a chance to increase their shipments of dairy and meat items.

India’s relation with other members of the bloc is also reasonably smooth, the official added. ONGC Videsh Ltd has been invited by Kazakhstan to explore its Abai bloc for energy resources, while India has also signed a deal with Belarus to supply 500 tonnes of potash fertiliser.

http://www.thehindubusinessline.com/economy/macro-economy/modis-moscow-visit-likely-to-propel-free-trade-agreement-talks/article7949526.ece

 

 

6.     Indo-Australia FTA on Track to be Sealed by Year End: Minister

 

November 16, 2015

 

The Indo-Australia free trade agreement is on track to be sealed by the end of the year but "issues" in India could impact plans for realising the deal, Trade Minister Andrew Robb has said.

The minister`s latest remark came at a time when Prime Minister Narendra Modi is set to meet his Australian counterpart Malcolm Turnbull and discuss the trade pact on the sidelines of the G20 summit in Turkey today.

The trade pact is likely to dominate talks between both the leaders who last night announced the completion of all the formalities for India-Australia Civil Nuclear Agreement.

Robb, buoyed by the reassurances he has received during his visits to India throughout the year, said Australia was on track to finalise the Free Trade Agreement by year end.

"We have got a programme which will see us complete it... and with India in particular they have lots of other issues that can interfere with our programme. But at the moment we are still on track to complete a Free Trade Agreement by the end of the year," Robb said as he did not elaborate what issues he was referring to.

According to Australian Associated Press news agency, Robb said that Modi was keen to access Australian expertise to help India realise its full potential.

"He (Modi) said to me at the outset... what he wants from

Australia is access to our expertise to help India realise its full potential," Robb said in Manila last night.

The minister said Australia would benefit greatly from a pact with one of its fastest growing markets for goods and services. However issues in India could impact on Australia`s plans on realising the deal.

Robb hoped that both the leaders emerge from the meeting with a confirmation of the intent to sign the deal. He made his fourth visit to India in October this year in a bid to finalise the bilateral Free Trade Agreement.

He had said that the two sides had made some good progress in recent months in advancing mutual aim of concluding Comprehensive Economic Cooperation Agreement negotiations.

 

http://www.newindianexpress.com/nation/Indo-Australia-FTA-on-Track-to-be-Sealed-by-Year-End-Minister/2015/11/16/article3130842.ece

 

 

7.      India, Canada closely working to finalise CEPA: Brian Parrott 

November 1, 2015

 

India and Canada are closely working to finalise the comprehensive economic partnership agreement (CEPA), Minister (Commercial) High Commission of Canada Brian Parrott said today. 

The negotiations for the free trade agreement, officially dubbed as Comprehensive Economic Partnership Agreement (CEPA), between the countries were launched in November, 2010. 

The proposed pact seeks to open services sector and facilitate investment proposals. 

Inaugurating the International Conference on Smart Cities at the PHD Chamber of Commerce here today, Parrott said that Canada can help India in building some of the smart cities with world-class infrastructure. 

"318 Canadian companies have their footprints in India and with increased globalisation, Canadian companies` presence in India will multiply in due course of time, especially when India accepts the Canadian expertise and technological development in building for it a number of smart cities," Parrott said. 

http://economictimes.indiatimes.com/news/economy/foreign-trade/india-canada-closely-working-to-finalise-cepa-brian-parrott/articleshow/49473004.cms

 

 

8.      India, Russia decide to triple bilateral trade by 2025



OCTOber 21, 2015

 

India and Russia have discussed ways to boost their economic ties and triple their bilateral trade to $30 billion in the next decade. 

External Affairs Minister Sushma Swaraj and Russia`s Deputy Prime Minister Dmitry Rogozin, chairing the 21st India-Russia Inter-Governmental Consultations yesterday, also looked at ways to enhance the mutual direct investment to $15 billion by 2025. 

Both sides identified various sectors to achieve these commercial targets, agreed upon by Prime Minister Narendra Modi and and Russian President Vladimir Putin during their summit meeting last year. 

Bilateral trade in 2014 amounted to $9.51 billion, with Indian exports touching $3.17 billion and imports from Russia stood at $6.34 billion. 

Agriculture, pharmaceutical and infrastructure were some of the areas identified by both sides to strengthen their economic engagement. 

While economic agenda was one of the focus areas in the consultations today, the other areas deliberated upon were space, energy, culture and science and technology. 

Officials said India also reiterated its commitment to work towards having 12 Russian nuclear plants as was agreed between Modi and Putin. 

Russia is an important partner for India in peaceful uses of nuclear energy. 

Earlier, Swaraj interacted with top Russian Indologists. The Indologists briefed her about their work including translations of the Ramayana and the Mahabharata as well as teachings of Indian languages. 

In her remarks, Swaraj said the hallmark of Indian literature and culture has been respect for all points of view. 

"From translations of Ramayana and Mahabharata to Rabindra Sangeet and teaching of Indian languages, Russian Indologists briefed the External Affairs Minister on their work," spokesperson in the Ministry of External Affairs Vikas Swarup said. 

http://economictimes.indiatimes.com/news/economy/foreign-trade/india-russia-decide-to-triple-bilateral-trade-by-2025/articleshow/49483242.cms

 

 

 

9.     India eyes $144b trade with Africa in 5 yrs

 

OCTOber 29, 2015

 

Prime Minister Narendra Modi will unveil the government’s Africa-centric policy push on Thursday, aimed at strengthening trade and investment relations. It would also forge a common agenda to pursue reforms aggressively in global multilateral bodies, including United Nations, World Bank, IMF as well as focus on climate change.

 

The prime minister will make India’s Africa focus policy statement on Thursday at the third Indo-Africa summit, the largest meeting of prime ministers and presidents in India during the recent past. Apart from raising the pitch for India’s larger role in global development and economic affairs, the prime minister may target doubling the country’s investments to $64 billion in the next five years in the world’s largest continent with special focus on the energy sector.

 

India’s bilateral trade with the African continent is pegged at $ 75 billion, making it the third largest trading partner for Africa after European Union and China.

 

He is expected to push for doubling the India–Africa trade engagement to $144 billion from the prevailing $72 billion during the next five years. Both nations will work on a common agenda for engagement through ‘an outcome document’ to be issued later on Thursday. This also assumes significance in the backdrop of the scheduled China–Africa summit in December this year. China’s trade engagement with Africa is pegged at $200 billion.

 

In a measure to beef up the Indo-African engagement, the prime minister met with 20 presidents and prime ministers at bilateral meetings, flagging issues for the two sides. Modi also hosted a state dinner for visiting heads of the states, which was ignored by leaders from the Congress party.

 

As a parallel move, external affairs minister Sushma Swaraj has also engaged with her counterparts from 20 other African countries on Wednesday as both sides prepared for the summit on Thursday.

 

Specific proposals like setting up a joint urea production plant in Congo, a railway network in Senegal to uranium supply by Namibia, a railway network in Ghana, a science-park and sugar processing unit in Swaziland, cyber city in Guinea, enhanced energy pacts with Nigeria, drug-processing unit in Uganda and diamonds processing in Botswana, also came up for discussions.

 

A PMO statement said that reforms in the United Nations security council (UNSC), institutions of global governance and terrorism figured prominently during the 19 bilateral meetings the prime minister held with African leaders. The prime minister’s meetings with African Union chairman and Zimbabwe president Robert Mugabe, the grand old man of Africa and Jacob Zuma, president of South Africa, were described as significant.

 

The PM discussed enhanced trade ties in maritime security, agriculture, information technology, cyber security and skills development with Ghana president John Dramani Mahama. With the Swaziland king Mswati-III, he discussed the possibility of expanding renewable energy engagement, infrastructure and skills development. Benin president Boni Yoyi and prime minister Modi, as per a PMO statement, discussed cooperation in power generation, mechanisation of agriculture and transport.

 

India flagged oil exploration and enhanced engagement in hydrocarbon economy, apart from jointly fighting terrorism with Nigeria, in the meeting he had with president Muhammadu Buhari.

 

The PM may meet presidents and prime ministers of eight other African countries, including Namibia, Mali, Ethiopia, Somalia, Egypt, Mauritania, Angola and Tanzania on Thursday.

http://www.mydigitalfc.com/news/india-eyes-144b-trade-africa-5-yrs-415

 

 

10. India’s trade with LAC region rises 9-fold to $49.1 billion

 

OCTOber 15, 2015

 

India’s total trade with the Latin America and the Caribbean (LAC) region has increased more than nine-fold to USD 49.1 billion in 2014 from USD 5.2 billion in 2005, Export-Import Bank of India said today.

Country’s total exports to LAC rose more than five-fold to USD 15.5 billion in 2014 from USD 2.8 billion in 2005, the bank said.

Total imports have also increased significantly to USD 33.6 billion from USD 2.4 billion during the same period. As a result, India’s trade balance with LAC which stood at a surplus of USD 0.5 billion in 2005, has turned into trade deficit of USD 18.1 billion in 2014, the Exim Bank added.

The bank said that it has identified the potential items for India’s exports to select countries in the LAC region, which broadly includes machinery, electrical and electronic equipment, transport vehicles, optical, iron and steel, photographic and medical apparatus, among others.

 

http://www.financialexpress.com/article/economy/indias-trade-with-lac-region-rises-9-fold-to-49-1-billion/151822/

 

 

 

11.   Safeguard duty fails to curb steel imports

 

OCTOber 21, 2015

 

The safeguard duty imposed by India a month ago on steel imports has had limited impact, except for a price increase of Rs 1,000 a tonne. Imports have maintained an upward trend and even inventory levels continued to remain high.

The government had imposed a 20 per cent import duty on certain products for 200 days from mid-September.

Total imports in the first half through September were 5.93 million tonne (mt), up 42 per cent; imports from Japan and Korea were up 80 per cent and 77 per cent, respectively.

China accounted for 1.59 mt of imports. Hot rolled coil (HRC) imports have increased from 1.59 mt to 2.91 mt, up 83 per cent. Here again, China, Japan and Korea together accounted for 2.25 mt, up by 88 per cent. Japan’s share was up by 135 per cent and Korea’s up by 220 per cent. Inventory levels were also at a higher level than during March-end.

A recent Icra report says, “Following the imposition of the duty, the differential between domestic and international HRC prices had reduced significantly and the domestic prices were now largely aligned with imported steel prices. However, international HRC prices have declined further by around five per cent after the duty was imposed, which along with weak domestic demand conditions and prospects of further capacity addition in India in the near term were likely to keep domestic prices under check.”

JSW Director-Commercial & Marketing Jayant Acharya said without the duty the situation would have been far worse. “Supply will get limited. The problem is, China has again reduced prices and so did Japan and Korea. So there is a neutralisation impact,” he added.

“September imports are in line with August but typically there is a lag in impact,” a steel producer pointed out.

But the industry has now come up with the demand of extending the safeguard duty to the entire value chain. “If it doesn’t happen, the next target will be cold rolled products. Imports of colour coated products have already gone up significantly,” Acharya said.

The government has also taken steps to boost infrastructure, which could help increase the demand.

The Icra report said while growth remained steady at upwards of six per cent during the first three months, it declined to 0.5 per cent in July 2015, indicating that the sustainability of demand improvement was still uncertain. Domestic steel production growth declined to 1.3 per cent during the period April-July 2015 from 3.3 per cent registered in FY15.

 

http://www.business-standard.com/article/markets/safeguard-duty-fails-to-curb-steel-imports-115102000295_1.html

 

 

 

12.  Anti-dumping duty on 4 Chinese items

 

OCTOber 22, 2015

 

 

The impact of excess capacity in China following an economic slowdown is showing in India with the government rushing in to impose anti dumping duty on at least four products from across the border as well as some other countries.

 

Although India is among the most prominent users of the anti-dumping tool -allowed by the WTO as a check against a flood of cheap imports that hurt the domestic industry - it is not very common that the government notifies levies on four pro ducts on the same day.

In recent weeks, it has been forced to take defensive measures, such as the safeguard duty on some steel products, and revenue secretary Hasmukh Adhia went to the extent of publicly stating that industry should explore protection through these measures in stead of rushing to the government seeking an increase in import duty. Anti-dumping and safeguard duties are imposed following an enquiry by independent directorates. Based on the findings of the Directorate General of Anti dumping and Allied Duties, the finance ministry notified anti-dumping duty on the four products from Wednesday .

 

Definitive anti-dumping duty has been levied on imports of "plain medium density fibre board of thickness 6 mm and above" originating in or exported from China, Malaysia, Thailand and Sri Lanka. A similar levy has been imposed on "front axle beam and steering knuckles meant for heavy and medium commercial vehicles" shipped from China.

 

Then, definitive anti-dumping duty has been levied on imports of "hexamine" from China and the UAE as well as on "all fully drawn or fully oriented yarnspin drawn yarnflat yarn of polyester (non-textured and non-POY)" originating in or exported from China and Thailand. The duties would be valid for five years, an official statement said.

 

 

http://timesofindia.indiatimes.com/business/india-business/Anti-dumping-duty-on-4-Chinese-items/articleshow/49489156.cms

 

 

13.  Government may double aluminium import duty to 10% 

OCTOber 26, 2015

 

The government is considering a move to double 5 per cent import duty on aluminium in a bid to salvage Rs 1.2 lakh crore of bank-financed capex investments by domestic players like Vedanta and Hindalco, and protect the 7.5 lakh jobs jeopardized by cheap imports that have captured well over half the market. 

Layoffs and plant shutdowns are already underway and more job cuts are on the anvil with the industry operating at just 49 per cent capacity in 2014-15 amid a sharp slump in global commodity prices that has brought aluminium prices down 30 per cent in three years. Warning of an adverse impact on the Modi government`s `Make in India` drive if this trend continues, CEOs of aluminium producing companies have sought an urgent intervention from finance minister Arun Jaitley, commerce minister Nirmala Sitharaman and ministries of coal and mines. The mines ministry is likely to make a proposal to the finance ministry that import duty on aluminium be raised to 10 per cent.

"The aluminium industry is facing an alarming scenario as all the producers, including Balco, Nalco, Hindalco and Vedanta, are running up cash losses after making heavy investments to raise capacity. They are going in for cost cutting and retrenchments and may lay off more workers to survive as they are projected to make losses this year," Mines Secretary Balvinder Kumar told ET, adding that contract workers are also affected with imports surging from China by 200 per cent in the four years since 2011. 

"We are thinking of recommending to the finance ministry that an additional 5 per cent duty be imposed on aluminium imports to take the effective duty to 10 per cent," Kumar said, after top CEOs from the sector, including Vedanta group CEO Tom Albanese, met top government mandarins in separate meetings to make their case, stressing that all major nations had raised duties and internal support to curb cheap aluminium imports from China that is sitting on surplus capacities. 

The producers are also making a pitch for anti-dumping safeguards, recently imposed on steel imports, claiming that the aluminium sector is in a much more precarious position as imports now account for 56 per cent of domestic demand, compared with 15 per cent in steel. 

Vedanta-run Balco, where the government still holds a strategic stake, has already pulled the shutters on its rolling mill unit in Korba, Chhattisgarh, laying off about 750 workers. Vedanta`s alumina refinery in Lanjigarh is operating at 50 per cent capacity and could be the next one to shut, said an industry official, leading to the loss of more jobs. 

"Indian producers have invested Rs 1.2 lakh crore to ramp up capacity from 2.1 million tonne per annum (mtpa) to 4.1 mtpa, which is now in jeopardy with a double whammy of crashing prices and dumping that has led to the domestic market being dominated by metal and metal scrap imports," said a representative of the Aluminium Association of India, arguing that the sector is hit by idle capacities and financial distress 

The industry has sought a 10 per cent duty on imports of both aluminium (from 5 per cent currently) and aluminium scrap, where the duty is 2.5 per cent. Duty on all other non-ferrous metal scrap like copper, lead, nickel, tin and zinc is at par with the prime metal, it has argued. 

Separately, each producer is building a case for slapping anti-dumping safeguards on aluminium imports, stressing that the sector is in bigger trouble than steel, on which anti-dumping duties were recently imposed. An industry official told ET that Vedanta had already submitted product-wise import data for this exercise to the Directorate General of Anti-Dumping and Allied Duties under the commerce ministry, while Hindalco is also about to do the same. 

Citing instances of Brazil and Russia, where the import duty on aluminium has been raised to 20 per cent and 10 per cent respectively, the industry has also pointed out the explicit government support through different sops to aluminium makers in China, the US and West Asia that make it difficult for Indian producers to compete. 

"In India, by contrast, producers are facing higher freight costs (up 25 per cent since 2013), higher energy costs (up 39 per cent-51 per cent since 2013-14) and the clean energy cess that has alone raised costs by Rs 2,300 per tonne of aluminium," said an industry official. 

 

14. Govt showers duty benefits to arrest slump in exports

 

OCTOber 31, 2015

 

The government on Friday extended duty incentives under the Merchandise Exports from India Scheme (MEIS) to 110 products, including sports goods and medical equipment. The move, which will further hit the exchequer by Rs 3,000 crore, is aimed at arresting a fall in merchandise exports, which declined for the 10th consecutive month in September. The Centre, however, didn`t announce interest subvention, as sought by exporters.

 

Through the MEIS, introduced by the Ministry of Trade and Commerce on April 1 this year, a certain percentage of the value of exports can be used to offset various duties, including customs, service tax and excise duty. Though the government retained this at two-five per cent, it increased the rate for some items such as industrial machinery, machine tools, textiles and paper.

 

It has also extended the countrywide coverage to items such as iron, steel, base metals and leather products, while global coverage has been accorded to commodities such as textiles, pharmaceuticals, auto components, computers and electrical products. As many as 2,228 products would get either higher MEIS rates or these incentives for export to more countries.

Federation of Indian Exports Organisation (FIEO) President S C Ralhan said the new items added to the MEIS list contributed about $10 billion to exports a year, or about three per cent to the overall value of exports. Now, the exports for which MEIS is applicable would account for about 55 per cent of the overall exports in a year, he added.


A few value-added items, especially in the agriculture sector, should also be considered, he said.

FIEO Director General and CEO Ajay Sahai said the move would cost the exchequer Rs 3,000 crore as allocations under MEIS has been raised to Rs 21,000 crore from Rs 18,000 crore. However, it would also add to the forex reserves of the country as exports increase, he added.

Introduced as part of the Foreign Trade Policy 2015-20, MEIS provides product and market-focused incentives for 4,914 tariff lines. Now, the scheme would be available to 5,010 products.

Termed MEIS duty credit scrip, the reward can be transferred or used to pay a number of duties, including customs duty and service tax.

In September, merchandise exports contracted 24.3 per cent to $21.84 billion, the steepest fall in 75 months.

 

http://www.business-standard.com/article/economy-policy/govt-showers-duty-benefits-to-arrest-slump-in-exports-115103100022_1.html

 

 

15.  Exports fall for 10th straight month, down 24% in Sept

 

OCTOber 16, 2015

 

India’s merchandise exports fell for the 10th consecutive month in September this year. During the 2008-09 global financial meltdown, the decline was for nine months in a row.

Exports contracted 24.3 per cent, the steepest in 75 months,  to $21.84 billion in September, against $28.86 billion in September 2014, according to data released by the commerce department on Thursday.

Besides a global slowdown, the severe fall is attributed to a decline in global commodity prices. Exports had last recorded growth in November 2014, rising 7.27 per cent year-on-year.

Among high-value export items, refined petroleum products plummeted over 60 per cent in September year-on-year, engineering goods almost 23 per cent and electronic goods over 16 per cent. According to exporters body  Federation of Indian Export Organisations (FIEO), just six items out of 30 for which data is available showed growth in September, against seven in  August. For September, imports declined 25.4 per cent to $32.32 billion, compared to $43.34 billion in the year-ago period.

 

As such, the trade deficit for September stood at $10.48 billion, lower than the deficit of $14.25 billion in September last year. For August this year, the deficit stood at $12.48 billion.

For the first half of this financial year, exports stood at $132.09 billion, while imports were worth $200.9 billion, a trade deficit of $68 billion. Exports were down 17.6 per cent during the period year-on-year, while imports over 14 per cent.

India’s oil imports stood at $6.62 billion in September this year, 54.53 per cent lower than $14.57 billion a year ago. For the April-September period, oil imports stood at $48.12 billion, 41.58 per cent lower than the oil imports of $82.37 billion in the year-ago period. Non-oil imports in September were estimated at $25.69 billion, 10.68 per cent lower than $28.76 billion in September 2014. This is attributed to the slow growth in the domestic industrial sector.

For April-September, non-oil imports stood at $15.28 billion, a 0.72 per cent rise compared with $151.71 billion in the year-ago period.

After a huge rise in previous months, gold imports declined 45.62 per cent to $2 billion in September from $3.8 billion a year ago. Non-oil non-gold imports declined 5.2 per cent to $23.7 billion from $25 billion. This category of imports is taken as a broad proxy for  demand of imported industrial products in the economy. This meant the demand refused to perk up, posing a question mark over sustainability of industrial growth, which rose to a near three-year high of 6.4 per cent in August.

Meanwhile, the government is yet to restore three per cent interest subvention for exporters, which expired in March 31.

“Overall, we expect exports to remain weak in the coming months on account of a subdued global demand scenario,” said Richa Gupta, senior director, Deloitte In India.

 

http://www.business-standard.com/article/economy-policy/exports-fall-for-10th-straight-month-down-24-in-sept-115101501044_1.html

 

16. FY`15 witnessed highest import of coal in India at 212.103 million tonnes 

OCTOber 20, 2015

 

India, the world`s third largest producer of coal, imported 212.103 million tonnes (MT) of dry fuel worth over Rs one lakh crore in the last fiscal, the highest ever in terms of value and quantity. 

The coal imports in the financial year 2014-15 were at 212.103 MT, an increase of 27 per cent over the previous year, the provisional coal statistics of 2014-15 released by the Coal Ministry said. 

Of the 212.103 MT of coal (worth Rs 1,04,524.1 crore), the non-coking coal import was 168.388 MT, while coking coal import was 43.715 MT, it said. 

The coal import during 2013-14 was at 166.857 MT (Rs 92,329.2 crore) while in 2012-13 it was 145.785 MT (Rs 86,845.5 crore) 

In 2011-12, the country imported 102.853 MT (Rs 78,837.6 crore) of coal while in 2010-11, the import stood at 68.918 MT (Rs 41,549.6 crore). 

In 2009-10, 73.255 MT of coal (Rs 39,180.0 crore) was imported and in the previous fiscal 59.003 MT (Rs 41,340.8 crore) of coal was imported. 

Coal Secretary Anil Swarup yesterday said that coal imports dropped by 27.16 per cent to 12.6 MT in September from a year-ago period on the back of rise in domestic production. 

Coal India accounts for over 80 per cent of the domestic coal production and is targeting one billion tonnes of coal production by 2019-20 fiscal. 

The government had earlier said it was expecting that one billion tonne output target will enable it to stop imports of thermal coal in two and a half years, which will soften pressures on current account deficit. 


http://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/fy15-witnessed-highest-import-of-coal-in-india-at-212-103-million-tonnes/articleshow/49466800.cms

 

 

17.  Diversify services to boost exports

OCTOber 24, 2015

 

 

The current trade landscape is defined by integrated production networks that combine intermediate goods and services from several countries to produce final goods and services. Global fragmentation of production is essentially a division of labour based on specialised tasks that need to be combined by the means of an efficient supply chain. Thus, the focus on export expansion now is to connect to regional and global supply chains.

India must focus on trade reform that diversifies services beyond information technology and IT-enabled services. Indian trade policy in services became IT-centric with an over-emphasis in its trade negotiation priorities on Mode 4 (or liberalisation of the movement of people), a critical demand of the Indian IT lobby. In doing so, it did not focus on the barriers preventing the take-off of other services such as behind-the-border regulatory restrictions on accounting, legal, engineering, architecture, or health-related professional services in partner countries.

Global trade in off-shored services is becoming increasingly about trade in tasks, i.e. carrying out specialised functions within the broader accounting or legal service professions. With the emergence of big data as a driving force of innovation and business development, data analytics and management will emerge as a huge area of opportunity in professional services exports for India.

Trade barriers related to regulatory constraints on undertaking certain types of legal or accounting tasks offshore, and barriers related to the emerging issues in data privacy and data restrictions are now the areas of maximum concern for the future growth of off-shore professional and technical services (i.e. BPOs). This requires urgent domestic regulatory reforms of the services sector in India (business facilitation) and negotiation of such trade barriers within trade agreements.

Needless to say, such negotiations are by definition WTO-plus, and India`s negotiating paradigm in services would have to shift from the traditional focus on Mode 4 minus the deep dive into regulatory barriers that effective market access for such professional and technical services requires.

Agreements like the TPP are discussing such trade matters. India cannot afford not to engage on these topics with major trade partners. The question remains, as mega-agreements like the TPP and TTIP take off, and almost all of India`s major competitors in professional and technical services join these negotiations. India cannot afford to remain a bystander.

In the new architecture of services we need to focus on task-based value chains in professional services in the following areas:

Accounting, engineering, architecture, design, product development, legal and medical services that are globally delivered, combining tasks being done by professionals in various locations

Each of the above have discrete tasks within the profession that can be outsourced; for e.g. recording book entries, cleaning of accounts, analytics, tax-related assessment can all be unbundled to provide the final audit services. Trade policy must ensure maximum market access for all tasks within the profession, and recognition of Indian qualifications

The analytics of big data, a huge emerging opportunity, will have its own skill-based value chain, with tasks ranging from basic quantitative assessment and presentation to the most advanced statistical and mathematical analysis.

Tasks in social media and animation will move away from pure media and entertainment to multiple uses ranging from training, education, and real-time instruction modules for decentralised manufacturing manuals for various products. This will create a range of professional services tasks.

The new trade policy priorities in services should embrace:

Data protection and privacy issues that can emerge as barriers: need to engage our main trade partners through twenty-first century trade agreements such as TPP and TTIP

Certification and qualification recognition with major partner countries (this can be done even outside trade agreements, but a strong mandate and cooperation are needed between the ministries of commerce and industry, human resource development, and corporate affairs).

India must be prepared for tariff barriers to digital trade to emerge. Technologies to monitor a firm`s use of digital inputs, or declare the professional services it sources from abroad will be developed, and such inputs can be differentially taxed.

We also need to reduce transaction costs of services delivery from India associated with the high cost of electricity and 24/7 availability; cost of communication; ensuring physical security and availing certification of security and quality from foreign accredited organisations. This will enable India to provide a new generation of services that are linked to manufacturing in the global value chains. Some examples are:

Repair and return

Virtual maintenance: online guide with self-help tools

Digital monitoring of engines

Computer-aided design

Computer-aided manufacturing

Virtual medicine

For its success we need liability regimes in areas like maintenance, digital monitoring and virtual medicine. We also require trade facilitation that allows expedited movement of materials in and out of India for services components to service manufactured goods, as in repair and return.

For expanding exports of services we need to immediately create a skill pipeline. The changing landscape of IT and ITES requires far greater emphasis on a diverse range of expertise and domain knowledge than mere programming that call-centres ask for. The government will have to come up with a strategic vision that can convert India`s large output of natural science, arts, and commerce graduates into employable resources. The private sector or the government working alone cannot do it; success will only come with the two working together. Government would also have to work with the over 1,000 private engineering colleges that over-emphasise programming and coding at the expense of hard-skills in engineering, and help re-orient them to meet the changing demands of industry.

India with its very dynamic professional services sector is well placed on data management and the `servicification` of global manufacturing with its emphasis on customisation, technical support and after-sales service. India, with the right policies in place, can ride this wave to create an entirely new generation of skilled citizens that drive forward export growth and employment opportunities for the next several decades.

 

http://www.business-standard.com/article/opinion/jayanta-roy-diversify-services-to-boost-exports-115102400935_1.html 

 

 

Disclaimer: India’s Policy Highlights mainly compiles and disseminates India-specific trade related news and featured articles. The stories covered do not necessarily represent the views of the EEPC India and have been put together solely for informational and outreach purposes.


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