INTERNATIONAL
The government plans to boost exports by plugging loopholes in online payment of customs duty and ensuring round-the-clock customs clearance at ports and airports. This will also help India fulfil its commitments under the World Trade Organisation's Trade Facilitation Agreement, officials said. "We want to reduce transaction costs because exports have been declining. One such way is to streamline existing procedures through better coordination between various agencies...we have to think out of the box," said one of the officials, who did not wish to be named. "We should use the Trade Facilitation Agreement to promote exports," he said. The commerce department plans to extend the timings of customs clearance at ports and airports so as to reduce congestion during peak hours of 2-6 pm."Even though there is 24x7 customs clearance, it has not completely taken off because of lack of coordination between customs and CISF. We will have to sort out traffic restrictions on truck movements to avoid delays in exports," the official said. However, Ajay Sahai, director general of the Federation of Indian Export Organisations, said there is need to increase manpower to implement the 24x7 procedures., Another step being considered is to extend the timing of online payment of customs duty, which is operational till 5.30 in the evening.
SOURCE: The Economic Times
Concerned at the slow transmission of policy rate changes by banks, the Centre plans to replace interest subvention schemes with interest subsidies that do not interfere with lenders’ marginal lending rates. The government has also asked states to coordinate with one another in market borrowings so that there is no liquidity crunch. “We need to revisit our interest subventions schemes and replace them with back-ended interest subsidies that do not interfere with the marginal lending rates, and yet have the same effect on the loan repayments as the interest subventions have,” Finance Secretary Ratan Watal said at a meeting with state finance secretaries here on Monday. While the focus is on setting policy rates, equally important is the monetary policy transmission, said Watal. “This cannot be left entirely to the central bank. Our policy interventions can often interfere with the transmission of monetary policy actions.”
Noting that banks have moved to a new system of marginal setting of lending rates, he said, “This cannot succeed unless we remove the marginal distortions that have crept into our system over the years.” He said the finance ministry’s decision to rationalise small savings rates should be seen as a positive development in this light. “Small savers and ordinary households are also needy creditors who deserve a better deal than they have been getting.” While the Reserve Bank of India has announced a number of path-breaking measures to systemically improve liquidity conditions, management of liquidity in the financial markets has remained an area of concern, he noted. According to Watal, one of the reasons for the tight liquidity conditions, especially since October 2015, was that a number of government securities were simultaneously off-loaded by state governments to meet their borrowing requirements. Having learnt from this experience, the Centre has now proposed a better coordinated and more evenly spaced borrowing schedule for 2016-17.
SOURCE: The Business Standard
With India slated to become a major importer of liquid bulk commodities such as biofuels (ethanol and biodiesel), the All India Liquid Bulk Importers and Exporters Association (AILBIEA) has called for modernisation of ports and removal of antiquated policies and systems. Jayyannt Lapsiaa, President, AILBIEA, said high transaction cost due to inadequate and inefficient infrastructure, delays and hassles due to antiquated procedures are the major hurdles that are blocking the country from attaining its full growth potential despite progress on other front.
Connectivity woes
Connectivity is still the soft underbelly of the port sector. Efficient infrastructure, combined with quality and expeditious clearance procedures, will help reduce costs and sharpen the competitive edge, he said, addressing the members at a recent event to confer lifetime achievement award on Nadir B Godrej, Managing Director, Godrej Industries. The association members handle 180-200 million tonne of liquid bulk a year, generating revenue of over Rs. 6.5 lakh crore. The association called for removal of operational constraints, stamp duty on transfer of shipping documents, rationalisation and systemisation of customs and excise procedure besides complete overhaul of infrastructure. If the government’s Make in India and Ease of doing business have to succeed, it is imperative for the Centre and State governments to modify outdated policies and procedures. Octroi levy, sales tax, stamp duty on import-export of cargo, removal of antiquated procedures and systems are some of the stumbling blocks, he said. India is set to become a major importer of a wide variety of liquid bulk commodities such as biofuels in the near future. Changes in infrastructure, along with change in mindset of process owners such as customs and government officials, are equally important, Lapsiaa added.
SOURCE: The Hindu Business line
Fitch Ratings expects India to be on the top of the global growth ladder and expanding by 7.7 per cent in the current fiscal, a shade higher than the estimated 7.5 per cent in the previous year due to higher disposable income and a likelihood of a normal monsoon. “Fitch has maintained its gross domestic product growth forecast for India for the fiscal year ending March 2016 at 7.5 per cent. Growth is expected to gradually accelerate to 7.7 per cent in financial year (FY) 2017 and 7.9 per cent in FY18,” Fitch Ratings said in its India-Global Economic Outlook (GEO) Forecast. This implies a minor downward revision from the December GEO, but leaves India at the top of the global growth ladder, it said. “We expect the gradual recovery in FY17 and FY18 to be supported by higher real disposable income, assuming a normal monsoon after two years of below-average rainfall and a substantial wage increase for central government employees,” it said.
The gradual implementation of the structural reform agenda, Fitch Ratings said, is expected to contribute to higher growth, even though progress is lacking so far on big-ticket reforms such as the Land Acquisition Amendment Bill and the goods and services tax. "Implementation of legislative reforms has so far been difficult, given the government's limited support in the senate (Rajya Sabha), but executive reforms continue to be rolled out." It said the Budget for FY17 contained some further announcements of reforms, including measures related to the FDI regime, the financial sector and agriculture, illustrating that the government continues to gradually broaden its reform agenda. Fitch said it expects another 25 bps of monetary policy loosening, facilitated by the government's recent announcement to maintain its fiscal targets for FY17 and FY18. "We expect the Reserve Bank of India to remain keen to avoid a significant deviation from the glide path to its inflation target, as it is still building a track record for its new monetary policy framework," it added further.
SOURCE: The Business Standard
Foreign direct investment (FDI) in the country increased to $42 billion during April-February in 2015-16, up 27.45 per cent from the inflows in the corresponding period of the previous financial year, RBI said on Monday. The inflows were $32.96 billion during April-February 2014-15. The data further revealed that FDI in February was $3.2 billion, down from $5.14 billion in January. The foreign direct inflows were $3.48 billion in February 2015. The net FDI (minus FDI outflow) was $34.04 billion during April-February against $29.66 billion in the corresponding period of the last financial year. According to the finance ministry, 98 per cent of FDI is coming into India through the automatic route and, as a “positive sign”, the number of applications being routed via the Foreign Investment Promotion Board approval route has started declining. The NDA government has been liberalising the FDI regime and has brought a number of sectors under the automatic route. Insurance, railways, defence and e-commerce are some of the key sectors where FDI norms have been liberalised.
SOURCE: The Business Standard
Trans-Pacific Trade Partnership likely to have serious implications on the textile sector, besides hitting garment exports to the US, the Indian Texpreneurs Federation has approached the government to take a closer look at the possible impact on the textile sector. In a letter to the Commerce Minister Nirmala Sitharaman, ITF Secretary Prabhu Damodharan reasoned that exporters from TPP member countries will get preferential access in the US market while non-members like India will lose out, especially for garment exports. Also if duty turns disadvantageous for India's apparel exports, the share is likely to fall substantially. On Yarn Forward Rule (YFR), Prabhu said that it has been made mandatory to source yarn, fabrics and other inputs used in making clothes from TPP partner countries only to avail of duty preference. YFR will induce garment manufacturers in TPP countries to source their raw material from them at the cost of non-TPP countries like India even if suppliers from that region are not the most efficient. Moreover, India's exports of apparel, both direct as well as indirect via Vietnam, to TPP countries like the US will go down since buyers would like to procure from TPP-based vendors, which may hurt India's fabrics and apparel exports, Prabhu added. In 2014, the US imported about $82 billion (nearly Rs 5.45 lakh crore) worth of apparel of which India supplied about $3.7 billion (nearly Rs 24,615.2 crore). This accounted for 21.5 percent of Indian total apparel exports.
SOURCE: Yarns&Fibers
Investors are most overweight on Indian markets in Asia-Pacific region, followed by Australia and China, according to a survey done by Credit Suisse at its 19th Asian Investment Conference, where more than 320 companies from 15 countries in the region participated, along with 1,200 institutional investors, hedge funds and high net worth individuals. About 42% of the participants expect the Asia-Pacific Index to rise over 10% this year, while 43% anticipate the index to be flat. China's growth concerns and currency risks are seen as biggest risks for global markets in 2016 by 54% of the participants, followed by concerns like geopolitical issues, and rising debt defaults. Among the sector preference, healthcare is seen as most liked sector followed by internet.
SOURCE: The Economic Times
India-UAE trade has increased phenomenally in the last half century and at $60 billion per annum currently, has made the Gulf nation India's third largest trading partner since the last couple of years, Petroleum Minister Dharmendra Pradhan said on Monday. He was addressing prominent industry captains of UAE on the first day of his two-day official visit to this country, India's petroleum ministry said in a statement. "India genuinely believes that there is potential to transform the buyer-seller relationship with UAE in energy into a genuine energy partnership," said Pradhan, who is accompanied by the CEOs of state-run companies like Indian Oil and BPCL. Earlier, he inaugurated the Make in India pavilion at the annual investment meet being held at the Dubai World Trade Centre. "Inaugurated Make in India pavilion at Annual Investment Meet of Dubai with Deputy Minister of Economy of UAE," Pradhan tweeted. He also visited the Jebel Ali Free Zone and met Indian investors there. "Visited Jebel Ali Free Zone in Dubai & met the Authorities;it hosts 70000 Indians workers & 790 Indian companies," he said in another tweet. Pradhan's visit to the United Arab Emirates is a follow up of the February India visit of Abu Dhabi's Crown Prince Sheikh Mohammed Bin Zayed Al Nahyan and Energy Minister Suhail Mohammed Al Mazrouei. Pradhan will meet Al Mazrouei, besides meeting the CEO of Abu Dhabi National Oil Company and the chairman of the Abu Dhabi Investment Authority. UAE contributes in a major way to India's energy security, being the sixth largest supplier of crude oil. India is the second largest destination for UAE's oil exports.
SOURCE: The Economic Times
India and Australia could clinch a deal in services and investments earlier than one in goods under the proposed free trade agreement (FTA), potentially marking a departure from the past strategy of concluding goods negotiations first. Sources told FE that both parties could hammer out a consensus on less contentious issues such as services and investments first and a deal on goods will likely take some more time due to the difficult nature of such negotiations. Nevertheless, India would like to continue with talks on all the three pillars of the proposed India-Australia Comprehensive Economic Cooperation Agreement (CECA) until a broad-based outcome is achieved, a source said. India’s final concessions on goods could hinge on Australia’s offer on services and investments, the source added. The shift in strategy should be a positive development for the domestic industry, which has long complained of the government’s move to first cede huge concessions in goods in the hope of getting a good deal, often in vain, in services and investments. For instance, the industry has been critical of the country’s FTA with Asean nations, saying that its offer on goods was hardly matched by gains in its subsequent deal in services and investments and resulted in massive merchandise imports from such countries and trade deficit.
India and Asean first signed the trade in goods agreement in August 2009, after six years of negotiations, while negotiations for services and investments were concluded only in December 2012. The government is now examining the impact of some of the existing FTAs, such as the Asean one following industry protests. Trade analysts say sorting out relatively easier issues in negotiations first is a pragmatic step as it cuts delays in clinching a deal. However, even in services, Australia seems unwilling to cede much on Mode 4, which provides for freer movement of professionals and a more relaxed visa regime, fearing a backlash before upcoming elections (expected by January 2017). However, India, with its vast resources of skilled professionals, especially in the IT and ITeS sector, is interested in worthwhile concessions from Australia on Mode 4, even as the former is also willing to respond positively to other aspects of services should Australia make a substantial and meaningful offer, a source said. “The ball is in their court now,” the source added. India is keen on services as they account for over a half of its gross domestic product (GDP). Services trade between Australia and India stood at A$4.4 billion in 2014-15, according to data by the Department of Foreign Affairs and Trade of the Australian government. While Australia exported services worth A$2.9 billion to India, its service imports from India stood at almost A$1.5 billion. One Australian dollar was equal to $0.75, or Rs 50.29, on Monday. India’s major services imports from Australia include education-related travel and personal travel, while personal travel (excluding education) and professional, technical and other business services are among its major exports to that country. Commerce minister Nirmala Sitharaman had a meeting with Australian trade envoy Andrew Robb last week, and the Indian side is learnt to be keen on a logical conclusion to the negotiations. Sitharaman said last week that India was negotiating with Australia for a better deal in services and both the sides were probably getting closer to a deal.
SOURCE: The Financial Express
India and Maldives signed six critical agreements related to cooperation in taxation and defence during the visit of Maldivian President Abdulla Yameen Abdul Gayoom. The agreements were signed here during the meeting between Prime Minister Narendra Modi and President Yameen on Monday. Both sides signed two pacts on taxation. One pact is for avoiding double taxation of income derived from international air transport and the other is for exchange of information with respect to taxes. The pact on double taxation arising out of international air transport is relevant to the administration and enforcement of domestic laws concerning taxes covered by the agreement. It also includes exchange of information relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation and prosecution of tax matters. “It is clear that the contours of India-Maldives relations are defined by our shared strategic, security, economic and developmental goals,” Modi said after his meeting and a working lunch with President Yameen. Modi also underlined India’s strategic interest in having a “stable and secure” Maldives. Both sides also signed an action plan for defence cooperation. “The Action Plan is in the context of defence cooperation being an important component of the India-Maldives relationship and the shared strategic and security interests of the two countries in the Indian Ocean region,” stated a press release by the Ministry of External Affairs.
SOURCE: The Hindu Business Line
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 38.95 per barrel (bbl) on 11.04.2016. This was higher than the price of US$ 37.91 per bbl on previous publishing day of 08.04.2016.
In rupee terms, the price of Indian Basket increased to Rs. 2585.73 per bbl on 11.04.2016 as compared to Rs 2519.82 per bbl on 08.04.2016. Rupee closed stronger at Rs 66.39 per US$ on 11.04.2016 as against Rs 66.47 per US$ on 08.04.2016. The table below gives details in this regard:
|
Particulars |
Unit |
Price on April 11, 2016 (Previous trading day i.e. 08.04.2016) |
Pricing Fortnight for 01.04.2016 (12 Mar to 29 Mar, 2016) |
|
Crude Oil (Indian Basket) |
($/bbl) |
38.95 (37.91) |
37.29 |
|
(Rs/bbl |
2585.73 (2519.82) |
2491.72 |
|
|
Exchange Rate |
(Rs/$) |
66.39 (66.47) |
66.82 |
SOURCE: PIB
Jiangsu Sunshine Group, a Chinese manufacturer, intends to construct a textile plant in Ethiopia at a cost of 350 million USD. In the aim of boosting the country’s textile industry and making the nation Africa’s textile industry hub, Ethiopia is using the sector as a bridge for economic development. The textile plant is planned to be installed in Adama Industrial Park. Once it starts operation it will have production capacity of 10 million meters of worsted wool fabrics and 1.5 million finished parts. The Chinese manufacturer has annual production capacity of 35 million meters of superfine worsted wool Fabrics and 3.5 million sets of men’s suits and women’s wear. It is also the only Chinese textile manufacturer that won honorable title of ‘World Brand' and 'Garment Export Inspection Exemption'. In the past few years Ethiopia has managed to attract different foreign companies which operate in the textile and clothing sector. This includes the Turkish textile giant Akber and Taiwanese George Shoe Corporation.
SOURCE: Yarns&Fibers
Hillary Clinton has a credibility problem when it comes to our country’s trade policies and the resulting enormous, humongous trade deficits that measure job loss — especially with regard to the Trans-Pacific Partnership. But Clinton has a chance to shore up her credibility with Democratic voters on this issue. It comes as President Obama, Wall Street and the multinational corporations are preparing to grease the skids for pushing the TPP through Congress in the post-election “lame duck” session.
Clinton, Credibility And Free Trade
Following months of demands that she take a position on the trade agreement, Clinton stated during an October PBS Newshour interview (just before the first debate with candidate Bernie Sanders) that TPP could, “... end up doing more harm than good for hard-working American families whose paychecks have barely budged in years.” Unfortunately for Clinton, few believe she means it. The business community, for example, sees Clinton’s position as simple posturing to voters for the election, believing she will switch back to supporting the agreement immediately after the election, as Obama did on NAFTA after promising throughout the 2008 campaign to renegotiate the agreement. For example, Chamber of Commerce President Tom Donohue went so far as to say in a recent Bloomberg TV interview that he believes Clinton will switch to supporting TPP after the election. Tory Newmyer, in a Fortune story after the Ohio primary, “Hillary Clinton and John Kasich Win Ohio, and So Does Free Trade,” described Clinton as pro-free trade, writing she really won the Ohio primary because she favors TPP, not because she opposes it,
Buckeye State voters in both parties delivered wins to trade-friendly candidates on Tuesday—and denied them to a pair who staked their claims on pledges to oppose new deals, starting with the Trans Pacific Partnership. That outcome was in doubt after Ohio’s neighbors to the north in Michigan last week voted for reality-show billionaire Donald Trump and Vermont Sen. Bernie Sanders, the most aggressive trade foes in the field. But in Ohio, Hillary Clinton and home-state Gov. John Kasich prevailed. The business community doesn’t believe for a minute that Clinton really opposes TPP. Working-class voters have a similar problem, solidly identifying Clinton with free-trade positions. Candidate Bernie Sanders has used this perception against her, winning Michigan and Wisconsin and gaining on her in Ohio and other states. These wins were a result of campaigning as a candidate who will restore balance to our country’s trade policies, as opposed to Clinton as a candidate favoring agreements that send jobs out of the country and who has even said such offshoring “is probably a plus for the economy in the long run.”
President Obama Presents Clinton With An Opportunity To Restore Credibility
President Obama is presenting Clinton with an opportunity to restore her credibility on TPP. Politico’s Morning Trade reported on Monday that the Obama administration is ramping up “a process” for “pushing for TPP approval in Congress.” The escalating anti-trade rhetoric emerging from the presidential election isn’t striking any fear in the heart of President Barack Obama or decreasing his willingness to send the TPP to Congress for approval, Commerce Secretary Penny Pritzker said in an interview with Pro Trade’s Doug Palmer. “This president is not intimidated and he’s not afraid to act here,” she said. “We have a process we have to go through first. We reviewed the process this week, so we could understand all the steps. This president is fully committed to TPP, as is our administration and, frankly, as is the business community.” Pritzker said she met with the CEOs and former CEOs of Caterpillar, Boeing and the Campbell Soup Company in recent days to talk about “the efforts their companies are going to make” as well as the efforts of the Business Roundtable, which Caterpillar CEO Doug Oberhelman chairs. She added that businesses are “raring to go” when it comes to pushing for TPP approval in Congress. Also in Monday’s Morning Trade, another Obama official says “there will be an opportunity to get TPP done this year,” likely meaning after the election
National Economic Council Director Jeff Zients argued forcefully on Friday for Congress to approve TPP. ... “So I am very confident that there will be an opportunity to get TPP done this year, and we’ve got to do everything we can to get it done because, if we don’t, there’s no guarantee when we’ll have our next shot,” he said, arguing the trade deal matters to U.S. workers and businesses. “I can assure you it matters to this president, which is why he will be doing everything he can to get TPP done.”
Clinton Should Ask Obama To Withdraw TPP
Reports like this only serve to further undermine Clinton’s credibility on TPP. Clinton is seen as the “establishment” candidate, and is described in the media as “hugging the Obama agenda,” “bear-hugging Obama,” “embracing Obama ‘as close as she can’“ and other similar descriptions. Obama’s push for TPP therefore harms Clinton as she tries to be seen by voters as the Obama successor. Voters hate the TPP. Having that threat of its passage after the election hanging out there only harms Clinton in the eyes of the electorate. Candidate Clinton has an opportunity to address her TPP credibility problem by asking Obama to withdraw TPP from consideration by Congress, and calling on her supporters and endorsers in Congress to join her in demanding that the agreement be withdrawn.
SOURCE: The Huffington Post
New Zealand Prime Minister John Key said Monday he will lead a high-level business delegation to China next week and look to upgrade the bilateral free trade agreement. The delegation would visit Beijing, where Key would hold meetings with Chinese leaders, as well as Xi'an and Shanghai, during the April 17-22 visit. "Along with a broad range of topics, I look forward to continuing discussions with them on an upgrade of the China New Zealand Free Trade Agreement (FTA), signed eight years ago this month," Key said. "Since this time, two-way trade between New Zealand and China has more than doubled, reaching almost 19 billion NZ dollars (12.96 billion U.S. dollars). An FTA upgrade would allow us to modernise the agreement and ensure it continues to drive our relationship forward."
China was a key destination for our goods exports and an important consumer of New Zealand services, Key said. "The visit provides an opportunity to strengthen our relationship and showcase New Zealand's creativity, innovation, and high-tech credentials," he said. In Beijing, Key would also address students at the prestigious Tsinghua University and meet with senior Chinese business leaders. Key will hold official meetings with senior provincial and city leaders in the major centers of Xi'an and Shanghai. In his first visit to Xi'an, capital of western China's Shannxi province, he would support New Zealand business and cultural links with Xi'an, and visit the city's international trade and logistics hub, part of China's Belt and Road initiative. Key would also help to promote New Zealand's creative industries by attending the launch of the New Zealand Film Festival in Shanghai. Key would be accompanied by Trade Minister Todd McClay and Primary Industries Minister Nathan Guy.
SOURCE: The East Day
The World Bank expects the Chinese economy to grow 6.7 per cent in 2016, the bank said in a report on Monday. The projection is on par with its last estimate in January. The bank has kept its projection for 2017 at 6.5 per cent, Xinhua reported. "China's orderly transition to slower but more sustainable growth has continued despite some volatility in financial markets," according to the East Asia and Pacific Economic Update, which is published by the bank twice a year. The growth deceleration was especially pronounced in the real estate and manufacturing sectors. Excess capacity has been a drag on a wide range of industries, while service sector remains robust, the report noted.
Despite slower GDP growth, the urban job creation exceeded the annual target in 2015 and the household disposable income grew faster than GDP growth. "The overall capacity of China's economy to create jobs is extremely high," said Sudhir Shetty, Chief Economist of the World Bank's East Asia and Pacific Region at a video conference. The bank warned that credit growth continues to outpace GDP growth and leverage is still building. Monetary and fiscal policy stances are expected to remain accommodative to limit risks of a rapid growth slowdown that could trigger disorderly adjustments in accumulated imbalances. The bank also expects growth in East Asia to ease from 6.5 per cent in 2015 to 6.3 per cent in 2016 and 6.2 per cent from 2017 to 2018. "Developing East Asia and Pacific continues to contribute strongly to global growth. The region accounted for almost two-fifths of global growth in 2015, more than twice the combined contribution of all other developing regions," said Victoria Kwakwa, incoming World Bank East Asia and Pacific Regional Vice President.
SOURCE: The Business Standard
