The Indian government on April 16 imposed port restrictions on the export of essential commodities categorised as prohibited or restricted to the Maldives. Through the 2024-25 fiscal, these commodities will only be permitted for export through four designated customs stations — Mundra Sea Port, Tuticorin Sea Port, Nhava Sheva Sea Port (JNPT), and ICD Tughlakabad. The ties between India and the Maldives have been strained following a social media dispute that led to an uproar among Indian tourists, who began boycotting the Maldives as a travel destination and instead chose Lakshadweep. Since then, both sides have been making attempts to mend their diplomatic ties. On April 5, India lifted restrictions on the export of specified quantities of nine products, including potatoes, onions, eggs, rice, wheat flour, and sugar to the Maldives for the current fiscal year. "Development & Regulation Act, 1992 (No. 22 of 1992), as amended, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy (FTP), 2023, the Central Government paragraph 1. hereby incorporates following conditions in Notification No. 03/2023 dated 05.04.2024 for exporting of essential commodities to Maldives under bilateral trade agreement between Government of India and Government of Maldives," Directorate General of Foreign Trade (DGFT) said in a notification. The bilateral trade agreement between the governments of India and Maldives that provides for the export of essential commodities was signed in 1981. This agreement continues to guide the trade relations between the two countries
Source: CNBC TV
Indian exporters, particularly those exporting to Europe and northern or eastern African countries are reaching out to lawyers to revisit their contracts and agreements in the wake of recent attacks on merchant ships by Houthi rebels in the Red Sea and Somali pirates in the Indian Ocean. Exporters and shipping companies are revisiting clauses that deal with grounds of termination, indemnifications, limitations of liabilities and damages, carve-outs about any losses, delays, claims, defaults etc. arising due to such unforeseen events introduced to safeguard the interest of the exporters and shipping companies. Exporters have also sought lawyers' help to strengthen the 'force majeure' clauses. The developments have hurt India's exports, especially of low-value products such as agriculture products and textiles with European countries, feel lawyers. Rerouting the shipments through the Cape of Good Hope (South Africa) is likely to increase the prices of Indian exports and this unprecedented crisis has forced companies to approach lawyers to revisit the shipping and charter-party contracts "We have noticed that many of the Indian buyers and sellers are looking to minimise their risks by contracting on DAP (delivered at place) and FOB (free on board) terms, respectively," said Zarir Bharucha, managing partner of law firm ZBA. "These terms are being insisted on by Indian traders obviously to mitigate marine risks, which have seen a sharp rise due to the recent crisis in the Red Sea and sudden re-emergence of pirate attacks in the Indian Ocean," added Bharucha. Under a DAP contract, the seller bears the risk/liability of loss of cargo until the same is delivered at the port of discharge thereby insulating the buyer from any risks during transportation. Similarly, under an FOB contract, the buyer bears the risk/liability of loss of cargo as soon as the cargo is loaded on a vessel by the seller, thereby entitling the seller to payment as soon as the cargo is loaded on a ship for transportation. The Red Sea route is crucial for India's trade with Europe, as about 80% of trade with Europe passes through the Red Sea. According to data provided by the Federation of Indian Export Organisations, India's exports to Europe constituted Sameer Tapia, founder of law firm ALMT Legal, said clients in the maritime industry are concerned not only about their contractual obligations but also about the safety and security of their employees on the vessel. "They are engaging in discussions with banks and insurance companies to renegotiate the terms of financing/credit facilities (which includes letter of credit facilities), and insurance as the same are also likely to be impacted due to the rerouting of the shipping vessels through Cape of Good Hope," said Tapia, a veteran shipping and maritime lawer. "Due to the present geopolitical crisis in the Red Sea, the insurance premium has escalated by as much as 1%. Insurance companies are also increasingly seeking help from governments across the world to intervene and help the situation," he said. The Red Sea crisis has significantly impacted the operations of container shipping lines, which have had to discontinue their services over the Suez Canal and reroute their sailings over the Cape of Good Hope. This has not only led to extended transit times but also the rescheduling of their services with the inclusion of different ports of call and transshipment ports. "Every year, during April/May, fresh contracts are signed between the exporters/importers and the shipping lines," said Sunil Vaswani, executive director of Container Shipping Lines Association (India), which represents foreign container shipping lines operating in India.
Source: Economic Times
Global rating agency Moody’s on Friday maintained a stable ‘outlook’ and affirmed longterm and short-term ratings at ‘Baa3’ and ‘P-3’ respectively for India. It has estimated growth rate of 8 per cent for Fiscal Year 2023-24 and 6 per cent plus for current and next fiscal (2024-25 and 2025-26) years. This is the last investment-grade rating, and the stable outlook means downward revision in the rating is unlikely in the near term. However, it has cautioned that that an “escalation of political tensions or further weakening of checks and balances” that would undermine India’s long-term growth potential would likely put downward pressure on the rating. After completion of periodic review, the agency said that the ‘stable’ outlook incorporates the likelihood that India‘s fiscal metrics will continue to gradually improve amid robust growth prospects compared with peers. Upside risks to inflation and correspondingly higher interest rates could challenge efforts to rein in spending and exacerbate already weak debt affordability, it added. “The credit profile of India balances its large and diversified economy with high growth potential, a relatively sound external position, and a stable domestic financing base for government debt against high general government debt, weak debt affordability and low per capita income,” it said. This review report has been published at a time when India is pushing hard for rating upgrade. Government officials have maintained that India has neither defaulted not shown any sign of stress in repaying debt. Also, it has managed to keep fiscal deficit in control. However, it appears that rating agency would like to wait for some more time before making any change in sovereign rating which is used by investors for making any investment decision. Meanwhile, the agency said the country has benefited from traction on infrastructure development, digitalization and the rehabilitation of the financial system. It highlighted that a stronger and more stable economy has emerged from the pandemic. “We do not expect a material reduction in debt amid gradual fiscal consolidation over the next year. Debt affordability will also be challenged by still high global and domestic interest rates,” it said. Regarding growth projection, it said 8 per cent in FY24 is estimated on account of growth during the first three quarters. This is higher than various estimates. Even the government’s own projection is 7.6 per cent. With contributions from gross fixed capital formation remaining robust amid the authorities’ ongoing emphasis on infrastructure development, the expectation for the current and next fiscal year is well above 6 per cent, but there are some concerns, too. “There are upside risks to the projections, based on the potential for private consumption to benefit from ongoing disinflation, while private investment could rise as election-related uncertainties clear and policy rates start to fall as inflation normalizes within the Reserve Bank of India’s target band,” it said. Explaining the credit profile, the agency said that ‘baa’ reflects “susceptibility to event risk, driven by political risk to account for rising sectarian tensions and intensifying domestic political polarization, while the easing of the negative feedback loop between the financial sector and the real economy over the past three years informs our assessment of banking sector risk.”
Source: Business Line
India and Peru concluded the seventh round of negotiations for a free trade agreement (FTA) on Thursday, aiming to deepen economic ties, a senior Indian government official said. The next round of talks is scheduled for the second week of June in Lima, with meetings likely to focus on consensus-building on trade of goods and services, the official added, requesting anonymity. The FTA is strategically important as India seeks access to Peru's lithium reserves, critical for its growing electric vehicle industry. Peru is surrounded by the 'lithium triangle' comprising Bolivia, Argentina and Chile. The four-day talks, which began on 8 April, were aimed at understanding each party's priorities and concerns, ensuring the agreement benefits both nations equally, according to a statement from the commerce ministry. India's commerce ministry has prioritized finalizing the trade pact with Peru as part of its 100-day agenda. Both countries are working to reduce or eliminate customs duties on several goods and ease norms to promote trade in services, the official said. Discussions also covered the movement of natural persons, rules of origin, and sanitary and phytosanitary measures, as per the ministry’s statement. Negotiations for an FTA began in 2017, with the fifth round concluding in August 2019. After a pause during the pandemic, talks resumed with the sixth round in February this year. Besides lithium, Peru is also a major producer of lead, zinc, gold, copper, and silver. As things stand, India and Peru have been experiencing steady growth in bilateral trade. During FY23, bilateral trade volume between the two countries hit $3.12 billion. India exported goods worth $865.91 million to Peru and imported goods valued at $2.25 billion from the country. According to data from the government’s Niryat portal, India’s exports to Peru from April to December were valued at $699.04 million, and included motor vehicles, cotton yarn, and pharmaceuticals. Peru's exports to India primarily consist of gold, copper ores, and concentrates
Source: Live Mint
The DMK on Sunday said that while Prime Minister Narendra Modi was predicting that it would disappear after the Lok Sabha election, organisations under the control of the Union government had ranked Tamil Nadu first in the export of textiles, readymade garments and leather goods. According to the National Import-Export Record for Yearly Analysis of Trade (NIRYAT), the DMK said, Tamil Nadu accounted for 22.58% of the textiles exported from the country. “The report has made it clear that Tamil Nadu tops the list when it comes to export of textiles,” the DMK said. Tamil Nadu’s share was $7.990 billion while Gujarat’s share was $4.738 billion. Tamil Nadu was also ranked first among the 10 States that export readymade clothes. The total exports from India was $16.19 billion and Tamil Nadu’s share was $5.30 billion. States such as Maharashtra and Gujarat were lagging behind in the export of readymade garments. According to NIRYAT, Tamil Nadu also secured the first place in the export of leather goods, accounting for 43.20% of the national tally. “The data clearly show that Tamil Nadu is leading in many sectors while the BJP-ruled States are lagging behind,” the DMK said.
Source: The Hindu
Ahmedabad: Patels or Patidars are one of the dominant castes when it comes to businesses, be it in agricultural commodities or diamonds. But it was also the textile sector a century ago that saw a significant investment and ownership by ‘Kunbis’ as how the caste was identified by the British. A recent doctoral work at IIM Ahmedabad (IIM-A) to understand ownership patterns by castes and communities indicated that Gujarat had a higher share of agricultural caste-owned textile units compared to other parts of the country. Amrita Roy, who got her PhD in the field of Economics at IIM-A at the recent convocation, studied Industrial Census of 1911 for her doctoral thesis, ‘Essays on Caste Demography, Occupational Diversity, Education and Entrepreneurship in India.’ The work won her the Prof Tirath Gupta Memorial Award for Best Thesis this year. Prof Chinmay Tumbe was the chair of the advisory committee for the thesis. According to Roy’s analysis, the regions belonging to Baroda state at that time had 63 textile units employing over 20 workers each. “Out of these units, 38 were owned by Hindus and 11 by Parsis. Notably, about 40% of the Hindu-owned firms had ownership in the hands of agricultural castes such as Kunbis. It is important as the trend was not seen in the rest of the country,” said Roy, adding that it indicates pan-caste-based business ownership compared to other parts of the country. The state has continued its legacy in the textile sector. The legacy that started with Ahmedabad becoming the ‘Manchester of the East’ with 60-odd mills by the end of the first half of 20th century. Today, Gujarat has among of the highest number of medium and large textile processing houses in the country with high concentration of weaving and processing units and lion’s share when it comes to denim and technical textile production. Prof Tumbe said that this thesis is the first to analyse the Industrial Census of 1911 that mapped social groups of factory owners and compared it to the Economic Census of 2013. “Indian business history literature is mostly about the trading castes or Banias so we were surprised to see that they comprised only 50% of the total privately owned factories in 1911. There was a high presence of Brahmins (17%) and also significant presence of agricultural castes such as Jats and Goalas, who are hardly spoken about in Indian business history,” he said. For Roy, access to census documents was not problematic, but working with them proved to be very challenging – over a million data points from the 1911 census were digitized by machine and hand. The caste and community-level statistics were often confined to margins of the pages or in footnotes. Roy said that traditional occupations by castes were not uniform by spelling across provinces and other literatures. The thesis delineates about 1,300 castes and communities and grouping them in agrarian, artisanal, trading castes and so on. “We observe large variations in caste demography across the subcontinent. There were several insights. For example, we find that the share of agricultural castes is positively correlated with districts having more rainfall, while the presence of trading castes correlates strongly with districts with a coastline for 1911 data,” she said. The study also found that the divide between ‘upper’ and other castes in terms of education and occupation got reduced from older to younger cohorts. The data was divided into three groups of 18-25, 26-45, and above 45 years. Another important aspect highlighted by the study is how traditional occupations influence the nature of entrepreneurship. “Historically, castes often leveraged the competencies of their traditional occupations to enter entrepreneurial activities. For example, in 1911, about 46% of the firms owned by artisan castes were related to their traditional occupation. However, for some of the others, ownership was more diversified across industries,” said Roy. She added that while comparing 1911 and 2013, one distinct aspect is the rise of the OBC (comparing only Hindu OBC castes), whose share in ownership has increased from 18 per cent in 1911 to 28% in 2013-14 in firms with more than 20 workers. “The share of SC and ST has increased but only marginally,” said Roy.
Source: Times of India
Synopsis Exporters anticipate 10-15% rise in air freight to Europe post Iran's attack. Red Sea crisis diverts cargo to air, inflating costs. Longer routes cause delays and impact engineering exports. Kolkata exporter expects 30-35% reduction in new project exports. Exporters are in a wait-and-watch mode as they expect air freight volume to Europe to rise 10-15%, logistics and insurance costs to rise and engineering exports demand to Europe to get impacted following Iran's attack on Israel. Already, the unfolding crisis in the Red Sea region is leading to shifting of large amount of cargo traffic to air mode such as leather goods, which were traditionally sent by ships, pushing up air freight volume. This has led to a surge in air cargo cost to Europe to about ₹140 per kg from ₹35 just three months ago. "Air freight from India to Europe will rise 10-15%. Flying time will rise because you can't fly over Iran," said Ajay Sahai, director general, FIEO. Longer routes have inflated shipping costs by 40-60% besides causing delays of around 20 days due to re-routing, higher insurance premiums of 15-20%, and potential cargo loss from piracy and attacks. "Exports to the European 60% exports are for new projects that will get impacted. We expect a 30-35% reduction in new project exports," said a Kolkata-based exporter.
Source: India Times
India and the United Kingdom will resume talks for the proposed free trade agreement (FTA) this week when an official Indian delegation visits London “A team is going to the UK this week. There are very few pending issues left in the negotiation,” said commerce secretary Sunil Barthwal on Monday, while declining to identify the issues. “A couple of key priority issues to seal the deal are being ironed out to have a balanced outcome,” said a commerce ministry presentation, adding that majority of difficult issues are towards resolution. The talks will be part of the 14th round of negotiations between India and the UK, the first leg of which was started in March this year. India and UK launched negotiations for a free trade agreement in January 2022 but the talks have gained momentum in recent months and were seen to be almost close to the finish line. However, with the General Elections in India, they are now in the slow lane but it is expected that a deal may be signed soon after the new government is elected. Pending issues between the two countries include the UK’s ask for greater market access and lower tariffs for items such as whiskeys and automobiles. India is looking for more visas for its professionals and social security payments by Indian professionals working temporarily in the UK though they do not qualify for pensions in the country. Meanwhile, India and the European Union are likely to start the eighth round of negotiations for the FTA, which is likely in May or June this year in Brussels. Both sides have decides to meet virtually to discuss some chapters before the commencement of the next round. The seventh round of talks between the two was held in February.
Source: The Hindu Business Line
The 7th round of India Peru trade talks in New Delhi marked a significant milestone in the bilateral relationship, characterized by substantive advances across various chapters, notably in areas such as Technical Barriers to Trade (TBT) and Dispute Settlement mechanisms. Sources confirmed to Financial Express Online that during the talks which concluded on Wednesday (April 11, 2024), “the two sides made substantive progress in TBT and Dispute Settlement mechanisms among others.” “These breakthroughs underscored a shared commitment to fostering a more robust and mutually beneficial trade framework between the two nations. As both sides continue to navigate the complexities of global commerce, the outcomes of these negotiations stand as a testament to the proactive efforts towards enhancing trade cooperation and resolving trade-related disputes effectively,” sources quoted above explained. Peru’s Ambassador to India, Javier Manuel Paulinich Velarde, expressed confidence in the progress made during the negotiations and the potential for a strong partnership. According to him, his country has 22 FTAs with 58 countries which has led to an almost immediate increase in trade, investment and cooperation. Peru’s Chief Negotiator, Gerardo Antonio Meza Grillo, highlighted the significance of restarting negotiations after a hiatus since 2019, emphasizing the need for flexibility to find mutual solutions. The negotiations covered various aspects including trade in goods and services, movement of natural persons, Rules of Origin, Sanitary and Phytosanitary Measures, and dispute settlement, among others. Both sides had around sixty delegates participating, discussing aspirations and concerns thoroughly. India and Peru have seen significant growth in trade over the past two decades, with the potential for further collaboration through the ongoing negotiations. The next round of talks, expected in June 2024, will involve discussions over video conference to address outstanding issues beforehand. At the beginning of the seventh round of talks, Sunil Barthwal, Commerce Secretary, Department of Commerce, Ministry of Commerce & Industry, highlighted the longstanding diplomatic ties between India and Peru since the 1960s. He pointed out the importance of discussions held during the 9th CII India-LAC Conclave in August 2023, which paved the way for resuming negotiations. He suggested that input from stakeholders and industry feedback should guide the negotiation process. Rajesh Agrawal, Chief Negotiator and Additional Secretary, Department of Commerce, noted the frequency of recent talks as a sign of both countries’ eagerness for deeper economic cooperation. He stressed the importance of swift and effective negotiations. Peru has emerged as the third-largest trading partner of India in Latin American & Caribbean Region. In the last two decades, the trade between India and Peru has increased from US$ 66 million in 2003 to around US$ 3.68 billion in 2023.The trade agreement under negotiations shall play a pivotal role in future collaboration in various sectors, creating avenues for mutual benefit and advancement.
Source: Financial Express
In the previous month, merchandise exports were $41.40 billion, while imports were $60.11 billion. In March, services exports were $28.54 billion against February's $32.35 billion, while imports were $15.84 billion compared to the previous month's $15.39 billion. Addressing a media briefing, Commerce Secretary Sunil Barthwal said, "The previous fiscal year was difficult from a trade point of view since not only did the Ukraine-Russia conflict continue, but other conflicts came up. There were huge issues with the Red Sea as well as recessionary trends globally. But India has beaten all the odds. India's FY24 trade deficit has narrowed substantially." Barthwal also said that the country is closely tracking the impact of the Iran-Israel conflict on trade.
Source: CNBC TV
China’s economic growth beat expectations in the first quarter, as factory output led the expansion bolstering expectations the government can hit its ambitious annual target. Gross domestic product increased 5.3% in the January-to-March period from a year earlier, data released by the National Bureau of Statistics showed Tuesday. That’s higher than the median estimate of 4.8% in a Bloomberg survey of economists and just above a growth rate of 5.2% in the final quarter of 2023.
Other Key Figures from the Data:
China’s economic recovery has been unbalanced. Manufacturing is holding up, thanks to resilient overseas demand and Beijing’s efforts to cushion the blow from US trade restrictions by developing advanced technologies at home. But Chinese consumers have been slow to recover their appetite for spending, amid a prolonged real estate downturn that’s weighing on household and business confidence. Factory prices have been in deflation for more than a year, reflecting anemic domestic demand as well as excess capacity in some industries. China’s growth target for this year is around 5%. Many economists say the government will have to take more action to stabilize the property market, and encourage consumers to spend, in order to hit the goal. Investors are closely watching one major government effort to boost domestic demand this year: a trade-in program that will encourage businesses to upgrade their machinery and households to buy new cars, refrigerators or washing machines. Shares of Chinese home-appliance makers jumped last week after officials vowed “strong” fiscal support for the plan
Source: CNBCTV
Former banker Uday Kotak has issued a warning of Chinese implosion on X (formerly Twitter), rating agency Fitch has put a negative outlook on Chinese prospects, and China’s growth rate for 2024 is forecast to come in at 4.8 percent by the Asian Development Bank, a shade lower than the Chinese government’s own target of 5 percent. Over the next 10 years, 300 million are going to move out of China’s working age population, as they age. And the overall population is shrinking, Is the dragon past its prime, and should the elephant prepare to race past this huffing and puffing mass of wiggly hubris? Not so fast. There is every reason to believe that China is transitioning to a more mature stage of economic growth, rather than trudging down a slope of decline. It would be wrong for Indian companies or the government to fashion plans based any assumption of Chinese economic decline. US’s Factory Capacity Warning to China US treasury secretary Janet Yellen has just completed her second official visit to China. Her mission was to persuade China to stop destroying jobs in the US by building up excess capacity and flooding the world market with everything from disposable nappies to snazzy electric cars. Janet Yellen is a diminutive economist, not Tom Cruise in drag; and so, this particular Mission Impossible lived up to its name, instead of succeeding against all odds. Chinese officials politely refused to assure her that Chinese companies would cut back production so that less competitive American companies could continue to inflict avoidable costs on consumers around the world. China is the world’s most competitive producer of electric cars, lithium-ion batteries and solar panels, dubbed the “New Three industries”. In 2023, their exports went up 29.9 percent over the previous year, even as overall Chinse goods exports shrank 4.6 percent, to a mere $3.38 trillion. Capacity utilization in China’s overall manufacturing is 75.9 percent, not far below the figures of 78.9 percent for the US and 78.8 percent for the EU, according to Reuters. This does not paint a picture of China building up enough capacity to make manufacturing redundant in the rest of the world. The charge that China is subsidizing its industries sits ill in the mouths of the US and EU, which are pumping hundreds of billions of dollars as subsidy into their own manufacturing capability, particularly in high-tech sectors. The US leads the world in shovelling subsidy at favoured industries. The Infrastructure Act, the Chips Act and the Inflation Reduction Act of the Biden administration are meant to incentivise investment into the sectors that the government thinks are vital for long-term economic, indeed, strategic, advantage. The trillion-dollar asubsidy bill of such industrial policy is financed, in part, by higher taxes. This amounts to the state deciding how resources generated by the economy should be invested, instead of leaving the choice to companies. This invites the charge of statism from ideologues, who proliferate in the real world, unlike untrammelled market forces that tend to choke up die outside the rarefied models of textbooks. However, on the ground, new chip-making foundries, battery plants, electric car production lines, and even a carbon dioxide removal plants are sprouting, in an unexpected American manufacturing resurgence. Chinese industry, on its part, does not just guzzle subsidy. It also shows rare entrepreneurial energy. Manufacturing the New Buzz Word Droves of Indian industrialists and policymakers go to Davos every year and come back spouting the latest buzzwords. Manufacturing 4.0 has been a favourite for some years. Indians who come back from Davos show off their newly acquired knowledge at industry gatherings. Chinese returnees install robots on the factory floor. The International Federation of Robotics compiles data on robots In 2022, the world’s stock of industrial robots stood at 3.9 million, after adding 550,000 robots that year. Of these, 290,000 robots were installed in China, 52 percent of the total. In 2012, China accounted for 14 percent of that year’s addition of robots. China’s world class 5G networks, and Artificial Intelligence capability, there is no reason to believe that this combination of robots, communication networks and AI would not offset, to a large extent, the impact of a depleting workforce on China’s manufacturing prowess. China Rises in the Tech World In the pandemic year of 2020, patent applications dropped off in the EU, US and Japan but kept climbing in China. In the number of international patent applications made via the Patent Cooperation Treaty (PCT) China overtook the US in 2021, and has increased that lead since. PCT Yearly Review 2023 shows that in 2022, China filed over 70,000 patent applications, 10,000 and 20,000 more than the US and from Japan respectively. India’s count was 2,618. The first Chinese built airliner, dubbed C919, a competitor to the Boeing 737 series and the Airbus A320 series of aircraft, made its first commercial flight for China Eastern Airlines last year. Chinese state support to a decelerating economy has, this time around, departed from a big boost to infrastructure. Reuters quotes Zhao Chenxin, deputy head of China’s National Development and Reform Commission, to say that the plan is to boost equipment upgrades at Chinese enterprises totalling $690 billion and to incentivise consumers to trade in old consumer goods, including cars, for new ones, a market estimated at $140 billion. China is building up its high-tech industry and evolving away from being a producer of just mass market goods. At $18 trillion, today’s Chinese economy should not be expected to grow at the same blistering pace as in the past. That does not mean the economy is about to implode.
Source: Money Control
