After Decline In Exports To The Usa And Europe, Indian Woollen Industry To Expand Market

 India's woollens industry is shifting focus to markets such as Kazakhstan, Germany, China and Australia as it faces decline in exports to the USA and Europe since the last financial year due to warmer winters and economic slowdown.

"The constant global warming is reducing severity of winter and it is playing a vital role in decline of exports. What is worrying is that the decline is 17 per cent from April to June 2016," said Sushil Kaura, chairman of Wool & Woollens Export Promotion Council under textiles ministry.

The exports that are mainly concentrated to the US and Europe dropped 3 per cent in 2015-16. Exports of wool and woollen products stood at Rs 3,012 crore in 2015-16 compared to Rs 3,112 crore a year ago

"The decline is 9.4 per cent in dollar terms for the period," Kaura said.

In dollar terms the exports stood at $462 million in 2015-16 compared to $510 million in the previous fiscal.

To overcome the impact of climate change, the council is holding trade fairs in the current financial year at Almaty in Kazakhstan, Melbourne in Australia, Munich in Germany and in China.

Apart from the changing climate, the rise in price of imported wool has heated up competition from Turkey, Thailand and Bangladesh for exporters. The 30-35 per cent rise in price of imported wool this fiscal has squeezed margins for the domestic players.

A Tirupur based manufacturer said that while makers of premium fabric and garments like RaymondBSE -3.75 % are able to absorb the price rise in imported wool, the smaller players are losing business.

"The last two winters have been of degrowth as impact of La Nina has arrested temperature drop in December and January," said Sudershan Jain, president of Ludhiana-based Knitwear and Apparel Manufacturers Association of Ludhiana,.

The industry feels that there is immediate need of government support in the form of increase in duty drawback rates, speedy release of drawback, abolition of import duty on raw wool, textile machinery and spare parts, and consideration of special package to boost exports, Kaura said.

 

Sources :economictimes.indiatimes.com

Sopa Urges Government To Increase Import Duty On Soyabean Oil

The Soybean Processors Association of India (SOPA) has urged the Narendra Modi government to increase duty on imported crude soybean oil to 37.5% and 45% on refined soybean oil, which is the WTO bound rate. This will check large scale import of cheap soybean oil and enable the domestic industry to start soybean meal exports again. It will also encourage soybean and other oilseed growers, the association feels.

In a letter to the Prime Minister, SOPA chairman Davish Jain has said that the soybean processing industry has been going through one of its toughest periods for the last 3 years and many of the units have had to close down. The major reason for this is large scale import of cheap edible oils including soybean oil at low rate of duty which has pushed up our prices of soybean meal and made us uncompetitive in the world market. Our exports have fallen from a high of Rs. 15000 crores to just Rs. 1500 crores during the last four years. The attached table and graph clearly show that as the soybean oil imports went up, soybean meal exports went down correspondingly and from a net foreign exchange earning of Rs. 6545 Crores in 2012-13, there was a net foreign exchange outflow of Rs. 19419 Crores in 2015-16. The net impact of increased soy oil import alone would be Rs. 25664 Crores.

"The burgeoning import of soybean oil which has increased several fold from a mere 10.55 lakh tons per annum (average of 2011-13) to 40 lakh tons (likely import in 2016) is also detrimental to the interest of oilseed cultivation in the country and will take us toward being totally dependent on imported oil as our own production of oilseeds may further go down," the letter adds.

At a time when the entire oilseed processing industry, particularly the soybean processing units are in great distress and facing closure because of cheap oil imports, the lobby of a handful of large importers and refiners have taken the opposite view in their own self-interest and have asked the government for reduction in duty on crude edible oil. This move has created a clear demarcation between the interests of business, led by importers versus the industry which is striving hard to survive.

The decision to maintain a duty differential of 7.5% between refined and crude oil was taken after careful consideration and a thorough investigation by the Tariff Commission (Ministry of Finance) into all aspects of oil refining. The cost of crude oil refining is not more than 5% at current prices and the 7.5% duty differential adequately protects the interest of crude oil importers. The demand for higher differential duty is, therefore, totally unjustified.

Right now when the very survival of the indigenous crushing industry is at stake, any reduction in duty will only mean more sickness, moving away of farmers from soybean cultivation and further increase in our dependence on imports. If the foreign suppliers were to take advantage of the situation and increase edible oil prices, the story of pulses may get repeated in edible oils also, Jain said in the letter.

 

Sources :economictimes.indiatimes.com

Coal India Anticipates Higher Sales As Imported Coal And Pet Coke Prices Rise

 The recent surge in international coal prices and pet coke may prove to be a boon for Coal India as it can now expect increased sales, particularly of the higher coal grades, to both the thermal and non-thermal consumers.

Imported coal prices, late June onwards, surged by over 30%. This month, imported coal of 6,000 GCV (gross calorific value) costs about $ 65 or Rs. 4348 a tonne on an average while pet coke surged by 73%. During January, pet coke was priced at $ 53 a tonne which has now increased to $ 92 or Rs. 6153 a tonne. Compared to these, Coal India's coal of a similar grade is priced at Rs. 3,000 for both the power and non-power sectors.

"Following the increase in imported coal prices and the government's push to increase sales of indigenous coal, consumers now will be interested in higher purchases of Indian coal", a senior Coal India official told Business Standard.

According to the official, the company is now considering modification of its e-auction calendar as well as the mix of coal grades offered in the auctions to meet the requirements of coal based power plants in the coastal belts as well as the cement and sponge iron segment.

A joint meeting between railways, port authorities and thermal power companies has paved the way for Coal India to send high as well as low grade coal to the ports from where deliveries to the consumers can be made either through inland waterways or the maritime route.

Also, higher offtake will imply Coal India increasing its production to meet the set target as the pithead stock situation will ease. During April-July, Coal India had lagged behind by six% to its targeted production of 172.72 million tonne (mt). The offtake situation was further dismal as only 89% of the 196.45 mt target could be achieved. Now, with import substitution a possibility for Indian coal buyers, the situation may improve.

Data from Motilal Oswal showed that Coal India's average monthly e-auction realisations from higher coal grades has been hovering between Rs. 2,505-3,044 a tonne during April to June this year as the coal monolith put 17.66% of the total 26.3 mt under the hammer.

"Higher grade allocation of coal in the auction is likely to increase following the recent changes in the imported coal and pet coke prices as non-power sector will try to purchase more indigenous coal", Dhruv Muchhal, an analyst with Motilal Oswal told this newspaper.

However, e-auction realisations had declined to Rs. 1,227 per tonne in June this year from Rs. 1,447 per tonne in May, on mix and lower premiums. The premium over notified price was down from Rs. 246 each tonne to Rs. 187 for every tonne over the same period.

A report from Motilal Oswal stated that Vedanta will be substituting imports completely.

Mucchal opined that rising pet coke prices too will bring some of the customers back to high-grade coal.

Coal Consumers Association of India (CCAI) is also of the opinion that Indian companies may shift to import substitution of higher coal grades now that the global prices have increased and Coal India is improving its quality.

"There may be an increase in demand of indigenous coal as Coal India has improved its quality of despatch as well as sending crushed coal. The rise in prices of imported coal will fillip it further", Subhasri Chaudhuri, secretary general of CCAI told this business daily.

Sharp increase in coal imports by China amidst its declining production is stated to be the key driver of the recent global thermal coal price increase. In June, China imported 21.8 mt of coal which is 31% higher when compared to the similar month of 2015 while it decreased its production by 17% in the same month under consideration.

 

Sources:.business-standard.com

Uk And Eu Based Indian Businesses Likely To Take A Hit Post Brexit: Deloitte

The BREXIT event is likely to have adverse repercussions for number of Indian businesses across industries as growth in the United Kingdom (UK) and European Union (EU) take a hit. The Deloitte study on BREXIT, highlights that, the problem of slowing sales might get compounded by issues of a weaker currency. The report analyses four possible scenarios that UK could adopt and the impact of each of those scenarios for business in general, feels Deloitte.

"Effects will vary with the kind of negotiations the UK government has with the rest of the EU. So, while Britain has decided to exit the EU, the question of how that plays out both politically and economically assumes significance. Indian companies can expect some hit to their UK businesses as overall growth in the country slows in the immediate short run. A weaker currency would also mean that any repatriation of profits from the UK region is likely to result in losses as compared to the pre-BREXIT era", said Anis Chakravarty, Lead Economist & Partner, Deloitte India.

UK used to be India's third biggest trading partner 15 years ago. Today, Britain ranks 12th in terms of bilateral trade and is one of seven countries with which India has a trade surplus. While the bilateral trade relationship between UK and India is dominated by goods, services also form an important part of the equation.

"At this juncture it is almost futile to say that BREXIT implies uncertainty, but that is an aspect most economies and corporates would have to deal with. However, in the mid to long run, if the forces of globalisation play itself out well, an event such as BREXIT may turn out to be a positive for India bringing it closer both to the EU and UK", said Anis Chakravarty.

According to the Deloitte study, in the scenario that the UK decides to become a member of the European Economic Area (EEA), could possibly be advantageous for India in terms of trade. In particular, UK would have the liberty to set their own external tariff and independently negotiate their own trade deals with countries outside of the EU. As such, trade deals negotiated between the UK and India could provide for huge potential for improvement and closer collaboration in terms of trade.

In the event that UK's trade is governed by the World Trade Organisation (WTO), the British government can change existing trade policies with India and further liberalize it by reducing tariffs. Further, if the UK and India manage to finalize an FTA, this would give UK-India trade a huge boost.

However, India would not be able to use the UK as a gateway to the European Union in terms of trade as easily as before. Further, goods exported through the UK to the EU are obligated to meet various EU standards, which is another factor making it difficult to trade with the EU through the UK. Consequently, trade between India and the EU through the UK may be hampered, and existing trade channels and supply chains involving the UK and the EU may be disturbed.

In terms of specific industries, there could be certain effects on businesses operating in sectors including Industrial and Consumer Products, Retail, Financial Services, Life Sciences and Health Care and Information Technology.

The Industrial and Consumer products sector is vast and has significant exposure to the UK economy. Companies in this sector that have manufacturing units in the UK, the access to single markets is important as their products can get artificially uncompetitive if they had to pay import duties. Indian garment exporters have already witnessed a 5% drop in demand in the last year. Bilateral trade of precious metals and stones between the UK and India amounted to over USD 2 billion in FY16, and is India's largest import from the UK.

India's Life Sciences and Healthcare sector has significant exposure to the UK, and a hit to demand in UK and the EU is likely to show effects on profits and sales. Many IT companies also have their EU headquarters in the UK and use the country as a gateway for business across the EU.

 

Sources :economictimes.indiatimes.com

Seafood Exports Could Grow 20% In Fy17

 Seafood exports from India are likely to increase 20 per cent in 2016-17, thanks to renewed global demand and addition of more areas for aquaculture.

Exports from the country had declined in 2015-16 with the slowdown in global economies and better supply from competing countries such as Thailand and Vietnam. In dollar terms, the percentage of plunge in exports was about 15 per cent in 2015-16 compared to $5,511.12 million exports registered in 2014-15.


"Renewed global demand for disease-free, healthy shrimps from India, over southeast Asia, has made Indian shrimp exporters revise their projection for a year-on-year export revenue growth of 15-20 per cent in FY17. Even a few months ago, the industry was not so bullish about the new year and was expecting the downturn of last year to continue, primarily owing to lower production. Exports had dropped 10 per cent in the last financial year, pulled down by both production-related issues and lower prices," said Rahul Kulkarni, director, WestCoast Group, seafood exporter.

Southeast Asian countries such as Vietnam, Thailand, Malaysia, Indonesia and China have been hit by diseases, labour and production issues. Thailand, which has been severely affected by diseases for the past several years, is also recovering from blacklisting by the US due to human rights abuses in seafood trade. These economies compete with India in exports.

Seafood exports could grow 20% in FY17
With their friendly policies, states such as Andhra Pradesh and Odisha have opened up opportunities for aquaculture farmers to bring more areas under shrimp production.

"Odisha has added 25 per cent to the existing number of ponds. Andhra has added about 25,000 hectares into aquaculture production. Similarly, West Bengal, Tamil Nadu, Maharashtra and Kerala have added to their number of ponds. Gujarat has added aquaculture ponds in a big way. There will be a growth of 15 per cent this year quantity-wise," said Ajay Dash, president (Odisha region), Sea Food Exporters' Association of India

 

Sources :business-standard.com