To Make India Diamond Global Trading Hub, Commin Eyes Booster Shot For First-Ever Snz

The commerce ministry is pitching for a reasonable and presumptive tax structure for the diamond industry — roughly similar to the one in Belgium — in the special notified zone (SNZ) to help India emerge as a global trading hub in the precious stones, reports Banikinkar Pattanayak in New Delhi.

Though the revenue department will have the final say on the tax rate, the commerce ministry will likely favour a presumptive tax on turnover of 2-3%. Such a move, the ministry feels, is vital to provide a leg-up to the country’s first SNZ for diamond in Mumbai.

The zone hasn’t witnessed any trading activity since its inauguration in December last year due to a “convoluted” tax structure, a senior official told FE. This could be part of the commerce ministry’s pre-Budget recommendations, to be submitted to the finance ministry.

Currently, as per the benign assessment procedure (BAP) introduced in 2007-08, net profit for the diamond business is presumed at 6 % for the purpose of computing corporate income tax. However, the industry’s contention is that 6% is too high, as the usual profit margin in the business is only 1-3%. By contrast, the effective presumptive tax for the diamond industry in Belgium stands at a meagre 0.06-0.09% of turnover, while that in Israel is in the range of 0.29% to 0.33%.

Even a task group under former director general of foreign trade Anup Pujari had conceded that only 2% of the industry players might be able to meet the threshold of 6%. This is because actual net profit in diamond manufacturing is in the range of 1.5-4.5% and in diamond trading in the range of 1-3%, the task group had said in a report in 2013.

Also, there can be huge differences in yields and in the gross margins of various companies, as the processes and the yield vary, depending on the rough diamonds procured.

Such high tax, along with a plethora of documents required to be submitted for complying with the tax structure, have encouraged domestic companies to import rough diamonds from places like Antwerp or Dubai and export them after polishing.

India had set up the special notified zone in Mumbai for diamond to remove middlemen and encourage overseas diamond mining companies to open their offices at designated places to sell rough diamonds directly to Indian manufacturers. This was also to help relatively smaller players to cut down on costs on foreign travels and setting up offices in places like Antwerp or even Dubai to source diamonds.

The success of the SNZ is important as although over 90% of the world’s rough diamonds are polished in India, domestic manufacturers still have to source the commodity from Belgium due to a benign tax regime there.

 

Sources:.financialexpress.com

Today, Kwid Is Biggest Make In India Story: Renault India's Md Sumit Sawhney

 Renault India's managing director Sumit Sawhney says the response to the Kwid mini car has exceeded expectations. The French carmaker is now going all out to tap the growing Indian market with one new car every year for the next four-five years. Renault, he said, is in an "investment mode" as it continues to invest in new products and Kwid variants. In a meeting held last week with ET reporters, Sawhney said India needs better free trade agreements (FTAs) with Europe, UK and Asean countries. Edited excerpts:

How has the journey of Kwid been so far?
The mini-car segment is the toughest segment and very hard to break. Nobody has succeeded in the past, but in the last 10 months, we have managed to garner 15 per cent share and we are selling about 9,000 units a month. We knew entry into this segment cannot be half hearted. So we created a platform for emerging markets ground up and for the first time in our 118-year history, a global car was launched outside of Europe, that too in India. So far, it has exceeded our internal expectations.

What was the recipe for the success?
We cannot succeed if we don't bring innovation. This is not just limited to design, product, features or technology. One of the biggest innovations for us was on cost. That is why everything about Kwid was built ground up. We wanted to sell a car at a certain price, so we went ahead with 98 per cent localisation. Nobody has ever done this before in India. Barring some electronics parts, all major parts are locally manufactured. Today, Kwid is the biggest 'Make in India' story. We invested a lot in basics, if you want to succeed in a country like India, you cannot succeed by luck. You need the infrastructure. We have invested in a big plant, a very big technology centre, which employs 5,000 people, two design centres in India and a global parts distribution centre in Pune. We got the basics right. For us it is a global car designed and developed out of India.

What are your future plans and projections?
Our aim is to launch one new car every year. We have been able to come up with a new CMFA platform and launched one car with 98 per cent localisation. We can recreate things in the sub-4-metre segment. We have understood the localisation game and can go beyond four metres also. A platform can easily take 4-5 bodies of new styles. I already have 75,000 customers for the Kwid. Before we close the year, we will have 1,25,000 customers on the road.

How important is India for Renault global?
This year, India is among the top 10 markets for Renault worldwide (in terms of volumes). The world's top three car markets will be China, the US and India. Renault is new to China, and is not there in the US and we are in a good position in India. So India remains very, very important. Chairman Carlos Ghosn reviews all the India programmes himself.

Are cab aggregators a target segment?
At this point no. We have enough demand from the personal owner segment for Kwid, which is our volume driver. But for the overall industry, it definitely is a target segment.

How difficult is it to satisfy the Indian customer?
The Indian customer is socially very aware. They want the latest and the best at the lowest cost. That is a combination which is very tough to create. If we see the same markets, 7-8 years back, the life cycle of a product was 5-6 years, but now you have to bring in changes every 2-3 years. Otherwise, the customer will bypass you. So the second point is consumer loyalty is very low in our country because he is always looking forward to a value proposition. The consumer is never wrong, we will have to keep pace with his expectations. If we have to bring something in India, it has to be innovative, it has to be a game changer. First it was the Renault Duster, now it is the Kwid. There are many more to follow.

What about Kwid's profitability?
In small cars nobody makes money till the time you have localised. Maruti SuzukiBSE -0.10 % is making money, so is Hyundai, so it was important for us that we make money on what we launch. That was also one of the criteria for pushing for 98 per cent localisation, so that we are not exposed to too much of forex risk, because that is what kills us. As for small cars, without going into specifics, we are slightly ahead of our internal plans on profitability. So is Renault overall making money? My answer will be no, as we are in an investment mode. We are still investing in Kwid and in our future products.

What is India's potential as an export hub?
We need better FTAs with Europe, UK and the ASEAN countries. Australia has stopped manufacturing cars and everything they buy is imported into the country. Similar is the story in the middle-east. Africa is another big opportunity. Also, India has the potential to be a big base for parts exports. Our chunk of parts sourced for global operations from India is growing month on month. Today we are making big number of cars in Romania, Turkey, and Morocco. A lot of our cars to Europe come from Morocco. With good policies we can explore such opportunities out of India also. There is so much capacity lying here in our country that if we have favourable FTAs, it can be deployed for exports. That wouldn't even need significant investments.

 

Sources ;economictimes.indiatimes.com

Rupee Closes Higher Against Dollar

The rupee on Tuesday strengthened against the US dollar, tracking gains in the Asian currencies markets.

The home currency closed at 67.06 per dollar, up 0.18% from its previous close of 67.19. The rupee opened at 67.12 per dollar and touched a high and a low of 67.04 and 67.14 respectively.

Asian currencies closed higher. The South Korean won was up 1%, Philippines peso 0.23%, Taiwan dollar 0.22%, Japanese yen 0.2%, Thai baht 0.2%, Chinese renminbi 0.12%, Singapore dollar 0.1%, China offshore 0.1%.

US Federal Reserve chair Janet Yellen is scheduled to deliver a speech on Friday on the US economy and monetary policy at the Economic Policy Symposium at Jackson Hole, Wyoming. Yellen’s remarks will be delivered following the hawkish rhetoric from Fed vice-chairman Stanley Fischer and New York Fed president William Dudley, Reuters reported.

The 10-year bond yield closed at 7.159%, compared with its Monday’s close of 7.161%. Bond yields and prices move in opposite directions.

India’s benchmark Sensex index rose 4.67 points, or 0.02%, to 27,990.21. So far this year, it has gained 7.17%.

The rupee is down 1.35% till date this year, while foreign institutional investors have bought $5.85 billion in equity and sold $1.1 billion in debt markets.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.346, down 0.18% from its previous close of 94.519.

 

Sources ;livemint.com

World Steel Production At 133.7 Mn Tonne In July, Up 1.4%: Wsa

 World's crude steel production stood at 133.7 million tonne in July, up 1.4% from corresponding period last year with India making a significant contribution in%age terms despite a not-so-strong demand scenario in the domestic market.

As per the World Steel Association (WSA) release, China's crude steel production was at 66.8 million tonne, up 2.6% from same period last year.

Elsewhere in Asia, Japan produced 8.9 million tonne crude steel, an increase of 0.5%, while India produced 8.1 million tonne of crude steel in July 2016, up 8.1% compared to the same month last year. South Korea's crude steel production was 6 million tonne, up 1.5%.

The WSA report showed production for 66 countries across globe where capacity utilisation ratios of the 66 countries were at 68.3%, same as the July 2015 levels. On sequential basis, however, utilisations dropped 3.7%age points.

In the European Union, Germany's crude steel production stood at 3.4 million tonne, down 6.1%, while United Kingdom produced meagre 0.7 million tonne, down 27.3%.

Turkey's crude steel production for July 2016 was 2.7 million tonne, up 6.5% from same period last year. Russia produced 6.1 million tonne crude steel, up 0.9% over last year. Ukraine produced 2.1 million tonne crude steel, up 10.5% compared to the same month in 2015. United States produced 6.9 million tonne, a decrease of 2.2% compared to July 2015, while Brazil's crude steel production stood at 2.7 million tonne, down 6.0% on year-on-year basis.

Despite weak seasonality, this is a strong performance. "We attribute this production rise to recent commissioning of capacities by most of the bigger integrated producers such as Steel Authority, JSW Steel and Tata Steel," said Emkay Global in its report. Essar Steel has also been improving its utilization, it said.

Since last few months several measures have been put in place by several countries to protect their steel industries with India being no exception. India has notified anti- dumping duty on hot-rolled and cold-rolled products recently replacing minimum import price (MIP) to address the concerns of the primary steel producers. However, despite these measures, poor demand has been weighing on the prices for last few months.

"We believe, sustainable demand growth is eminent for price recovery and so a good monsoon and 7th pay commission may help in this regard," said the brokerage.

 

sources :business-standard.com