Plan To Boost Exports To Islamic Nations Flounders

India’s move to boost its goods and services exports to over 50 Islamic nations mainly in Africa and Asia through a $100 million commercial Line of Credit (LoC), has failed to take off even five months after a pact to that effect.

There have been no disbursements under the financing mechanism -- though Export-Import Bank of India (Exim Bank) and the Islamic Corporation for the Development of the Private Sector (ICD) had signed a Memorandum of Understanding (MoU) for it in April this year. A worried Exim Bank has now urged ICD to raise awareness about the facility in the 52 Islamic nations that are ICD members. ICD is the private sector arm of Islamic Development Bank (IDB) Group.
No disbursements

Yaduvendra Mathur, Chairman & Managing Director, Exim Bank, told The Hindu: “The disbursements (under the LoC) have not started. We have told the ICD to push it (the financing mechanism).” Mathur said Exim Bank has also asked several exporters in India as well as Indian companies executing projects in various Islamic nations to inform the importers of their goods & services and sub-contractors operating in those countries to seek access to the commercial LoC.

According to the Indian government-owned Exim Bank, it extends commercial LoCs to recipients – who are overseas financial institutions, foreign governments, regional & national development banks, and commercial banks. These recipients – in this case, in the 52 Islamic nations – can then on lend to buyers for financing items that are imported from India including machinery, vehicles and equipment as well as related services. This loan is also helpful in cases where Indian firms win bids to execute projects in those countries. Credit periods for these LoCs are usually medium-to-long term and it carries London Interbank Offered Rate (LIBOR)-linked interest rates.

Once a contract gets the required approvals to be covered under the LoC mechanism, the Indian exporter/contractor can claim payment from Exim Bank against conforming documents & certificates regarding the export of goods & the services rendered. The (overseas) buyers of Indian goods & services repay the recipient financial institutions/bank/foreign governments (in this case, in the 52 Islamic nations). These recipients then make the repayment to Exim Bank. The ICD, under the LoC mechanism, will step in and make repayments to Exim Bank in case the recipient financial institutions/banks/governments in the 52 Islamic nations fail to make repayments on time. This ensures that the Exim Bank and Indian exporters are covered from risks.

The LoC has not taken off due to several reasons including lack of awareness, according to official sources who did not want to be identified. They said another reason is that though the MoU does not state that the LoC is only to promote trade between Muslims in India and in those Islamic nations, there is an apprehension that a section of officials in the financial institutions / banks / governments in the 52 Islamic nations and within the ICD are keen that the mechanism is used, among other things, to promote trade with Muslim suppliers in India. Export sector sources said most Indian exporters from the Muslim community are confined to segments such as meat, leather, ready-made garments, weaving, cashew and handicrafts. This particular LoC, however, is mainly for machinery, vehicles and equipment as well as related services, where it is difficult to find only Muslim suppliers, they said, adding that even otherwise there will be problems in linking a Muslim supplier in India to a Muslim buyer in those countries.

Sources :thehindu.com

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Vietnam Price Drop Raises Hopes For India Robusta Coffee Exports

 Continuous rainfall in Vietnam, the largest producer of robusta coffee, has kindled hopes of a fall in prices which could boost exports of the commodity from India that have been declining due to sluggish demand and high robusta bean prices.

A large chunk of India's coffee exports comprises robusta coffee variety, the prices of which have been rising in the past few months on concerns of a lower crop in Vietnam and Brazil, two major producers that set the price in the world market.

The ICE London November robusta coffee futures fell 1 per cent to $1,909 per tonne on Friday last week, ending seven consecutive sessions of gains.

Many Indian exporters said rains at this stage may not help make good damage suffered by the coffee crop in Vietnam due to drought. "Vietnam is expected to end up with less than 25 million bags (each bag of 60 kg), about 10 per cent less than in the previous year. Harvest begins in November," said a senior executive of NKG Jayanti Coffee, a major exporter.

Traders said global futures may rise another $200 in the coming months given that the next robusta crop in Brazil, Indonesia and India is likely to be lower.

   "In India the robusta prices have climbed to Rs 130 per kg from Rs 110 per kg in a few weeks. If it goes above Rs 140 per kg, there could be consumer resistance," said a leading coffee broker, who did not wish to be identified.

India's coffee exports increased nearly 17 per cent from January 1to September 9 to 265,860 tonnes from that a year ago. In the earlier months, exports grew 20 per cent over the previous year's figures.

"In India, most of the stock has been sold out. Maybe 15 per cent of the stock is left. Moreover, the European buying is sporadic. As a result export trend will be slack for next three months," said Ramesh Rajah, president of Coffee Exporters Association of India.

The stock has thinned despite a bumper crop last year. Only the large growers are left with some stocks, Rajah said.

India's coffee growers have revised their estimate of fall in the next robusta output from more than 20 per cent to 15 per cent since the monsoon has been good. Coffee Board has forecast in its post blossom estimate that the robusta crop will be down 10 per cent to 2.2 lakh tonnes.

 

Sources :economictimes.indiatimes.com

Palm Oil Price Up 10% In A Month

 Frying samosas and namkeen will be costlier this festive season, with prices of palm oil having shot up 10 per cent in the past month and little respite in sight.

Edible oil makers have already passed on the hike in palm oil prices to consumers. Palm oil, the cheapest among all edible oils, is widely used across India, with the south consuming the largest volume.

Experts said crude palm oil prices may remain firm throughout 2016 since the global output of palm oil is expected to shrink after the prolonged El-Nino related dryness that hit palm producing regions in Southeast Asia this year. Media reports indicate that production of palm oil in Indonesia is likely to be around 31 million tonnes in 2016 compared to 32.5 million tonnes last year.

Malaysian palm oil output is expected to drop below 19 million tonnes compared to 19.96 mt in 2015.

"A projected short supply in the global markets has pushed up palm oil prices. Additionally, Indians are short covered as far as palm oil is concerned. Consumption in India for palm oil will be on the higher side till Diwali," said Anghsu Mallick, chief operating officer at Adani Wilmar.

Mallick said the company, which sells palm oil under brand name 'Raag Gold', has passed on the price hike to consumers. "The price hike will have an impact on consumption and slow down the movement of palm oil," he said.


Soy oil prices have gone up 6 per cent in the past one month. "The impact of soy oil prices moving up will not be as much as the palm oil. Soy oil is generally consumed by the upper and upper middle-class people," said Sandip Bajoria, CEO of oil consultancy firm Sunvin Group.

Global soyabean production for this season is forecasted to be 314 metric tonnes, down 1.8 per cent from last season's historic high, but it will still be the second-largest harvest. The output of the US, among the bigger producers, is pegged at 107 million tonnes, almost identical to the all-time record of the 2014-15 season.

Bajoria said, "Price hike in soy oil is a temporary phenomenon. Whenever prices of any of the oils in the edible oil complex go up, then other oils also tend to become costlier." The rising prices of palm oil may bring down its imports by India.

"The price difference between RBD palmolein (finished palm oil) and soy oil is narrowing down. This may result in people shifting to soft oil like soy oil," said BV Mehta, executive director, Solvent Extractors' Association of India.

Palm oil import has already decreased to 61.75 lakh tonnes in the first nine months of current oil year (November 2015 to July 2016) from 68.26 lakh tonnes a year ago, while import of soft oils import has increased to 46.12 lakh tonnes from 33.73 lakh tonnes last year.

The share of soft oils in imports increased to 43 per cent from 33 per cent last year while the share of plam oil products went down to 57 per cent from 67 per cent.

 

Sources :economictimes.indiatimes.com

India And Russia Discuss Direct Gas Delivery Line

In a major boost to their energy ties, India and Russia today launched a working group for creating an "energy bridge" for a possible direct gas delivery from Russia and also directed their concerned ministries to finalise "concrete outcomes" in key areas of trade and investment by the next month's summit between Prime Minister Narendra Modi and Russian President Vladimir Putin.

The discussions were held during the 22nd Indo-Russia interGovernmental Commission meeting today which were co-chaired by External Affairs Minister Sushma Swaraj and Russian Deputy Prime Minister Dmitry Rogozin.

"The Intergovernmental Commission reviewed the preparations for the forthcoming India-Russia Annual Summit to be held in Goa on 15 October 2016.

"While expressing satisfaction at the progress made in regard to some projects, the Commission also directed concerned Ministries and departments to focus on key sectors in the trade and investment spheres to finalise concrete outcomes by the forthcoming summit in October 2016," MEA said after the meeting.

Noting that there has been substantial progress on the investment front with expanding cooperation in oil and gas sphere, MEA in a release said Indian and Russian oil and gas companies are working towards finalisation of investments in each other's countries.

"Both sides launched an industry level Working Group - led by Gazprom, biggest Russian gas company, and a consortium of Indian oil and gas companies- for creating an 'energy bridge' between the two countries through possible gas pipelines for direct gas delivery from Russia to India," it said.

   

India and Russia reiterated their strong desire to further broaden their strategic cooperation with emphasis on key sectors such as nuclear energy, space, modernisation, high technology, disaster management, and supercomputing.

Asserting that a new milestone was recently achieved in the India-Russia cooperation in nuclear energy with the dedication of Unit 1 of the Kudankulam nuclear power project by Modi and Putin last month, it said the two sides renewed their commitment to work together on remaining stages of Kudankulam 2,3,4,5 and 6; and other projects through localisation under the Make in India programme.

Stating that connectivity was a major theme of discussion during the meeting, it noted that implementation of the International North South Transport Corridor (INSTC) project and the launch of the 'Green Corridor' project for customs facilitation are major steps towards better connectivity and trade facilitation.

Cooperation between Indian and Russian railways in the field of dedicated freight corridor, modernisation of railway stations, and training of railway personnel emerged as a new area to broaden cooperation in transports and logistics, it added.

 

Sources :economictimes.indiatimes.com

African Oil Import Funds May Be Put In Vostro Accounts To Settle Exporters’ Dues

The government may soon extend to African countries a mechanism to clear payments of Indian exporters, especially pharmaceutical companies, stuck for months.

The payment model is similar to the one used in the case of Iran and now proposed for Venezuela.

The commerce department has moved a proposal but the final decision rests with the department of financial services and the Reserve Bank of India.

Essentially, the payment for oil imports from these countries will be used for paying for Indian exports. It will be a rupee mechanism wherein payment for imports from these countries will be made into a vostro account that will be then used to settle dues of domestic exporters.

Vostro account is a bank account held by a foreign bank with an Indian bank. Nigeria and Angola, the two top oil producing African countries, have been hit by a series of economic and political crises that have forced their governments to hold on to precious foreign exchange. These countries are not releasing dollars for payment to exporters.

The currency crisis is worsened by falling commodity prices, especially of oil. Nigeria is Africa's largest economy. "Many exporters are not able to do business because the payments are delayed," said PV Appaji, director general of Pharmexil. A least 15 complaints of delayed payments have been received, he said.

 "For three to four African countries, including Nigeria & Angola, we have suggested a payment mechanism to resolve issue of pending payments for our exporters," a commerce department official said, requesting not to be identified.

 

Sources :economictimes.indiatimes.com