CA Terminal: January 2017

Tuesday, 10 January 2017

India’S Oilmeal Exports Jump 130 Per Cent In December

Indian Rupee Closes Little Changed Against Us Dollar

The Indian rupee on Tuesday erased most of the gains and closed little changed against the US dollar as the traders avoided taking large positions ahead of the release of key macro economic data.

The rupee closed at 68.18 a dollar, up 0.03% from Monday’s close of 68.21. The rupee opened at 68.09 a dollar and touched a high and a low of 67.99 and 68.21 respectively. So far this year it fell 0.3%.

India’s benchmark Sensex index was trading at 26,893.23 points, up 0.62% or 166.38 points from its previous close. So far this year it gained 1%.

The government will issue index of industrial production (IIP) and consumer price inflation (CPI) data for November and December on 12 January. According to Bloomberg analyst estimates, IIP will be at -2.2%, while CPI will be at 3.5%. The government will also release wholesale price inflation data on 16 January.

The 10-year bond yield closed at 6.398%, compared to Monday’s close of 6.397%. Bond yields and prices move in opposite directions.

So far this year, foreign institutional investors sold $285.56 million in equity while $112.26 million buy in debt.

Most of the Asian currencies were trading higher as dollar index dropped amid narrowing US yield curves.

South Korean won was up 1.15%, Taiwan dollar 0.53%, Indonesian rupiah 0.41%, China renminbi 0.21%, Philippines peso 0.17%, Thai Baht 0.14%, Japanese yen 0.1%. However, China Offshore spot was down 0.14%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 101.85—down 0.1% from its previous close of 101.93.

Soures:.livemint.com

Budget 2017: Steel Min Seeks Import Duty Reduction On Coking Coal, Nickel

New Delhi: Ahead of the Union Budget 2017-18, the Steel Ministry has sought reduction in import duty on both coking coal and nickel -- vital components of steel making -- a move that may revive the sector, a top official said.

In an interview to PTI, Steel Secretary Aruna Sharma said the dependence on imports is particularly heavy on nickel, coking coal and gas.

"What we are discussing is whether there is need to take a re-look at their custom and import duties. This is still under discussions. Let's see how it moves out during the Budget," the Secretary said.
Reuters

Reuters

The Steel Ministry, in its recommendations to the Finance Ministry, has sought bringing down the import duty on coking, coal, nickel and gas, Sharma said.

While the import duty on nickel is five percent, in the case of coking coal, it is 2.5 percent now.

Sharma also said that in the future, the requirement of gas will increase in the manufacturing of pellets and added, "Like what the Prime Minister has said, tomorrow's economy is going to be gas-based."

Pellets are small balls of iron ore used in steel making.

To bring down the imports of coking coal, Sharma said that her Ministry was is discussions with the Coal Ministry to invest in washeries.

"There are two ways of tackling imports. One is to replace the imports with a better alternative fuel. So, we are in discussions with Coal Ministry to invest in washeries and the Coal Ministry has agreed to invest in them so the coking coal imports will come down by nearly 30 percent which is a very good sign for the coming years," she said.

India has to heavily depend on import of coking coal, as the domestic quality has higher ash content which is unsuitable for the steel industry with present technology.

Asserting the need to go for electric-based or gas-based steel production, she said that "pellet making can easily shift to the gas-based thing if it is guaranteed at affordable prices."

"Now, with the Paris Convention, it is mandatory that we must bring down the carbon footprints. So, that is another alternative we are working on," she said.

Indian Steel Association (ISA), the industry body representing primary steel producers, has also urged the government to reduce import duty to zero on all the raw materials used for steel making.

Sanak Mishra, Secretary General of ISA said, they have also requested the government to reduce railway freight for the steel industry.

SAIL, India's largest steel maker, had recently said there is a need to develop indigenous sources of coking coal to meet requirements as the recent rise in the price of metallurgical coal was putting pressure on its operations.

Soures :economictimes.indiatimes.com

Rubber Growers Demand Sops From Government

The Centre should urgently step in to give an export price incentive of at least R5 per kilo for Indian rubber, leading growers of the commodity have said.

Only timely export push can haul up the domestic price, IRGA (Indian Rubber Growers’ Association) has told Parliamentary Standing Committee for Commerce in Kochi, during the hearing sessions on impact of Association of Southeast Asian Nations (ASEAN) pact on plantation sector.

Currently, there is a gap of Rs 30 per kilo between the international price and domestic price of NR. At Rs 160 per kilo, international price has been flying above the domestic price of the premium grade RSS-4 (Ribbed Smoked Sheet), which is Rs 130 per kilo this week.

“Unless the window of export opportunity is opened now, there will not be enough psychological pressure to haul up the domestic price, punched down by excessive NR imports in recent years.

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Price-realisation for rubber has been at such negative levels that farmers are quitting tapping, in the peak season. This could hit the crop’s future. We have urged the Parliamentary Committee that announcing an export incentive for NR at this fortnight, as the price-gap is as big as Rs 30, would be the best support measure for the country’s 10 lakh-odd rubber farmers,” IRGA general secretary Sibi Monipally told FE.

At present, the Centre’s MEIS (Merchandise Exports from India Scheme) includes only rubber products. The growers’ body has mooted that the Centre dips from its MEIS pocket to back the farmer in the export of rubber sheets too.

IRGA has also pleaded that, while entering into FTAs (free trade agreements), with other countries, the Centre should safeguard the interest of rubber farmers and MSME sector. “Livelihood clause” should be incorporated in all trade agreements to protect the small and marginal growers.

Sources :financialexpress.com

Import Duty Hike May Hit Jewellery Exports To Dubai

India's gold and diamond-studded jewellery business is likely to take a hit, at least in the short term, following the hike in import duty from 0.36 per cent to 5 per cent, starting January, on all jewellery products exported to Dubai. Exporters may also stop using Dubai as a hub and start exporting directly to destination countries. In any case in last two months, huge exports already taken place for stocking there.

As much as 32 per cent of Gems and jewellery exported from India are headed to the UAE.

Sanjeev Agrawal, CEO of Gitanjali Exports Corporation said, "The jewellery business has in any case been facing an unfriendly business atmosphere in India since 2013, with the imposition of an increasing number restrictions that haven't spared even units in e-port zones. And now, the 5 per cent duty in Dubai, which has been a major market, will render Indian exports unviable."

Agrawal sees some export units shifting to Dubai and even new investment being made there in order to avoid the duty, unless the Indian government enters in a treaty with that country for a barter-like arrangement under which jewellery is exported against the import of crude oil.

Dubai is a hub for jewellery exports and several units are exporting ornaments from there with higher mark-ups to developed countries. Besides, many tourists prefer to buy their jewellery in Dubai, instead of their home countries, where prices in many cased are invariably much higher. Even the Indian tourist would rather buy jewellery in Dubai, as would the one from the US. In India, 10 per cent import duty, VAT and excise duty make it lucrative for tourists to buy jewellery from them.

Dubai is one of the few locations in the world where one can buy jewellery at a very low mark-up. For instance, plain jewellery. which is sold at a mark-up of 15-20 per cent in Dubai, is sold in some western countries at well over 100 per cent (in fact, nine-carat gold, which contains only 37.5 per cent of the precious metal, can command up to 400 per cent in some markets). What's more, in many cases such purchases also suffer local VAT. According to Sudheesh Nambiath, lead analyst for India and South Asia, GFMS Thomson Reuters, "This differential is significant for a hub like Dubai, where last year the number of visitors increased seven per cent year-on-year to 14.2 million, as against a world average of 4 per cent growth".

Nambiath added, "Our view is that the duty hike could logistically disturb the business in the short term, but for the longer term, the trade has already positioned itself to be a strong manufacturing hub with the required resources as likely to weather the storm."

India, while remaining the largest supplier of gems and jewellery, has seen a sharp fall in exports to the UAE, which dropped from 62 per cent in 2011 to just 34 per cent in 2016. India could also see a challenge to its leadership in items like diamond- and precious stone-set handmade jewellery. This is because the skill sets required to make such ornaments are likely to move to Dubai, following the recent surge in job losses in this sector in India. Besides, tax-free income in Dubai, efficient functioning of the workforce in the UAE, and low-cost capital are other factors that might provide impetus to the handmade jewellery fabrication business in that region.

Rajesh Mehta, CMD of Rajesh Exports said, "While our 60 per cent of exports are to Dubai, we will not affected much as we use Dubai as a hub to re-export the same jewellery. Duty has not been increased for such re-export."

Dubai has emerged as a hub for gem and jewellery exports due to the kind of facilities and flexibility extended to exporters that are not available in India. Some of these include a goods-return policy and lower credit cost.

South India-based jewellers are likely to take the biggest hit as they have all export heavily to Dubai.

There is a shopping festival going on in Dubai currently, and the timing of duty just ahead of this event will test its impact.

Sources :business-standard.com

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