Why The Central Government Should Go All Out To Expand Oil Palm Cultivation

The Indian edible oil sector is the world’s fourth-largest after the US, China and Brazil and accounts for around 9 per cent of the world’s oilseed production.

An irony of this industry is its heavy dependence on imports. Cooking oil imports are all set to touch a record 15 million tonnes (mt) in the current, 2015-16 Oil Year, ending October. Out of the 15 mt, palm oil imports alone account for 9 mt or 60 per cent.

The reason for palm oil occupying the lion’s share of the total consumption is because palm is generally the cheapest commodity vegetable oil and also the cheapest oil to produce and refine globally.

Therefore, focussed palm oil cultivation will undoubtedly play a key role in addressing the domestic shortfall in edible oil consumption and lowering India’s edible oil import bill and saving foreign exchange.
Highest-yielding crop

A distinct advantage that palm enjoys is that it is the highest-yielding perennial edible oil crop and needs a fraction of the area used to grow in comparison to other oilseeds. This is indeed potentially attractive in a country like India, where land is increasingly scarce as the population rockets.

On a per-hectare basis, oil palm trees are 6-10 times more efficient at producing oil than temperate oilseed crops such as rapeseed, soyabean, sunflower or ground nut. For example, while a hectare of land can yield 300-400 kg of groundnut oil, nearly 4 tonnes of palm oil can be produced from a hectare of land.
The case for palm oil

P Rethinam, a plantation crop management specialist, in his detailed report titled ‘Increasing Vegetable Oil Production through Oil Palm Cultivation in India’ observes: “27 million hectares of nine oilseed crops produce about 9 million tonnes of oil per year but 2 million hectares of oil palm could produce 8 million tonnes of crude palm oil, 0.8 million tonnes of palm kernel oil, palm kernel cake, bio mass for bio energy, eco-friendly bio-diesel, etc.” There is a big potential to raise the acreage of palm, which is currently cultivated on about 200,000 hectares. According to OPDPA, India has the potential to expand the acreage to 20 lakh hectares, keeping in view the demand. If this is done, the palm oil industry, which provides employment to 20,000 people, can create two lakh additional jobs.

Indian palm oil production is estimated at 1.7 lakh tonnes for 2014-15, up from 0.6 lakh tonnes in 2010-11. Palm oil cultivation has grown from zero to 2,00,000 hectares in the past two decades.

The Central government has been trying, for many years now, to reduce its dependence on imported edible oils by encouraging farmers to take up palm cultivation. In an encouraging move, the current government has announced a package of ?10,000 crore over three years, which is intended to support farmers until the trees begin to yield (it takes three to five years for the palm tree to start yielding fruit).

The government has identified nine States with suitable climatic conditions. In November 2015, the government has also allowed 100 per cent FDI in palm oil plantations, a move the industry believes will boost domestic production, bring in more funds and newer technologies into the sector.
Industry challenges

However, there are several road blocks for India preventing it from successfully expanding on its domestic palm oil cultivation. First and foremost, lack of large land tracts is a major constraint.

The industry wants the government to declare palm oil as a plantation crop to move it out of the Land Ceiling Act. Moreover, the current import duty is not supportive of oil palm farmers and the industry.

Secondly, the Indian edible oil industry has been urging the government to maintain a duty differential of at least 15 per cent on crude and refined oil to protect the interests of refineries. Domestic edible oil refiners are facing a surge of imports of refined oil over the last few months, reducing their capacity utilisation to 30-40 per cent from 55-60 per cent a year ago.

Last month, the Centre lowered the import duty on crude palm oil from 12.5 per cent to 7.5 per cent and on refined oil from 20 per cent to 15 per cent. Hence, there was no change at all in the duty differential and the move is not expected to have any impact on either the industry or farmers.

The government needs to provide a level playing field to the domestic refining industry. Otherwise, Indian edible oil importers will be perpetually fighting a losing battle with cheap rival palm oil from top producers Malaysia and Indonesia.
Conclusion

A focus on palm oil cultivation is key to India’s goal of attaining self-sufficiency in vegetable oils over the next decade. The palm oil industry deserves the highest priority and encouragement from the government to meet the internal demand of edible oil, resulting in a strong imprint on savings of foreign exchange, employment generation and boosting India’s food security.

 

Sources :hindubusinessline.com

Rupee Recovers Over 20 Paise Against Dollar, Ends At 66.72

Indian rupee recovered over 20 paise against the US dollar on Friday on account of increased selling of the American currency by banks and exporters. Rupee closed 22 paise up at 66.72 against the US dollar. The local currency slipped 40 paise on Thursday and closed at fresh three-week low of 66.94 against the dollar on rising concerns over interest rate hike by the US Federal Reserve.

Meanwhile, domestic equity markets traded choppy in a narrow range and ended in green. Concern about the global economy contributed to the early weakness, while value buying at reduced levels after the drop helped the bourses in some recovery. This week has seen brutal cuts on equity markets globally as investors contend with weak China data, weak start to earnings in the US and now almost 70 per cent probability of rate hike by the Federal Reserve.

Foreign institutional investors remained net sellers in the Indian equity markes as they sold shares worth of Rs 846 crore on Friday, according to the provisional data available with NDSL.

US Dollar Index declined by 0.45 per cent in Thursday’s trading session due to unfavourable economic data from the country. However, sharp fall in the currency was cushioned due to rise in risk aversion in global markets which led to increase in demand for the low yielding currency.

US Unemployment Claims remained unchanged at 246,000 for the week ending on 7th Oct’16. Import Prices grew by 0.1 percent in September with respect to decline of 0.2 percent in August.

 

Sources :.financialexpress.com

Pakistan Will Face Difficulty In Exporting Products If India Scraps Mfn Status: P R Chakravarty

P R Chakravarty, former consul general of India in Karachi on Tuesday said if New Delhi scraps the 'Most Favoured Nation' status to Islamabad, it won't affect India whereas Pakistan would have problems in exporting their products.

"This meeting on the MFN status is context with what happened in Uri and what the options are available for India in terms of taking action against Pakistan. So, MFN is one of them because we gave MFN status to Pakistan in 1996 and they have not yet given it to us," Chakravarty told ANI

"If we scrap the MFN, which is part of our obligation under the WTO, it will affect Pakistani exports to India because then India would be able to apply higher tariffs than what we do for other countries. For India even if India-Pakistan trade goes down a bit it makes no difference. Pakistan will have problems in exporting their products," he added.

Prime Minister Narendra Modi will chair a meeting with top officials on Thursday to decide whether to withdraw "Most Favoured Nation" status for Pakistan. It is expected that officials from the Ministry of External Affairs and Commerce Ministry would attend the meeting.

Reports are rife that India is considering withdrawal of the Most Favoured Nation (MFN) status to Pakistan in the wake of the Uri terror attack.

The decision comes a day after India reviewed the Indus Waters Treaty with Pakistan.

It is expected that officials from the Ministry of External Affairs and Commerce Ministry would attend the meeting.

Reports are rife that India is considering withdrawal of the Most Favoured Nation (MFN) status to Pakistan in the wake of the Uri terror attack.

 

Sources:business-standard.com

Rupee Closes Up 0.19% Against Us Dollar

The rupee on Tuesday closed stronger for the fourth consecutive session to hit a near three-week high against the US dollar, on continued buying from foreign institutional investors in local and debt markets. Gains in Asian currencies market also helped the rupee.

The home currency closed at 66.49 per dollar, up 0.19% from its previous close of 66.61. The rupee opened at 66.50 and touched a high of 66.44 per dollar, a level last seen on 8 September. So far this year it fell 0.5%.

The benchmark 10-year government bond yield closed at 6.793%, compared with Monday’s close of 6.789%. Bond yields and prices move in opposite directions.

India’s benchmark Sensex fell 70.58 points, or 0.25%, to close at 28,223.70. So far this year, it has gained 8.06%.

Most Asian currencies closed higher as Democrat Hillary Clinton was seen as outperforming Republican Donald Trump in the first US presidential debate, improving risk sentiments.

The South Korean won was up 1%, Indonesian rupiah 0.66%, Taiwan dollar 0.65%, Malaysian ringgit 0.18%, Singapore dollar 0.1% and Thai baht 0.05%. However, the Philippines peso fell 0.15% and Japanese yen was down 0.06%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.33, up 0.04% from its previous close of 95.297.

 

Sources :.livemint.com

Indian Steel Association Requests Government To Consider Extending The Minimum Import Price

 Indian Steel Association (ISA), a lobby group of leading domestic steel majors, has requested the government to consider extending the minimum import price (MIP) regime for some steel items notified in August this year for another six months.

“The situation with respect to import prices of the 66 HS codes covered under the August 4, 2016 remains low and as per ISA understanding these prices operate on a predatory level. Demand for these products have not picked up domestically. The situation would be affected adversely if these are now imported at dismally low prices leading to an unwarranted glut in the domestic market,” Sanak Mishra, secretary general of ISA said.

The India steel industry is not asking for protection but for fair competition for these products in the domestic market, he added.


While petitions for anti-dumping and other steel products would be taken up concomitantly and take its due course of process it is imperative that the August 4, 2016 MIP notification is extended for a period of six additional months, ISA said. Unless this is done issues pertaining to global overcapacity emanating mainly by China would recreate pressure on Indian steel markets, it added. The situation is reaching crisis proportions which is why it said there is global consensus building up to hold China accountable for its commitment to take swift steps to reduce excess capacity, ISA statement said.

 

Sources :economictimes.indiatimes.com

India Likely To Import 2 Mt Wheat To Boost Supplies

: India is likely to import up to 2 million tonne (MT) wheat in the current fiscal after the customs duty cut on the grain to boost domestic supply and check prices, according to flour millers.

"Imports will increase in the coming months and reduce pressure on the domestic availability," Food Ministry Joint Secretary Prashant Dwivedi told PTI on the sidelines of an AGM of Roller Flour Millers Federation of India (RFMFI) here.

He said the government will not discontinue the sale of FCI wheat to bulk consumers like flour millers.

Asked about likely quantity to be imported this fiscal, Dwivedi declined to give any figure.

However, the industry players estimated that overseas purchase of the grain would touch 2 MT in the 2016-17 fiscal helped by duty cut.

Already, about 6,00,000 tonnes of wheat has been imported from Australia, Ukrain, France and Russia, while another 4,00,000 to 5,00,000 tonnes is in the pipeline, RFMFI Ex-President M K Datta Raj said.

    
"Total wheat imports are expected to be 2 million tonnes this year," he said.

Much of the imports are being undertaken by flour millers in south India. Now with the duty cut, imports have become viable for flour millers in Maharashtra and West Bengal, he added.

Four millers are importing Australian white wheat in big quantities, which is costing about Rs 19.50 per kg for delivery at Bangalore after the duty cut, while earlier it was costing Rs 23 per kg, he explained.

Last week, the government had slashed import duty on wheat to 10 per cent from 25 per cent till February 2017.

The country's wheat production is estimated to be 93.50 million tonnes in the 2015-16 marketing year (April-March), while the industry players peg 5 million tonnes less output.

Despite projection of higher production, the state-run Food Corporation of India (FCI) has procured only 22.9 MT as against the target of 30.5 MT set for the 2016-17 marketing year (April-March). The bulk of the procurement was done during April-June.

 

sources :economictimes.indiatimes.com

In Lean Season, Seafood Exports Increase By 7 Per Cent

 In a sign of strong recovery, seafood exports in first five months of the current fiscal rose 7 per cent from a year ago to touch 333,832 tonnes, according to data from Marine Products Export Development Authority (Mpeda). In value terms, the year-on-year increase was 17 per cent to Rs 13,426 crore, Mpeda's provisional data for the five months to August showed.

"The good performance has come in the lean season, which augurs well for the coming months," Mpeda chairman A Jayathilak said.

In 2015-16, marine exports dipped 9 per cent from the previous year to Rs 30,421 crore as the unit value realisation of frozen shrimp, which constitutes over 70 per cent of total exports, fell by $2 to $8.28 per kg. Jayathilak said the loss of the previous year has been made good in the first few months of the current year. He said seafood exports are expected to touch the targeted $5.6 billion in the current year.

 As per Mpeda data, production of aquaculture shrimp, which is driving exports, touched an alltime high of 550,000 tonnes in 2015-16.

 

Sources :economictimes.indiatimes.com

Rupee Trades Higher At 66.96 Against Us Dollar

The Indian rupee on Monday was trading little changed against the US dollar, as traders turned cautious ahead of the US Federal Reserve meeting.

At 2pm, the home currency was trading at 66.96 per dollar, up 0.04% from its previous close of 66.99. The rupee opened at 66.95 per dollar and touched a high and a low of 66.86 and 66.95, respectively.

India’s benchmark Sensex index rose 0.11% or 32.50 points to 28,631.53. So far this year, it has gained 9%.

Most Asian currencies advanced and regional equities rallied for the second day amid improving risk sentiment with the Fed expected to stand pat this week. The Fed meeting will start on Tuesday and end on Wednesday. The Bank of Japan meeting will be held on 21 September.

Taiwan dollar was up 0.73%, Japanese yen 0.49%, South Korean won 0.33%, Singapore dollar 0.29%, Thai baht 0.2% and China renminbi 0.08%. However, China offshore spot was down 0.23%, Malaysian ringgit 0.23% and Philippines peso 0.08%.

The 10-year bond yield stood at 6.867% compared to its Friday’s close of 6.868%. Bond yields and prices move in opposite directions.

The rupee is down 1.17% till date this year, while foreign institutional investors have bought $6.29 billion in equity and sold $666.10 million in debt markets.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.881, down 0.24% from its previous close of 96.108.

 

 

Sources:livemint.com

Sudarshan Chemicals Plans Rs 1000 Cr Investment In Five Years

 Pune based pigment and agro chemical maker Sudarshan Chemicals is planning to invest Rs 1000 crore over the next five years. The company is aspiring to become the fourth largest company in the world.  Its products primarily serve the coatings, plastics, inks and cosmetics markets.  It is one of the leading manufacturers of color & effect pigments in India.

"We have signed a memorandum of understanding (MoU) with Maharashtra government of Rs 1,000 crore of investment in the next five years. The first stage of the investment has already kicked off and we are already seeing very good utilisation of those capacities," said Rajesh Rathi, deputy managing director, Sudarshan Chemicals.

Sudarshan Chemicals is eying international markets to gain fourth largest position. The global market of pigment manufacturing is of $5.5 billion. It has a dominant 35 per cent domestic market share and are seeing the opportunities towards high margin pigment products with sharpening focus in Europe and North America.

The company would desire to become fourth largest global player in the next three years.  To achieve this, it has started globalising its business from the last two-three years. Its changing the product portfolio to high performance pigments and which go into coatings and also effect pigments which go into cosmetics. Most of these products have a much better margin than the traditional pigments especially in the international markets.

"We are already a dominant player in India and the Middle East market, but we want to majorly increase our market share in international markets because that is where 90 per cent or more of the market is. Our aim is to gain 10 per cent market share in the international markets" adds Rathi.  

This year, the company is planning to introduce new products in the market. It aims at 15 to 20 per cent  increase in sales with these products in the next two years. In the last seven years, Sudarshan Chemicals has introduced more than 100 products.  It has two manufacturing plants in Maharashtra, one is in Roha and other is located at Mahad.

The other three global players in the market are German giant BASF,  Switzerland's Clariant and Japan's DIC Corporation. Domestically, it competes with Pidilite Industries.  

Sudarshan Chemical's FY16 revenue growth 15.7 per cent to Rs 1,409 crore from Rs 1,218 crore in FY16. Its EBIDTA rose 29.5 percent (YoY) to Rs 167 crore in FY17. For FY17, the company is betting on uptick in approvals for its operations in Europe, Asia and North America to clock a higher growth than FY16. Sudarshan Chemical, which has a capacity utilisation iof 80-90 percent tops the Indian pigment manufacturing market with a share of 35 per cent.

Speaking about the expansion plans Rathi said that the company has required infrastructure and already expanded for the utilities and boilers.

"Our exports today would be about 60 percent would be exports and 50 percent would be India market. In near future, we see the export percentage to go much higher up, not that our focus from the India market is going to go away, but 95 percent of the market is out of India," he said.

Plus, it has planned and executing several strategic initiatives within the company to grow the margins and especially a lot of focus on the return on capital employed and the earnings before interest, taxes, depreciation and amortisation (EBITDA) margins.

 

sources:business-standard.com

Pulses Traders Welcome Panel Report

 Pulses traders have appreciated the Subramanian committee’s recommendations on measures needed for long term solutions to the commodity’s inflationary problems.

The committee headed by Chief Economic Adviser Arvind Subramanian recommended immediate increase in the minimum support price (MSP) by at least 20% for major pulses with tur and urad at Rs 60 a kg from Rs 50.50 a kg each and chana at Rs 40 a kg from the existing Rs 35 a kg.


“Wheat output stands at four times that of pulses. This means, if a farmer harvests four tonnes of wheat on a piece of land, he would get only one tonne of pulses. Therefore, MSP for pulses (tur and urad) should be four times that of wheat which currently works out to around three times. Assuming that even 10 per cent farmers are diverting there crop from wheat to pulses, India would have enough pulses,” said Pradeep Jindal, President, Pulses and Beans Importers Association.

India’s pulses consumption is estimated at around 24 million tonnes as against its production at 16.47 million tonnes in 2015-16 and 17.15 million tonnes in 2014-15 because of two years of subsequent droughts. Following a more than 30% increase in acreage on favourable monsoon, India’s pulses output is estimated to breach its previous record of 19.25 million tonnes in 2013-14 to achieve at 22 million tonnes for crop year 2016-17.

Further, the panel recommended that the Centre should encourage states to delist pulses from Agriculture Produce Markets Committee (APMC) Act to allow farmers to sell their produce to consumers directly. The government has already adopted this practice in fruits and vegetables.

“The role of APMC is nothing beyond collecting 5.8 per cent of various taxes just to make pulses costlier,” said S P Goenka, Director, U Goenka Sons, a Mumbai-based pulses importer. “Today, farmers should be allowed to sell their produce to anyone who pay higher prices. If they feel, they can sell their output directly to consumers at the prevailing market price. The system which was set years ago as a vote bank for politicians, still continues. Today, APMC has become irrelevant. So, it should be abolished.”

Pulses traders say that this is the first time ever that the government has received right policy recommendations. Some years ago, when pulses’ export was banned, India used to be a hub for processing of varieties of dals. But when dal prices moved up, then Food Minister Sharad Pawar invoked the ban.

“The ban on pulses exports was just an eye wash. India used to import 3 million tonnes of pulses about a decade ago of which 10 per cent was processed locally for re-export which used to earn forex for India. Now, export of 10 per cent of imported goods makes no difference in its availability for domestic market as dal mills could have imported this exportable quantity extra. The ban on export not only killed our industry but also helped emerged many such processing units in the Middle East and Asian countries. It should be immediately revoked to make a market free from any hurdles,” said a senior industry official.

Similarly, traders termed as wrong the stock limit imposed by the current NDA government to control pulses inflation, and have urged the government to intensify procurement to meet its buffer requirement and purchase more in case of distress sale from farmers.

“By imposing a stock limit, the government restricted stockists to hold limited quantity which means supply is restricted. Instead of taking all corrective measures, why the government has not convened a meeting of farmers to understand the problems faced by them for growing less pulses. The increase in pulses area this year is the result of high prices during the last two years. The government, therefore, needs to take a long term measures to encourage farmers with adequate returns to their produce,” said Jindal.

Apart from urging the government to allow genetically modified seeds in pulses for higher yield, traders called for immediate ban on futures trading due to excessive speculation by certain groups of traders.

 

Sources:.business-standard.com

We've Improved And Expect A Rebound In Demand Over The Coming Years: P K Singh

The steel industry in India, like other countries, has been affected by the global oversupply created by China, which led to cheap imports replacing domestic steel. This impacted the margins of all steel makers. However, the government’s intervention by bringing in protective trade measures of various forms provided some respite.

Since the last quarter of the earlier financial year, we’ve improved and clocked record sales of around 3.8 million tonnes, about 20 per cent up over the same period last year. In the first quarter of FY17, we have posted the highest ever in saleable steel production, with 11 per cent growth and a nine per cent growth in operating earnings. Simultaneously, the government’s plans to invest heavily in infrastructure is expected to boost the demand for domestic steel in coming times.

Is there a demand pick-up? What are the factors preventing a rebound?

In the April-August period, domestic steel consumption grew only 1.3 per cent. During the same period, there was a fall in the import of finished steel of 30 per cent and exports rose 24 per cent. We had a good monsoon and that will surely translate into a rise of steel consumption in rural markets and, demand-wise, a better second half for domestic steel makers.

The huge infra push from the government in form of smart cities, expansion of road and rail network, favourable policies like Make in India, indigenisation of sectors like defence, heavy engineering, etc. will all require substantial amounts of quality steel as a major input. So, we expect that in the coming years, there will be a spurt in demand and no factor would stop that rebound.

How far have the minimum import price (MIP) and anti-dumping and safeguard duties helped? If MIP had not been implemented, what would have been the price scenario? Should MIP be further extended?

The government extended MIP on August 4 on 66 items for a further two months. Further, in March, it extended the safeguard duty on hot-rolled coil (HRC) imports, placed in September 2015, till March 2018. The Directorate General of Anti-dumping & Allied Duties recommended provisional anti-dumping duty on HRC and cold-rolled flat products, which also have been issued. Imposition of provisional anti-dumping duty on wire rods is also under consideration.

In the face of huge global oversupply, almost every other country has resorted to trade safeguard measures of some degree to shield their domestic steel industry. At such times, these are required to give a level field to your own industry.

What is your capital expenditure and your major projects?

For this financial year, capex is planned at Rs 4,000 crore. We spent a little over 25 per cent of this amount in the first quarter of FY17.

SAIL had undertaken modernisation and expansion of its five integrated steel plants at Bhilai, Bokaro, Rourkela, Durgapur and Burnpur, and the special steel plant at Salem, at an investment of Rs 62,000, to enhance crude steel production capacity from 12.8 million tonnes per annum to 21.4 mtpa. All major facilities under this plan at Rourkela, IISCO (Burnpur), Durgapur, Bokaro and Salem have been completed and are under operation or stabilisation. Many of the major projects at Bhilai has been completed; others are in advance stages of installation.

What is the status on your foreign projects?

The major overseas project is at Mozambique. Our joint venture in coal mines there is a strategic investment, our first footprint outside India to acquire any coal mines. Till date, we have exported around 1.3 mt of coking coal from the mines. The cost of operations at the time of acquisition was quite high but in due course, a number of steps were taken that have resulted in considerable reduction of the coking coal price.

 

Sources :business-standard.com

Tea Board Hopeful Of Doubling Exports To Australia In Five Years

 After his recent visit to Australia with a 15-member delegation of tea exporters, Executive Director of Tea Board C Paulrasu said he is hopeful of doubling the export volumes to that continent.

“Indian tea exports to Australia now stand at 3 million kg. This could double in the next five years,” he said, adding that Australia is looking only for speciality products such as organic tea, value-added teas, flavoured teas and green tea.

The total volume of tea imports into Australia is estimated at 15 million kg. “Indian tea exporters are fully geared to cater the international market,” he added.
Tea exports

Tea export has risen by 10 per cent in 2015 -16 compared to the earlier year to touch 221 million kg.

As per Tea Board figures, the CIS continues to be the largest importer of Indian teas at 60.52 million kg in 2015-16. Other major importers of Indian teas are Iran (20.41 million kg), Pakistan (18.94 m kg), the UK (17.70 m kg) and the UAE (15.01 m kg).

The export volumes to the CIS countries have seen some improvement from 54.26 m kg in 2014-15 to 60.52 m kg in 2015-16, which industry sources say “is consequent to the visit of a tea delegation to Moscow just over a year ago.”
Production

Indian tea production rose in 2015-16 by 36 m kg to 1233 m kg compared to the corresponding 12 months of the previous year. While north Indian production increased by 52 m kg to 1,008 m kg, tea production in the South took a huge hit slipping by 16 m kg to 225 m kg.

At the 34th annual general meeting of the Tea Trade Association of Coimbatore, its Chairman UV Saraf said the situation in the South is worrisome. “We do not expect the crop situation to improve during the later part of this year, until and unless rainfall improves in the tea growing areas.”

 

Sources:.thehindubusinessline.com

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

Ford Pips Hyundai To Become Top Passenger Vehicle Exporter In August

 Even as it expects improvements in India sales, Ford’s export story is getting stronger as the US carmaker displaced Hyundai to become the largest passenger vehicle (PV) exporter from India in August.

However, in cumulative exports for the current fiscal, Ford India stays in the second slot.

By shipping higher number of ‘India-built’ vehicles over the past five months, Ford displaced Maruti to grab the second slot. With robust exports, its numbers even surpassed export volumes of Hyundai in August.

During the month, Ford exported 17,860 units of PVs as compared with Hyundai’s exports of 16,506 units and Maruti’s 12,131 units.

During the April-August 2016 period, Ford’s total PV exports stood at 60,249 units, an increase of 45 per cent over the previous year.

Narrowing volume

Hyundai’s exports were flat at 70,893 units during the first five-month period of this fiscal, according to the data provided by SIAM.

In the past one year, the gap in export volume between Hyundai and Ford has been narrowing.

Hyundai has been facing some challenges in some of its export destinations. Also, its domestic demand continues to rise, and hence, its share of exports has been declining.

 

Sources :thehindubusinessline.com

Indonesia To Issue Permits To Import 700,000 Cattle In 2017

Indonesia said on Tuesday it would issue permits to import 700,000 cattle for slaughter in 2017 as well as shipping in additional buffalo meat from India, as it looks to control climbing food prices.

Since coming to power in October 2014, President Joko Widodo has pursued food self-sufficiency to protect farmers, but the result has often been volatile prices and worried investors, eroding support for the government.

"This is being done to push down prices that are still high, and to prepare for demand during the Muslim fasting month in 2017," the country's economic ministry said in a statement.

The Southeast Asian nation ships in virtually all its cattle from Australia - a trade that was worth nearly $600 million in the last financial year.

Indonesia's government late last year estimated that the country would import around 700,000 head of cattle in 2016.

The country has been pushing cattle-buyers to start breeding their own livestock as part of efforts to reduce its dependence on imports.

Trade minister Enggartiasto Lukita said on Tuesday that for every five cattle imported, feedlots would need to have at least one animal for breeding purposes.

The government has also revised plans to import buffalo meat from India. It now expects to ship in 100,000 tonnes of the meat by June 2017, rather than aiming for 80,000 tonnes of such imports this year.

 

Sources :.business-standard.com
 

Wheat Scarcity Leads To Jump In Import

 There has been a phenomenal increase in the price of wheat in India in the last few months due to falling production and low procurement by government agencies  specially at a time when the price in the global market is low.

Import of the grain has increased, as that is viable in some centres in south despite 25 per cent import duty.

Initial estimates suggest wheat import this year will be 2.3 million tons which was not seen since 2009. Reports suggest if import duty is cut, import will rise to 3-4 million tons.

From April onwards, wheat prices have gone up in India by 15 per cent.
 
Trade and user industry is craving for the abolition or cut in import duty of wheat which is at 25 per cent, fresh contracts of 1 million tonne have been singed recently, said informed sources.

The superior quality Australian wheat is available at $225 per tonne and Ukrainian wheat is available at $195 per tonne.

Despite a high import duty of 25 per cent on wheat, the landed cost of imported wheat is Rs 2125 per quintal to 1850 a quintal (depending upon the quality) against the average price of Rs. 2000 per quintal of wheat liquidated by Food Corporation of India under OMSS (Open Market Sales Scheme).

In southern state wheat cost more due to higher transportation charges.

Officials in FCI informed that the demand for wheat under OMSS has been exceptionally high this year and 2 million tonnes of wheat has been sold till 8 September under the e-auction of OMSS against a minuscule 3.58 lac tonnes in the corresponding period last year.

He agreed that if the trend continues there may be difficulty in tackling the situation as demand picks up significantly during and after festival season.

The total annual sale of wheat under OMSS last year was 7 million tonnes, he informed.

The annual requirement of wheat for Public distribution system is 24.5 million tonne. The Food Corporation procured 23 million tonne this year against the estimated target of 28 million tonne. The opening stock of wheat as on April 1, 2016 was 13.85 million tonne.

The average annual requirement of wheat for PDS and OMSS (24.5 million tonne and 7 million tonne) and FCI has an estimated stock of 36.8 million tonne from April 16 to March 17.

The trade estimates predict a higher demand for imported wheat, somewhere close to a million tonne by the private millers this year FCI is hand to mouth with its wheat stocks.

"We could have imported 3-4 million tonne as the prices are at a rock bottom level in the international market had the duty been kept at 10% and not revised to 25%.

The escalation in wheat price, that has been creating holes in consumers' and millers' pocket would have averted by importing higher quantity at a lesser price", told an importer who did not wish to be quoted.

Multinational companies, flour millers and a few wheat product makers are said to be importing and have contracted for another million tons import and if duty is relaxed, imports this year is expected to be 3 to 4 million tonne.

Even at current rate Edelweiss Agri Research report puts import estimate for the current season at 2.3 million tonne and it will revise it upward if import duty is relaxed.

Ministry of agriculture's fourth advance estimate lowered crop estimate at 93.5 million tonne for when but Edelweiss Agri Research estimates, "crop at 82.64 million tonne. Trade sources puts it at 80 million tonne and USDA estimated it in August at 88 million tonne," said EAR report.

Adi Narayan Gupta, a miller from Uttar Pardesh and a senior member of Roller Flour Millers Association of India said that a relaxation in import duty may have direct implications the millers in South due to proximity to port but it will have repercussions on millers in other parts of India too as lesser demand will ease out the prices.

According to sources, 5 lac tonne of import was imported last year. This year 1 lac tonne has already been imported. Lower price in international market and supply constraints in domestic market may result into much higher exports this year.

 

Sources :.business-standard.com

Rupee Trades Lower At 66.40 Against Us Dollar

The Indian rupee on Thursday weakened against the US dollar.

At 2pm, the home currency was trading at 66.40 per dollar, down 0.13% from its previous close of 66.37. The rupee opened at 66.47 per dollar and touched a high and a low of 66.39 and 66.49, respectively.

India’s benchmark Sensex index rose 0.24% or 68 points to 28,994.36. So far this year, it has gained 11%.

Bond yield fell in 10 out of 12 trading sessions. The 10-year bond yield was trading at 7.055% from its Wednesday’s close of 7.056%.

Yield on 6.97% 2026 bond, which is the new 10-year debt, was trading at 6.829% from its previous close of 6.824%. Bond yields and prices move in opposite directions.

The government will issue consumer price index (CPI) inflation data for August and Index of Industrial production (IIP) data for July on 12 September. Wholesale price index (WPI) inflation data for August is due on 14 September.

According to a Religare Securities report, retail inflation is set to ease to 5.5% in August from 6.1% in July as food inflation is likely to decline 150 basis points on disinflation in vegetables and pulses. WPI inflation is expected to touch a two-year high of 4.3% in August. There is limited scope for further rate cuts as of now; however, the Reserve Bank of India (RBI) will continue to “ease by stealth” via open market operations.

The rupee is down 0.4% till date this year, while foreign institutional investors (FIIs) have bought $6.30 billion in equity and sold $997.2 million in debt markets.

Asian currencies were trading mixed. Malaysian ringgit was up 0.46%, Japanese yen 0.17% and Indonesian rupiah 0.12%. However, Philippines peso was down 0.47%, South Korean won 0.24%, Thai baht 0.12% and Taiwan dollar 0.11%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.853, down 0.10% from its previous close of 94.956.

 

Sources:.livemint.com

India Enhances Its Repute In Auto Exports

MUMBAI: India is emerging as an export base for mid-size cars, SUVs and engines as it builds on the image as a key supplier of small cars. India-made Vento sedan is one of Volkswagen's top selling models in Mexico. According to people in the know, Hyundai Motor, the biggest auto exporter from India, is considering exporting its new generation mid-size Verna, codenamed HCI, from next year. Creta SUV from Hyundai's Chennai factory has also got acceptance abroad.

Premium brands like Chrysler and Land Rover, too, are considering exporting vehicles made in India to right-hand-drive markets, said people with knowledge of plans. Ford Motor will start exports of EcoSport SUV to North America from here next year, while the SuzukiBSE 2.71 % Baleno hatchback is supplied to Japan by the company's Indian unit, Maruti SuzukiBSE 2.71 %.

With Indians increasingly opting for bigger cars and local quality standards similar to those abroad, it has become easier for manufacturers to pick models for exports from India, said Gaurav Vangaal, senior analyst for forecasting at IHS Automotive. Exports allow them to post "better operational performance domestically due to combined volumes of domestic (sales) and exports," he said.

India is already a key exporter of the likes of Hyundai's Grand i10, Ford Ka and Chevy Beat. For some global automakers, such as General Motors and Nissan Motor, exports have helped offset weak demand in the Indian market. Hyundai is looking to ship about 11,000 units of the next gen Verna from India in 2017 and take it to 70,000 by 2019-2020, said three component suppliers to the local unit of the South Korean carmaker. Indian manufacturing will ease production load on its Korean operations, allowing it to use the factories there to increase the production of Elantra and Sonata which are in demand in its home market.

"We are planning to make a new version of the Verna next year in the second half. India is one of the countries which will see increase exports of Verna," Hyundai Motor India managing director YK Koo told ET. "Volume for Verna exports is yet to be finalised, but it will be significant," he added.

The Hyundai Creta has a one- to two-month waiting period in overseas markets, Koo said. "We are exporting 5,000-6,000 units a month,the numbers of mid-size cars will go up with new model."

Apart from fully built cars, vehicle makers plan to source engines from India. Ford India is set to begin exports of 2- and 2.2-litre Panther engines from its factory at Sanand in Gujrat from 2017-18. Its plan is to produce 2 lakh engines at Sanand and export to all over the world. Panther engines will be supplementing a new range of smaller petrol engines, internally named Dragon, which will power the next gen Figo and Aspire cars. A Ford India spokesperson said as a policy, the company does not comment on speculations on products or manufacturing plans.

Exports of cars longer than 4 metres accounted for 20% of total exports of 6.5 lakh vehicles in fiscal 2016 — the share has more than doubled in three to four years. If vehicles like Toyota Etios and EcoSport are included — these are slightly smaller — mid-size segment will account for almost 30% of India's total car exports.

Experts say though the domestic market share for many MNCs has remained modest, it is the export strategy which has help them justify big capital investments and break even in India with economies of scale.

 

Sources :economictimes.indiatimes.com

Steel Sector Shines In August; Import Falls, Export And Demand Rise

NEW DELHI: August turned out to be a bright month for the over USD 100 billion Indian steel industry, with imports of the metal declining, while exports and consumption registering an upward trend.

After declining for 2 consecutive months, country's steel consumption rose, though marginally, to 6.97 million tonnes (MT) last month compared to July 2016.

Consumption in the world's third largest steel producer rose 2.7 per cent in August this year, against July, while on year-on-year basis the growth was one per cent, latest data by Steel Ministry's Joint Plant Committee (JPC) showed.

India's consumption of total finished steel saw a growth of 1.3 per cent in April-August this fiscal to 33.74 MT over the same period of last year, it added.

The demand had declined for the second-straight month in July 2016, falling over 7 per cent to 6.3 MT compared to June, whereas in June 2016, it fell 8 per cent to 6.8 MT over May.

However, on the brighter side, steel imports fell 34.5 per cent to 3.012 MT in April-August 2016-17 compared to the year-ago period, JPC data showed.

"Imports in August 2016 (0.619 MT) was down 36 per cent over August 2015 and by 2.2 per cent over July 2016. India remained a net importer of total finished steel during this period," it said.

Another silver lining for the sector was an increase in exports of the metal.

Exports of total finished steel was up 23.6 per cent in the first five months of this fiscal to 2.38 MT against the April-August period in 2015-16.

Outbound shipments in August 2016 stood at 0.68 MT, a healthy growth of 87 per cent over August 2015 and 26 per cent over July 2016.

During April-August 2016-17, crude steel production grew 7 per cent to 39.98 MT over same period of 2015-16.

Steel output in August 2016 stood at 8.18 MT, up 9.8 per cent over August 2015 and by 1.2 per cent over July 2016.

 

Sources :economictimes.indiatimes.com

Silver Imports Fell By Half In 2016 As Traders Offloaded Old Stock

After over 20,000 tonnes of imports in the last three years, silver imports nosedived in 2016 in line with gold. From January to July this year, imports fell over half and only 2,111 tonnes of silver was imported in India against 4,362 tonnes last year, lowest after 2012. Demand was low and huge import of silver by traders in past years was coming in the market as raiders and stockists were booking profit. That has also resulted in prices quoting at $1 per ounce discount in July. Now, however, discount has shrunk to 30 cents per ounce.

Chirag Thakkar, director, Amrapali Group, said that imports are quite low because “all the importers are sitting on heavy stock since past many months. Prices went up sharply this year. As a result, every importer has been struggling to clear the stocks and that is the reason even silver market is in disparity of around 30 cents per try oz”. He said that demand is still not picking up because current price levels are high, “but if prices stay at the same level, within a month we can see demand in silver”.

Silver has been a high beta commodity with prices rising and falling fast compared to gold.

Further, there's no fresh demand in the market at current price levels.

Sudheesh Nambiath, lead analyst (precious metals demand), South Asia & UAE, GFMS Thomson Reuters, explains that Indian silver imports have slumped this year largely due to a supply overhang in the domestic market, attributed to unsold inventories across the value chain and the high level of above the ground stocks at secured vaults and in private hands. He believes that the trend will continue. “We expect full-year total imports to be close to 3,500 tonnes in 2016 (which will be lowest after 2012), a drop over 44 per cent on 2015 levels. This follows a first half total of just 2,027 tonnes. In our view, we would need to see the price back below $18 an ounce for the pent-up demand to be unleashed.”

Interestingly, according to the GFMS data, in the last three decades, India has imported approximately 87,000 tonnes of silver. And the three decade average price of silver was Rs 16,447 per kg, which is two-third of the current price level. Thus, “it shouldn’t surprise when investors and consumers liquidate silver holdings at current prices or indeed exchange it against new jewellery”.

In such a scenario, only industrial demand can support the market and such demand is still quite low in India.

Globally, over half of silver is used for industrial purposes, while in India only 20 per cent is estimated to be going for industrial use.

 

Sources :business-standard.com

India Since Liberalization: A Look At Share Of Commodities In Exports

New Delhi: Twenty-five years since India’s liberalization, here’s a look at how the share of commodities in the overall exports basket has changed.

India’s trade profile has seen a significant change since the first foreign trade policy was unveiled between July 1991 and March 1992 in a series of steps by then commerce minister P. Chidambaram.

These measures gradually dismantled the quantitative restrictions on imports in the form of import licences on most products and abolished the office of the chief controller of imports and exports, replacing it with the Directorate General of Foreign Trade.

India’s peak import duties which were among the highest in the world at over 200% in 1991 were gradually brought down to 45% by 1997-98. Now the peak customs duty stands at only 10%.

The share of manufacturing in the Indian exports basket saw a nominal rise from 78% in 92-93 to 84% in 2015-16.

But there has been a marked change in the composition of India’s export basket—the share of leather, textiles and ready-made garments has fallen sharply reducing while items like engineering goods and chemical products have seen a strong rise during the same period.

Madan Sabnavis, chief economist at Care Ratings said the change in composition from traditional goods to sophisticated goods is encouraging.

“Demand for engineering and chemical products is elastic. Developed countries are importing chemical-based products like pesticides as these commodities create environmental problems during production in their own countries,” he said.

K. J Joseph, ministry of commerce chair professor at the Centre of Development Studies, Trivandrum, said India’s manufacturing exports have lagged behind due to a lack of innovation culture. “Sadly in case of India, there are reasons to believe that we are yet to evolve a vibrant innovation system at the national level. This is not to underplay the existence of certain extent of vibrancy at the level of certain sectors which also present better export performance,” he added.

The share of petroleum and crude products has also increased from 3% in 1992-93 to 12% in 2015-16 after the discovery of oil and gas reserves, especially in the Krishna-Godavari basin.

Alongside the rise in manufacturing products and petroleum products, the share of agriculture and allied product has fallen from 17% to 14% and that of ores and minerals from 4% to less than 1% during the same period.

However, the domestic value addition to the overall merchandise exports has been falling, which has caused concern. According to the Economic Survey 2014-15, the domestic value addition for overall merchandise exports fell from 85% in the 1998-99 to 71% in 2007-08, implying more import content in India’s export basket.

Rashmi Banga, economist at the United Nations Conference on Trade and Development, pointed out in an article published in the Economic and Political Weekly in October 2014 that even if manufacturing output grows and exports rise, unless domestic value addition rises, there will be no commensurate production-linked gains like employment generation, technology upgradation and skill development.

“Declining value-added growth can lead to a stage where the industries will need to increase their imports of inputs but will not be able to add much value to their exports and will thus slowly hollow-out,” she wrote.

India’s share in global merchandise exports hasn’t increased much. While in 2004-05, India’s merchandise exports had a share of 0.9%, it increased to 1.6% by 2014-15.

 

Sources:.livemint.com

 

Indian Rupee Gains 8 Paise At 67.10 Against Us Dollar In Early Trade

Indian rupee gains 8 paise at 67.10 against US dollar in early trade
Indian rupee gained 8 paise at 67.10 in early trade (9.34 am) against the US dollar at at the Interbank Foreign Exchange (forex) market on Tuesday following selling of the American currency by banks and exporters amid firm domestic and global cues.
By: FE Online | Updated: August 30, 2016 10:02 AM  

Indian rupee vs US dollar Indian rupee gained 8 paise at 67.10 in early trade (9.34 am) against the US dollar at at the Interbank Foreign Exchange (forex) market on Tuesday following selling of the American currency by banks and exporters amid firm domestic and global cues. (Photo: Reuters)

Indian rupee gained 8 paise at 67.10 in early trade (9.34 am) against the US dollar at at the Interbank Foreign Exchange (forex) market on Tuesday following selling of the American currency by banks and exporters amid firm domestic and global cues. The local currency had opened at 67.11 and closed on Monday at 67.18 level against the US dollar. Domestic equity firm opening also supported the rupee. The BSE Sensex was trading 172.49 points up at 28,075.15, while NSE Nifty was trading 53.60 points up at 8,661.05 following firm global cues amid RBI’s latest report that said near-term growth outlook for India seems brighter than last fiscal and the economy is likely to expand at 7.6 percent in 2016-17.

Dollar weakness against other emerging market currencies also contributedto the rally. The American currency gave up gains after doubts were raised on weather US Federal Reserve really would hike interest rates as soon as September.

The rupee on Monday depreciated by 12 paise to close at 67.18 a dollar on account of strong demand for the US currency amid expectations of rate hike by the US Federal Reserve before the end of the year.

The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 67.18 and for Euro stood at 75.18 on August 29, 2016. While the RBI’s reference rate for the Yen stood at 65.62, the reference rate for the Great Britain Pound (GBP) stood at 88.01.

 

Sources:financialexpress.com
 

Further Drop In Steel Imports To Help Domestic Mills Regain Lost Market Share

The twin impact of anti-dumping duty and minimum import price is likely to help steel players overcome market challenges led by domestic weak demand. While imposition of provisional anti-dumping duty (ADD) on hot-rolled and cold-rolled coils for six months will help domestic flat steel producers overcome challenges in the market caused by weak domestic demand, extension of minimum import price (MIP) on a truncated list of steel products for two months will benefit the industry, ratings agency ICRABSE 1.39 % has said in its latest sector report.

The latter will particularly benefit producers of long steel products which do not attract ADD as of now.

"India's steel imports, which fell by around 29% year-on-year (YoY) in April-June quarter of the current fiscal largely due to MIP and Safeguard Duty (SGD), are expected to reduce further in the coming months, thus helping domestic mills regain lost market share," Jayanta Roy, senior vice-president, ICRA said.

Domestic hot-rolled coil (HRC) prices witnessed a drop in July 2016 on account of weak demand and subdued Chinese export prices. However, after the imposition of ADD in August 2016, HRC prices have increased by Rs. 1,500/tonne and are expected to remain buoyant in the near term as domestic HRC prices are still cheaper than landed cost of Chinese import offers by about 13%.

However, steel prices are unlikely to increase significantly from the current levels unless demand growth strengthens, ICRA said given a marginal demand growth of 0.4% in Q1 FY2017 and concern linked to overcapacity in the domestic market. Given the scenario, an expected revival in rural demand following a normal monsoon after two years, and a likely rise in discretionary consumption after the 7th Pay Commission payouts, remain critical for an improvement in domestic steel consumption in the second half of FY2017, the report added.

 

Sources:economictimes.indiatimes.com

Businessline Twenty Years Ago Today: Sugar Export To Be Decanalised

 The United Front Government has decided to decanalise sugar exports, breaking the monopoly of the Indian Sugar and General Industries Export Import Corporation (ISIGEC) which was the sole canalising agency until now Parliament’s approval will be sought shortly to amend the Sugar Export Promotion Act (1958) The decision to allow several players to export sugar by amending the SEPA Act has been taken by the Union Cabinet. The Food Ministry, which piloted the proposal for decanalisation, will forward a draft amendment to the SEPA to the Law Ministry for clearance.

Hind Lever pays 60% interim

Hindustan Lever Ltd (HLL) has announced an interim dividend of 60 per cent. It had declared an interim dividend of 50 per cent in the previous year. The company has recorded a 37 per cent jump in net sales at Rs 2,207.27 crores for the half year ended June 30, 1996 compared with Rs. 1,610 crores in the corresponding period of the previous year. According to a press release, the company has recorded a profit after tax (before extraordinary items) of Rs 147 89 crores, an increase of 40.1 per cent Profit before tax for the period was Rs. 23853 crores.

ICICI tells nominees to police corporates

The ICICI has told its nominees on company boards to act against managements which do not perform and adhere to ‘best’ corporate practices. In what signals an attempt to raise the standards of corporate governance in India, where the financial institutions have large equity holdings, ICICI has told its nominees to closely monitor the working of the company and also ensure that promoters follow the mandatory procedures at board meetings.

 

Sources;thehindubusinessline.com

Indian Oil Corp Raises Oil Import From Iran To 5 Mt For Fy'17

 Indian Oil Corp, the nation's biggest oil firm, has raised crude oil import from Iran to four fold and has cleared most of the past payments as sanctions against the Persian Gulf nation were eased.

"We have contracted to import 5 million tonnes (MT)of crude oil from Iran in 2016-17, up from 1.2 MT,"  IOC Director (Finance) A K Sharma said here.

India has steadily raised crude oil imports from Iran after US sanctions were lifted in January this year. Iran today is India's fourth biggest crude oil supplier.

Iran, which was India's second biggest supplier of crude oil after Saudi Arabia till 2010-11, had been relegated to 7th place in 2013-14 and 2014-15 out of the 50-odd nations India sources its crude oil from.

But with the lifting of sanctions in January this year, crude oil imports have steadily climbed. India imported 12.7 MT of crude oil in 2015-16, up from 11 MT in the previous two fiscals.

That made it 6th largest supplier of oil to India.

In April-June this year, India bought 5 MT of crude oil from Iran, making it the fourth largest supplier just a shade behind Venezuela which exported 5.2 MT.

Iran had in 2009-10 supplied 21.2 MT which came down to 18.5 MT in 2010-11 and to 18.1 MT in the year after.

Sharma said imports from Iran were going exactly in line with the plans. "Month-wise lifting is in line with the 5 MT contracted volume," he said.

IOC Director (Refineries) Sanjiv Singh said the company had paid $510 million out of the total outstanding of $621 million due to Iran in past oil dues.

Sanctions had blocked payment routes and dues had accumulated over the past couple of years.

After accounting for the exchange variations, the total outstanding due is only $55 million now, he said.

Iraq this year has overtaken Saudi Arabia as India's top oil exporter. It sold 11 MT of crude oil to India during April-June, higher than 10 MT sourced from Saudi Arabia.

Saudi Arabia has been India's top supplier of crude oil — selling 35 MT of oil in 2014-15 and 40.04 MT in 2015-16.

During the first three months of current fiscal, India imported 53.2 MT of crude oil, 65 per cent of which came from the volatile Middle East region.

India imports about 80 per cent of its oil needs.

 

Sources;business-standard.com

Cai Projects 33.60 Million Bales Cotton Production For 2016-17

 A favourable monsoon across the country has resulted in an increase in productivity of cotton despite a 10% fall in area under cultivation for the year 2016-17. However, according to the first projection report by Cotton Association of India (CAI), cotton production is being estimated at 33.60 million bales (A bale of 170 kg) for the year 2016-17, marginally lower from 33.77 million bales production in 2015-16.

The projected balance sheet drawn by the association has estimated total cotton supply for the cotton year 2016-17 at 40 million bales as against 42 million bales last year. Cotton year starts from October and end in September every year in India.

"Area under cotton crop is expected to be lower by 10 per cent in 2016-17. However, productivity is likely to be higher during the 2016-17 season due to the better weather conditions across all cotton growing regions in India. Therefore, the crop for the next cotton season is expected to be similar to the cotton crop for the current season," said Dhiren Sheth, president of CAI.

As per the agriculture department of India, cotton sowing has been done on an area of around 10.15 million hectares as on August 19, 2016, down by 8 per cent from 11.02 million hectares in corresponding period of 2015.

CAI in the projection report has estimated domestic consumption at 30.80 million bales same as in current year.

However, despite no significant change in domestic production and consumption of cotton, the association has predicted higher import of two million bales in next cotton year as against 1.5 million bales in this year.

Cotton production in the central zone of India which includes Gujarat, Maharashtra and Madhya Pradesh has been estimated at 19.50 million bales as against 18.47 million bales. On the other hand, production estimates for north and south zone stand at 4.2 million bales and 9.3 million bales, respectively. Last year, while north zone had seen production of around four million bales, south zone had seen around 10.75 million bales.

According to CAI, as on July 31, 2016, 33.40 million bales of cotton have been arrived in the markets in current season.

 

Sources;.business-standard.com

Rupee Weakens To A One-Week Low Against Us Dollar

The Indian rupee on Monday weakened to a one-week low against the US dollar, tracking the losses in its Asian peers after comments by US Federal Reserve speakers on last Friday raised the possibility of a September rate hike.

Traders are also cautious ahead of the gross domestic product (GDP) data for the June quarter and fiscal deficit data for July on 31 August. According to Bloomberg analyst estimates, GDP may be at 7.5% from 7.9% in the March quarter.

The home currency closed at 67.18 per dollar—a level last seen on 22 August, down 0.18% from its previous close of 67.06. The rupee opened at 67.14 per dollar and touched a low of 67.21, a level last seen on 22 August.

The 10-year bond yield closed at 7.123%, compared with its Friday’s close of 7.129%. Bond yields and prices move in opposite directions.

India’s benchmark Sensex index rose 0.43% or 120.41 points to closed at 27,902.66. So far this year, it has gained 6.83%.

Most Asian currencies markets slipped after Fed chair Janet Yellen indicated that an interest rate increase remains on the cards for this year.

The case for a rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth is looking likely to continue at a moderate pace, Yellen said in a speech at the Fed’s annual monetary policy conference in Jackson Hole, Wyoming, on Friday.

While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. She described consumer spending as “solid” but noted that business investment was weak and exports hurt by a strong dollar, Reuters reported.

South Korean won was down 1%, Malaysian ringgit 0.7%, Indonesian rupiah 0.42%, Japanese yen 0.34%,Taiwan dollar 0.22%, Philippines peso 0.18%, China renminbi fell 0.17% and Singapore dollar 0.13%. However, Thai Baht was up 0.18% and China offshore was up 0.04%.

The rupee is down 1.5% till date this year, while foreign institutional investors (FIIs) have bought $5.78 billion in equity and sold $1.19 billion in debt markets.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.7, up 0.14% from its previous close of 95.566.

 

Sources :.livemint.com

Higher Domestic Prices Dent Cotton Exports From India

 Domestic cotton prices are on the upside since April, due to expectation of weak production. This has affected exports, mainly to Pakistan. In the current cotton year (it runs from October of one year to September of the next), about 37 per cent of exports have been to Pakistan. However, with prices moving up to Rs 50,000 a candy (356 kg), this is being hit, says the trade.

“China is the major buyer for Indian cotton but this year's demand was not so good. Against it, due to crop failure, Pakistan became a major importer. However, if our prices were lower, our overall export might be higher than it has,” said J Thulasidharan, president of the Indian Cotton Federation.


As per reports, Pakistan is looking at other options such as the US to import cotton. Even Indian experts believe that. So far, India has exported about 2.5 million bales to Pakistan only out of the total exports of 6.8 million bales.

"During June and July this year, Indian cotton prices were higher than international prices. While buyers are getting cheaper cotton from others why one should buy at the higher rates. However, all depends on demand. There was a good demand from Pakistan this year but after prices gone up, this has affected the export from India," said Naveen Mathur, associate director of commodities and currencies business at Angel Broking.

Because of high cotton prices in domestic markets, many mills from South India are importing from West Africa. According to industry sources, India has imported about two million bales of cotton during this year so far.

Thulasidharan said: "Higher domestic price also increased the cotton import this year as stock size in India is less. This has forced the domestic mills to import cotton. So far India has imported about two million bales and it may increase further.

 

Sources ;business-standard.com

India's First Textile City Likely To Come Up In Ap

India’s first integrated textiles city is likely to come up in Andhra Pradesh. The central government has already initiated the process of identifying land, technology and expertise for the same.

According to sources, Textiles Minister Smiriti Irani has spoken to Andhra Pradesh Chief Minister N Chandra Babu Naidu for providing land and other facilities.


With Naidu’s Telugu Desam Party being an ally of the ruling National Democratic Alliance at the Centre, the proposal, mooted by the NITI Aayog, is likely to be accepted.

Officials said Irani, along with Naidu and top officials from NITI Aayog, would visit China to get a first hand information on the working and structure of the proposed mega textile city.

The city would be largely catering to the export market and build a brand for Indian textiles.

China is a pioneer in building such mega textiles cities. The China Textile City in Keqiao district is one such example.

Founded in the 1980s, China Textile City is the first national professional textile market spread over a construction area of 3.65 million square metres with 29,000 companies managing 40,000 kinds of products.

The textiles sector is the largest employer in the country, employing 32 million people and is critical to Prime Minister Narendra Modi’s plans to create jobs in the country.

It announced a special package for the sector in June aimed at improving India’s competitiveness, which would lead to greater production. The reforms, in turn, are expected to generate 10 million new jobs in the textiles sector in three years.

The package is estimated to cost Rs 6,000 crore, which includes funds for additional five per cent duty drawback for the garments sub-sector.

The government will also bear the cost of employers’ contribution under the Employees’ Provident Fund scheme for new employees of the garment sector earning less than Rs 15,000 a month for the first three years.

The government is also working on a revamped national textiles policy, which is expected to be placed before the Cabinet soon. The draft policy focuses on achieving $300 billion exports and 35 million new jobs by 2024-25.

India exported $36.25 billion worth of textiles and related goods in 2015-16 — a 2.4 per cent decline from 2014-15.

 

 

Sources :business-standard.com

India Aims For Zero Import By 2020, 37 Mobile Manufacturing Units Set Up In Last 1 Year

India has attracted investment from 37 mobile manufacturing companies in last one year that have generated 40,000 direct jobs and 1.25 lakh indirect employment, IT Minister Ravi Shankar Prasad said today

"We decided to make India a big hub of electronics manufacturing. In the last one year, 37 new mobile manufacturing units have come," Prasad said after inaugurating government-funded 'Electropreneur Park'

He said that 11 crore mobile phones have been made in the country in last one year compared to 6 crore earlier

"We have given jobs to forty-thousand people and 1.25 lakh indirect jobs," Prasad said

Chinese companies like Gionee and Xiaomi are making their handsets at Foxconn plant in Andhra Pradesh. Domestic companies such as Karbonn, Lava, Micromax, Intex, Jivi, iTel, and MTech too have set up their manufacturing plants in the country

As per industry sources, Chinese company LeEco will start mobile manufacturing unit on Tuesday

Prasad said that besides manufacturing electronics product in India, product designing is also important

He said that government has provided Rs 10,000 crore under Electronics Development Fund to support new entrepreneurs in the field of electronics
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The Electropreneur Park (EP), which was innaugurated on Saturday in South Campus of Delhi University, is an incubation centre set up with government funds of around Rs 21 crore to support incubation of up to 50 companies

Also Read: India's share in global smartphone market may double in 3 years: Prasad

Set-up in collaboration with academia and industry represented by Indian Electronics and Semiconductor Association, the Park will focus on creation of intellectual property rights and product development to increase domestic manufacturing of electronics items

"India imports electronic goods of over Rs 3 lakh crore

By 2020 government aims to bring down import to zero. The Electropreneur Park started today is a step in that direction," Minister of State for IT and Law P P Choudhary said

Ministry of Electronics and IT has selected six start-up firms that will develop products at this incubation centre

"6 out of 176 start-ups have been selected which means they have capability of developing good quality products and selection of six more are in pipeline," MEITY Additional Secretary Ajay Kumar said.

 

Sources ;indiatoday.intoday

Refinery Wars: China, India Win; S. Korea, Japan, Singapore Lose

There is little doubt that China’s surging exports of refined fuels have cut profit margins for Asia’s refiners, but the pain is unlikely to be shared equally across all the region’s exporters of oil products.

Given the scarcity of detailed official data on oil product imports and exports among many Asian countries, it’s nigh impossible to build a completely accurate picture of the likely winners and losers.

However, detailed data is provided by China on the export destinations of its product exports, and Australia, the region’s biggest importer of refined fuels, also gives a country-by-country breakdown of its imports.

The overall picture for Asia’s refiners is that profit margins appear to have shifted structurally lower as a result of China’s massive exports of diesel and petrol.

China’s exports of 370,000 barrels per day (bpd) of diesel in July were 181.8% higher than the same month last year, and year-to-date exports are up a staggering 223%.

Its petrol exports are also up sharply, rising 84.3% in the first seven months from a year ago.

The Chinese customs data does give clues as to where the additional fuel exports are heading, with gasoline shipments to Malaysia rising 490% in the first seven months of the year for example.

For diesel, Chinese exports to the Philippines are up an astounding 2,084% to the equivalent of about 45,000 bpd, and those to Australia have jumped 1,049%.

But these figures must be treated with some caution as they reflect only direct exports to those countries, and not cargoes shipped through another country.

Chinese customs figures show a 134.7% rise on diesel exports to Singapore in the first seven months of the year and an 119% increase in shipments of gasoline.

Singapore is the region’s main trading hub and the Chinese exports to the island state are almost certain to be re-exported to other countries.

Australia shows losers

For this reason, looking at the Australian statistics is useful, as it breaks down fuel imports by country of origin.

Australia reports data in megalitres and converting this to barrels per day using the BP conversion factors shows that China exported about 54,000 bpd of refined products in June, the latest month for which statistics are available.

This was almost 50% higher than the average 37,800 bpd Australia imported from China in the year ended 30 June.

As China’s exports to Australia have risen, other countries have seen theirs decline.

South Korea’s total product exports to Australia were about 135,800 bpd in June, down from an average of 167,800 bpd in 2015-16, while Singapore’s dropped to 86,795 bpd from 135,700 bpd and Japan’s from 121,700 bpd to 86,000 bpd.

Looking specifically at diesel, the main product that Australia imports given its reliance on the fuel for powering the country’s mining industry, and a similar pattern emerges.

Australia bought 37,608 bpd of diesel from China in June alone, versus an average 10,511 bpd for the year to 30 June.

Shipments from South Korea to Australia dropped to 46,963 bpd in June from the 2015-16 average of 71,496 bpd, Singapore declined to 52,731 bpd from 80,444 bpd and Japan to 64,707 bpd from 68,000 bpd.

While Australia’s three traditional suppliers of refined products all appear to be losing market share, it’s not just China that is gaining.

Australia bought 47,900 bpd of diesel from India in June, up from the 2015-16 average of 30,000 bpd.

With both China and India gaining increased shares of Australia’s open and competitive refined fuels market, this would seem to indicate that they are more competitive than refineries in South Korea, Japan and Singapore.

Given both India and China have the most modern and presumably cost-efficient refineries in the region, it makes sense that they’re able to be more competitive.

China’s overbuilding of refinery capacity will continue to act as a disruptor in Asia’s fuel markets, making profits harder to come by and forcing refiners to focus on cost-cutting and flexibility in marketing in order to prosper. Reuters.

 

Sources :.livemint.com

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