- Global Trade Scenario and Indian Exports
Global trade is facing headwinds more so after the Russia Ukraine war having a huge impact on global crude and food prices. The WTO has already revised its forecast for the global trade from 4.7% to 3% in April,2022 and we expect a further downward revision in October, 2022.
The contraction in global trade is also visible from the sharp decline in the freight rates which have reduced by about 50% on major trade routes. The freight from Asia to North Europe and the US (West Coast) dropped from US$ 14,000 to US$ 4,000 and US$ 8,000 respectively.
With inflation plaguing all economies, inventories are very high globally in all economies as the purchasing power has dwindled which has affected the offtake and thus the demand is slowing. However, the demand for low value products is increasing by leaps and bounds. Therefore, while we expect volumes to remain intact, the value may take a hit. This is also because the prices of most commodities: steel, ferro alloys, plastic polymers, cotton yarn, etc. have declined significantly. This will affect our exports in two ways: (i) the value of raw materials exports will come down and (ii) the value of the final product manufactured out of such raw material will also be lowered since the input prices have declined.
However, we also have various opportunities coming in our way. Buyers are moving from China both as China is becoming costlier and less reliable with a zero covid tolerance policy and anti – China sentiments are gaining ground day by day. Lot of orders for low value products, which were a virtual monopoly of China, are now coming to India.
While the Russia Ukraine war is a setback to our exports in the short run, we are looking to increase our exports to Russia once the Rupee payment mechanism gets operationalised. As per our study, we can add about US$ 5 billion in exports to Russia. With Europe maintaining sanctions on Russia, we expect the trade to divert from Russia to India. This has already happened in respect of petroleum products, iron & steel and food products and likely to be further accentuated in times to come.
- Rupee depreciation viz a viz Other Currencies
Contrary to general perception Rupee depreciation is not providing much competitiveness as currencies of most of the countries are depreciating more steeply. Rupee has depreciated by 8.1% as on 7th September, 2022 from a year ago. However, a fairly large number of currencies have depreciated more steeply over the same period as can be seen in the table below:-
Today, Rupee is one of the best performing currencies in Asia meaning thereby that the competitiveness provided by the exchange rate is no longer with us. Therefore, there is a need to provide some other fiscal or non-fiscal support to help exports in this scenario.
- Liquidity and Interest Rates
The demand for liquidity has gone up as buyers are delaying the payments and asking exporters to withhold further shipments or release small quantities of such shipments. There is a need to extend further credit to the export sector by automatically enhancing the limits by 20% or so as given under the Gold Card scheme, at least to the established exporters.
Moreover, with interest rates firming up, the MSMEs are getting credit at not less than 10-11%. This is likely to go up further as RBI is expected to increase the same again in October. The subvention for the Interest Equalization Scheme (IES) was reduced, when the scheme was extended from 30th September,2021 to 31st March, 2024 as interest rates were then coming down. However, with complete change in the situation, there is an urgent need to restore the interest equalization benefit of 5% to manufacturer MSMEs and 3% for all tariff lines as cost of credit is equally hurting all exporters.
- Indian Rupee Trade Mechanism
The exporters are very much encouraged by the RBI Notification allowing exports-imports in Indian Rupee. This will help us to increase our exports to countries facing acute foreign exchange shortage or those covered by sanctions. However, to do costing for exports under Indian Rupee, exporters require clarity with regard to (i)applicability of export benefits which we feel may be extended on the analogy of Iran for which such a facility has been provided. (ii)Moreover, a lot of exporters who have imported under various schemes also require clarification regarding acceptance of export obligation in Indian Rupee against imports made in free foreign currency. (iii)In this context, ECGC should also revisit its coverage for Russia which has moved from open to restricted cover and exporters are flagging the issue that ECGC is generally reluctant/delays to provide such cover.
A related issue is the logistics for exports to Russia. We are very happy that the Government is considering using the INSTC route to reach Russia. The route reduces the voyage time and the cost. Unfortunately, the Indian banks are reluctant to negotiate any document when goods touch Iran, being a sanctioned country. Therefore, some clear instructions need to be given to the banks to negotiate the documents for goods routed through Iran with ultimate destination as Russia or CIS which is clearly available in the combined transport bill of lading.
- GSP loss in EU particularly for Machineries and electrical equipment and Plastics
India would be losing out GSP benefit in respect of Plastics, Articles of Leather, Articles of Stones and Machinery & Electrical Appliances with effect from 1.1.2023. While our exports of Article of Leather under Chapter 43 and Article of Stone under Chapter 68 are not significant, we need to evaluate its impact on plastics and machineries as they together have an export of about US$ 7.2 Bn in EU accounting for over 20% of our exports of these products. The Government may engage with the industry to understand how the withdrawal of GSP is going to affect them and what strategy may be adopted so that we maintain our share in the EU market.
With headwinds clearly visible in merchandise trade, we need to push our Services exports in the current fiscal so that we have the necessary cushion both on trade deficit and current account deficit. With economies opening up, we expect that the travel & tourism and aviation industry would help us to increase our services exports significantly besides other sectors.
(i) Mode-II of services require little more support as lack of international travel in 2020-21 and 2021-22 has affected a large number of travel & tourism sector exporters besides hotels. A scheme like SEIS may be considered for these sectors besides some others.
(ii) We may also consider to operate the IGST refund to foreign tourists for which a provision was incorporated in the Act about 5 years back but still not operationalised. This will not only benefit the tourism sector but also carpets, handicrafts, apparel, leather, handloom and gems & jewellery besides e-commerce.
(iii) The Interest Equalisation Scheme (IES) should be extended to the services sector as well since the cost of credit is equally affecting them.
(iv) It is equally important to showcase our various services in thrust or focused countries. Government may create a corpus for marketing of services globally through different organisations/ associations with a target to reach US$ 1,000 billion by 2030.
The e-commerce retail exports, which has a potential of 10x multiplier in 3 years, needs to be encouraged by addressing various regulatory issues and providing them at least the same benefits which are available to the merchandise sector. We have already submitted our papers in this regard (attached as Annexure-A) and would like the New Foreign Trade Policy to recognise the potential of the sector which can be a game changer to show results in a very short time for some of the Government initiatives like GI products or One District One Product.
- Foreign Trade Policy
The new Foreign Trade Policy is expected by the end of the month to provide a roadmap for reaching US$ 1 trillion each in goods as well as services exports by 2030.
(i) While the existing schemes are likely to continue, we are expecting remodelling of the Special Economic Zone scheme by the DESH. The DESH will provide the plug & play facility to the industry to attract FDI as well as the domestic investment encouraging companies to invest more in technologies.
(ii) Besides e-Commerce, certain services like R&D services can be a game changer as R&D and Innovation are required in every country. Recognition to R&D services and strategy to promote the same can help Indian exports in the longer run.
(iii) The new Foreign Trade Policy should focus on promoting exports under Indian brands which will not only fetch more value for the product but will also take the country from the price sensitive segment of exports. Associations and EPCs may be given the mandate to promote individual products and services while exporters may be provided liberal funding, at competitive cost, to promote their brands.
(iv) The Foreign Trade Policy should have an increasing focus on digitization so that various facilities and benefits may be made available online to the exporting community. As a further step in the process, a faceless method for issuance of authorizations, amendments and closure of the cases may be pursued. The current system restricts the exporters with the DGFT offices having jurisdiction over their entities. In electronic processing, such jurisdiction is not relevant. The application for authorisations, amendment and EODC may be marked by the system to any officer based on the workload, in a faceless manner, for optimum utilisation of manpower and giving the advantage of faceless processing to exporters.
(v) India is targeting US$ 1 trillion of goods and services exports each by 2030. This would require new entrepreneurs, start-ups in exports and re-orientation of domestic companies including MSMEs towards exports. We also expect lack of trained manpower in the exim segment, as a constraint, to take us towards such an ambitious but achievable target. To exclusively focus on the skill requirement of the foreign Trade, a Foreign Trade Sector Skill Development Council may be set up. FIEO is willing to provide all secretarial assistance for the formation of such Council.
(vi) In many cases, due to slowdown in global trade and problem of liquidity, exporters have not been able to complete their export obligation within the time allocated. Such exporters are saddled with the responsibility of payment of customs duty with 15% interest. This heavy burden is affecting exporters’ export efforts having a serious impact on export growth and employment. It is, therefore, proposed that the Government may provide a one-time extension of six months to allow such companies to complete export obligations under Advance Authorisation and EPCG Scheme. This will not only push the country’s exports but will also generate additional jobs emanating from such exports.
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Capt Amarinder Singh to attend BJP core committee meet
Captain Amarinder Singh, a former chief minister of Punjab, will attend the Punjab BJP’s core committee meeting on Monday at the party’s Chandigarh headquarters.
After joining the BJP exactly one week ago, this will be the former Congress leader’s first trip to the party’s headquarters. In the national capital, his daughter Jai Inder Kaur and son Raninder Singh both joined the BJP.
On September 19, Capt. Amarinder Singh combined his party, the Punjab Lok Congress, which he launched after leaving the Congress last year, with the BJP.
On Monday evening, Capt. Amarinder Singh and Ashwani Sharma, the chief of the state BJP, will address a joint press conference.
After the assembly elections in February, this will be the former chief minister’s first appearance in public in the state.
PM Modi, Rahul Gandhi wish Manmohan Singh on his 90th birthday
Prime Minister Narendra Modi on Monday sent Dr. Manmohan Singh his birthday wishes on his 90th birthday, wishing him a long and healthy life.
“Birthday greetings to former PM Dr Manmohan Singh Ji. Praying for his long and healthy life,” tweeted PM Modi.
Rahul Gandhi, the leader of the Congress, sent Dr. Singh birthday greetings as well.
Wishing one of India’s finest statesmen, Dr Manmohan Singh ji a very happy birthday. His humility, dedication and contribution to India’s development, have few parallels. He is an inspiration to me, and to crores of other Indians. I pray for his good health and happiness,” tweeted the Wayanad MP.
Before the partition, Singh was born on September 26, 1932, in the Punjabi village of Gah. He studied at Oxford, Cambridge, and Punjab University.
Today marks the 90th birthday of Dr. Singh, who served as prime minister for two consecutive terms (from 2004 to 2014). He is a well-known economist who is credited with enacting significant reforms in the 1990s.
Mallikarjun Kharge, Ajay Maken to meet Sonia Gandhi today over Rajasthan crisis
Mallikarjun Kharge and Ajay Maken, two Congress observers who were in Rajasthan on Sunday to attend the legislature party meeting at the home of the chief minister Ashok Gehlot, are anticipated to meet Sonia Gandhi on Monday afternoon.
With Gehlot expected to run for presidential polls next month, the state is currently dealing with a new crisis. Numerous Gehlot’s supporters resigned on Sunday and handed them to Assembly Speaker CP Joshi as a result of Sachin Pilot’s name being mentioned. The resignation is reportedly from more than 80 MLAs.
The MLAs made clear to the observers their demands, emphasising that the next chief minister should be chosen after October 19, once the party’s presidential elections are over, that the Gehlot successor should be chosen from among the roughly 102 MLAs who supported the party during the 2020 crisis, and that Ashok Gehlot should be kept informed throughout the decision-making process. They were reminding the party of Sachin Pilot’s uprising against Gehlot when he visited to Haryana by bringing up the 2020 dilemma. Later, after guarantees from the senior management, he returned.
Ajay Maken said: “We came for the CLP meeting fixed by the CM at a time and date of his choice. Very strange that MLAs didn’t come for that. We also wanted to follow the procedure of speaking to individual MLAs about what they want so that they can speak freely.”
The condition that no announcement – on the chief minister – should be made before October 19 seems to be conflict of interest as resolution authorises the Congress president to take the decision, and by October 19, Ashok Gehlot would have been the Congress president,” he further said.
Partnerships, technology and behaviour change key for agriculture growth, said Union Agriculture Minister
India has the potential to become “aatmnirbhar” in agriculture and also meet the food requirement of the world, said Narendra Singh Tomar, Union Minister of Agriculture & Farmers Welfare.
Speaking during the session, Food for All: From Farm to Fork, during the 3rd edition of LEADS 2022—— a global thought leadership initiative of the industry chamber FICCI, the minister said the country is steadfastly moving ahead in the direction. However, everyone must work together for the goal. “We would like to collaborate. I use this opportunity to invite the international community to join hands with us for the benefit of coming generations,” he said.
He noted that country’s agri exports had crossed the milestone of ₹4 lakh crores. “We are working to increase it further,” he said.
Minister Tomar said that the government is constantly working to make the country “aatmnirbhar”. As a result, Indian agriculture recorded a robust growth of 3.9% despite the pandemic. In addition, the minister reiterated that the government aims to make Indian agriculture internationally competitive by aiding the small farmers in the country. He alluded to several government programmes to reduce farming-related challenges. “Due to increase in investment in basic infrastructures like irrigation system, storage, warehousing, and cold storage, the Indian agriculture is expected to record robust growth in the coming years,” he added.
On occasion, H.E. Mr Damien O’Connor, Hon’ble Minister for Trade & Export Growth; Agriculture; Biosecurity; Land Information & Rural Communities, New Zealand, alluded to the challenge emanating from climate change. “agricultural emissions from livestock are a real challenge for New Zealand and food systems around the world. It contributes 35% to the global greenhouse gas emissions and 48% to New Zealand’s emission profile.”
He also alluded to Global Research Alliance and encouraged Indian parliamentarians “to look at investigating partnering up with a Global Research Alliance” to gather global technologies “in a way that is not seeking to maximise commercial benefit but to maximise the climate change benefit from this collaboration.”
Sanjiv Mehta, President, FICCI and CEO & Managing Director, Hindustan Unilever Limited (HUL), said achieving food and nutrition security is a multifaceted challenge. “Food systems can play a big role in protecting food security and nutrition if careful attention is paid to targeting the poor, reducing inequalities, including gender inequality and incorporating nutrition goals and actions were relevant.”
Dr Anish Shah, Vice President, FICCI and Managing Director and CEO, Mahindra & Mahindra, said the world will have 10 billion people by 2050. “Today, we do not have enough food to provide for everyone, so we have to do a number of things to feed everyone.” He pointed to three themes that can help address the challenge. The first is partnerships to reduce carbon footprint and improve productivity. Second, adopting technology to transform agriculture and thirdly, inducing behaviour change.
Sunny Verghese, Co-Founder and Group CEO, Olam International, said, the biggest priority is to help decarbonise.
Digital Agriculture Mission to digitalise the farmer: Manoj Ahuja, Secretary, Agriculture
Contextual and correct information to anybody associated with agriculture has the potential to unlock a lot of value, said Manoj Ahuja, Secretary, Union Ministry of Agriculture & Farmers Welfare, at the Release Ceremony of the FICCI compendium on “Enhancing Farmers’ Income”.
In this regard, Ahuja alluded to the Digital Agriculture Mission, which essentially tries to digitalise the farmer in terms of identity, linking up the farmers’ land and geo-referencing it, and crops grown. “These are some of the basic things we are trying to put in the agristack,” he said. “We have made some headway; hopefully, next year, we should show substantial results,” he added.
Ahuja said, “I’m seeing the benefits information contextualised to the various partners in the agricultural ecosystem can bring”.
On occasion, Samuel Praveen Kumar, Joint Secretary, Union Ministry of Agriculture & Farmers Welfare, spoke on backstopping agriculture startups that are coming up with innovative technologies and solutions to enhance farm incomes. In this regard, Mr Kumar alluded to the three C’s— convergence, capacity building, and collectives like (FPOs and cooperatives) as the vital elements.
Elaborating on convergence, Kumar said, “if the government can package the schemes in such a manner that you give more benefits, in a unified manner to the businesses or startups, I think they will be able to sustain their business.” Similarly, on capacity building, he noted, “when we talk about capacity building for farmers or extension workers, it’s not like that. It is for everybody in the ecosystem.” Mr Kumar also alluded to developing climate-resistant crops, reducing carbon footprints using technology, and developing infrastructure.
Elaborating on the compendium, TR Kesavan, Chairman, FICCI National Agriculture Committee & Group President, TAFE, noted the need to document the best practices and give them to people so that “people can touch, feel, do and understand the practices.” He added, “small and marginal farmers are going to be one of the greatest strengths of the country. Some of the case studies in the compendium tell how they are changing.”
The FICCI compendium of guidelines presents select case studies, and successful projects and interventions rolled out by various organisations in achieving higher crop connectivity, resource use efficiency, cropping intensity and diversification towards high-value agriculture.
Supreme Court: An Order Is In Given Factual Circumstances; Judgement Lays Down Principles Of Law
The Supreme Court in the case Akil Valibhai Piplodwala observed and has issued a notice on a petition filed by a man seeking a direction that he should not be deported to Pakistan until his claim to be an Indian citizen is decided as per Section 9(2) of the Citizenship Act, 1955.
The bench comprising of Justice Surya Kant and the Justice J. B. Pardiwala observed and has also issued status quo in the matter. Thus, the notice on the plea has been issued to the District Superintendent of Police (Godhra), State of Gujarat and the Ministry of Home Affairs, Union of India.
According to the plea, the was born at Godhra, Gujarat in 1962 and had completed his education in India. The petitioner moved to Pakistan in 1976 but in 1983 he returned to India and got married at Godhra to an Indian woman on 2nd March 1984 and had three children from the wedlock. Thus, the petitioner again went away and finally returned to India in 1991 after obtaining all the requisite permits including a residential permit and continued to reside in India with his family.
However, out of fear of getting deported, the petitioner moved a regular civil suit before the Court of Civil Judge praying to declare him a citizen of India under Section5(1)(C) of the Indian Citizenship Act, 1955 since he was married to an Indian citizen. It is also prayed by him to restrict authorities from deporting him till his application under Section 9(2) of the Act is decided by the Union of India. In 1999, it was held by the Civil Judge that the Court did not have jurisdiction to decide the citizenship of the Petitioner. However, the decree was allowed by the Civil Judge partly to direct that he should not be deported back until his application under the Citizenship Act is decided.
Further, after the period of 4 years, the Union of India preferred a delayed appeal under Section 96 of CrPC against the order of the Civil Judge before the Principal District Judge. On 12.07.2022, the District Judge set aside the decree passed by the Civil Judge.
The petitioner being aggrieved by the order of the District Judge, moved the High Court of Gujarat. On 02.08.2022, the High Court dismissed his appeal holding that no substantial question of law arose.
Senior Advocate IH Sayed, appearing for the petitioner submitted that the High Court disregarded the fact that the Petitioner has been rendered vulnerable to deportation and if he is not protected till his application is adjudicated upon it would be violation of the procedure established by the principle of law.
The present petition was filed through Advocate Taruna Singh Gohil.
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