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The manufacturing sector is the highest priority for India and while foreign direct investment (FDI) is welcome, it must be incremental in terms of creating jobs in the country especially in the rural and agro-based sectors, Shri Kamal Nath, Minister of Commerce and Industry, said at a breakfast meeting of the Global Agenda in Davos yesterday, in which the other participants were the Finance Minister Shri P. Chidambaram and the Deputy Chairman of the Planning Commission Shri Montek Singh Ahluwalia. He described the recent decision on FDI in retail as only a limited opening and underlined the need, in the light of the experience in this regard in other Asian countries, to find a model which would be back-ended – e.g., FDI in setting up of cold chains and agro-processing, and not rock the boat of the country’s existing small retailers.
The Minister indicated that FDI inflow into India was being targeted at US $ 10 billion in 2006-2007, while the inflows were likely to touch US $ 7.5 billion during this fiscal 2005-06.
Later, responding during a press conference to a query about the deliberations of the informal meeting of WTO trade ministers held on the sidelines of the World Economic Forum (WEF) in Davos, Shri Kamal Nath indicated that the meeting attended by about 20 trade ministers agreed on a work programme listing out the timelines for 2006 in pursuance of the Hong Kong Declaration in different areas of negotiations including agriculture, non-agricultural market access and rules. The work programme envisages finalization of modalities in agricultural negotiations (including the modalities for elimination of export subsidies) and in non-agricultural market access (NAMA) negotiations by 30th April 2006.
Shri Kamal Nath also said that the US and the European Union (EU) must move in the matter of reducing trade-distorting agricultural subsidies and the issue of tariff peaks and tariff escalations in areas of interest to developing countries in industrial tariff negotiations if the Doha round was to deliver as a truly development round. The argument of some developed countries that they must get greater market access in return for cutting agricultural subsidies was unacceptable as “ we cannot be asked to pay a price for their stopping to do something they should not be doing in the first place”, he said.
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KAMAL NATH PARTICIPATES IN DAVOS SESSIONS, BBC WORLD DEBATE, WTO G-6 MEET
New Delhi: 27th January, 2006
In a hectic schedule of engagements during the annual meeting of the World Economic Forum (WEF) in Davos today. Shri Kamal Nath, Minister of Commerce and Industry, participated in a series of important meetings which included a session on Shifting Trade Winds – A Vision for 2020 (participants included Richard N. Cooper, Professor of International Economics, Harvard University, David Abney, President, UPS International and Pascal Lamy, Director General, WTO), The BBC World Debate on Jobs – Where will they Come from Next; a session on Indo-US Partnership and an Informal Gathering of World Economic Leaders on the Doha round issues.
Participating in the BBC World Debate along with Shri Kamal Nath were: Ahmed Mahmoud Nazif, Prime Minister of Egypt, Ellen Johnson-Sirleaf, President of Liberia, Sheikh Hashem Bin Abdullah Bin Hashem Yamani, Minister of Commerce and Industry of Saudi Arabia, Elaine L. Chao, US Secretary of Labour, Kamal Dervis, Administrator, UNDP-New York, Donald Johnston, Secretary General of the Organisation for Economic Cooperation and Development (OECD), Min Zhu of the Bank of China and Gunter Verheugen, Commissioner – Enterprise and Industry – European Commission, Brussels.
Addressing the Indo-US Partnership session, Mr. Kamal Nath said the Indo-US relationship was on an upswing with the US ranking as India’s largest trading partner accounting for almost 18% of India’s total exports and also as largest investing country in India in terms of FDI inflows and portfolio investment.
`´The economic synergies between our two countries are enormous. This is already visible in the sphere of information technology. Nearly half of all Fortune 500 companies today outsource some component of their back office operations from India…. To sustain the landscape of the future, I would like to suggest five milestones for a broader and deeper bilateral relationship – the nature of engagement, an enabling environment, building stronger physical and virtual networks through bilateral investments a technology cooperation, integrating markets by stepping up bilateral trade and nurturing shared values`´, the Minister said.
On the sidelines of WEF, Shri Kamal Nath also attended a meeting of the G-6 which was hosted by Mr. Mark Vaile, the Trade Minister of Trade of Australia. The ministers reviewed the position on Doha round issues ahead of the mini-ministerial of the World Trade Organisation (WTO) scheduled to take place in Davos tomorrow and decided to intensify the trade talks with a view to adhering to the deadlines agreed to at the Hong Kong Ministerial. The mini ministerial is expected to be attended by around 30 trade ministers of WTO member countries. Participants at the G-6 meeting included Peter Mandelson, the EU Trade Commissioner, Celso Amorim, Foreign Minister of Brazil, Robert Portman, US Trade Representative, Mark Vaile, Trade Minister of Australia and the agriculture minister of Japan, besides India.
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INDIA TO MOVE FROM BPO TO EPOs – KAMAL NATH ADDRESSES DAVOS SESSION ON SHIFTING TRADE WINDS
New Delhi: 27th January, 2006
Making a strong pitch for India as an investment and manufacturing destination in Davos, the Commerce and Industry Minister, Shri Kamal Nath, said that India would soon move from business process outsourcing (BPO) to engineering process outsourcing (EPOs) and Knowledge Process Outsourcing (KPOs), as India was rapidly ascending the knowledge chain and was no longer a base for only low-end processes and operations. He was addressing the annual meeting of the World Economic Forum (WEF) session entitled “Shifting Trade Winds – A Vision for 2020” today. Meanwhile, India’s IT-enabled and other services exports topped US $ 40 billion a year, he said, adding that “we are immensely proud to be the ‘default choice’ as the world’s Back Office”.
He underlined the transformation in the collective mindset that was taking place whereby India was being perceived as more than just a base for low-cost operations, with excellence in manufacturing reflected in the 12 % growth in the country’s industrial sector. “ We are already well on the way to making the transition as scores of Indian companies are emerging as global players, looking outward with a new-found energy and confidence and last year, for instance, Indian companies paid almost 2 billion dollars – five times the amount for all of 2001 – to acquire 62 overseas companies”, he said.
“Today, the shift in trade winds are being activated in part by the ‘credible India’ – the India that has a six – decade old stable democracy, the India in which there is rule of law and a fiercely independent judiciary and an equally fiercely free press, and an India in which there is a broad consensus across the political spectrum that only economic reform can bring prosperity to the common man”, he said.
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New Delhi: 26 January, 2006
The hub of world economic activity is shifting from the Atlantic Ocean to the Indian Ocean and India’s technological skills coupled with its attractiveness as a manufacturing centre are fast making India the hub of not only information technology (IT) – enabled services but also manufacturing, Mr. Kamal Nath, Minister of Commerce and Industry, said at the Annual Meeting of the World Economic Forum (WEF) Session on “Trendspotting 2020: Confronting a New World Order” in Davos today. “We have been experiencing a consistent industrial growth of 12% for the past few years, and this trend will accelerate”, he told the gathering of world business and political leaders.
Outlining the future trends, Mr. Kamal Nath said India could capture potential market through value addition in fields as diverse as engineering goods, chemicals, pharmaceuticals and biotech, and also fashion, lifestyle products and leather goods. India already dominates the world’s diamond market, with cut and polished diamonds from India accounting for approximately 85% of the global markets in volume terms.
Further, with aging of populations in the developed world, the workforce – not just labour, but the skilled and technologically qualified manpower - would come from developing countries. And the unique combination of IT, biotech and strong pharma manufacturing base would mean that India would remain not only business process outsourcing (BPO) destination but also a destination for knowledge process outsourcing (KPO) and engineering process outsourcing (EPO), Mr. Kamal Nath said.
Referring to the profound changes in the consumer base in India, he pointed to the emergence of the 300 million strong Indian middle class which was growing at the rate of 25 million a year which had become a strong driver of consumption of goods like cars, branded items in food and fashion etc. “ This is not just about rich urban consumers, but also about people from smaller rural towns. My own rural constituency, for example, has been a surprisingly good market for mobile handset manufacturers. The new low-cost airlines are providing an affordable link with larger cities, changing patterns of business and pleasure. Of course, even without traveling, Indians can now venture out virtually, thanks to inexpensive computers and affordable broadband connections…. It is significant that many of these low-priced brands are from reputed companies, not just cheap local fakes. Companies (in India) will more and more realize the need to span the spectrum for catering to a low-end customer as well as to those at the top end”, Mr. Kamal Nath said. More money would also mean more people clamouring to manage it and hence, more demand for services including financial, legal and other services, an area in which developing countries were fast catching up with the developed countries, he stressed.
“Contrary to what many feel, I am quite convinced that there is no possibility whatsoever of politics withering away or being triumphed over by economics. But I am equally convinced that it is good economics that will increasingly lend legitimacy to politics. Political success will lie in the art of facilitating faster economic growth through innovative policy intervention, rapid deregulation and infrastructure development. It is my belief that good politics – and good economics – can accomplish this”, the Minister said.
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New Delhi: 19th January, 2006
Shri Kamal Nath, Minister of Commerce and Industry, has said that India has a lot to gain from the Comprehensive Economic Cooperation Agreement (CECA) signed with Singapore last year, as it could be an important instrument for attracting investments into India. Referring to queries he had often faced as to why Singapore, the Minister said: “Besides our political ties and the presence of people of Indian origin, India sees Singapore as a model for financial discipline; as a major hub for attracting investments into India with Singapore already having emerged as the fifth largest foreign investor in India; and as providing an avenue for capitalizing on the synergies which represented the phenomenal potential for both countries to increase bilateral trade in goods and services as well as investments”. He was speaking at the CII Partnership Summit luncheon session in honour of Mr. Goh Chok Tong, Senior Minister and the former Prime Minister of Singapore, which was chaired by Shri Y.C. Deveshwar, President/CII and hosted by Bharati Enterprises in Kolkata this afternoon.
The real credit for the CECA goes to Mr. Goh, Shri Kamal Nath said, while recalling that it was Mr. Goh who during his visit to India two years ago as the then PM of Singapore had urged both countries to move towards CECA for a mutually beneficial partnership.
Mr. Goh underlined that the CECA could also act as a building block for India’s comprehensive integration with the ASEAN.
Later, Shri Kamal Nath called on the Prime Minister of the Czech Republic Mr. Jiri Paroubek and said that his visit provided a useful opportunity to continue the high level dialogue between the two countries on trade and economic matters. Complimenting the Czech Republic on joining the European Union (EU) from May 2004, Shri Kamal Nath expressed the hope that the enlarged union would impart a new impulse for broadening trade ties between the two countries.
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New Delhi: 19th January, 2006
The ongoing negotiations in the World Trade Organisation (WTO) on services as part of the Doha Round is expected to lead to an ambitious outcome that will be a win-win scenario for India and other developing countries having a comparative advantage in the area of services such as professional and IT-enabled services. Participating in the CII Partnership Summit session on “ Trade in Services: Dynamics are Different” in Kolkata today, Shri Kamal Nath, Union Minister of Commerce and Industry, said that the services negotiations were very important for India as 52 % of India’s GDP today constituted services and this year India would be exporting services worth more than US $ 50 billion – equivalent to almost half of the country’s total trade in merchandise or goods. The services sector also contributed significantly to employment growth in the country. Hence, it was important to ensure market access for India abroad in the areas of movement of persons as well as cross-border supplies like business process outsourcing (BPO) by addressing in the WTO negotiations the issue of the new barriers being erected in the developed countries.
Mr. Joseph Deiss, Federal Minister for Economic Affairs, Switzerland and Sheikha Lubna Al Qassimi, Minister of Economy and Planning, UAE, were the other participants in the session, which was chaired by Shri Tarun Das, Chief Mentor/CII.
At the Hong Kong Ministerial, Shri Kamal Nath said, in services, India sought to strike a balance between the “development” dimension as well as push towards more liberal offers from developed countries in areas of interest to developing countries. “ To do so, it was felt that the dynamics of the negotiations would have to include plurilateral requests as well, while retaining the primacy of the request-offer process in the negotiation. We got binding commitments (from other countries) in cross border supply of services and in movement of natural persons. Of course, it is expected that plurilateral requests would also be placed on India and other developing countries, mainly in mode 3 (which in WTO parlance refers to commercial presence including foreign direct investment). But plurilateral requests are optional and countries always retain the policy space and space best suited to their own special needs”, he explained.
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New Delhi: 18th January, 2006
Shri Kamal Nath, Union Minister of Commerce and Industry, has said that the tide of the brain drain is turning in India’s favour as scores of educated Indians, who left the country’s shores for lack of dynamic growth opportunities, are now returning to head corporations that are setting base in India and in the IT-enabled industry which is one of the key drivers of globalisation, there is even a reverse brain drain with many foreigners working in the Indian industry. Addressing the CII Partnership Summit in Kolkata today, Shri Kamal Nath said that India was on the cusp of a new economic paradigm with an upbeat perception of India that was adapting creatively to the challenges and opportunities of globalisation.
The Minister lauded the Communist government of West Bengal for its success in attracting investments by leveraging the process of economic reforms instead of boycotting it. “ As India’s third largest economy, West Bengal has spared no effort in terms of significantly improving its enabling environment to attract investment from both within in India and overseas, while simultaneously subscribing to Marxist philosophy (this can happen only in India). Today the state boasts of new investments from some of the biggest name in the industry, and scores of blue-chip foreign investors are eyeing it as an attractive investment destination. Of course, West Bengal is not alone in this ‘great leap forward’-huge swathes of India, even states that have traditionally been as backward, are now in the race to attract investment and fuel growth”, he said.
Speaking to the media on the sidelines of the Summit, Shri Kamal Nath indicated that the Special Economic Zones (SEZ) Act recently passed by the Parliament would be notified within a week along with the rules. The legislation, he explained, would provide a stable policy framework for investors in the Zones, which had the potential to attract Rs.10,000 crore investment including foreign direct investment (FDI) within the next few years.
Shri Kamal Nath also chaired the session on “ ASEAN: Meeting the New Challenges in the 21st Century”, where the keynote speaker was Mr. Fidel Ramos, former President of the Philippines, and stressed the need for new ideas in the ASEAN in order to face the new challenges. He said, “ Another challenge for developing countries in general and ASEAN in particular would be able to maintain its economic resilience and competitiveness. Elimination of non-tariff barriers and trade distorting subsidies by the developed countries is also a challenge. There is an urgent need for the developing countries to unite for not only free trade but also fair trade. What we witnessed in Hong Kong is unprecedented in the history of WTO.”
Mr. Ramos in his address said,” It seems likely that the regional groupings will become the economic units of the foreseeable future- and that it is not too far-fetched for us to hope that the whole Asia will eventually become incorporated into a ‘Federation of Nations’ similar to that being organized by the European Union.”
Shri Kamal Nath’s other engagements during the Summit today included: the Canada-Quebec Luncheon session in honour of the Premier of Quebec: Indo-British Partnership Network Meeting and bilaterals with Ms. Akira Matsu, Senior Vice Minister of Trade and Industry of Japan and with Mr. Tran Duc Minh, Deputy Minister of Trade of Vietnam.
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INPUT-OUTPUT NORMS FOR 17 NEW EXPORT ITEMS NOTIFIED
PRESS NOTE
The Directorate General of Foreign Trade (DGFT) has issued Public Notice No.82 dated 16/012006 notifying additional standard input-output norms for 17 new export items and amendments/ corrections/deletions in the standard input-output norms for 16 existing export items. Out of the 17 new norms, 15 norms relate to the chemicals & allied products, one relate to engineering products and one relate to the food products. Fixation of standard input-output norms will facilitate issue of advance licences to the exporters for above additional items.
Directorate General of Foreign Trade, Ministry of Commerce & Industry
New Delhi, 18th January, 2006
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PRESS NOTE
The Government, vide Press Note 2 (2005 Series) dated 2.3.2005, had notified the policy for Foreign Direct Investment (FDI) in townships, housing, built-up infrastructure and construction-development projects. The Government has received few requests from investors seeking clarifications on applicability of these policy guidelines to some other sectors such as Special Economic Zones, Hotels, Hospitals, etc.
The matter has been considered in the light of the policy prevailing prior to issue of the subject Press Note. FDI up to 100% was already allowed under the automatic route in the Hotel and tourism sector vide Press Note 4 (2001 Series) and in the Hospital sector vide Press Note 2 (2000 Series). Special Economic Zones are separately regulated under the Special Economic Zone Act, 2005.
It is clarified that the provisions of Press Note 2 (2005 Series) shall not apply to Special Economic Zones; neither shall it apply to establishment and operation of hotels and hospitals which shall continue to be governed by Press Note 4 (2001 Series) and Press Note 2 (2000 Series) respectively.
Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Press Note No. 02 (2006 Series), New Delhi, 18th January, 2006
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New Delhi: January 17, 2006
A significant milestone was crossed today with the unveiling of the FICCI Task Force Report on cooperation between India and Italy in the areas of Fashion, Design and Life Style Products, here by Shri Kamal Nath, Commerce and Industry Minister and Dr. Adolfo Urso, Deputy Minister for Productive Activies and Foreign Trade (Independent Charge) of Italy.
The day was also marked by the signing of the multilateral Statement of Intent for launching of collaborative Certificate Programme – “Managing Fashion & Design Companies Successfully” – by National Institute of Design (NID), Ahmedabad, FICCI, Bocconi University, Altagamma and Confidustria, Italy.
Both are a landmark in the history of design in India witnessed by the two Ministers. Also present on the occasion were those who have shaped the course of these events, including Dr (Prof.) Darlie O Koshy Executive Director, NID, Ahmedabad; Dr. Amit Mitra, Secretary General Federation of Indian Chamber of Commerce and Industry (FICCI); Prof. Andrea Sironi, Dean for International Affairs, Bocconi University, Milano (Italy); Mr. Armando Branchini, Secretary General Associazione Imprese Italiane Alta Gamma (Altagamma), Milano, (Italy); and Mr. Carlo Calenda, Assistant to the President Confindustria, Rome (Italy).
The events are a chronicle of the development of Indian Fashion and Lifestyle Products market, which has been changing rapidly in recent times, a change perhaps unsurpassed in any similar span of years in the past. With the economy opening up and global and brand awareness guiding the Indian consumer, there has been a noticeable transformation in consumer expenditure configurations. This, in turn, has spurred the entire market, from producers of such fare to the retail market, to try and gear up for this rapid retail revolution.
NID/Ahmedabad, FICCI, Bocconi University, Altagamma and Confidustria, Italy have come together to offer a certificate programme entitled “Managing Fashion and Design Companies Successfully”. This pathbreaking programme – certainly the first of its kind in India -- is targeted at trained design and fashion professionals who need to be moulded to evolve into the new managers in the retail revolution in India. It will culminate in successful students being awarded a Joint Certificate of participation issued by Bocconi University and NID. Students will be trained in areas including Strategic Design Management, Design Process, New Product Development, Packaging, Retail Impact, Competitive Analysis of Design-Business, Strengths and Design Measurement, by a faculty made up of stalwarts from Strategic Design Management, Lifestyle Accessory Design, Apparel Design & Merchandising and faculty of both the NID and the Bocconi University.
NID is an acknowledged repository in the field of design education, consultancy and design promotion in India, while Bocconi University is one of the leading management and business universities of Europe. Altagamma, the association of Italian companies of international renown operating in the high end of the market and Confidustria, the Italian employers' federation will help identify the Italian member companies to be involved both in the Programme. FICCI will assist in identification of the Indian companies to be involved in the Field Projects.
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FOREIGN DIRECT INVESTMENT (FDI) IN UP-LINKING OF TV CHANNELS
PRESS NOTE
At present, foreign direct investment (FDI) up to 49% is permitted for setting up hardware, Up-linking HUB, etc., subject to compliance with the Broadcasting Laws and Regulations and subject to the detailed guidelines for Up-linking announced by the Ministry of Information and Broadcasting from time to time.
Under the revised guidelines for Up-linking notified on 2.12.2005, the Government has decided to allow FDI in the Up-linking of TV Channels as under:
a) FDI up to 49% would be permitted with prior approval of the Government for setting up Up-linking HUB/ Teleports;
b) FDI up to 100% would be allowed with prior approval of the Government for Up-linking a Non-News & Current Affairs TV Channel;
c) FDI (including investment by Foreign Institutional Investors (FIIs) up to 26% would be permitted with prior approval of the Government for Up-linking a News & Current Affairs TV Channel subject to the condition that the portfolio investment in the form of FII/ NRI deposits shall not be “persons acting in concert” with FDI investors, as defined in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The Company permitted to uplink the channel shall certify the continued compliance of this requirement through the Company Secretary at the end of each financial year.
While calculating foreign equity of the applicant company, the foreign holding component, if any, in the equity of the Indian shareholder companies of the applicant company will be duly reckoned on pro-rata basis, so as to arrive at the total foreign holding in the applicant company. However, the indirect FII equity in a company as on 31st March of the year would be taken for the purposes of pro-rata reckoning of foreign holdings.
FDI for Up-linking TV Channels will be subject to compliance with the Up-linking Policy of the Government of India notified by the Ministry of Information & Broadcasting from time to time.
Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Press Note No. 01 (2006 Series), New Delhi, 17th January, 2006
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New Delhi: 17th January, 2006
Shri Kamal Nath, Commerce and Industry Minister, will attend the Partnership Summit 2006 of the Confederation of Indian Industry (CII) in Kolkata on 18th and 19th January 2006. The Minister will also attend the Indo-British Partnership Network Meeting in Kolkata tomorrow.
The Partnership Summit 2006 being organised by CII from 17-20 January and scheduled to be inaugurated by the President Dr. A.P.J. Abdul Kalam brings together on one platform about 25 business delegations, 400 foreign delegates, including Mr. Ian Pearson, Minister for Trade, the Foreign and Commonwealth office (UK); Mr. Jiri Paroubek, Prime Minister of Czech Republic; Mr. Fidel Ramos, former President of the Philippines; Mr. Goh Chok Tong, former Prime Minister of Singapore; Mr. Jean Charest, Premier, Province of Quebec, Canada; Ms. Akira Matsu, Senior Vice Minister of Economics & Trade and Industry of Japan; and Mr. Tran Duc Minh, Deputy Minister of Trade of Vietnam.
Shri Kamal Nath will have bilateral meetings with Ministers of Japan, Viet Nam and Singapore, besides meetings with the Prime Minister of the Czech Republic and the former President of the Philippines. He is also scheduled to attend the foundation stone laying ceremony of the “City Centre” of Bengal Ambuja.
This year's Partnership Summit is focussing on some of the key international issues facing growth and development today such as biotechnology, Free Trade Agreements (FTAs), Regional Trade Agreements (RTAs), EU-India ties, UNCTAD, issues related to Middle East and East Asia, rising oil prices, China's growth story and India and the US, ASEAN etc.
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New Delhi: January 16, 2006
India’s merchandise exports have regained momentum in December 2005 after the negative growth witnessed in the month of November 2005, and as a result, exports in 9 months (April-December 2005-06) have crossed US $ 66 billion. “I am bullish on exports”, Shri Kamal Nath, Union Minister of Commerce & Industry, said commenting on the pick up in exports during December 2005.
Exports during April-December 2005-06 are valued at US $ 66431.00 million ($ 66.4 billion) which is 18.03% higher than the level of US $ 56284.61 million ($ 56.2 billion) during April-December 2004-05. In rupee terms, the exports were Rs.293829.21 crore, during April-December 2005-06 which is 15.18% higher than the value of exports during April-December 2004-05.
Exports during December 2005 are valued at US $ 8283.70 million ($8.2 billion) which is 16.19% higher than the level of US $ 7129.23 million ($ 7.2 billion) during December 2004. In rupee terms, the exports were Rs.37807.74 crore, which is 20.58% higher than the value of exports during December 2004.
India’s imports during April-December 2005-06 are valued at US $ 96263.95 million representing an increase of 27.29% over the level of imports valued at US $ 75627.19 million in April-December 2004-05. In rupee terms, the imports increased by 24.18%.
Oil imports during April-December 2005-06 are valued at US 31123.72 million which is 45.43% higher than oil imports valued at US $ 21401.08 million in the corresponding period last year. Non-oil imports during April-December 2005-06 are estimated at US $ 65140.23 million which is 20.13% higher than the level of such imports valued at US $ 54226.11 million in April-December 2004-05.
Imports during December 2005 are valued at US $ 10985.94 million representing an increase of 8.44% over the level of imports valued at US $ 10130.59 million in December 2004. In rupee terms the imports increased by 12.54%.
The trade deficit for April-December 2005-06 is estimated at US $ 29832.95 million which is higher than the deficit at US $ 19342.58 million during April-December 2004-05.
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New Delhi: January 16, 2006
Shri Kamal Nath, Minister of Commerce and Industry, today invited Quebec companies to invest in India in order to reap the benefits of highly skilled and relative cheap manpower which along with the progressive liberalisation of the economy have made India a manufacturing hub for foreign countries. “ We invite Quebec companies to enter into partnerships with Indian companies not only for projects in India, but also for projects in third countries. There are potential synergies between India’s pool of highly qualified scientific and technical manpower, and Quebec’s hi-tech know-how”, he said while meeting the Premier of Quebec (in Canada)Mr. Jean Charest. Premier Charest is leading a business delegation to India from Quebec, which is one of Canada’s largest provinces, from January 15 to 21, 2006.
Referring to investment prospects in India, Shri Kamal Nath said that given India’s urgent and extensive requirement of foreign direct investment (FDI) in infrastructure coupled with Canada’s expertise in airport construction and modernisation, environment technology etc. there would be many profitable openings for Canadian firms in India.
Meanwhile, the Confederation of Indian Industry (CII) and the Quebec Manufacturers and Exporters Association have signed an MOU for greater business-to-business cooperation.
“There is tremendous potential to scale up the level of bilateral economic cooperation. Recently, India and Canada have intensified the level of interaction with an emphasis on trade and investment. We have identified certain sectors of mutual synergy and have been working on an Investment Promotion and Protection Agreement”, Shri Kamal Nath said.
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New Delhi: January 16, 2006
A lot of work remains to be done, post-Hong Kong, if the ongoing Doha Round of the World Trade Organisation (WTO) negotiations are to successfully conclude by the projected end date of December, 2006. This was indicated by Shri Kamal Nath, Minister of Commerce and Industry and Mr. Ian Pearson, the visiting UK Minister of State for Trade. during a meeting here this morning. Shri Kamal Nath flagged in particular India’s interests in addressing the issue of tariff peaks and tariff escalation in developed country markets in the non-agricultural market access (NAMA) negotiations as these adversely affected exports of value-added products from India. Shri E.V.K.S. Elangovan, Minister of State for Commerce and Industry, was also present at the meeting.
Both the Ministers underlined the need to further strengthen bilateral trade and economic cooperation between India and the UK, especially in the services sector on a mutually beneficial basis. The United Kingdom (UK) is India’s largest trading partner in European Union (EU) with Indo-UK two-way trade estimated at US $ 7 billion during 2004-05. It was indicated during the discussions that the second meeting of the India-UK Joint Economic and Trade Commission (JETCO) would take place in London later this month which would discuss in detail substantive measures for increasing the scope of bilateral trade and investment between the two countries.
Later during an interaction with the business delegation accompanying Mr. Pearson, both the sides underlined the untapped potential for further boosting trade and economies between India and Britain. The UK side raised the issue of market access of alcoholic beverages to India. From the Indian side, it was urged that Indian whisky be classified as whisky for market access purpose. (Indian whisky is not allowed to be marketed in Europe as Whisky since it is molasses based and the EC position is that whisky must be manufactured out of grain based alcohol).
While the Indian delegation at the talks included Shri S.N. Menon, Commerce Secretary and Dr. Ajay Dua, Secretary (Industrial Policy & Promotion). the UK side included the UK High Commissioner to India Sir Michael Arthur, besides members of the official UK business delegation accompanying Mr. Pearson which included representatives of The Times (TBC); Glaxo Smithkline; London StockExchange; Pinsent Masons; Virgin Atlantic; UK Trade and Investment; Asia House; Centre for Entrepreneurial Learning; Cambidge University; Standard Chartered Bank; Global Group (Europe) Ltd. and Mr. Karan Bilimoria, CBM, (delegation leader).
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Shri Kamal Nath, Union Minister of Commerce and Industry, today invited the trade and industry represented in the high-level Board of Trade to give their inputs and suggestions for both the forthcoming Union Budget and the Foreign Trade Policy (Annual Supplement), which is scheduled to be brought out in March this year. In his keynote address at the meeting of the Board of Trade – the first to be held outside Delhi – in Mumbai, the minister also indicated that he had taken up with the Union Finance Minister the issue of the Fringe Benefit Tax (FBT) and Service Tax incidence, which were having an adverse impact on India’s export competitiveness, along with several other important proposals.
Welcoming the reports of the Working Groups and the Study Groups, which were set up last year by the Board of Trade under the chairmanship of Shri Kumarmangalam Birla, Shri Kamal Nath urged the Board to narrow the recommendations to 3 or 4 issues having the maximum impact on the exports. The minister assured that the recommendations would be finalized soon and sent to the relevant departments for speedy implementation within a definite time-frame.
Shri Kamal Nath also announced that the Target Plus scheme would be revamped to make it more focussed and ensure that the scheme actually fulfilled its objectives. The Target Plus scheme is an incentive scheme based on incremental exports and is being implemented at a cost of nearly Rs. 8,000 crore. “Since Rs.8,000 crore is being spent on the scheme, it must generate at least 20-30 times this amount by way of export earnings for the country”, Shri Kamal Nath observed and invited the Board members to also give their suggestions on this aspect.
Agreeing with the exporters on the need for a stable policy regime and the adverse impact of the extension of the DEPB (Duty Entitlement Pass Book) scheme in fits and starts for a few month at a time, Shri Kamal Nath assured that such uncertainties would be removed and announced that the DEPB continue till a new scheme was finalized. “Not only will it continue, but we are also committed to there being a reasonable overlap period in order to have a smooth transition”, he said.
Stating that India’s export growth had regained its momentum in December, 2005, Shri Kamal Nath indicated that the growth of exports in the 9 months of the current financial year (April – December) was over 18%, which was commendable considering that this was achieved on the already all-time high base of 26% growth last year. India’s merchandise exports from April – December 2005-06 stood at a little over US $ 66 billion, while imports during this period, if oil imports were excluded, amounted to US $ 65 billion. Shri Kamal Nath said that he was bullish about achieving export target of US $ 93 billion during 2005-06 and urged the Board of Trade to strategize for even exceeding this target.
There were presentations at the meeting on the Working Group reports relating to: Evaluation of Different Export Promotion Schemes, Trade Facilitation, Manufacturing Sector and Identifying specific sectors and strategies having comparative advantage.
In his welcome address, the Commerce Secretary Shri S. N. Menon highlighted the importance of the Board of Trade in providing an impetus the government’s export effort by involving the Trade and Industry and stated that infrastructure and domestic regulatory issues, which continued to erode competitiveness, needed to be addressed urgently so that trade liberalization in the World Trade Organization (WTO) could lead to the desired results.
Shri Birla complimented Shri Kamal Nath on his outstanding performance at the WTO Hong Kong Ministerial Conference, which, he said, had enhanced India’s image and stature in the global trade arena. Briefing the members on the Hong Kong outcome, Shri Kamal Nath said that India’s defensive interests in Agriculture were fully protected, while in the area of industrial tariffs, there was a commitment by the developed countries to address the issues of tariff peaks and tariff escalations on products of interest to developing countries.
Members of the Board, who participated included representatives of Tata Sons, Allana Sons, Bharat Forge, Ranbaxy, Maruti Udyog, ESSAR Group, SPIC, Gujarat Ambuja, Yes Bank, FICCI, FIEO, CII, ASSOCHAM; Chairmen of Gems and Jewellery Export Promotion Council, Apparel Export Promotion Council, Texprocil, SRTEPC, Export Promotion Council of Handicraft (EPCH), Seafood Exporters Association of India, Council of Leather Exports, Chemexcil, Pharmexcil, CAPEXIL, Electronics and Software Export Promotion Council, Export Promotion Council for EOUs and Engineering Export Promotion Council (EEPC) besides official members of the Board of Trade including Shri K. T. Chacko, who is member secretary of the Board.
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New Delhi: January 13, 2006
The Fourth Meeting of the National Manufacturing Competitiveness Council (NMCC) was held under the Chairmanship of Dr. V. Krishnamurthy, here today and discussed the progress of activities undertaken so far by the NMCC as well as its future work. The final draft of the “National Strategy for Manufacturing”, prepared after taking inputs from various stakeholders, was also taken up. Shri V. Govindarajan, Member Secretary, NMCC; Dr. Ajay Dua, Secretary (Industrial Policy & Promotion); Shri Priyadarshi Thakur, Secretary (Heavy Industries & Public Enterprises); and Shri Ashok Jha, Secretary (Economic Affairs) attended this important meeting along with other members of the Council.
Following the meeting, members of the NMCC called on the Prime Minister Dr. Manmohan Singh and briefed him on the activities of the Council, besides seeking his guidance on various issues relating to India’s manufacturing competitiveness.
During the meeting, it was emphasised by Council Members that ‘Competitiveness is central to robust growth of manufacturing sector. Manufacturing sector is crucial, directly or indirectly, for providing jobs for the large work force entering the job market every year, particularly from the rural areas. The challenges facing Indian manufacturing would require actions from the Government as well as the Industry for making the manufacturing sector competitive. There are certain areas where both the Government and the Industry would need to put in efforts, preferably, through a well designed public-private partnership. Therefore, to improve overall competitiveness, it is essential to improve National level competitiveness as well as firm level competitiveness.’
The NMCC has recommended the following main Goals for Manufacturing Sector:
• If the Nation’s GDP is to grow at balanced 8 - 9% per annum then the manufacturing sector has to grow at 12% - 14% per annum over the next decade compared to less than 7% growth in the last two decades;
• Manufacturing is a force multiplier as investments in manufacturing yields four times effect on GDP growth;
• Manufacturing is crucial for the robust growth of the economy, of exports and of generating substantial relevant employment;
• Growth target of 12% in manufacturing would create about 1.6 to 2.9 million direct jobs annually and in addition 2 to 3 times new jobs indirectly; and
• The long term goal should be to aim at much higher contribution of manufacturing in the GDP (25% to 35%).
The approach adopted by NMCC is based on the premise that improving competitiveness, and not protection or subsidy, is the remedy. It comprises:
• A National level strategy paper on Manufacturing;
• Taking up sub-sectors having immediate potential for gains in terms of growth, market share, employment and identify impediments – initiate suitable action;
• In addition Examine in-depth, certain generic issues cutting across most sub-sectors (e.g. HRD/ Training, Innovation, Taxation, etc.); and
• Engage various States in the whole process (they drive manufacturing, investments, employment generation etc.).
The Action Plan suggested by the NMCC includes implementation of ‘National Strategy for Manufacturing’ by launching a National Manufacturing Initiative with a 10-year horizon, and setting short term, medium term and long term goals looking at both national as well as firm level issues.
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JOINT STUDY GROUP RECOMMENDS COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT WITH KOREA
New Delhi: January 12, 2006
The Indo-Korea Joint Study Group (JSG) has recommended that India and Korea should enter into a Comprehensive Economic Partnership Agreement (CEPA) covering, among other things, Trade in goods; Trade in services; Measures for Trade Facilitation; Promotion, facilitation and liberalisation of investment flows; Measures for promoting bilateral economic cooperation in identified sectors; and Other areas to be explored for furthering bilateral partnership.
It may be recalled that Prime Minister Dr. Manmohan Singh and the President of the Republic of Korea during their meeting on 6 October 2004 agreed to establish a Joint Study Group to take a comprehensive view of bilateral economic linkages between Korea and India. Shri Kamal Nath, Commerce and Industry Minister, directed the Department to start the work of the JSG on priority and complete its proceedings within a year. Accordingly, the Joint Study Group, composed of government officials, economists and representatives of business communities of Korea and India, held its first meeting in end-January 2005 and has met alternately in India and Korea four times.
Commerce Secretary, Shri S.N. Menon, led a delegation to Seoul from 5-7 January, 2006 to attend the Fourth and the Concluding Meeting of India-Korea Joint Study Group when the JSG Report was finalised and signed on 5th January. The JSG, has, in fact, completed its report before the stipulated timeline. The meeting was co-chaired by Shri Menon from the Indian side and Mr. Joong Keun Kim, Deputy Minister for Trade, Ministry of Foreign Affairs and Trade from the Korean side. The India-Korea JSG report was signed by the two co-chairs. Among the OECD countries, Korea is the first country with which India has completed the JSG report.
The JSG also recommended that the two Governments appoint a Joint Task Force composed of government officials to work on realizing benefits that might be derived from the Korea-India Comprehensive Economic Partnership Agreement (CEPA) and accordingly start its work of developing a CEPA for completion within a reasonable period of time. The Joint Task Force would bring about specific recommendations on each of the constituent elements of the CEPA for adoption by the two Governments.
A comprehensive economic partnership envisaged under the India-Korea CEPA would be of great assistance in fostering the two countries’ economic partnership at all levels. Liberalisation of goods under the CEPA would bring about an overall increase in trade flow between the two economies and promote further inter-industry trade. Efficiency in the service sector is crucial for the further economic growth of both Korea and India, which can be achieved through liberalization of trade in services. For the further expansion of bilateral investment flows, the two countries are required to improve their investment environments by removing constraints to foreign investment on an institutional basis. Indian and Korean enterprises, which are quickly emerging as significant sources of outward investment, could be made even more attractive to third country FDI by enlarging the market through a bilateral agreement such as the CEPA. The CEPA will also help form a bridge between South Asia and North East Asia and possibly lay the foundation for even larger regional economic integration across Asia. The JSG hoped that the CEPA would ensure even greater economic expansion and everlasting economic links between the two countries in the 21st century.
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New Delhi: January 10, 2006
The Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry, has notified Draft Patents (Second Amendment) Rules, 2005 which was published in the Gazette of India Extraordinary, Part II, Section III, sub-Section (ii) vide S.O. No. 1844 (E) dated 30/12/2005. The notification containing the proposed amendments to the rules is available on the website of the Office of the Controller General of Patents, Designs and Trademarks at: www.ipindia.nic.in and also available for sale with the Department of Publications. The draft rules have been published for the information of all concerned and to invite suggestions/ comments, which would be taken into consideration before finalisation and notification. The period of furnishing suggestions/comments being 30 days, the last date for receipt will be 3rd February, 2006.
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KAMAL NATH CONVENES MEETING OF BOARD OF TRADE IN
MUMBAI
FIRST EVER BOT MEETING OUTSIDE DELHI
New Delhi: January 10, 2006
Shri Kamal Nath, Union Minister of Commerce & Industry, has convened a meeting of the Board of Trade in Mumbai on 13th January, 2006. This will be the first ever meeting of the Board of Trade outside Delhi.
The Board of Trade is a forum for continuous dialogue between Government and the trade and industry and the Board, inter-alia, advises the government on policy measures connected with India’s foreign trade in order to achieve the objective of boosting the country’s exports, including advising the government on preparation and implementation of short term as well as long term strategies for enhancing exports in the light of emerging national and international trade scenarios.
An important item on the Agenda of the forthcoming meeting would be the presentation by select Working Groups and Study Groups which were set up sometime ago on specified areas of Indian exports. Five Working Groups were set up on “evaluation of different export Promotion Schemes”; “trade facilitation”; “manufacturing sector”; “identifying specific sectors and strategies having comparative advantage” and on SEZs and EOUs. Besides this, there were four sectoral Study Groups on textiles; pharmaceuticals; chemicals & allied sectors; and on the impact of Regional Trade Agreements RTAs) and Free trade Areas (FTAs) on Indian industry and exports.
The Board of Trade was revamped in pursuance of the announcement made by Shri Kamal Nath as part of the Foreign Trade Policy (2004-09) and given a clear and dynamic role. The Minister had also announced that an eminent person or expert on trade policy would be the Chairman of the Board of Trade as against the earlier practice of having the Commerce Minister as Chairman. Accordingly, the Board of Trade, headed by Dr. Kumar Mangalam Birla, Chairman of the Aditya Birla Group was reconstituted with 39-members, including both non-official and official members.
The non official members of the Board of Trade are: Mr. Ishaat Hussain, Tata Sons; Mr. Baba Kalyani, Bharat Forge; Mr. Malvinder Singh, Ranbaxy; Mr. Irfan Allana, Chairman, Allana Sons; Mr. Jagdish Khattar, Managing Director, Maruti Udyog; Mr. Ravi Raheja, President Shoppers Stop Ltd. ; Mr. Prashant Ruia, ESSAR Group; Mr. A.C. Muthiah, SPIC; Mr. Harsh Neotia, Gujarat Ambuja; Mr. Rana Kapoor, Yes Bank; Mr. Swaminathan S. Anklesaria Aiyar, Economist; President, CII; President, FICCI; President, FIEO; President, ASSOCHAM; Chairman, NASSCOM; Chairmen of Gems & Jewellery EPC; Apparel Export Promotion Council; Texprocil; SRTEPC; Export Promotion Council for Handicraft (EPCH); Seafood Exporters Association of India; Council for Leather Exports; Chemexcil; Pharmexcil; CAPEXIL; Electronic & Software Council; Export Promotion Council for EOUs; Engineering Export promotion council
The official members of the Board of Trade are: Secretary, Department of Commerce; Secretary, Department of Revenue; Secretary (ER), Ministry of External Affairs; Secretary, Ministry of Textiles; Chairmen of India Trade Promotion Organization, Export Credit Guarantee Corporation (ECGC); Managing Director, EXIM Bank; Deputy Governor, Reserve Bank of India; Secretary, Shipping; and the Director General of Foreign Trade, as Member Secretary of the Board.
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IMPORT OF SENSITIVE ITEMS DECLINE DATA FOR APRIL-OCTOBER 2005
New Delhi: January 10, 2006
The total import of sensitive items for the period April-October 2005 has been Rs.9853 crore as compared to Rs.10873 crore during the corresponding period of last year thereby showing a fall of 9.4%. The gross import of all commodities during same period of current year was Rs.328813 crore as compared to Rs.257103 crore during the same period of last year. Thus import of sensitive items constitute 4.2% and 3.0% of the gross imports during last year and current year respectively.
Imports of edible oil, cotton & silk, milk & milk products and rubber have shown a decline at broad group level during the period. Imports of fruits & vegetables, spices, automobiles, tea & coffee and products of SSI have shown increase during the period under reference.
In the edible oil section, the imports have decreased from Rs.6660 crore last year to Rs.5288 crore for the corresponding period of this year. A significant feature of edible oil import is that import of crude oil has gone up by 20.6% and that of refined oil have gone down by 76.0%. The downfall in edible oil import is mainly due to huge shortfall in import of RBD Palmolein, which has gone down by 74% and Other Refined Palm Oil which has gone down by 73%.
Imports of sensitive items from Argentina, Brazil, China P RP, Egypt A RP, Ghana, Guinea Bissau, Cote D’ Ivoire, United Arab Emirates, United States of America, Vietnam Soc Rep etc. have gone up while those from Indonesia, Malaysia. Benin, Japan and Sri Lanka DSR etc. have shown a decrease.
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CALIBRATED GLOBALISATION THE BEST BET FOR DEVELOPING COUNTRIES LIKE INDIA, SAYS UNCTAD STUDY
New Delhi: January 08, 2006
Developing countries such as India should calibrate further integration with the world economy or globalisation in such a way that it does not lead to job losses, unequal income distribution or increased poverty, but rather to greater employment and prosperity, according to a publication titled “India and the Doha Work Programme – Opportunities and Challenges” brought out under the aegis of the project on Strategies & Preparedness for Trade and Globalisation in India which UNCTAD has been implementing. This is among the two major strategic challenges in the era of globalisation, the study says, adding that the other challenge is to ensure that new entrants to the country’s labour force rising at the rate of 2% per annum, as well as the existing unemployed and underemployed are able to have employment and work with adequate remuneration and rising real wages. The publication has been edited by Dr. Veena Jha, Project Coordinator, UNCTAD.
Infrastructure and domestic regulatory environment in all sectors of economy would be important factors in ensuring that trade liberalisation at the WTO delivers the desired gains, while domestic policies would also play an important role in ensuring that distribution of gains from trade liberalisation is more even, the study states.
Since the informal sector constitutes the bulk of Indian economy and, therefore, burden of providing employment falls necessarily on this sector, the report calls for making the informal sector in India more dynamic. The most important way of doing this is for the government to maintain as high a rate of growth of aggregate demand and exports as possible. Faster growth of real demand in the economy will give greater opportunity to small firms to survive and to expand. “In this context, non-agricultural market access (NAMA) becomes all the more important, especially in sectors of export interest to India such as textiles and garments, gems & jewellery, auto components, leather & leather goods, etc. Some of these sectors particularly face tariff peaks and tariff escalation in major markets. At the same time, the informal sector is vulnerable in sectors such as fish and processed food where protection may be required”, the study says.
On the issue of manufacturing versus services as the engines of economic growth, the study argues that India should take advantage of its strengths in information technology (IT) and use it extensively in all areas of the economy in order to upgrade manufacturing and agriculture, as well as services.
The study further argues that in NAMA, India should bind its unbound tariffs only if, in turn, it is able to get some market concessions especially in sectors such as textiles, leather & leather products, auto components and the like.
On the issue of agriculture in WTO negotiations, the Report expresses the view that in the medium term, India’s defensive interests overwhelm its offensive interests. Nonetheless, India should seek a reduction in agricultural subsidies of developed countries, as there may be a few products in agriculture where India might become competitive in a few years’ time.
In other areas, India’s interest would lie primarily in the trade facilitation negotiations to address non-tariff barriers (NTBs) relating to logistics, while putting its own house in order.
Similarly, in view of its vast reserves of traditional knowledge, India should argue for a more development friendly Agreement on Trade-related Intellectual Property Rights (TRIPs). The study also argues for a subsidy regime that would permit subsidised capital goods imports, which would help the Indian industry to upgrade itself technologically to face the challenge of global competition.
The study notes the rapid strides made by the Indian economy in recent years with exports in 2004-05 estimated at US $ 80 billion, imports at US $ 105 billion and foreign exchange reserves at $140 billion, as well as encouraging trends in employment generation with a study commissioned by Ministry of Commerce & Industry showing that exports generated an incremental direct employment of one million jobs in 2004-05 over the previous year.
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New Delhi: January 06, 2006
The Federation of Indian Export Organisations (FIEO) felicitated the Commerce & Industry Minister, Shri Kamal Nath, here this evening, for his dexterity in articulating India’s interests and concerns at the recently concluded Sixth Ministerial Conference of the World Trade Organisation (WTO) held in Hong Kong and for clinching “the best possible deal for developing countries”. Shri O.P. Garg, President, FIEO, referring to the issue of agricultural subsidies, expressed confidence that Shri Kamal Nath with his negotiating skills would help to ensure that a level-playing-field was provided across the globe for exports and imports.
Earlier in his address at the Hero Mindmine Summit here this morning, the Minister said: “No one can doubt that it is the success of our businessmen and entrepreneurs that has put India squarely on the global map today and has contributed to the growing prosperity of our people. In fact, India’s performance at the WTO ministerial truly represents a coming of age of the business of commerce in India. It is India that led from the front. As we conclusively demonstrated to the world today, we as Indians can negotiate from a position of strength in global forums – and be heard. This, indeed, is the business of commerce at another level”. Countries like India are confidently emerging as champions of fairer trade, he added.
Referring to exports, Shri Garg pointed out that there was no slackening of demand in world markets for Indian goods but it was the issue of continuing constraints on the export community that was reflected in the export statistics of November 2005. He categorically said that an array of new levies such as FBT, VAT and service tax on foreign agents’ commission, warehousing charges etc., had eroded India’s competitiveness in the global market. “There is no doubt that our rule-books do contain provisions for the refund of these levies, but the cumbersome refund processes always leave exporters in the lurch”, he said. FIEO also urged the Minister to address the issue of non-tariff barriers in SAARC in the interest of boosting trade in the region within the framework of the newly launched South Asian Free Trade Area (SAFTA).
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GREATER MARKET ACCESS FOR INDIA’S INDUSTRIAL PRODUCTS AS A RESULT OF HONG KONG –
FARMERS
INTERESTS FULLY PROTECTED
SURGE IN INDIA’S EXPORTS CONTINUES
SEZs TAKE OFF WITH PASSAGE OF BILL
SAFTA IMPLEMENTATION CLEARED
YEAR END REVIEW – DEPARTMENT OF COMMERCE
New Delhi: January 01, 2006
Industrial products from developing countries like India will get greater market access as a result of the Ministerial Declaration adopted at the Sixth Ministerial Conference of the World Trade Organisation (WTO) held in Hong Kong, as it provides for reduction and elimination of tariff peaks and tariff escalations, in particular on industrial products of export interest to developing countries. Shri Kamal Nath, Minister of Commerce and Industry, led the Indian delegation to the Hong Kong Ministerial Conference which was held from 13-18 December, 2005. As indicated by Dr. Amit Mitra, Secretary General, Federation of Indian Chambers of Commerce & Industry (FICCI) “perhaps the biggest gains from Hong Kong came from reduction and elimination of tariff peaks and tariff escalations, prevailing in developed countries, against our industrial products. Though the average import duty in developed countries is supposedly 3%, the peak duty on specific items such as ready-made garments is to the tune of 30%. Similarly, tariff escalations duty on value-added leather bags as against raw leather reach levels of 20% in the US. Another gain was in the realm of flexibility which would let the Indian business have selected items exempt from import duty reduction altogether”.
In agriculture, interests of farmers have been fully protected as the Declaration clearly provides that developing countries will be able to self-designate an appropriate number of tariff lines as Special Products (which are subject to nil or marginal tariff reductions) based on the criteria of food security, livelihood security and rural development. Further, to safeguard farmers against surge in imports or fall in international prices, developing countries will be able to use a Special Safeguard Mechanism with both import quantity and price triggers. Domestic support given to farmers in countries like India having a preponderance of small farmers has also been fully preserved. Besides, the complete elimination of export subsidies in all agricultural products by developed countries will not only help in protecting farmers in developing countries from unfair competition in the domestic market, but will also open up new opportunities for export of developing countries.
Meanwhile, India’s merchandise exports grew at an accelerated pace during 2005, with exports continuing to record double-digit growth during April-November 2005-06. During 2004-05, India’s merchandise exports at US $ 80 billion far exceeded the target. It is anticipated that the export target of US $ 92 billion for 2005-06 will also be exceeded. To improve competitiveness of India’s agri exports, almost Rs.100 crore worth of cess presently levied on export of several agricultural products under different enactments is proposed to be abolished and a Bill to this effect has been introduced in the Parliament.
In a major new initiative, the Annual Supplement to the Foreign Trade Policy announced in April 2005 provided for the setting up of an Inter State Trade Council to actively engage State Governments in promoting India’s international trade, besides containing a series of other measures to simplify procedures, reduce transaction costs and enhance competitiveness of Indian exports, especially in the manufacturing sector.
The Special Economic Zone (SEZ) Scheme finally took off in the year 2005 with the passage of the SEZ Bill by the Parliament in May 2005. This new law is aimed at giving stability to domestic and foreign investors in SEZs, thereby creating world-class infrastructure and boosting exports and employment in the country. The setting up of as many as 71 SEZs has been approved. Of these new SEZs, several have already become operational – namely, Indore multi-product SEZ (Madhya Pradesh); and the following sector-specific SEZs: Manikanchan (West Bengal) – gems & jewellery; Jaipur (Rajasthan) – gems & jewellery; Mahindra City, Chennai (Tamil Nadu) – IT, hardware bio-informatics, apparel and fashion accessories; Salt Lake Electronic City (Kolkata) – software development and IT enabled services; and Jodhpur (Rajasthan) – handicrafts. The Chandigarh SEZ (electronic and IT enabled services) has already been notified and is ready for operation.
In a landmark decision, the year also witnessed the Union Cabinet giving clearance to implementation of the South Asia Free Trade Area (SAFTA) which comes into effect from 1st January, 2006. SAFTA is aimed at reducing existing tariffs to less than 5% within a stipulated time frame to boost trade among the SAARC member countries. At the same time, sensitive products covering agricultural items, textiles, pharmaceuticals, small-scale industries etc., will be exempt from the trade liberalisation programme.
Among the other important regional trade initiatives was the signing of a Comprehensive Economic Cooperation Agreement (CECA) between India and Singapore in June 2005 covering trade in goods & services, as well as investments. The Agreement came into effect from 1st August, 2005. Negotiations for the establishment of an FTA are going on with a number of countries which include (i) Bay of Bengal Initiative for Multi-sectoral Technical and Economic Cooperation (BIMSTEC) comprising Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand; (ii) ASEAN and (iii) Thailand, under the respective Framework Agreements.
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