Press Information Bureau
Government of India
******

New Delhi: 30 November, 2004

Shri Kamal Nath, Union Minister of Commerce & Industry, has convened a meeting here on 11^th December, 2004, with all Export Promotion Councils (EPCs), Commodity Boards and other concerned bodies with a view to pushing India’s exports, which are already on the upswing, to reach a level of US $ 75 billion during the current financial year 2004-05. The purpose of the meeting is essentially to review the country’s export performance in the light of the new Foreign Trade Policy (2004-09), which was announced by Shri Kamal Nath earlier this year and to discuss further steps as may be required to accelerate exports.

Meanwhile, disaggregated foreign trade data for the period April-July of this financial year 2004-05 shows that India’s exports to all major destinations have gone up by over 20% in US dollar terms. During this period, exports to EU, constituted 22% of India’s exports and registered a growth rate of 22.7%. Exports to USA accounted for 17.4% of India’s exports and registered a growth rate of 24%. Asia and Oceania accounted for 46.6% of India’s exports. Exports to this region registered a growth of 42.3%. Exports to China have registered a growth rate of 71.9%. Exports to the single largest destination in Asia and Oceania, UAE, registered a growth of 68.2%. Exports to Africa accounting for 5.8% of India’s exports registered a growth of 29.2%.

An export target of 16% growth corresponding to a level of $ 73.4 billion has been fixed for the year 2004-05 which is higher than the target for the last two years of 12%. This will help exports to reach a level of $ 150 billion in 2009-10.

According to the latest available aggregate data, India’s exports during the first seven months of current financial year 2004-05(April-October) have crossed US $ 40 billion. India’s exports during April-October 2004-05 are valued at US $ 40291.08 million (US $ 40.02 billion), which is 23.73% higher than the level of US $ 32564.32 million (US $ 32.5 billion) during April-October 2003-04. This is over and above the 7.05% export growth in April-October 2003-04 over April-October 2002-03.

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Press Information Bureau
Government of Indi
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RECORD RISE IN INDO-PAK TRADE: KAMAL NATH
EXPORTS TO PAKISTAN UP BY 328%

New Delhi: 29 November, 2004

Bilateral trade between India and Pakistan is showing a very buoyant trend during the current financial year (2004-2005) Shri Kamal Nath, Union Minister of Commerce and Industry, has indicated. According to the available bilateral trade data for the first four months of this fiscal (April to July), India’s exports to Pakistan have shown a record 328% increase, having gone up to US $ 167.38 million from US $ 39.10 million during the corresponding months of last year 2003-2004. Imports from Pakistan are estimated at US $ 18.98 million as against US $ 25.31 million during the same period last year, but are expected to also pick up during the remaining months of this fiscal year. Thus, the total two-way between India and Pakistan during April-July of this year has trebled in four months, rising to US $ 186.36 million as against US $ 64.41 million during April-July, 2003. Total trade between India and Pakistan stood at US$ 344.29 million in the full year 2003-04, US $ 251.01 million in 2002-03, US $ 208.77 million in 2001-02 and US $ 250.35 million in 2000-2001. If the present growth trend continues, the total trade between India and Pakistan may cross US $ 500 million during the current financial year 2004-2005.

Last week, the setting up of the Joint Study Group on Economic Cooperation between India and Pakistan was announced at a press conference in Islamabad by the Pakistan Commerce Minister Mr. Humayun Akhtar Khan in the presence of Shri Kamal Nath, following the Indian Minister’s meeting with President Pervez Musharraf in Rawalpindi on 23 November, 2004. The major items of India’s exports to Pakistan are drugs, pharmaceuticals and fine chemicals, inorganic/organic/agro chemicals, rubber manufactured products except footwear, dyes/intermediates and coal tar chemicals, iron ore, manufactures of metals etc. The major items of India’s imports from Pakistan are pulses, machinery except electrical and electronic, cotton yarn and fabrics, fruits and nuts excluding cashew nuts, raw wool etc.

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Press Information Bureau
Government of India
***

INDO-PAK TRADE BUOYANT THIS FISCAL: KAMAL NATH
EXPORTS TO PAKISTAN UP BY 328%

New Delhi: 28 November, 2004

Bilateral trade between India and Pakistan is showing a very buoyant trend during the current financial year (2004-2005) Shri Kamal Nath, Union Minister of Commerce and Industry, has indicated. According to the available bilateral trade data for the first four months of this fiscal (April to July), India’s exports to Pakistan have shown a record 328 % increase, having gone up to US $ 167.38 million from US $ 39.10 million during the corresponding months of last year 2003-2004. Imports from Pakistan are estimated at US $ 18.98 million as against US $ 25.31 million during the same period last year, but are expected to also pick up during the remaining months of this fiscal year. Thus, the total two-way between India and Pakistan during April-July of this year has trebled in four months, rising to US $ 186.36 million as against US $ 64.41 million during April-July, 2003. Total trade between India and Pakistan stood at US$ 344.29 million in the full year 2003-04, US $ 251.01 million in 2002-03, US $ 208.77 million in 2001-02 and US $ 250.35 million in 2000-2001. If the present growth trend continues, the total trade between India and Pakistan may cross US $ 500 million during the current financial year 2004-2005.

Earlier this week, the setting up of the Joint Study Group on Economic Cooperation between India and Pakistan was announced at a press conference in Islamabad by the Pakistan Commerce Minister Mr. Humayun Akhtar Khan in the presence of Shri Kamal Nath, following the Indian Minister’s meeting with President Pervez Musharraf in Rawalpindi on 23 November, 2004. The major items of India’s exports to Pakistan are drugs, pharmaceuticals and fine chemicals, inorganic/organic/agro chemicals, rubber manufactured products except footwear, dyes/intermediates and coal tar chemicals, iron ore, manufactures of metals etc. The major items of India’s imports from Pakistan are pulses, machinery except electrical and electronic, cotton yarn and fabrics, fruits and nuts excluding cashew nuts, raw wool etc.

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SB/MRS

PRESS INFORMATION BUREAU
GOVERNMENT OF INDIA
*****

INDIA TO FOCUS EFFORTS ON INCREASING EXPORTS TO LATIN AMERICAN COUNTRIES
INDIA-LAC BUSINESS MEET OPENED TODAY

New Delhi, Agrahiayana 5, 1926

November 26, 2004

The Government would make every effort to boost exports to Latin American countries and annexes to the Preferential Trade agreement (PTA) which was signed earlier this year, are being finalized expeditiously to help increase trade with this region. This was stated by the Union Commerce Secretary, Shri S.N. Menon while inaugurating the Indo-LAC Business Meet here today.

Shri Menon pointed out that although India’s trade with Latin American Countries has increased 87 per cent during the last five years, yet country’s share in the global trade of Latin American Countries constitutes only 0.48 per cent. India’s exports to Latin America crossed US $ 1.5 billion in 2003-04 and its imports from this region was approximately US $ 1.1 billion during the same period. On the other hand, global imports of Latin America in 2002 were US $ 330 billion and their total exports were $ 343 billion.

The Secretary informed that the Joint Business Commercial Councils with Brazil and Colombia have been constituted for bringing together the business communities of the two countries to resolve trade disputes and thrash out a strategy for promotion of trade at regular intervals of time.

He also said that the Central Warehousing Corporation is going to open a warehouse in Uruguay shortly to cater to the needs of Indian products in Latin America. Several well known Indian companies have already set up base in Latin America, he informed.

Shri Rakesh Shah, Chairman of the Engineering Export Promotion Council also spoke on the occasion and emphasized the need to tap the new markets. He also informed that the Engineering Export Promotion Council proposes to set up INDIAMART in Sao Paulo, Brazil under the Market Access Initiative Scheme of the Department of Commerce. It will be a multi-purpose outlet of Indian exporters with facilities of a Showroom, Warehouse, Distribution Centre and Marketing Support.

Over 100 Indian leading exporters from India and a large number of entrepreneurs from Latin American countries like Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Panama, Peru, Trinidad & Tobago, Uruguay and Venezuela are participating in this meet.

SB/VBA/MRS

Press Information Bureau
Government of India
***

EXEMPT EXPORTS FROM VAT: CAPEXIL
CAPEXIL AGM AND EXPORT AWARDS FUNCTION HELD

New Delhi: November 26, 2004

Exports should be exempted from the value-added tax (VAT), CAPEXIL (formerly Chemicals & Allied Products Export Promotion Council) Chairman, Shri A. M. S. G. Ashokan urged the government in his speech at the CAPEXIL’s Export Awards Distribution Function and the 46^th Annual General Meeting here last evening. "The Value Added Tax in its present form does not appear to have provisions for exporting the good without the payment of VAT. The futile procedure of having to pay first and seek yearly refund later results in blockage of funds and high transaction costs, and is also a meaningless exercise for the State Governments as the transaction will not fetch any revenue ultimately. As such, exports should be exempted from VAT", he said. Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry, gave away the awards, and said that CAPEXIL had emerged as one of the premier export promotion bodies in India catalysing exports of chemical based and allied products.

CAPEXIL has under its coverage a sizeable segment of 7.5% of India’s total exports, amounting to export of US $ 4.85 billion spread over 16 diverse product-groups and shared by its 4000 members spread across the country. Shri Elangovan said that the role of the government was that of an enabler to provide reformed trade policy that could nurture a sustainable export growth. He said a slew of benefits had been announced in the new Foreign Trade Policy and export procedures were being simplified to bring down the transaction cost for exporters.

CAPEXIL has also requested the government to take urgent steps to refund through the mechanism of Duty Drawback the numerous state/local taxes such as sales tax, octroi, fuel surcharge, service tax etc. that the Indian trade and industry had to pay unlike their foreign counterparts, impacting on their export operation and production. He also urged the government to address the issue of inordinate delays in export through the JNPT port in order to avoid giving India a bad name.

In another significant observation, the CAPEXIL Chairman said "present duty exemption schemes such as advance license, DEPB etc., are WTO-compatible and therefore, we are under no obligation to withdraw such schemes. To allay fears of the export trade, the government should come forward with a positive statement in the matter. Steps should also be taken to make these schemes more dynamic and flexible by incorporating suitable changes".

SB/VBA/MRS

Press Information Bureau
Government of India
*****

New Delhi: November 25, 2004

Shri Kamal Nath, Union Minister of Commerce & Industry, has said that the improved investment climate has resulted in unprecedented inflows of FDI against projects which had been approved earlier, but which had not resulted in actual inflows. The FDI inflows have posted an impressive growth during the first six months of 2004-05. FDI inflows amounting to US$ 2.38 billion were received during April-September 2004 as against US$ 1.41 billion received in the corresponding period of the previous financial year, registering a growth of 68%. This covers only the equity component. Other FDI components such as reinvested earnings and other capital would be included at the end of the financial year. After incorporating these components into FDI statistics, it is expected that the inflows would further go up by around 65% to 70%, Shri Kamal Nath said while addressing a news conference here today.

Even fresh FDI approvals have picked up during the first six months of 2004-05. 835 approvals were granted involving US$1.38 billion, showing a growth of 94% over the corresponding period last year, the Minister said.

With the opening of the Indian economy in 1991, the FDI policy has been progressively liberalised. Most sectors and activities have been placed under the automatic route. "The policy is under constant review and the goal is full automacity. The Government has recently allowed transfer of shares and convertible debentures from resident shareholders to foreign investors on the automatic route except in the financial sector and in cases attracting the SEBI Takeover Code", Shri Kamal Nath said.

India has been attracting attention of the global investing community in view of its liberal and investor friendly regime and competitive strengths. Besides the known prowess of India in the field of information technology, the automobile, telecommunication, electronic and electrical equipments pharmaceuticals, financial sectors are some of the major sectors attracting global investors.

In the FDI Confidence Survey, 2004, A. T. KEARNEY has rated India as the 3^rd most attractive investment destination (behind China and USA) compared with 15^th position two years ago and 6^th last year.

A. T. KEARNEY has also ranked India as the best BPO destination.

According to UNCTAD & Corporate Location, India is amongst the top 3 investment ‘hot spots’ for the next 4 years.

The latest World Economic Forum’s ‘Global Competitiveness Report ranks India at 41^st place out of 102 countries in terms of restrictions on foreign ownership. In comparison, Malaysia is ranked 65^th, Thailand 72^nd and China 81^st. Interestingly, none of the major developing economies is ranked higher than India.

Mauritius, USA, Netherlands, Germany and Japan are the top five investing countries into India during this period.

The top five sectors receiving FDI are electrical equipment, drugs & pharmaceuticals, consultancy services, fuels and metallurgical industries.

Delhi, Maharashtra, Karnataka, Andhra Pradesh and Gujarat are the major recipient states of FDI.

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Press Information Bureau
Government of India
*****

New Delhi: November 25, 2004

Government have decided to enhance the equity base of the Export Credit Guarantee Corporation of India Ltd. (ECGC) from Rs. 500 crore to Rs. 800 crore over the 10^th Five Year Plan period. The financial requirement for this purpose will be Rs. 300 crore at the rate of Rs. 100 crore per year for 3 years to be provided as a Plan allocation. This was announced by Shri Kamal Nath, Union Minister of Commerce & industry, here today.

Enhancement of equity base is as per accepted norms followed in other countries and are meant to increase the capacity of ECGC to extend cover to medium term and long term projects in addition to the short term projects and to underwrite project exports, Shri Kamal Nath said.

Export Credit Guarantee Corporation of India Ltd. (ECGC) which was set up in 1957 has made significant contribution to the development of exports from the country, mainly by providing credit insurance to Indian exporters against loss in export of goods and services arising out of commercial and political risks and by catalysing the availability of adequate finance for exporting activity through guarantees provided to the banks.

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SB/VBA/MRS

Press Information Bureau
Government of India
****

New Delhi: November 25, 2004

Exports should be exempted from the value-added tax (VAT), CAPEXIL (formerly Chemicals & Allied Products Export Promotion Council) Chairman, Shri A. M. S. G. Ashokan urged the government in his speech at the CAPEXIL’s Export Awards Distribution Function and the 46^th Annual General Meeting here today. "The Value Added Tax in its present form does not appear to have provisions for exporting the good without the payment of VAT. The futile procedure of having to pay first and seek yearly refund later results in blockage of funds and high transaction costs, and is also a meaningless exercise for the State Governments as the transaction will not fetch any revenue ultimately. As such, exports should be exempted from VAT", he said. Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry, gave away the awards, and said that CAPEXIL had emerged as one of the premier export promotion bodies in India catalysing exports of chemical based and allied products.

CAPEXIL has under its coverage a sizeable segment of 7.5% of India’s total exports, amounting to export of US $ 4.85 billion spread over 16 diverse product-groups and shared by its 4000 members spread across the country. Shri Elangovan said that the role of the government was that of an enabler to provide reformed trade policy that could nurture a sustainable export growth. He said a slew of benefits had been announced in the new Foreign Trade Policy and export procedures were being simplified to bring down the transaction cost for exporters.

CAPEXIL has also requested the government to take urgent steps to refund through the mechanism of Duty Drawback the numerous state/local taxes such as sales tax, octroi, fuel surcharge, service tax etc. that the Indian trade and industry had to pay unlike their foreign counterparts, impacting on their export operation and production. He also urged the government to address the issue of inordinate delays in export through the JNPT port in order to avoid giving India a bad name.

In another significant observation, the CAPEXIL Chairman said "present duty exemption schemes such as advance licence, DEPB etc., are WTO-compatible and therefore, we are under no obligation to withdraw such schemes. To allay fears of the export trade, the government should come forward with a positive statement in the matter. Steps should also be taken to make these schemes more dynamic and flexible by incorporating suitable changes".

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SB/VBA/MRS

 Press Information Bureau
Government of India
***

INPUT OUTPUT NORMS FOR 60 NEW EXPORT ITEMS NOTIFIED
PRESS NOTE

The Directorate General of Foreign Trade (DGFT) has issued Public Notice No. 26 dated 23/11/2004 notifying additional Standard Input-Output Norms for 60 new export items and amendments/ corrections/deletions in the Standard Input-Output Norms for 42 existing export items. Out of the 60 new norms, 48 norms relates to the chemicals and allied products, 12 relates to engineering products. Fixation of Standard Input-Output Norms will facilitate issue of advance licences for above additional items to the exporters of the items without any need for referring the same to the headquarter office of DGFT on repeat basis.

Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industry, New Delhi, dated 25^th November, 2004

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SB/PM/MRS

Press Information Bureau
Government of India
*****

New Delhi: November 24, 2004

Major procedural simplification steps to boost exports by cutting down delays and reducing transaction costs to the exporters were announced by the Ministry of Commerce & Industry, here today. The measures are in pursuance the announcement made by Shri Kamal Nath, Union Minister of Commerce & Industry, in the Foreign Trade Policy (2004-09) on 31^st August, 2004 that the government is committed to reducing transaction cost and simplifying procedures and that to this effect, a number of rationalisation measures would be introduced.

The procedural simplification measures notified by the Directorate General of Foreign Trade (DGFT) through a series of notifications issued recently are as follows:

To enable the importing/exporting community to file their annual import/export trade returns, the last date has been extended from 31^st October to 31^st December;

The system of nexus examination by an expert Committee for issuance of EPCG licences has been dispensed with. Henceforth, the EPCG licences can be obtained based on a certificate issued by a Chartered Engineer certifying the essentiality of goods;

To develop agricultural infrastructure and promote export of agricultural products new Agri Export Zones have notified for Bananas, Oranges, Cashewnut, Sesame seeds, Lentils and Grams in the States of Maharashtra, Madhya Pradesh, Tamil Nadu and Gujarat; and

Star Exporters seeking renewal of upgradation of their existing status shall not be required to file detailed bank realisation statements.

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Press Information Bureau
Government of India
*****

New Delhi: 24 November, 2004

In a major initiative, India and Pakistan have decided to set up a Joint Study Group on Economic Cooperation between the two countries. This decision was announced folowing the meeting of Shri Kamal Nath, Union Minister of Commerce & Industry, with President of Pakistan Mr. Pervez Musharraf at a news conference in Islamabad by the Commerce Minister of Pakistan Mr. Humayun Akhtar Khan. The Joint Study Group will examine the possibilities of further preferential trade arrangements between India and Pakistan on goods and services as well as investment. It would also have sub-groups to look at possibilities in various areas. The Joint Study Group will be headed by the Commerce Secretaries of India and Pakistan.

Shri Kamal Nath who was in Islamabad in connection with the 4^th meeting of the SAARC Commerce Ministers, called on the President Pervez Musharraf at his residence in Rawalpindi last evening and also met the visiting Prime Minister of Pakistan, Mr. Shaukat Aziz in New Delhi today. The Minister described his meeting with the President of Pakistan as very positive. Shri Kamal Nath briefed President Musharraf about his interaction with the Indo-Pak Chamber of Commerce in Islamabad and the very high expectations that the businessmen of Pakistan had on the trade and economic front. He conveyed to President Musharraf that while the potential of the two economies was enormous, the trade flows between the two nations continued to be very low. Shri Kamal Nath told newsmen that President Musharraf agreed that bilateral trade needed to be enhanced and that trade issues should be addressed along with all other issues in a composite dialogue.

Shri Kamal Nath said he had a very useful meetings with the SAARC Commerce Ministers as well as his host the Commerce Minister of Pakistan, Mr. Humayun Akhtar Khan.

The two-day deliberations of SAARC Commerce Ministers concluded yesterday.

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Press Information Bureau
Government of India
*****

New Delhi: 22 November, 2004

Shri Kamal Nath, Union Minister of Commerce & Industry has called upon the countries of the South Asian Association for Regional Cooperation (SAARC) to device a concrete agenda focussing on economic cooperation. "It is imperative that the SAARC countries devise a concrete, positive, workable and programme-based agenda centering around economic cooperation. The logic of mutual economic benefit must triumph", Shri Kamal Nath said while addressing the inaugural session of the two-day SAARC Commerce Ministers Conference in Islamabad, which was chaired by the Pakistan Commerce Minister, Mr. Humayun Akhtar today. "SAARC is entering the 20^th year of its existence. Our combined efforts have no doubt admittedly borne fruit in several areas. But compared to some other regional groupings, particularly in the field of trade and commerce, we have a long way to go. Two-thirds of global trade today is taking place within regional groups. The most visible of these are the EU, NAFTA, ASEAN, MERCOSUR and SACU. These groups span the five continents. Regional economic cooperation has brought unprecedented prosperity to the peoples of their constituents. In South East Asia particularly, and also to a substantial extent in Latin America, countries are making a paradigm shift from developing to almost developed standards within the span of single generation. Why should we in South Asia lag behind?", Shri Kamal Nath asked, adding that the South Asian region with its 1.3 billion people, constitute one-fifth of the human race. "One in every five human beings on this planet is represented here. If we bring prosperity to our people, we will have achieved something outstandingly remarkable, not just on a regional basis, but on a global scale", he said.

Shri Kamal Nath pointed out that the total intra-regional trade amongst SAARC countries was barely of the order of US $ 6 billion or so. "It is a drop in the ocean when compared to the total volume of our combined international trade of over 200 billion dollars. We should strive to forge a common platform and a common approach to achieve what is clearly a common goal", he said.

SAARC Commerce Ministers congratulated Shri Kamal Nath on his leadership role in the WTO in the Geneva negotiations and resolved to continue their cooperation with each other to put up a united position in the WTO. Stating that the initiation of SAARC trade fairs had been a welcome development, Shri Kamal Nath invited all the SAARC countries to participate in the Sixth SAARC Trade Fair which would be held in New Delhi early next year.

The Minister said that the signing of the Agreement on a South Asia Free Trade Area in January this year at the Islamabad Summit was a milestone in the economic profile of SAARC countries. He stressed that it was a matter of regret that over 90% of the requirements of South Asian countries were still sourced from outside the region. And conversely, a major part of India’s exports were also destined for countries outside the SAARC grouping. Despite the limited concessions of SAPTA, regional trade had failed to register the kind of growth which would give us satisfaction, he said, underlining the urgent need for introspection. He expressed the hope that the SAARC Chamber of Commerce & Industry, which had been in existence for the past decade with its headquarters in Karachi, would play a little more incisive role now that member countries were embarking on SAFTA and work towards the realisation of SAFTA’s full potential.

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Press Information Bureau
Government of India
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KAMAL NATH TO ATTEND SAARC MINISTERIAL MEETING IN ISLAMABAD
RENEWED THRUST ON ECONOMIC RELATIONS AMONG SAARC COUNTRIES AND
PROGRESS TOWARDS SAARC FTA

New Delhi: 21 November, 2004

Shri Kamal Nath, Union Minister of Commerce & Industry, is leaving for Islamabad on Monday, 22^nd November, to participate in the 4^th meeting of the SAARC Commerce Ministers scheduled to be held there on 22-23 November, 2004. The meeting is expected to give a major and renewed thrust to trade and economic cooperation among the countries of the South Asian Association for Regional Cooperation (SAARC), namely, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka and to facilitate faster progress of negotiations on the SAARC Free Trade Area (SAFTA) which is due to come into effect from 1^st of January, 2006 as per the agreed time-frame. Shri Kamal Nath is also scheduled to address the Indo-Pakistan Chamber of Commerce & Industry in Islamabad on Monday, 22^nd November, 2004.

The meeting of the SAARC Commerce Ministers is preceded by the 12^th Meeting of the Committee on Economic Cooperation (CEC) in Islamabad on 20-21 November, 2004 which is being attended by Commerce Secretaries of the SAARC countries. Shri S.N. Menon, Commerce Secretary, is already in Islamabad to participate in the deliberations of the CEC.

The agenda of the SAARC Commerce Ministers Meeting as well as the official level CEC Meeting includes, inter-alia, review of progress on negotiations on matters relating to economic cooperation since the 11^th meeting of the CEC in Kathmandu in 2002 covering the SAARC Preferential Trading Arrangement (SAPTA) including exchange of tariff concessions among members and progress on negotiations since the signing of the SAFTA agreement in Islamabad in January 2004 with specific reference to issues like Rules of Origin, Sensitive List, Technical Assistance to Least Developed Countries (LDCs), Trade Facilitation measures etc. The other items on the agenda include progress in the field of Investment, Arbitration and Avoidance of Double Taxation; Standards and Quality Control; SAARC Trade Fairs; Visa facilitation; discussions on the proposed SAARC High Economic Council; the proposed SAARC Infrastructure Fund; cooperation in the transport sector; cooperation with the European Commission and consideration of matters relating to evolving SAARC common position before the Ministerial Conference of the World Trade Organisation (WTO). The Ministers are likely to discuss issues before the 6^th Ministerial Conference to be held in Hong Kong on 13-18 December, 2005 and consider matters of common interest with a view to evolving a SAARC common approach in the WTO negotiations.

Background on SAFTA:

South Asian Association for Regional Cooperation (SAARC) consists of seven countries, namely, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. A regional trade block among these members was formed when SAARC Preferential Trading Arrangement (SAPTA) was signed in April, 1993 for giving preferential market access to the exports of the member countries in a limited way. Four rounds of negotiations have been completed and no further round on SAPTA is now contemplated following the signing of Agreement on SAFTA.

At the 9^th SAARC Summit held in Male in May 1997, the Heads of State or Government recognised the importance of achieving a free trade area by the year 2001 and reiterated that steps towards trade liberalisation must take into account the special needs of the smaller and the Least Developed Countries and that benefits must accrue equitably. The mandate of the 10^th SAARC Summit held at Colombo in July, 1998, reiterated the importance of achieving SAFTA as mandated by the Ninth SAARC Summit. To this end they decided that a Committee of Experts, in consultation with Member States, be constituted with specific Terms of Reference (TOR) to work on drafting a comprehensive treaty regime for creating a free trade area. In its first meeting held at the SAARC Secretariat, Kathmandu, in July, 1999, the Committee of Experts (COE) finalised the Terms of Reference for drafting the SAFTA treaty. However, further meetings of the COE could not take place for almost three years due to inconvenience of dates proposed by the SAARC Secretariat for some Member countries. The COE held several meetings during 2002 and 2003 in Kathmandu to finalise the text of the Agreement. Some of the contentious issues were finally resolved in the Council of Ministers (Foreign Ministers) Meeting on 2-3^rd January 2004 and the Agreement on SAFTA was signed during the 12^th SAARC Summit held in Islamabad on 4-6^th January, 2004. The Agreement provides for free trade in goods among SAARC member countries.

SAFTA Agreement will enter into force on 1^st January 2006 upon completion of negotiations on Sensitive Lists, Rules of Origin, Revenue loss Compensation Mechanism for LDCs. These negotiations would be carried out by the existing Committee of Experts and are expected to be completed by the end of June, 2005.

The SAFTA Agreement will supersede the Agreement on SAARC Preferential Trading Arrangement (SAPTA).

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SB/VBA/MRS

Press Information Bureau
Government of India
*****

KAMAL NATH MOOTS JOINT STUDY GROUP ON COMPREHENSIVE
ECONOMIC COOPERATION AGREEMENT WITH RUSSIA

URGES RUSSIA TO STEP UP PURCHASE OF TEA, TOBACCO,
MANUFACTURED GOODS FROM INDIA TO REVIVE TRADE

RUSSIA KEEN TO COOPERATE WITH INDIA IN WTO - DEPUTY PM OF
RUSSIA MEETS COMMERCE AND INDUSTRY MINISTER

New Delhi: 19 November, 2004

Shri Kamal Nath, Union Minister of Commerce & Industry, has proposed the setting up of a Joint Study Group on a possible Comprehensive Economic Cooperation Agreement between India and the Russian Federation with a view to enhancing bilateral trade and economic relations. The Deputy Prime Minister of Russia, Mr. Alexander D Zhukov, welcomed the proposal mooted by Shri Kamal Nath during an hour-long meeting with the Russian delegation here last evening and said that such an expert Group would impart a fresh impetus to trade between India and Russia. Recalling the strong trade ties that India traditionally had with Russia, Shri Kamal Nath called for substantive steps to reverse the declining trend in the volume of trade between the two countries and urged Russia to step up its imports of tea, tobacco and manufactured goods from India. Mr. Zhukov suggested the establishment of joint ventures in Russia based on tobacco sourced from India. Shri S.N. Menon, Commerce Secretary, was present at the meeting along with Shri Kawal Sibal, India’s Ambassador to Russia and other senior officials.

Mr. Zhukov, who is in India ahead of the forthcoming visit of President Putin, said that Russia hoped to become a member of the World Trade Organisation (WTO) by 2005 and would be keen to cooperate with India in the WTO.

During the discussions, Shri Kamal Nath flagged the issues relating to the high duty differential on import of bulk and packaged tea which discouraged export of quality package tea to Russia and the grant of Geographical Indication (GI) status for Darjeeling tea. The differential duty structure was meant to be temporary and hence, India has been seeking its revocation. The issue of GI for Darjeeling tea is being pursued with the Russian side during the ongoing negotiations for their accession to the WTO. Shri Kamal Nath conveyed India’s concern over dwindling tobacco exports to Russia, especially since Russia had traditionally been the single largest overseas market for Indian tobacco.

The potential for cooperation in diamonds was also discussed as India is the largest processing centre for rough diamonds, while Russia is one of the world’s largest producers of rough diamonds.

The Russian side expressed concern over anti-dumping investigations in India against certain goods of Russian origin and requested recognition of market economy status for Russia for anti-dumping purposes. Shri Kamla Nath allayed the apprehension expressed by Mr. Zhukov by pointing out that no anti-dumping investigations had been initiated involving Russia by the Directorate General of Anti-Dumping (DGAD) since November 2003 and hence, the concern on this account was not based on any specific decision of the DGAD.

India’s exports to Russia amounted to US $ 708.68 million in the year 2003-2004, showing a decline of 0.66 % compared to 2002-2003, while imports from Russia stood at US $ 959.51 million.

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Press Information Bureau
Government of India
***

New Delhi: 17 November, 2004

Members of the Consultative Committee of the Ministry of Commerce and Industry have unanimously favoured putting curbs on exports of iron ore in the interest of the domestic economy and with a view to encouraging utilisation of precious raw materials to ensure value-added earnings for the country. Some of them expressed the view that exports of high-grade iron ore be curbed by canalisation through MMTC, while restrictions could be placed on other grades of ore to prevent misuse. Some of them also expressed concern over environmental degradation resulting from the process. Presiding over the meeting of the Consultative Committee of his Ministry here last evening, Shri Kamal Nath, Union Minister of Commerce and Industry, informed members that the government was reviewing the iron ore policy bearing in mind both the interests of the domestic industry and the current global market situation.

On exports, Shri Kamal Nath emphasised that state levies should not impinge on exports once the VAT regime was put in place. Members present were: Shri Sambasiva R Rao, Shri Abdul Rehman Antulay, Shri Sarvey Sathyanarayana, Shri P. Karunakaran, Shri Shyam Chandra Gupt, Shri Rajeev Shukla, Shri N. R. Govindarajar and Shri Eknath K Thakur. Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry; Shri S.N. Menon, Commerce Secretary; and Shri Ashok Jha, Secretary, Department of Industrial Policy & Promotion (DIPP) also participated along with senior officials of Ministry of Commerce and Industry. The Minister assured members that he would look into all the suggestions made by them including ways and means for tapping the vast export potential of the Konkan region through adequate infrastructural support and addressing problems of the plantation sector, such as tea, pepper and tobacco.

Referring to the post-MFA scenario, Shri Kamal Nath said that his Ministry was in regular touch with Ministry of Textiles on the measures required to be taken to enable the Indian textile industry to gear up fully to face the challenges and opportunities after expiry of the restrictive textile quota regime of the multi-fibre agreement (MFA) with effect from 1/1/2005. He said that the government was trying to ensure continuation of the GSP market access in the European Union (EU) and expressed the hope that Indian textile exports would register a quantum increase after elimination of MFA quotas, despite the anticipated pressure of competition from various countries.

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KAMAL NATH TO ADDRESS ECONOMIC EDITORS TOMORROW

New Delhi: 16 November, 2004

Shri Kamal Nath, Union Minister of Commerce & Industry, is scheduled to address the Economic Editors’ Conference 2004 here tomorrow.

Shri Kamal Nath will address the afternoon session of the Conference i.e., from 2.30 p.m. to 3.15 p.m. at the National Press Centre, Press Information Bureau, Shastri Bhavan, New Delhi.

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New Delhi, dated 11 November, 2004

The 12-member Committee, headed by the Secretary, Department of Commerce, Ministry of Commerce and Industry, as Chairman, includes the following : Joint Secretary, Ministry of Finance, Department Of Economic Affairs; Joint Secretary, Department of Consumer Affairs; Representatives from the Reserve Bank of India (RBI); the Security Exchange Board of India (SEBI); Forward Market Commission; one Bullion Association; National Commodity and Derivative Exchange; Associated Chamber of Commerce and Industry of India (ASSOCHAM); Gems and Jewellery Export Promotion Council; the Directorate General of Foreign Trade (DGFT) and a representative of a nominated agency, besides any other person, as and when required for the purpose of the Committee.

The Committee will submit its report within six weeks from the date of its first meeting, according to the office memorandum dated 10 November 2004 issued by the Ministry of Commerce and Industry.

The proposal to set up the Committee was mooted by Shri Kamal Nath at the International Gold Summit here on 30 October 2004. He had pointed out on the occasion that till last year India did not figure as a major trading centre of gold and silver in the international market despite being the world’s largest importer and exporter of value-added jewellery items as well as the world’s largest consumer of gold. Global gold trading is concentrated in the UK, Switzerland, Dubai and Hong Kong. " With the commencement of futures trading in gold in India, the scenario appears to be changing. In the short span of less than a year, the performance of trading in gold shows the robustness of the Indian gold industry. Therefore, India can longer be looked upon merely as just ‘a price taker of gold’, but also as a ‘price settler’ in the international market, because of its status as the largest importer of gold, as well as one of the most vibrant market places for the yellow metal", he said.

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New Delhi, 5 November, 2004

Shri Kamal Nath, Minister of Commerce and Industry, is accompanying the Prime Minister to the Fifth India-EU Summit scheduled to be held in The Hague on 8 November,2004. Four such Summits have been held so far since the year 2000, alternatively in Europe and in India and the fourth Summit was held in New Delhi in November 2003.

The European Union (EU)-India relationship is important both in terms of bilateral trade and investment and in the multilateral forum.

The EU is India’s largest trading partner accounting for about 25 % of India’s global trade, and India’s trade with the EU is showing good growth in the first quarter (April-June) of the current financial year, having increased by over 14 % compared to the same period of the last financial year. India’s exports to the EU have grown by over 20 % and imports from the EU by 9 % during the first quarter of this fiscal year. The two-way trade between India and the EU in 2003-2004 was valued at US $28.32 billion Of this, India’s exports to the EU were valued at US $ 13.82 billion and imports from the EU at US $ 15.63 billion. With 25 member states and 550 million population with high purchasing power, it is India’s largest potential market..

EU countries are also among the largest investors in India and large EU companies have always had a presence in the Indian manufacturing and industrial scene, especially in the core/infrastructure sectors and high technology areas. FDI from the EU approved during the period 1991 to 2003 has been of the order of US $ 16.34 billion which represents around 26 % of the total FDI investment approved by India globally. But the actual inflow of FDI from the EU countries for this period was US $ 5.45 billion , with the realisation rate of actual FDI inflow to approvals in respect of EU countries working out to 35.58 %.

Similarly, India’s share in the EU’s global imports is around 1 % and the EU’s exports to India also accounts for around 1 % of EU’s global exports, underling the vast scope for the further expansion and diversification of bilateral trade.

With the EU expansion, 10 countries of Eastern and Central Europe and the Baltic states (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia) joined the EU in May, 2004. The enlarged EU accounts for 19 % of world trade, 46 % of global outward FDI and 24 % of inward FDI, thus offering new opportunities and challenges for trade and investment.

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New Delhi, 5 November, 2004

Shri Kamal Nath, Minister of Commerce and Industry, today urged India’s trading partners to undertake more liberal commitments in services especially in cross border supply of services (i.e., Mode 1 which covers business process outsourcing – BPO etc) and movement of natural persons (i.e., Mode 4) in the WTO negotiations and said that India would expect greater commitments in Mode 4 from the developed countries, thereby ensuring easier access for skilled professionals and facilitating delivery of remote services through electronic means. This, he said, were India’s core objectives in the WTO negotiations, while addressing the Special Session of the National Conference on " New Challenges, New Solutions in the IT and the WTO era", organised here by the Institute of Chartered Accountants of India (ICAI). He emphasised that India had been actively participating in the ongoing services negotiations in the World Trade Organisation (WTO) largely because of its strong competitive advantages in services.

Referring to FDI in Accounting Services Sector, Shri Kamal Nath mentioned that at present foreign service providers were not allowed to undertake statutory audit of companies in India. However, under the GATS (General Agreement on Trade in Services) negotiations India had received several requests from her trading partners for opening up of Mode 3 for investment. " This is something which your profession should debate. Since most arrangements are reciprocal ones, we have to weigh whether we have more to gain or more to lose. At the Uruguay Round, we have not taken any commitment for accounting services. However, we have offered commitments in this sector in our initial offer filed in December 2003. We have offered full commitments in Modes 1 and 2 for accounting and book-keeping services. While no commitments are offered in Mode 3, our Mode 4 commitment is unbound", he told the ICAI.

Recently, the General Council of the WTO on 1 August, 2004 adopted a Framework Agreement providing a road-map for further negotiations under the Doha Work Programme. " We (like all othe WTO member countries) are expected to file improved offers by 31 May 2005. The next WTO Ministerial Conference scheduled to be held in Hong Kong in December 2005 is expected to take stock of negotiations in all areas, including services", the Minister added.

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TURKISH BUSINESS DELEGATION CALLS ON KAMAL NATH

New Delhi, 4 November, 2004

The high level business delegation from Turkey, led by Mr. Aldo Kaslowski, called on Shri Kamal Nath, Minister of Commerce and Industry, here today. An India-Turkey CEOs Business Forum has just been set up under the aegis of the Confederation of Indian Industry (CII) and the Turkish Industrialists and Businessmens’ Association (TUSIAD) in order to create an effective institutional mechanism for promoting economic and business cooperation between India and Turkey. Shri Kamal Nath said that India regarded Turkey as an important ally both economically and politically and expressed the hope that the Business Forum initiative would further boost bilateral trade and economic cooperation between the private sectors of the two countries. He said India welcomed the initiatives for Turkey’s full membership of the European Union (EU) which could offer India an additional Eastern gateway to access the European market. He agreed with the business delegation that lack of direct air and shipping links as also the lack of direct banking relationship hampered bilateral relations and these would have to be addressed.

Bilateral trade between India and Turkey amounted to US $ 638 million during 2003-04, showing a growth of 49 % over the previous year. The figures for the first three months (April-June) of the current financial year 2004-05 at US $ 200 million registering a 100 % increase over the same period of last year confirms the upward surge. At the current rate of growth, bilateral trade is well poised to reach the target of US $ 1 billion in 2004 and Us % 2 billion by 2009 as mutually agreed in the last meeting of the Indo-turkish Joint Working Group, Shri Kamal Nath said.

Later in the evening, the visiting Foreign Minister of Mauritius, Mr Jayakrishna Cuttaree, also had a meeting with Shri Kamal Nath.

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SEPARATE CELL FOR INVESTMENT FROM JAPAN PROPOSED
JAPANESE BUSINESS DELEGATION CALLS ON KAMAL NATH

New Delhi, 2 November, 2004

Shri Kamal Nath, Minister of Commerce and Industry, has said that he would be happy to have a separate cell in the Ministry to deal exclusively with investment from Japan. He said that a special thrust was required to realise the full potential of trade and economic co-operation between the two countries, during a meeting with the high-level business delegation from Japan, led by Mr. Nobuo Ohashi, Chairman / Mitsui company and head of the India-Japan Business Cooperation Committee, which called on him today. The Minister agreed with the delegation that infrastructural inadequacies were the weakest links in India’s investment scenario, but pointed out that it also offered an opportunity for investment for Japanese companies. In response to a specific query from the Japanese as to why India could not borrow to fund its infrastructure projects, Shri Kamal Nath said that "investment would also bring in latest technology and besides, unlike borrowing, investment is an asset creating process." Regarding Press Note 18, the Minister clarified that the government would be mindful of the specific concerns of foreign investors, including those from Japan.

On export of iron ore to Japan, it was noted that the current agreement was going to expire by March 2005 and a solution satisfactory to both the countries would be found to sustain the trade.

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54% increase in STC’s turnover this year – Dividend cheque presented to Shri Kamal Nath.

New Delhi:1^st November,2004

The State Trading Corporation of India Ltd (STC) has registered a total turnover exceeding 5000 crores during April- September this year, an increase of 54 percent over the corresponding period of last year. It has paid a final dividend of 5% for the year 2003-04 to the Govt. of India. The dividend cheque was handed over by Dr. Arvind Pandalai, CMD of STC to the Minister for Commerce and Industry Shri Kamal Nath here today.It has also declared an interim dividend of 15% this year, thus making a total contribution of Rs.5.46 crores to the Exchequer. The Corporation was able to achieve higher profits by negotiating better trading margins.

The Corporation’s domestic sales rose to the level of 150 crores during April- September this year and is confident of achieving another milestone in this year by recording a turnover of Rs. 10,000 crores.

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JAPAN INVITED TO HAVE FRESH LOOK AT TRADE AND INVESTMENT OPPORTUNITIES IN INDIA
KAMAL NATH ADDRESSES INDIA-JAPAN BUSINESS COOPERATION COMMITTEES MEET

New Delhi, 1 November, 2004

Shri Kamal Nath, Minister of Commerce and Industry, today invited the captains of Japanese trade and industry to have a fresh look at where India stands today and take a long term view of trade and investment opportunities that are on offer. While a large number of the big names in Japan have become household names in India – Nippon, Mitsubishi, Mitsui, Fujitsu, Itoh, Marubeni and others, the actual inflow of Japanese investment in India is still low, indicating a considerable degree of caution. " In all major policy pronouncements since taking office, the new Government has reaffirmed its commitment to economic reforms that stimulate growth, investment and employment. .. .. In a vast developing society administered by a democratic dispensation, it has to be ensured that economic liberalisation does not undermine equitable development and does not erode broad political support for the reforms process itself. This is precisely what our government is trying to do. With Dr. Manmohan Singh as Prime Minister, the management of the Indian economy and the future of the reforms process are in safe hands. Our partners and potential investors should have no cause for any misgivings in this regard", the Minister said while inaugurating the 32^nd Joint Meeting of India-Japan Business Cooperation Committtees, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here . Close cooperation between India and Japan was a pre-requisite for making the 21^st century truly the century of Asia, Shri Kamal Nath said, adding that " it is for this reason that India and Japan have jointly staked their legitimate claim along with Germany and Brazil for permanent seats in the UN Security Council".

India-Japan trade amounted to US $ 4 billion last year, showing a growth of 18 % over the preceding year. But while the overall growth was good, this came after a three-year stagnancy, and also there was a marked negative balance of trade in favour of Japan. So far the full potential of bilateral economic relationship was far from being realised and a boost was clearly required, Shri Kamal Nath said.

Referring to the new Foreign Trade Policy, he said the whole effort was to push up exports by a quantum jump and expressed the hope that India’s total exports would cross US $ 75 billion this year (2004-2005) as against US $ 63 billion last year. Stating that India is particularly eager to get investment in infrastructure, Shri Kamal Nath invited the Japanese to invest in the Special Economic Zones (SEZs) which would include Bio-Technology Parks and Free Trade and Warehousing Zones as well and for which a bill would be introduced in Parliament before the end of this year.

A 50-member Japanese delegation led by Mr. N. Ohashi, Chairman, India-Japan BCC and Chairman, Mitsui Co. participated in the meeting, along with Shri Ashok Jha, Secretary, Department of Industrial Policy and Promotion and Mr. Kenji Yoshizawa, Advisor, Bank of Tokyo-Mitsubishi Ltd.

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