Indian Economy-News & Updates

[SinoIndusFriendship]

Protectionism hurting India's trade with EU: FICCI
By IANS
Sunday,02 August 2009, 18:41 hrs


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New Delhi: India Inc. is opposed to protectionism practised by the European Union (EU) by way of agriculture subsidies and non-tariff barriers on services exports and faces adverse conditions in the European market, especially the pharma and IT sectors, a survey by an industry body has revealed.


The Federation of Indian Chambers of Commerce and Industry (Ficci) survey on India-EU Trade Relations reveals that Indian exporters face the adverse impact of the huge amount of subsidies enjoyed by EU farmers through free seeds and fertilizers and a freight subsidy to producers.

In addition, exporters face cumbersome quality testing which increases the cost for Indian companies. In particular, many mid-sized India pharma companies have been severely hit due to the recent seizure of shipments at transit ports located in the EU, a Ficci release noted.

The survey respondents felt that the main impediment in the expansion of services to the EU were visa and consular issues, and non-clarity of taxation and cross-border transaction laws as applicable to Indian service providers.

In the IT sector, companies face difficulties in obtaining work permits for their professionals. While issuing work permits can take time, delays are rarely appreciated by clients in the EU who sign time-bound contracts and expect timely delivery.

Yet, a majority of the respondents said that the EU is a very attractive market and they were planning to expand trade with it in the next two years either by way of exploring new markets within the EU, setting up distribution centres or tie-up with existing market players to have a wider reach in the existing and new markets.

The EU is a strategic trade and Investment partner for India. Commercial interaction between the two nations has grown exponentially since 2000 - with current annual trade being 52 billion euros approximately, growing by more than three times between 2000 and 2008.

But in spite the growing bilateral trade volume, industry is unanimous in its opinion that there still exists a discrepancy between what is projected as an open and uniform regime and what is experienced by Indian companies during their real life interaction with the EU, the industry body said.

 

[aimarraul]

it won't cause much damege to the world economic,protectionism is always two way street,not just india have that card

 

[BanglaBhoot]

Top 100 Tax Defaulters Owe 1.4 Trillion Rupees -Minister

By MUKESH JAGOTA

NEW DELHI -- The top 100 direct tax defaulters owe the Indian government 1.4 trillion rupees ($29.59 billion) as on March 31, 2009, Junior Finance Minister S. S. Palanimanickam said Tuesday.

The defaulters include NTPC Ltd., IDBI, Oracle Corp., Nokia Corp., Coca Cola India Pvt. Ltd., three companies of the Tata group, Reliance Energy Ltd. and Indian Oil Corp. Ltd., he said in reply to lawmakers' queries in the upper house of parliament.

Top 100 Tax Defaulters Owe 1.4 Trillion Rupees -Minister - WSJ.com

 

[Ruag]

India and South Korea have developed stronger bilateral relations by signing a free trade agreement.

Seems that India's "Look East policy" is in full momentum.

New Partnership With India

India-Korea economic deal targets major trade goods - JoongAng Daily -

A boon for Korea-India trade - The Korea Herald : The Nation's No.1 English Newspaper

 

[Brahm0s]

Gr8 news. All of sudden india doing right things. Still long way to go but india started moving right direction. Cheers.

 

[Mig-29]

Great news indeed and also India and south Korea and collaborate towards defense sector as well. south Korean defense industry is one of the best in Asia .

 

[peace123]

Gujarat will probably emerge as the most prosperous state in the next 8-10 years.

Punjab is still sitting on its laurels from the Green Revolution. It needs to industrialize in order to keep its ranking.

Mizoram is India's "Coolest" state...best literacy and most laidback people.

Kerala is the ideal welfare state....very high equality and literacy....rivals scandinavian countries on that count.

yeah gujrat will emerge because of its position on the sea but i think punjab will remain 2-3 position because of agriculture but do u even think if punjab become industrialized india will be forced to import...
and i personally don't want a indusrialized punjab because i hate industrialized state especially in india with its caos and polution and i can assure u that punjab will remain the richest state of india

 

[BanglaBhoot]

Fight Droughts with Science

By HENRY I. MILLER
News that India may suffer a weaker-than-normal monsoon this year is raising concerns about crop yields and food supply. As worrying as those reports are, however, this is only a short-term element of a much bigger problem with the availability of water there. Even when the rains do come, India's water usage still will be at unsustainable levels. Better crop plants that use water more efficiently could be a big part of the solution—if only bureaucrats and activists would get out of the way.

Irrigation for agriculture accounts for roughly 70% of the world's fresh water consumption, but that figure can be higher in some places, depending on crop types and local hydrological conditions. India, for instance, is the world's second-largest producer of cotton, the thirstiest of crops: It takes 11,000 liters of water to produce a single kilogram. In just one example of the consequences, consumption from irrigation and other human uses is depleting groundwater in the northwestern part of India at the unsustainable rate of four centimeters per year despite consistent rainfall levels, according to an article published this week in the British journal Nature.

The results of this research should get policy makers to focus on how water is being used, especially in India's agricultural sector. The introduction of plants that grow with less water would allow more to be freed up for other uses. Plant biologists have identified genes regulating water utilization that can be transferred into important crop plants. Some modifications allow plants to grow with less or lower-quality water. The first drought-resistant crop, maize, is expected to be commercialized by 2012. If field testing goes well, India would be a potential market for this variety.

Pest- and disease-resistant strains also indirectly help water efficiency. Because much of the loss to insects and diseases occurs after the plants are fully grown—that is, after most of the water required to grow a crop has already been applied—the use of crop varieties that experience lower post-harvest losses in yield means that the farming and irrigation of fewer plants can produce the same total amount of food. More than 13 million farmers in at least 25 countries already are using genetically modified crop varieties to produce higher yields with lower inputs and reduced impact on the environment. In 2008, India ranked fourth in the world (behind the United States, Argentina and Brazil) in cultivation of genetically modified crops, with 7.6 million hectares.

But research and development are being hampered by resistance from activists and discouraged by governmental overregulation. There are more than a dozen vocal and radical activist groups—of which Greenpeace is the prototype—around the world opposed to this kind of technology. They have concocted tales in developing countries about genetically modified crops causing homosexuality, impotence, illnesses like HIV/AIDS, and even baldness. One of the most vocal activists is Delhi-based Vandana Shiva, who denies not only the manifest benefits and potential of genetically modified crops, but even derides the 20th century's stellar Green Revolution as having inflicted violence on the environment. She claims that genetically modified crop technology is untested, unproven and unsafe—all of which are demonstrably untrue.

This pressure both encourages overregulation in response to questionable science and also offers cover to those who want to overregulate these crops for other reasons. The United Nations agency that sets international food standards, the Codex Alimentarius Commission, has established requirements for data on genetic construction, composition, toxicity, and the like specific to genetically modified foods that are hugely expensive—and that could not be met by any food derived from conventionally modified plants. In addition the Cartagena "biosafety protocol," crafted under the aegis of the United Nations' Convention on Biological Diversity, has created unscientific and burdensome regulations of field trials and transport of genetically modified organisms (but not of other conventional plants such as invasive vines or weedy grasses that are far more worrisome). The United States has not ratified this convention.

Meanwhile, governments interested in protecting their agricultural sectors from foreign competition are all too happy to use spurious fears over genetically modified crops to erect trade barriers. Witness the European Union's unscientific, protectionist restrictions on the import of genetically modified agricultural products. This, as much as any other U.N. regulation, effectively discourages the use of these technologies. A study by Professor David Zilberman at the University of California at Berkeley dates the worldwide slowdown in the development pipeline to the EU's 1998 ban on genetically modified products.

The U.N.'s misadventures in regulation fly in the face of the quarter-century-old scientific consensus that modern genetic modification is essentially an extension or refinement of conventional (but less precise and less predictable) ways of modifying crops to create or enhance desirable characteristics.

The U.N.'s inconsistency is striking. The Food and Agriculture Organization calls for a greater allocation of resources to agriculture, but then makes those resources drastically less cost-effective via unnecessary, unscientific regulation of genetically modified plants. The Secretary-General of the U.N.'s World Meteorological Organization announces that "integrated water-resources management is the key to achieving the Millennium Development Goals of securing access to safe water, sanitation and environmental protection," while an alphabet soup of other U.N. agencies is making virtually impossible the development of crops that can grow with low-quality water or under drought conditions.

By compromising commerce and the quality of life, water scarcity has the potential to destabilize industrialized and developing countries alike. Scarcity hinders economic development; excessive water extraction lowers ground levels and exacerbates rising sea levels; and poor water quality makes populations vulnerable to water-related diseases, such as cholera, dysentery, viral hepatitis A and typhoid. Especially during drought conditions—which currently afflict much of Europe, Africa, Australia, South America and the U.S.—even a small percentage reduction in the use of water for irrigation could result in huge benefits, both economic and humanitarian.

Some of the planet's biggest drought fears may be in India today, but no one will be immune to water worries in the future. It's essential that bureaucrats and activists stop blocking agricultural technologies that can give us more crop for the drop.

Henry I. Miller: India Faces Water Supply Problem - WSJ.com

 

[EjazR]

Kashmir buyer-seller meet evokes good response

Shujaat Bukhari

SRINAGAR: The international buyer-seller meet that ended here on Tuesday has helped handicraft traders in Kashmir re-establish their direct links with foreign buyers.

The four-day meet, inaugurated by Chief Minister Omar Abdullah and Union Minister for Environment and Forests Jairam Ramesh on August 8, on the banks of Dal Lake was sponsored by the Union Government and organised by the Kashmir Chamber of Commerce and Industry (KCCI). “We have done business which has been more than what we had expected,” said KCCI President Mubeen Shah.
Carpet business

The chamber is now compiling data on the orders received by various traders. The meet has also set forth the trend of arrival of high-value foreign buyers directly to Kashmir, which was discontinued in 1989.

“This has set forth the process of shifting the carpet business from New Delhi to Srinagar,” said Mr. Shah.

At present around 90 per cent of carpet trade, whose total volume is Rs. 800-1,000 crore, is done from New Delhi. “From Srinagar, the volume of carpet trade is just Rs. 100-150 crore,” said Mr. Shah.

Traders said that if the business shifted back to Srinagar it would give a huge boost to the local economy and the entire profit would be shared by the Kashmiris and they would also get a good price. According to Feroz Ahmad Bisati of Modern Carpets, “the meet has been a grand success and now the need of the hour is to continue this momentum.”
Biannual affair

Mr. Bisati called for making the event a biannual affair in accordance with the best buying season of the year.

Besides carpets, orders have been received for crewel stitch, shawls, papier mache and wood products. UAE and Germany have been among the biggest buyers.

Traders felt that the meet had been able to break the age old jinx and inhibition that Kashmir was not the safe place for doing business.

Shakil Ahmad Chaku from wood carving company A R Chaku and Sons said, “the big thing is that businessmen are able to come here and it augurs well for Kashmir.” Chaku’s wood products have generated interest among Brazilian and even some Palestinian businessmen.

The Hindu : Business : Kashmir buyer-seller meet evokes good response

 

[RPK]

India set to gain access to trillion-dollar ASEAN market, deal today


India and 10-nation economic bloc ASEAN will ink a free trade pact in Bangkok today, which will open the 1.7 billion consumer market to each other.

After six years of painstaking talks, the Comprehensive Economic Cooperation Agreement (CECA) will be signed which will eliminate duties on 80 per cent of goods traded between the two over the next eight years.

Commerce Minister Anand Sharma, who is here to sign the pact, said the agreement is well balanced and is in harmony
with the India's Look East Policy.

"I can say negotiations have been painstaking. The negotiators have ensured that our sensitive areas where we had
concerns are fully addressed," Sharma said.

When asked whether the concerns of plantation growers of South India have been addressed, Sharma said the whole debate of the CECA adversely impacting domestic planters was based on "uninformed" speculations.

FICCI Secretary General Amit Mitra, who is accompanying Sharma, said, "This agreement will be a win-win situation for India and the the Association of South East Asian Nations (ASEAN). It takes care of the country's strategic interest in line

 

[RPK]

India inflation falls again to -1.74 percent | 13 August 2009 | www.commodityonline.com

NEW DELHI (Commodity Online) : India inflation dropped marginally to minus 1.74 percent for the week ended August 1 from last week’s minus 1.58 percent.

In a statement issued here by India’s Commerce ministry said also said, index for primary articles rose 0.1 percent to 262.5 (provisional) from 262.2 (provisional) the week before.


The index for manufactured products rose 0.1 percent to 205.9 (provisional) from 205.6 (provisional) for the previous week. It added.

India’s wholesale prices fell the most in three decades, giving the central bank more time to keep interest rates at a record low before weak monsoon rains reduce harvests and stoke inflation.

Wholesale price based inflation rate turned negative for the week ended June 6 for the first time since the new wholesale price index (WPI) series started in 1995.

Inflation has slowed from a 16-year high of 12.91 percent in August 2008 as oil prices fell from an unprecedented $147.27 a barrel in the previous month.

The commerce ministry Thursday revised the rate for the week ended June 6 to a fall of 1.01 percent from a decline of 1.61 percent

 

[glomex]

India signs FTA with ASEAN

Ending months of uncertainty, India and the 10-nation Association of South East Asian Nations on Thursday signed a crucial trade pact that will break duty barriers in the 1.7 billion consumer market in the region.

The pact on trade in goods under the Comprehensive Economic Cooperation Agreement (CECA) was signed by Indian Commerce and Industry Minister Anand Sharma and ASEAN Economic Ministers after more than six years of intense negotiations.

The first phase of implementation is supposed to be over by January 1, 2010.

The pact, on which Prime Minister Manmohan Singh has formed a GoM to allay domestic concerns, will eliminate duties on 4,000 items by 2016, covering 80 per cent of India's imports from the South-east Asian nations.

However, as many as 489 items have been kept out of the pact, keeping in view the concerns of vulnerable domestic industries and agricultural producers. The main areas of differences revolved around sensitive agricultural products, mainly in the plantation sector.

The agreement is "well balanced" and is in harmony with the India's Look East Policy, Sharma said.

Bilateral trade between ASEAN and India was of about USD 40 billion in 2007-08.

 

[EjazR]

India's industrial output up 7.8 per cent in June

Further signs of recovery in India's industrial sector emerged on Wednesday with the latest official data indicating a 7.8 per cent growth in June over the like month the previous year.

Notably, the manufacturing output rose 7.3 per cent during the month, as per the data on the index of industrial production released by the Central Statistical Organisation here.

The data showed that while mining output was up 15.4 per cent, that for electricity rose 8 per cent. Output of capital goods and consumer goods sectors expanded respectively by 11.8 per cent and 4 per cent during the period.

"The IIP figure at 7.8 per cent does no longer look like a flash in the pan. It appears to be an indication of a turnaround in the industrial economy," said Federation of Indian Chambers of Commerce and Industry (Ficci) president Harsh Pati Singhania.

"I believe this is a turnaround because this growth has been registered at a time when our exports have been shrinking. The disaggregated figures show all major industrial sectors making impressive gains," he added.

However, the Ficci president said adequate credit supply at reasonable interest rates was essential to sustain the recovery process.

"This is very important as given the anticipated slowdown in agriculture sector following a bad monsoon, we have to maintain fairly high growth of the industrial and services sectors to support the overall growth of the economy."

According to Sherman Chan, an economist with Moody's Economy.com: "The strong industrial production data bode well for India's June quarter GDP performance. The pickup in domestic activity appears to have been strong enough to offset the slump in external demand."

She said despite the the government carrying a huge debt burden, policymakers have explored alternatives such as public-private partnerships. "Therefore, India's industrial outlook for the short- to medium-term is encouraging," Sherman added.

"Fiscal stimulus measures seem to have also filtered through to manufacturers swiftly, providing much-needed support amid sluggish external orders."

However, Sherman said, given the "much stronger than expected" June results, a brief slowdown was possible in July.

According to Tushar Poddar, an economist with global investment bank Goldman Sachs, the upside from industrial activity likely to mitigate the negative impact of poor rains.

"Several indicators of consumption and investment demand have been showing significant upticks. Financial conditions have continued to loosen over the summer, and we think this mitigates the negative impact from a contraction in the agricultural sector," Poddar added.

India's industrial output up 7.8 per cent in June- Hindustan Times

 

[BanglaBhoot]

Where The Middle Rules

India's superrich lose the limelight.
By Ruchir Sharma | NEWSWEEK

Published Aug 15, 2009

From the magazine issue dated Aug 31, 2009

When two elephants fight, the grass suffers. So goes the African saying, and a few years ago it would have been true of the Indian market. But the bitter and very public corporate battle between the billionaire Ambani brothers, who control the Reliance Group of companies, has produced surprisingly little collateral damage so far.

For a long time, the popular notion was that as the Reliance Group went, so went the Indian stock market. Now investors can ignore the family feud because the market is so much bigger. At the start of this decade, Reliance was one of five Indian companies with a market value of more than $5 billion. Currently there are 40 such companies, the total value of the market is more than $1 trillion, and the Reliance Group accounts for less than 10 percent of the total.

The reduced focus on the Reliance Group is part of a broader trend, in which the obsession with the top of the pyramid is shifting to a growing interest in the bulging middle. In 2006 and 2007—the heyday of the growth boom—all eyes were on the wealth of India's richest few. As the stock market surged, the media kept a close tab on how many Indians were making it to the Forbes list of billionaires. At the end of 2007, 10 Indians were on the top-100 list— trailing only the Americans and Russians in number.

Many companies targeted their growth strategies at high-income households, and the cocktail circuit was abuzz with details of the latest iconic apartment deal. In the commercial capital, Mumbai, apartment sales topped $2,500 per square foot—twice the going rate in cities like Shanghai. Last year's global meltdown led to a sudden stop in all such activity.

As India now emerges from the boom-bust growth cycle, the masses are firmly leading the recovery even as the upper classes remain conspicuous by their absence at stores. Two-wheeler sales are up nearly 15 percent so far in 2009, compared with an average growth of 5 percent over the past five years. Small-car sales have increased by 20 percent in recent months, while purchases of luxury cars are down 20 percent from a year ago. Consumer-goods companies are reporting a bipolar market: widely used products from hair oil to soaps are selling well, but more expensive skin-treatment items are not.

The mounting realization that the real growth opportunity in India lies lower down the price curve is forcing many companies to rejigger their strategies. Retailers used to place high-end brands close to the entrance of their malls, hoping to woo customers to chic brands, but they ended up intimidating them with high prices. Retailers are now reshuffling the front window, giving pride of place to goods the middle class can afford.

Similarly, in the real-estate market, the latest catchphrase is "affordable housing." The average unit cost of an apartment in India's five leading cities is down by 50 percent over the past year, not just due to falling prices but also to a reduction in the size of the average home. Developers have learned the hard way that selling in India is a volume game. Their earlier idée fixe that penthouses and villas were where the glamour and margins lay has given way to the reality that the market for such products is extremely limited.

Even at the peak of the boom in 2007, there were only 100,000 Indians with an estimated financial net worth of more than $1 million. That contrasts with 100 million middle-income households with an estimated annual income of $2,000 to $10,000. This segment is growing at the fastest pace, and many new members of this class have yet to buy their first motorcycle, car, or apartment. The political class in India has been very conscious of the need to make growth more inclusive and therefore spent much of the revenue windfall from the high-growth years on increased welfare spending. Furthermore, these households are carrying relatively low levels of debt, making them less vulnerable to swings in the global business cycle.

Analysts have hyped the potential of the In-dian middle class for a long time, but now it has reached critical mass. At the same time, it is still not as affluent as in other countries, such as China, where sales this year of luxury cars and Burberry apparel are growing at an impressive 10 to 20 percent. India's per capita income of $1,000 is less than a third of China's, and the average Indian consumer remains highly price-sensitive, with a limited appetite for expensive, high-margin products.

The positive fallout of the past year's economic turmoil is that it has shown where India's real potential lies. The more quickly companies throw in their lot with the rising middle, rather than the overhyped and overestimated rich few, the more successful they will be in India.

Where The Middle Rules | Print Article | Newsweek.com

 

[ironman]

A More Civilized Response​

August 14, 2009 by Ashish Advani

The Swine flu outbreak is the raging talk of the town in India.

Cases are popping up all over the country. The locals are wearing surgical masks and there have been multiple outbreaks in several cities. Some people are even running scared…but no one is panicking yet.

It’s a far cry from Mexico. If you remember, back in April when the world first heard about this “new flu” in Mexico, the Mexican world came crashing down…including its currency, the Mexican peso.

In Mexico, the Swine flu had been making the rounds for over a month before the news broke around the world. On April 26th, the world first heard of this ‘global’ pandemic.

A few dozen school and college students in Australia, New Zealand and U.S. who had been in Mexico were showing signs of the illness. This triggered a massive overreaction in Mexico and worldwide.

The Mexican peso declined by 5% and the stock market crashed by 3.4% on Monday April 27. History now shows us that this was a huge overreaction and corrections came swiftly in the next few days.
Where Calmer Heads Prevail…

Now please understand, I do not take any sickness lightly. And I do accept that we should all take prudent care to prevent this disease from spreading and cut down on the loss of productivity in the affected areas.

But that’s no reason to spread a panic and play with markets (stocks, currencies, etc.). In fact, that is just the kind of overreaction you should avoid in this situations. Calmer heads should always prevail, so those involved can proceed in the wisest manner.

Just look at India. Over the last two weeks, India has seen a dramatic increase in cases.

The zenith of this crisis came on Wednesday. Authorities in Mumbai (one of the largest cities in India) declared the city was closing all schools and colleges as well as public places such as swimming pools, etc for a week.

They closed these facilities after trading hours last night. If the Indians were prone to overreaction, we should have seen a crash of the stock markets and currencies. Granted that the scare is now older and the world now knows that this “killer” disease does not kill as much.
Indian Stocks Refuse to Catch the Flu

Yet, a school closure of this scale in the financial capital of India should have elicited some kind of reaction in India’s markets right?

Instead, NADA. ZILCH.

On the contrary, the stock market was up 3.4%. The market was celebrating the Federal Reserve’s assessment that the U.S. economy is on a path to recovery. The currency markets barely budged as well, which helped the Indian rupee.

I am very impressed by this mature and appropriate reaction to the closing of schools in Mumbai. Yes, the spreading of a sickness like this is serious and needs some action.

School closures were appropriate to avoid spreading the disease to the youngest and most vulnerable. But the long-term effects of such an epidemic on India’s economy should have been what we saw…Nothing.

The rest of the world could learn from such mature responses from “Third World” economies like India. We would all be calmer, saner and the business world would be a better place to trade and earn money.

Stay long India my friends as this country has shown us time and time again that it has the sense to take on the world in appropriate and measured fashion.