Sri Lanka has temporarily banned the import of live fowl from India following an outbreak of bird flu in the country, officials said Saturday.
The decision comes after India's government on Thursday confirmed an outbreak of H5N1-strain bird flu at a poultry farm in the northeastern state of Manipur, marking the country's first reported outbreak since February last year.
Saturday, July 28, 2007
Sri Lanka bans import of live birds from India
Sri Lanka has banned imports with immediate effect, after we received reports of an outbreak of bird flu in Manipur, India," said D.D. Wanasinghe, president of the All Island Poultry Association.
Sri Lanka, which has had no reported cases of the H5N1 virus, also imports a large quantity of maize from India.
"The government has not made a decision to ban Indian maize so far. India supplies 90 percent of our maize requirements. The health ministry told us that they would take a decision shortly," Wanasinghe told AFP.
Foodstuffs such as maize and soya, which Sri Lanka also imports from India, carry a risk of infection because they are grown in fields where chickens live, and crops and packing bags can come in contact with fowl excrement, he said.
Colombo's decision came after India reported that the Manipur government had ordered the culling of thousands of birds.
Sri Lanka has already lifted the ban on imports of birds and chicken flesh from the US and Australia, but not from Britain, he said.
The island nation produces between 11 million and 12 million chickens a year, according to Wanasinghe. Sri Lanka imports poultry mainly for food processing to make sausages that are packaged and sold in supermarkets.
Sri Lanka, which has had no reported cases of the H5N1 virus, also imports a large quantity of maize from India.
"The government has not made a decision to ban Indian maize so far. India supplies 90 percent of our maize requirements. The health ministry told us that they would take a decision shortly," Wanasinghe told AFP.
Foodstuffs such as maize and soya, which Sri Lanka also imports from India, carry a risk of infection because they are grown in fields where chickens live, and crops and packing bags can come in contact with fowl excrement, he said.
Colombo's decision came after India reported that the Manipur government had ordered the culling of thousands of birds.
Sri Lanka has already lifted the ban on imports of birds and chicken flesh from the US and Australia, but not from Britain, he said.
The island nation produces between 11 million and 12 million chickens a year, according to Wanasinghe. Sri Lanka imports poultry mainly for food processing to make sausages that are packaged and sold in supermarkets.
Does N-deal really solve issues?
Instead of coming out clean on the text of the 123 agreement by making it public, both India and the United States in collusion have chosen to keep it under wraps and are selectively issuing rosy statements that all is well and all our concerns have been fully addressed.
While one wishes it is really satisfactory, it is unfortunate that the Cabinet committees, the political parties and the public are deprived of constructive analyses and unbiased expert opinions.
What we are fed up with is one-sided interpretation of the text by the official side though there is promise that the text will be made public soon in consultation with the US.
While one wishes it is really satisfactory, it is unfortunate that the Cabinet committees, the political parties and the public are deprived of constructive analyses and unbiased expert opinions.
What we are fed up with is one-sided interpretation of the text by the official side though there is promise that the text will be made public soon in consultation with the US.
The article India has same rights as nuclear weapons States based on off the record briefings, which appeared on rediff.com makes one wonder how far the government is attempting to sugarcoat.
Some of the points made in this article do not need the full text to comment.
If the July 18, 2005 joint statement where India was lifted to the moral high ground is kept by the side of the Hyde Act, a legally binding document based on which the 123 Agreement will largely actually be implemented, it is not difficult to see to what extent India has been given the same rights and privileges of a Nuclear Weapons State.
As just one example, while a Nuclear Weapons State can voluntarily place under civilian list any of their nuclear facilities and exclude any facility as military facility and make changes at will, India was made to fight for every facility during the preparation of the separation plan.
Also, the safeguards' implementation as far as Nuclear Weapons States are concerned is hardly intensive and India can never hope to get that sort of parity judging by many of the stipulations in the Hyde Act.
It is to be expected that while negotiating a bilateral agreement there will always be constraints on both sides. However, in this case it is the US, by passing the Hyde Act disregarding the concerns expressed by Prime Minister Manmohan Singh [Images] and his commitments to Parliament has left India to compromise.
More than the substance, the negotiators seem to have concentrated more on fixing the language to make the text look palatable on paper.
So far we have only the negotiators' interpretation of the deal without the access to how the various issues are actually worded. The government seems to be working on garnering support from various quarters to gain psychological advantage before releasing the text.
The reprocessing issue is still confusing.
Contrary to what is being told in the briefings there seems to be conditional clearance with actual bottlenecks still not being fully removed. This is where the text is important to really ascertain whether our interests are fully protected.
It is reported that the Japanese model is followed. If it is so, I can say with my experience it is not too pleasant in practice. They have in the past suffered under the US restrictions.
On the issue of the fate of the cooperation agreement in case of testing, there is no ambiguity as far as Hyde Act is concerned. What seems to have been achieved is language couching, vague complex wordings to circumvent and give an impression of having adequately addressed the issue.
This is nothing but absolute fooling!
When implemented in the present form, there is no doubt that in future any government in power will be constrained to decide in favour of testing having dug deep into foreign investments in nuclear power plants and pressures on the political and economic fronts among others.
The government during the negotiations may be under advice from certain influential quarters that actual testing could be replaced by computer simulation. This is a dangerous prospect indeed! On this issue there seems to be no escaping the Hyde Act and supreme national security concerns.
On the issue of full civilian nuclear cooperation it is amazing to see the new definition given by the spin-masters on both sides. What is simple and straight forward at least in definition is being made to look oversimplified. Part cannot be full as US wants to define.
If recognising our strategic programme, allowing us to import reactors and fuel and have the right to reprocess and enrich uranium and also export heavy water through our own efforts could constitute full civilian cooperation, what is the big deal?
It is being argued that we have the technology in the entire fuel cycle and why do we bother? If it is so, we have the technology for designing, building and operating reactors. Why are we going in for this technology import?
Are we getting over the embargoes on import of equipment and components and any other materials on all parts of the fuel cycle, specifically including enrichment, reprocessing and heavy water, flagged by the Hyde Act or restricted to only those parts of the fuel cycle like reactors which are of commercial interest to suppliers?
There seems to be a calculated move to denigrate critics who really care for long term interests in energy and national security of having defeatist mentality and paranoid about the deal.
They should bear in mind that some critics among former nuclear scientists have spent their professional careers in the nuclear establishment and helped build a strong foundation showing achievements as a consequence of which India has been able to stand up with its head high.
India could not have been discussing this deal without their contribution. They do not have any vested interests nor need for protecting the chair they once occupied. Their only interest is to see that the inherent strength of the country in the nuclear field is suitably harnessed to grow even stronger.
Weakness of Uranium shortage is a known factor and it has been factored into the Indian nuclear programme for more than five decades now. Long term energy independence cannot be driven by externally controlled imports. Thinking ahead and cautioning against hasty actions detrimental to national interests cannot be termed inferiority complex.
A deal, which can truly takes us out of the shell and allow us to interact as a global player on honourable terms, is always welcome. We should not be treated as receivers of technology but we are capable of offering a lot in the nuclear field.
Let us not consider ourselves as weak partners in this game and compromise. We should stand up fight for our rightful place.
DJ Indian Edible Oil Prices Dn As Govt Cuts Import Duties
MUMBAI (Dow Jones)--Indian edible oil prices were down in the week to Friday as the government reduced import duties by 5-10 percentage points to check rising inflation.
Some signs of revival of rains in the country's main oilseed growing central and western regions after a gap of more than 10 days also kept prices down, traders said.
Monday, India reduced the import duty on palm and soy oils by five percentage points and cut the duty on refined sunflower oil by 10 percentage points.
The across-the-board cut in the import duty of all major edible oils was aimed at keeping a check on local prices of these commodities, government officials said.
"The reduction in import duties on all edible oils is meant to ensure adequate supplies ahead of the festival season, but it will only have a temporary impact as supplies will remain tight till the new crop hits the market around October," a Mumbai-based analyst said.
India's oilseed production in the crop year that ends in October is around 23 million metric tons, down 4 million tons on the year.
Latest, weather data, however, showed that rains in the week to Wednesday were estimated 30% below average at 47.7 millimeters.
July is the most important month of the monsoon season in terms of the volume of rain and crop sowing operations.
The Southwest monsoon is crucial for India's oilseed crop as large tracts of agricultural land aren't irrigated.
Friday, local groundnut oil prices were at INR74,500/ton, down from INR75,000/ton a week earlier.
Crude palm oil was at INR42,200/ton, down from INR42,500/ton from the week before.
Refined, bleached and deodorized palm olein was at INR48,000/ton, down from INR49,000/ton a week earlier.
Refined soyoil prices were at INR48,200/ton, down from INR48,500/ton a week earlier.
Crude soyoil prices were higher, at INR46,200/ton from INR46,000/ton a week earlier.
Some signs of revival of rains in the country's main oilseed growing central and western regions after a gap of more than 10 days also kept prices down, traders said.
Monday, India reduced the import duty on palm and soy oils by five percentage points and cut the duty on refined sunflower oil by 10 percentage points.
The across-the-board cut in the import duty of all major edible oils was aimed at keeping a check on local prices of these commodities, government officials said.
"The reduction in import duties on all edible oils is meant to ensure adequate supplies ahead of the festival season, but it will only have a temporary impact as supplies will remain tight till the new crop hits the market around October," a Mumbai-based analyst said.
India's oilseed production in the crop year that ends in October is around 23 million metric tons, down 4 million tons on the year.
Latest, weather data, however, showed that rains in the week to Wednesday were estimated 30% below average at 47.7 millimeters.
July is the most important month of the monsoon season in terms of the volume of rain and crop sowing operations.
The Southwest monsoon is crucial for India's oilseed crop as large tracts of agricultural land aren't irrigated.
Friday, local groundnut oil prices were at INR74,500/ton, down from INR75,000/ton a week earlier.
Crude palm oil was at INR42,200/ton, down from INR42,500/ton from the week before.
Refined, bleached and deodorized palm olein was at INR48,000/ton, down from INR49,000/ton a week earlier.
Refined soyoil prices were at INR48,200/ton, down from INR48,500/ton a week earlier.
Crude soyoil prices were higher, at INR46,200/ton from INR46,000/ton a week earlier.
Govt to ease cement import to cut prices
NEW DELHI: Government will ease rules on importing cement to rein in high domestic prices, which have angered both the construction industry and policymakers trying to tame inflation, a senior government official said on Thursday.
Industry Secretary Ajay Dua said the government would relax certification norms to make cements imports easier and help bridge the demand-supply gap. He said prices would fall once imports began to arrive.
"If the economy grows by 9 per cent plus, the growth in demand for cement will be 10 per cent, while supplies from domestic firms have been only increasing by 6-7 percent," Dua told reporters. "We hope to bridge it partially through imports," he told reporters at an industry conference.
In April, India cut duties on cement to increase supplies but shipments from Pakistan could not be distributed as the foreign firms did not meet certification norms issued by the Bureau of Indian Standards (BIS).
Present rules mandate that a cement firm can sell its products only after BIS officials inspect its plants and issue clearance certificates.
Dua said rules would be relaxed and BIS could be allowed to issue foreign manufacturer certificates to overseas cement firms within two months of an application being lodged.
So far Pakistani firms have expressed the most interest in exporting to neighbour India. By June cement prices in India were up by close to 10 per cent from a year ago, as Asia's third largest economy scales up infrastructure to sustain high growth rates.
In 2005/06, cement prices surged by 50 per cent in some regions, far above the rise in input costs.
Monopolies and Restrictive Trade Practices Commission (MRTPC) has ordered notices of inquiry against 14 Indian cement companies including Ambuja Cements, ACC Ltd, Grasim Industries Ltd, UltraTech Cement, Birla Corp Ltd and India Cement Ltd. If the firms are found guilty of cartelisation, Dua said, they could be penalised.
The Cement Manufacturers' Association of India estimated that output grew 9.5 per cent to 155.31 million tonnes during 2006/07. Cement makers have pledged to add 100 million tonnes of additional capacity by 2010 at a cost of Rs 400 billion.
Industry Secretary Ajay Dua said the government would relax certification norms to make cements imports easier and help bridge the demand-supply gap. He said prices would fall once imports began to arrive.
"If the economy grows by 9 per cent plus, the growth in demand for cement will be 10 per cent, while supplies from domestic firms have been only increasing by 6-7 percent," Dua told reporters. "We hope to bridge it partially through imports," he told reporters at an industry conference.
In April, India cut duties on cement to increase supplies but shipments from Pakistan could not be distributed as the foreign firms did not meet certification norms issued by the Bureau of Indian Standards (BIS).
Present rules mandate that a cement firm can sell its products only after BIS officials inspect its plants and issue clearance certificates.
Dua said rules would be relaxed and BIS could be allowed to issue foreign manufacturer certificates to overseas cement firms within two months of an application being lodged.
So far Pakistani firms have expressed the most interest in exporting to neighbour India. By June cement prices in India were up by close to 10 per cent from a year ago, as Asia's third largest economy scales up infrastructure to sustain high growth rates.
In 2005/06, cement prices surged by 50 per cent in some regions, far above the rise in input costs.
Monopolies and Restrictive Trade Practices Commission (MRTPC) has ordered notices of inquiry against 14 Indian cement companies including Ambuja Cements, ACC Ltd, Grasim Industries Ltd, UltraTech Cement, Birla Corp Ltd and India Cement Ltd. If the firms are found guilty of cartelisation, Dua said, they could be penalised.
The Cement Manufacturers' Association of India estimated that output grew 9.5 per cent to 155.31 million tonnes during 2006/07. Cement makers have pledged to add 100 million tonnes of additional capacity by 2010 at a cost of Rs 400 billion.
India's wheat import rules unrealistic: US
NEW DELHI: The United States on Wednesday criticised India's wheat import regulations as "unrealistic" after strict controls on weed presence, fumigation and inspection barred purchases of US grain in a recent tender. In May, it appeared officials from the two countries were moving closer to an agreement on wheat import standards after a visit by an Indian delegation, but substantial hurdles remain.
"We are very disappointed that the Indian government's committee of secretaries and ministry of agriculture officials have decided against bringing India's unrealistic wheat import phytosanitary requirements in-line with international standards," the US Embassy in New Delhi said in a statement. "India's very low weed seed standard is nearly impossible for any global exporter to meet, raising questions about the reliability of India's import inspection process," the statement added.
India requires a lower level of weed seeds in grain than typically requested in international tenders. India paid 10 to 20% more for wheat purchases made last year than Egypt, the statement said.
"We are very disappointed that the Indian government's committee of secretaries and ministry of agriculture officials have decided against bringing India's unrealistic wheat import phytosanitary requirements in-line with international standards," the US Embassy in New Delhi said in a statement. "India's very low weed seed standard is nearly impossible for any global exporter to meet, raising questions about the reliability of India's import inspection process," the statement added.
India requires a lower level of weed seeds in grain than typically requested in international tenders. India paid 10 to 20% more for wheat purchases made last year than Egypt, the statement said.
US slams India for high wheat import stds
NEW DELHI: Disappointed with the stringent standards set by India that came in the way of supply of American wheat, the US today sought independent tests of the grain arriving into the country.
It described as "unrealistic" New Delhi's phytosanitary requirements for the foodgrain.
"We are very disappointed that the Indian government's committee of secretaries and Ministry of Agriculture officials have decided against bringing India's unrealistic wheat import phytosanitary requirements in line with international standards," a US Embassy statement said here.
Meanwhile, India today decided to import over 500,000 tons of wheat to augments its buffer stocks.
The government plans to import one million tons of wheat this year.
The US Embassy statement said India's very low weed standard is "nearly impossible" for any global exporter to meet, raising questions about the reliability of India's import inspection process.
"The US calls upon the Government of India to conduct independent tests of imported wheat arriving in Indian ports to verify that these standards are truly being met", the statement said.
Stating that the high cost to Indian consumers of these "overly stringent" rules is very clear in purchases made last year, the statement said India paid 10 to 20 per cent more for wheat than their comparable Egyptian counterparts.
"The total cost savings to India from relaxing norms and including US wheat in tenders last year, would have resulted in 65-85 million dollars in savings, it said.
"The prices being offered to India in the most recent import tender are significantly greater than recent purchases by other wheat importing nations", it said.
It described as "unrealistic" New Delhi's phytosanitary requirements for the foodgrain.
"We are very disappointed that the Indian government's committee of secretaries and Ministry of Agriculture officials have decided against bringing India's unrealistic wheat import phytosanitary requirements in line with international standards," a US Embassy statement said here.
Meanwhile, India today decided to import over 500,000 tons of wheat to augments its buffer stocks.
The government plans to import one million tons of wheat this year.
The US Embassy statement said India's very low weed standard is "nearly impossible" for any global exporter to meet, raising questions about the reliability of India's import inspection process.
"The US calls upon the Government of India to conduct independent tests of imported wheat arriving in Indian ports to verify that these standards are truly being met", the statement said.
Stating that the high cost to Indian consumers of these "overly stringent" rules is very clear in purchases made last year, the statement said India paid 10 to 20 per cent more for wheat than their comparable Egyptian counterparts.
"The total cost savings to India from relaxing norms and including US wheat in tenders last year, would have resulted in 65-85 million dollars in savings, it said.
"The prices being offered to India in the most recent import tender are significantly greater than recent purchases by other wheat importing nations", it said.
Fusion Music
Prime Minister Manmohan Singh had a smile of satisfaction as M.K. Narayanan, the leader of his crack team, reported from Washington: "Mission accomplished." In his quiet manner, the PM adjusted his blue turban with the most coveted feather—a hard-won nuclear deal with the US that's not just forward-looking, but mind-altering and potentially world-defining. It's a deal that would open important doors shut in India's face for three decades and create a sui generis category for it in the nuclear order. The agreement was proof and price of America's desire to be India's strategic partner as the two democracies navigate the shifting sands of an uncertain world.
The PM's "first concern was that all parties in India be told the facts so there is no disinformation campaign by vested interests," said an official.
There was no beating of drums, no champagne or laddus as history was made by Manmohan and his partner in Washington, President George Bush. But now the US has to convince the Nuclear Suppliers Group, a cartel of 45 countries, to change its rules and allow sale of nuclear technology
to India or this deal means little. Nick Burns, the lead US negotiator, is on the task this week as his boss, secretary of state Condoleezza Rice, plans a visit to New Delhi around October and "move forward" in her engagement of India. She too will have reason to smile—it was Rice who first presented the vastly improved vision of bilateral relations to Manmohan in March 2005.
Most of India's major demands have been met—the right to reprocess fuel, to stockpile it and to get uninterrupted supplies whether from the US or other countries. The text also contains a specific reference that the agreement will not adversely impact India's strategic nuclear programme, a clause insisted upon by the Indian team to ensure no curbs are imposed on the military side. Yes, if India conducts a nuclear test, the cooperation ends but there was no way to circumambulate the US Atomic Energy Act and nor was it a realistic aim, say Indian negotiators. Given Bush's low approval ratings, he can't "amend toilet paper" leave alone a long-standing pillar of a law, a diplomat commented.
The last make-or-break round was clinched after India's offer at Heilingendamm during the June G-8 summit to build a separate safeguarded facility for reprocessing spent fuel from reactors India would import, ensuring no US fuel leaked into the military programme—a fear underlying the negotiating stance of the US. When Narayanan landed in Washington along with foreign secretary Shivshankar Menon and the Indian team, the air was thick with anticipation. Time was short given the US legislative calendar, the need for congressional approval and the pile of thorny issues yet to be resolved. But Burns and Narayanan knew they had to deliver.
"We knew we couldn't afford to fail, no matter what the disagreements. Both of us recognised that if you don't do it now, it will never be done. No one would touch this for decades, saying it is too difficult to deal with the Indians," a lead US negotiator explains. If there were dissenting, stern voices in Delhi, there were troublemakers in the US bureaucracy who interpreted the July 18, 2005, Indo-US joint statement from which this deal flowed in the narrowest manner possible. The state department's own non-proliferation bureau was opposed to the deal. Burns was regularly supplied papers, muddling mind and matters. These had to be countered, making the "paper war" intense and time-consuming. Then the US Congress went two steps further with the Hyde Act, making the horribly difficult negotiations hellish.
From Tuesday until Friday last week, the two sides systematically resolved all issues, either with a way out or by finessing or by postponing.
The PM's "first concern was that all parties in India be told the facts so there is no disinformation campaign by vested interests," said an official.
There was no beating of drums, no champagne or laddus as history was made by Manmohan and his partner in Washington, President George Bush. But now the US has to convince the Nuclear Suppliers Group, a cartel of 45 countries, to change its rules and allow sale of nuclear technology
to India or this deal means little. Nick Burns, the lead US negotiator, is on the task this week as his boss, secretary of state Condoleezza Rice, plans a visit to New Delhi around October and "move forward" in her engagement of India. She too will have reason to smile—it was Rice who first presented the vastly improved vision of bilateral relations to Manmohan in March 2005.
Most of India's major demands have been met—the right to reprocess fuel, to stockpile it and to get uninterrupted supplies whether from the US or other countries. The text also contains a specific reference that the agreement will not adversely impact India's strategic nuclear programme, a clause insisted upon by the Indian team to ensure no curbs are imposed on the military side. Yes, if India conducts a nuclear test, the cooperation ends but there was no way to circumambulate the US Atomic Energy Act and nor was it a realistic aim, say Indian negotiators. Given Bush's low approval ratings, he can't "amend toilet paper" leave alone a long-standing pillar of a law, a diplomat commented.
The last make-or-break round was clinched after India's offer at Heilingendamm during the June G-8 summit to build a separate safeguarded facility for reprocessing spent fuel from reactors India would import, ensuring no US fuel leaked into the military programme—a fear underlying the negotiating stance of the US. When Narayanan landed in Washington along with foreign secretary Shivshankar Menon and the Indian team, the air was thick with anticipation. Time was short given the US legislative calendar, the need for congressional approval and the pile of thorny issues yet to be resolved. But Burns and Narayanan knew they had to deliver.
"We knew we couldn't afford to fail, no matter what the disagreements. Both of us recognised that if you don't do it now, it will never be done. No one would touch this for decades, saying it is too difficult to deal with the Indians," a lead US negotiator explains. If there were dissenting, stern voices in Delhi, there were troublemakers in the US bureaucracy who interpreted the July 18, 2005, Indo-US joint statement from which this deal flowed in the narrowest manner possible. The state department's own non-proliferation bureau was opposed to the deal. Burns was regularly supplied papers, muddling mind and matters. These had to be countered, making the "paper war" intense and time-consuming. Then the US Congress went two steps further with the Hyde Act, making the horribly difficult negotiations hellish.
From Tuesday until Friday last week, the two sides systematically resolved all issues, either with a way out or by finessing or by postponing.
India-Pak likely to move forward in trade-talks
New Delhi July 28: Latest progress in bilateral trade which mounted from $200 million four years ago to $ 1.5 billion this year between India and Pakistan has encouraged the officials from both sides to hold more talks to tender more co-operation to each-other.
In this wake the secretary level talks are scheduled to be held on July 31 to find out the solutions for the problems in enhancing their commercial ties between two countries.
A delegation from Pakistan led by commerce secretary, Syed Asif Ali Shah will participate in two day fourth round of talks with his Indian counter part, G K Pillai.
Issues likely to make place on the table in the secretarial talks are the opening of the bank branches in each other’s country to avoid the transaction through either American or European banks which charge $220 for every transaction.
FIFO (Federation of Indian Export Organisations) also made similar suggestions that India and Pakistan should carry out mutual trade in their own currencies rather than in international ones by fixing the exchange rate.
This transaction in local currencies can be facilitated only when the branches of Indian banks are opened in Pakistan and vice versa.
Another issue to surface in the talks is related to transportation of goods and transit trade. Both the countries are willing to push the boundaries of the trade items of trade basket.
India would look at the prospect of the import of cement from Pakistan.
The issue came to the surface when Pakistan P M Shaukat Aziz discussed with Dr. Man Mohan Singh on the side lines of the SAARC meeting that Pakistan could export cement to India.
Pakistan has expressed its interest to export cement in view of the high growth in the sector in their country if India waives additional custom duty and countervailing duty.
India plans to include molasses too in the list of import items along with cement as Pakistan has got the surplus of molasses too.
The issue of opening more trade points and transit trade with central Asian countries is also likely to come up as Pakistan has refused earlier to increase the trading points.
Other trade issues joint registration of basmati rice, linking of capital markets and facilitation of business visas not addressed till yet are likely to surface.
India and Pakistan look forward for a joint geographic indicator on Basmati rice so that no other country could sell or patent any rice under basmati brand.
Indian high commission has opened in India a drop box visa application facility for businessmen to visit India and would seek the reciprocation of the step.
This is also to be known that India still seeks most favoured nation status from Pakistan who has been bestowed the same by India a long ago.
A joint study group would also meet after the secretary talks which would address the Pakistan’s grievances about high tariffs.
This round of talks is a corollary of the previous ones in which officials had talks on Sir Creek issue, Tulbul navigation project and on terrorism and human trafficking etc.
Both the nations also look forward to holding trade exhibitions. The continuous rounds of talks and the increasing trade between both countries reflect that from competitive economies they are heading towards being the complementary ones despite various hurdles.
In this wake the secretary level talks are scheduled to be held on July 31 to find out the solutions for the problems in enhancing their commercial ties between two countries.
A delegation from Pakistan led by commerce secretary, Syed Asif Ali Shah will participate in two day fourth round of talks with his Indian counter part, G K Pillai.
Issues likely to make place on the table in the secretarial talks are the opening of the bank branches in each other’s country to avoid the transaction through either American or European banks which charge $220 for every transaction.
FIFO (Federation of Indian Export Organisations) also made similar suggestions that India and Pakistan should carry out mutual trade in their own currencies rather than in international ones by fixing the exchange rate.
This transaction in local currencies can be facilitated only when the branches of Indian banks are opened in Pakistan and vice versa.
Another issue to surface in the talks is related to transportation of goods and transit trade. Both the countries are willing to push the boundaries of the trade items of trade basket.
India would look at the prospect of the import of cement from Pakistan.
The issue came to the surface when Pakistan P M Shaukat Aziz discussed with Dr. Man Mohan Singh on the side lines of the SAARC meeting that Pakistan could export cement to India.
Pakistan has expressed its interest to export cement in view of the high growth in the sector in their country if India waives additional custom duty and countervailing duty.
India plans to include molasses too in the list of import items along with cement as Pakistan has got the surplus of molasses too.
The issue of opening more trade points and transit trade with central Asian countries is also likely to come up as Pakistan has refused earlier to increase the trading points.
Other trade issues joint registration of basmati rice, linking of capital markets and facilitation of business visas not addressed till yet are likely to surface.
India and Pakistan look forward for a joint geographic indicator on Basmati rice so that no other country could sell or patent any rice under basmati brand.
Indian high commission has opened in India a drop box visa application facility for businessmen to visit India and would seek the reciprocation of the step.
This is also to be known that India still seeks most favoured nation status from Pakistan who has been bestowed the same by India a long ago.
A joint study group would also meet after the secretary talks which would address the Pakistan’s grievances about high tariffs.
This round of talks is a corollary of the previous ones in which officials had talks on Sir Creek issue, Tulbul navigation project and on terrorism and human trafficking etc.
Both the nations also look forward to holding trade exhibitions. The continuous rounds of talks and the increasing trade between both countries reflect that from competitive economies they are heading towards being the complementary ones despite various hurdles.
Russia to send experts to test Indian labs for rice import
NEW DELHI: After lifting ban on import of rice from India, Russia will soon send a team of officials to visit Indian laboratories it has shortlisted for issuing safety and quality certificates that need to accompany the grain shipments.
Moscow removed the ban on rice consignments from India with effect from July 20. But the shipments had to be accompanied by Import Quarantine permission, a safety and quality certificate issued by Shri Ram Institute for Industrial Research and Phytosanitary Certificate (SRIIRPC).
While SRIIRPC is the only institution giving these certificates, the Agricultural and Processed Food Products Export Development Authority (APEDA) has submitted a list of accredited laboratories which can issue safety and quality benchmarks for rice exports from India.
"A Russian team would be visiting India soon to inspect these laboratories to consider the admissibility of safety and quality certificates issued by them," an official said.
According to a Commerce Ministry statement, the Russian Federation allowed rice imports from India after Commerce and Industry Minister Kamal Nath held talks with his counterpart G O Gref in St Petersburg on June 9-10 this year. These parleys were followed by another delegation led by Commerce Secretary G K Pillai early this month.
The two governments signed a Protocol on July 10 in Moscow. Restrictions on import of rice into Russia from various countries, including India, were imposed from May 1 this year on the pretext that exporters were violating the Russian Sanitary-Epidemiological requirements, in particular regarding pesticide residues
Moscow removed the ban on rice consignments from India with effect from July 20. But the shipments had to be accompanied by Import Quarantine permission, a safety and quality certificate issued by Shri Ram Institute for Industrial Research and Phytosanitary Certificate (SRIIRPC).
While SRIIRPC is the only institution giving these certificates, the Agricultural and Processed Food Products Export Development Authority (APEDA) has submitted a list of accredited laboratories which can issue safety and quality benchmarks for rice exports from India.
"A Russian team would be visiting India soon to inspect these laboratories to consider the admissibility of safety and quality certificates issued by them," an official said.
According to a Commerce Ministry statement, the Russian Federation allowed rice imports from India after Commerce and Industry Minister Kamal Nath held talks with his counterpart G O Gref in St Petersburg on June 9-10 this year. These parleys were followed by another delegation led by Commerce Secretary G K Pillai early this month.
The two governments signed a Protocol on July 10 in Moscow. Restrictions on import of rice into Russia from various countries, including India, were imposed from May 1 this year on the pretext that exporters were violating the Russian Sanitary-Epidemiological requirements, in particular regarding pesticide residues
EU Halts WTO Probe Into India's Import Tariffs
New Delhi, India (AHN) - Following India's recent easing of tariffs on imported beer, wine and spirits, the European Union has halted a probe by the World Trade Organization into India's import tariffs, on Monday.
"EU wines and spirits exporters deserve a level playing field in India," said Peter Power, spokesman for EU Trade Commissioner Peter Mandelson said in an AP report. "This decision brings us closer to that goal."
Nonetheless, Brussels responded that it regrets India's decision to raise basic duty on wines from 100 percent to 150 percent.
Taxes on imported alcohol like French wine and Scottish whisky were as high as 550 percent in India, before the recent modifications were made.
The U.S. has also made a comparable case with the WTO regarding India's alcohol imports. However, U.S. officials have declined to comment if it will make a similar decision on the same issue.
According to an AP report, India is one of the biggest markets for alcohol and related products. However, imports account for a very low percent of the total consumption in the country. Both Brussels and Washington raised issue with New Delhi saying that the high taxes of imports were unfair trade practices designed to keep other countries were tapping the world's most populous democracy's market.
In comparison, almost all spirits enter the U.S., EU and Japan, virtually duty-free. And China, which has been accused by the U.S. and EU for devaluing its currency to keep its goods cheap in the global market, charges a 10 percent tax on imported liquor.
The EU said in a statement that the WTO panel currently probing the case on India may be suspended for a year, while it observes improvements in trade practices between the two: "The European Commission will now continue to monitor the situation on the ground to make sure that no new discriminations appear at state level," reports BBC news.
"EU wines and spirits exporters deserve a level playing field in India," said Peter Power, spokesman for EU Trade Commissioner Peter Mandelson said in an AP report. "This decision brings us closer to that goal."
Nonetheless, Brussels responded that it regrets India's decision to raise basic duty on wines from 100 percent to 150 percent.
Taxes on imported alcohol like French wine and Scottish whisky were as high as 550 percent in India, before the recent modifications were made.
The U.S. has also made a comparable case with the WTO regarding India's alcohol imports. However, U.S. officials have declined to comment if it will make a similar decision on the same issue.
According to an AP report, India is one of the biggest markets for alcohol and related products. However, imports account for a very low percent of the total consumption in the country. Both Brussels and Washington raised issue with New Delhi saying that the high taxes of imports were unfair trade practices designed to keep other countries were tapping the world's most populous democracy's market.
In comparison, almost all spirits enter the U.S., EU and Japan, virtually duty-free. And China, which has been accused by the U.S. and EU for devaluing its currency to keep its goods cheap in the global market, charges a 10 percent tax on imported liquor.
The EU said in a statement that the WTO panel currently probing the case on India may be suspended for a year, while it observes improvements in trade practices between the two: "The European Commission will now continue to monitor the situation on the ground to make sure that no new discriminations appear at state level," reports BBC news.
India : Import of sensitive items down 7.9 percent
The total import of sensitive items for the period April-May 07 has been Rs.2606 crores as compared to Rs.2828 crores during the corresponding period last year thereby showing a decrease of 7.9%.
The gross import of all commodities during same period of current year was Rs.148054 crores as compared to Rs.121305 crores during the same period of last year.
Thus import of sensitive items constitute 2.3% and 1.8% of the gross imports during last year and current year respectively.
Imports of edible oil, fruits & vegetables (including nuts), cotton & silk, products of SSI, spices, marble & Granite and milk & milk products have shown a decline at broad group level during the period.
Imports of items viz. automobiles, rubber and Alcoholic beverages have shown increase during the period under reference.
In the edible oil segment, the import has decreased from Rs.1601 crores last year to Rs.1381 crores for the corresponding period of this year.
The import of both crude oil as well as refined oil have gone down by 13.6% and 16.4% respectively. The fall in edible oil import is mainly due to significant decrease in import of Soya-bean oil and its fractions (Crude), which has gone down by 63%.
Imports of sensitive items from Indonesia, China P RP, Thailand, Germany, Japan, Cote D’ Ivoire, Australia, United Kingdom etc have gone up while those from Argentina, United States of America, Malaysia, Benin, Egypt A RP, Sri Lanka DSR, Brazil, Vietnam Soc Republic etc have shown a decrease.
The gross import of all commodities during same period of current year was Rs.148054 crores as compared to Rs.121305 crores during the same period of last year.
Thus import of sensitive items constitute 2.3% and 1.8% of the gross imports during last year and current year respectively.
Imports of edible oil, fruits & vegetables (including nuts), cotton & silk, products of SSI, spices, marble & Granite and milk & milk products have shown a decline at broad group level during the period.
Imports of items viz. automobiles, rubber and Alcoholic beverages have shown increase during the period under reference.
In the edible oil segment, the import has decreased from Rs.1601 crores last year to Rs.1381 crores for the corresponding period of this year.
The import of both crude oil as well as refined oil have gone down by 13.6% and 16.4% respectively. The fall in edible oil import is mainly due to significant decrease in import of Soya-bean oil and its fractions (Crude), which has gone down by 63%.
Imports of sensitive items from Indonesia, China P RP, Thailand, Germany, Japan, Cote D’ Ivoire, Australia, United Kingdom etc have gone up while those from Argentina, United States of America, Malaysia, Benin, Egypt A RP, Sri Lanka DSR, Brazil, Vietnam Soc Republic etc have shown a decrease.
Monday, July 2, 2007
US 'no' to duty-free import of Indian jewellery
Days after the collapse of G4 talks on the WTO, the US has withdrawn concessions given to imports on gold jewellery and brass lamps from India as well as auto parts from Brazil as part of a revision of trade sops given to developing countries.
The duty-free access was withdrawn under its annual review of generalised system of preferences (GSP) through a proclamation signed by US President George Bush yesterday.
The changes mean exporters of gold jewellery from India, the world’s largest producer, would now have to pay an import duty of 4 per cent. The move will impact close to $1.8 billion of jewellery exports to the US, which accounts for one-third of the total shipment of $5.21 billion.
The decision would also affect exports of brass lamps, hitting the handicraft sector struggling under the impact of a hike in the rupee value. The concessions were removed on imports that exceeded the new statutory threshold established by US Congress, US Trade Representative Susan Schwab said.
Leave the rupee to the market
Why the rupee surged in the past few months is very clear. India has been the recipient of high capital inflows, Foreign Direct as well as Institutional Investment .
However, what clearly stands out is the high External Commercial Borrowing (ECB) by Indian companies. ECBs have been on the rise recently as companies take advantage of the recent rule changes by the Reserve Bank of India permitting companies to raise more money abroad.
This works well for companies because they pay less interest compared to they would if they borrowed in rupees.
That said, while the general appreciation against the yen, the euro, and the pound can to an extent be explained by ECBs and FII/FDI flows, the situation against the dollar is a tad different.
The dollar has been on its own slump against most currencies because of recent issues with its economy, such as the general slowdown, the high interest rates, the problems in the sub-prime loan industry, and the high current account deficit.
However, one of the biggest reasons for the slump of the dollar is the bad news that is coming out the Asian countries especially those with large foreign exchange reserves, in particular, China.
This had the effect of keeping the value of the dollar high whilst keeping the interest rates low.
Now countries want to diversify their holdings of reserves and recently China said it wants to diversify the reserve holdings. Whether it will really diversify is not known but its mere mentioning of the fact had the effect of knocking the dollar fairly hard.
In theory, this deficit should have led to a fall in the dollar but it didn’t because the Asian countries hoarding reserves were doing so in dollars and this supported that currency’s price.
This huge deficit (most of it trade deficit) has increased the vulnerability of the dollar primarily because its future has become unpredictable.
The Effects of a Strong Rupee
The whole concept of outsourcing to India is the cost arbitrage that foreign companies get. The value of the contract will rise just because of the rupee appreciates and the Indian software companies have to take the hit for this rise.
Software companies have already given profit warnings post the steep appreciation of the rupee. On exports, it is going to have a fairly huge impact. Industries such as tea are already complaining about the effects that a strong rupee is having on tea exports. The REER of India against six countries as well as 36 countries (data for the first set are available until May 2007 and for the second until March 2007). show that with regard to the 36 countries the rupee is just overvalued, the six-country REER shows the rupee to be heavily overvalued. What this overvaluation means is that India has become uncompetitive and that goods from India are not price competitive vis-À-vis other countries.
When a currency appreciates, it more or less hits the trade balance.
India’s trade balance and the exchange rate on a monthly basis between January 2006 and April 2007 show that as the rupee appreciated, the trade deficit increased a month or so later. This lag is because foreign importers need time to react to the exchange rate. In April 2007 there has been a sharp rise in the trade deficit, a casualty of the exchange rate appreciation in March.
The Deficit Relation
With regard to the relationship between exchange rates and trade deficits, as the rupee weakened from 2000 to 2003, there was a general reduction in the trade deficit as a percentage of GDP. However, as the rupee strengthened, the trade deficits as a percentage of GDP start to get higher. 2007 is an anomaly but that was due to two reasons. One was high oil prices because of which the import bill was much higher than usual and the second was that production was at near full capacity and the only way to satisfy demand was to import.
Though much has been made in the media that a stronger rupee reduces the level of inflation since imported goods become cheaper, it is mostly a fallacy. This strong currency reducing inflation (also called ‘import led inflation’) works well in small open economies and India is neither. A strong rupee does initially have the effect of reducing the trade deficit but over a few months, exports usually get hit and imports boom because it is cheap to buy from abroad.
As this continues and the trade deficit gets higher, the rupee starts to depreciate because there is now increased demand for the foreign currency and it is back to Square One. Then what happens is that the weaker rupee will actually bring in inflation. Though the rupee is currently being supported on the back of very strong capital inflows, one must also note that most of those inflows are those that will also one day leave the country (ECBs and FII).
Where is the Rupee Headed?
However, any forecast of beyond a year should be taken with a grain of salt. A forecast of the rupee is something that falls into that category as there is no standard quantitative model to forecast the rupee movement and most forecasts of the rupee are qualitative judgments.
My view on the rupee is fairly similar to the above. In the near-term, it should be in the 41.50-42 range. The reason is that the rupee gets heavily influenced by FII inflows. FIIs (hedge funds) are bringing in big sums because of the property market and Initial Public Offers by Indian corporates as well as the booming stock market. However, most of this money is short-term and will go out of the country fairly soon especially as stock market and real-estate valuations in India are generally thought to be in the expensive and over-valued.
The rupee, in my view, will start appreciating again in around 18 months because FDI money into infrastructure projects will start coming in and this money is going to be fairly large. However, it is unlikely to appreciate beyond the Rs 38 levels because the RBI will still view rupee appreciation as something that will affect the economy as it can hit the software and the export sectors fairly heavily.
What the past few months have shown is that a currency that is managed just does not work in the long term. It gives the illusion of being a panacea but in effect only pushes problems into the future. The gist is that the rupee needs to be left to market forces. They may be some volatility in the beginning but then it usually will sort itself out.
The RBI may have been a decent manager of the currency before but that was when capital flows were at a minimum. It would be fair to say that central banks are often out of their depth in this era of modern capital flows.
The only way out of this predicament is to free the rupee and for the country to adapt itself to a free floating rupee as the costs of managing the rupee will soon outweigh any benefits.
However, what clearly stands out is the high External Commercial Borrowing (ECB) by Indian companies. ECBs have been on the rise recently as companies take advantage of the recent rule changes by the Reserve Bank of India permitting companies to raise more money abroad.
This works well for companies because they pay less interest compared to they would if they borrowed in rupees.
That said, while the general appreciation against the yen, the euro, and the pound can to an extent be explained by ECBs and FII/FDI flows, the situation against the dollar is a tad different.
The dollar has been on its own slump against most currencies because of recent issues with its economy, such as the general slowdown, the high interest rates, the problems in the sub-prime loan industry, and the high current account deficit.
However, one of the biggest reasons for the slump of the dollar is the bad news that is coming out the Asian countries especially those with large foreign exchange reserves, in particular, China.
This had the effect of keeping the value of the dollar high whilst keeping the interest rates low.
Now countries want to diversify their holdings of reserves and recently China said it wants to diversify the reserve holdings. Whether it will really diversify is not known but its mere mentioning of the fact had the effect of knocking the dollar fairly hard.
In theory, this deficit should have led to a fall in the dollar but it didn’t because the Asian countries hoarding reserves were doing so in dollars and this supported that currency’s price.
This huge deficit (most of it trade deficit) has increased the vulnerability of the dollar primarily because its future has become unpredictable.
The Effects of a Strong Rupee
The whole concept of outsourcing to India is the cost arbitrage that foreign companies get. The value of the contract will rise just because of the rupee appreciates and the Indian software companies have to take the hit for this rise.
Software companies have already given profit warnings post the steep appreciation of the rupee. On exports, it is going to have a fairly huge impact. Industries such as tea are already complaining about the effects that a strong rupee is having on tea exports. The REER of India against six countries as well as 36 countries (data for the first set are available until May 2007 and for the second until March 2007). show that with regard to the 36 countries the rupee is just overvalued, the six-country REER shows the rupee to be heavily overvalued. What this overvaluation means is that India has become uncompetitive and that goods from India are not price competitive vis-À-vis other countries.
When a currency appreciates, it more or less hits the trade balance.
India’s trade balance and the exchange rate on a monthly basis between January 2006 and April 2007 show that as the rupee appreciated, the trade deficit increased a month or so later. This lag is because foreign importers need time to react to the exchange rate. In April 2007 there has been a sharp rise in the trade deficit, a casualty of the exchange rate appreciation in March.
The Deficit Relation
With regard to the relationship between exchange rates and trade deficits, as the rupee weakened from 2000 to 2003, there was a general reduction in the trade deficit as a percentage of GDP. However, as the rupee strengthened, the trade deficits as a percentage of GDP start to get higher. 2007 is an anomaly but that was due to two reasons. One was high oil prices because of which the import bill was much higher than usual and the second was that production was at near full capacity and the only way to satisfy demand was to import.
Though much has been made in the media that a stronger rupee reduces the level of inflation since imported goods become cheaper, it is mostly a fallacy. This strong currency reducing inflation (also called ‘import led inflation’) works well in small open economies and India is neither. A strong rupee does initially have the effect of reducing the trade deficit but over a few months, exports usually get hit and imports boom because it is cheap to buy from abroad.
As this continues and the trade deficit gets higher, the rupee starts to depreciate because there is now increased demand for the foreign currency and it is back to Square One. Then what happens is that the weaker rupee will actually bring in inflation. Though the rupee is currently being supported on the back of very strong capital inflows, one must also note that most of those inflows are those that will also one day leave the country (ECBs and FII).
Where is the Rupee Headed?
However, any forecast of beyond a year should be taken with a grain of salt. A forecast of the rupee is something that falls into that category as there is no standard quantitative model to forecast the rupee movement and most forecasts of the rupee are qualitative judgments.
My view on the rupee is fairly similar to the above. In the near-term, it should be in the 41.50-42 range. The reason is that the rupee gets heavily influenced by FII inflows. FIIs (hedge funds) are bringing in big sums because of the property market and Initial Public Offers by Indian corporates as well as the booming stock market. However, most of this money is short-term and will go out of the country fairly soon especially as stock market and real-estate valuations in India are generally thought to be in the expensive and over-valued.
The rupee, in my view, will start appreciating again in around 18 months because FDI money into infrastructure projects will start coming in and this money is going to be fairly large. However, it is unlikely to appreciate beyond the Rs 38 levels because the RBI will still view rupee appreciation as something that will affect the economy as it can hit the software and the export sectors fairly heavily.
What the past few months have shown is that a currency that is managed just does not work in the long term. It gives the illusion of being a panacea but in effect only pushes problems into the future. The gist is that the rupee needs to be left to market forces. They may be some volatility in the beginning but then it usually will sort itself out.
The RBI may have been a decent manager of the currency before but that was when capital flows were at a minimum. It would be fair to say that central banks are often out of their depth in this era of modern capital flows.
The only way out of this predicament is to free the rupee and for the country to adapt itself to a free floating rupee as the costs of managing the rupee will soon outweigh any benefits.
Rising rupee hits Indian software makers
Bangalore: Indian software makers are throwing up their hands in despair as the rupee’s unbridled surge cuts into the earnings of a $50-billion industry that makes two-thirds of its revenue in US dollars.
Infosys Technologies, India’s second-largest software exporter, said in April that its calculations were based on an exchange rate of Rs43.10 to the dollar. Mindtree Consulting, a mid-sized firm, put the rupee at 42.3.
Both were way off the mark, beaten by the vagaries of a currency market that had by Friday, 29 June, pushed the rupee to 40.7 per dollar, up almost 10% since the start of the year and 14% in the past 12 months.
The impact of the falling dollar will be evident when the country’s information technology companies report their fiscal first-quarter earnings later this month.
“You can’t beat the market,” said Krishnakumar Natarajan, president and chief executive officer of IT services at Bangalore-based Mindtree.
“There’s no scientific basis on which you can predict foreign exchange rates.”
The company, with sales of more than $100 million last year, earns 62% of its revenue from US clients including rental-car giant Avis. It typically hedges half its dollar-denominated revenue in the forward and futures markets.
“You cannot hedge beyond a point,” said Natarajan. “And there is a cost to hedging.”
“You have to hedge at a very fundamental level by de-risking yourself from the US market, reducing your reliance on the US.”
But that scenario won’t come to pass anytime soon.
For Mindtree, which is trying to strengthen its operations in Europe and Asia-Pacific including Japan and Australia, the US market is still growing at 40% a year.
The National Association of Software and Services Companies (Nasscom) has estimated India’s software exports at $31 billion for the year ended March.
At India’s three largest software companies, net foreign exchange earnings make up 51% of sales at Tata Consultancy, 56% at Infosys and 35% at Wipro.
Software exporters have been counting on central bank intervention to stem the rupee’s rise, but the Reserve Bank of India has adopted a hands-off policy as it seeks to wrestle down inflation.
Letting the rupee rise has made imports less expensive, cushioning the impact of strong fuel prices for India, which relies heavily on imported oil priced in dollars.
A strong rupee is “good for the country because imports become cheaper,” including oil and machinery needed to reinforce India’s deficient infrastructure, said Kris Gopalakrishnan, CEO at Infosys, which logged $3.1 billion in sales last year.
“It affects exporters, of course,” he added. “And the challenge has been the rapid rise of the rupee, not appreciation per se. If it had happened slowly, we could have learned to manage.”
IT companies, while billing in dollars, are not import-intensive, unlike jewellery makers who buy raw material such as gems and uncut diamonds from abroad to polish and fashion into ornaments they ship to Western markets.
“All our expenditure is in rupees so we take a huge hit,” said Nasscom president Kiran Karnik.
Neither economists nor exporters had foreseen the advance of the rupee to 10-year highs, making it one of the biggest gainers this year and propelling India to a trillion-dollar economy.
The rise has been fuelled by inflows from investors eager to pump money into an economy that expanded a blistering 9.4% in the last financial year.
Foreign investment nearly tripled in the year to March to $16 billion from $5.5 billion in the previous year.
“The rupee appreciation is sharp and here to stay,” investment bank Credit Suisse warned in a recent report. “The impact is material for many and can no longer be ignored as cyclical.”
Infosys Technologies, India’s second-largest software exporter, said in April that its calculations were based on an exchange rate of Rs43.10 to the dollar. Mindtree Consulting, a mid-sized firm, put the rupee at 42.3.
Both were way off the mark, beaten by the vagaries of a currency market that had by Friday, 29 June, pushed the rupee to 40.7 per dollar, up almost 10% since the start of the year and 14% in the past 12 months.
The impact of the falling dollar will be evident when the country’s information technology companies report their fiscal first-quarter earnings later this month.
“You can’t beat the market,” said Krishnakumar Natarajan, president and chief executive officer of IT services at Bangalore-based Mindtree.
“There’s no scientific basis on which you can predict foreign exchange rates.”
The company, with sales of more than $100 million last year, earns 62% of its revenue from US clients including rental-car giant Avis. It typically hedges half its dollar-denominated revenue in the forward and futures markets.
“You cannot hedge beyond a point,” said Natarajan. “And there is a cost to hedging.”
“You have to hedge at a very fundamental level by de-risking yourself from the US market, reducing your reliance on the US.”
But that scenario won’t come to pass anytime soon.
For Mindtree, which is trying to strengthen its operations in Europe and Asia-Pacific including Japan and Australia, the US market is still growing at 40% a year.
The National Association of Software and Services Companies (Nasscom) has estimated India’s software exports at $31 billion for the year ended March.
At India’s three largest software companies, net foreign exchange earnings make up 51% of sales at Tata Consultancy, 56% at Infosys and 35% at Wipro.
Software exporters have been counting on central bank intervention to stem the rupee’s rise, but the Reserve Bank of India has adopted a hands-off policy as it seeks to wrestle down inflation.
Letting the rupee rise has made imports less expensive, cushioning the impact of strong fuel prices for India, which relies heavily on imported oil priced in dollars.
A strong rupee is “good for the country because imports become cheaper,” including oil and machinery needed to reinforce India’s deficient infrastructure, said Kris Gopalakrishnan, CEO at Infosys, which logged $3.1 billion in sales last year.
“It affects exporters, of course,” he added. “And the challenge has been the rapid rise of the rupee, not appreciation per se. If it had happened slowly, we could have learned to manage.”
IT companies, while billing in dollars, are not import-intensive, unlike jewellery makers who buy raw material such as gems and uncut diamonds from abroad to polish and fashion into ornaments they ship to Western markets.
“All our expenditure is in rupees so we take a huge hit,” said Nasscom president Kiran Karnik.
Neither economists nor exporters had foreseen the advance of the rupee to 10-year highs, making it one of the biggest gainers this year and propelling India to a trillion-dollar economy.
The rise has been fuelled by inflows from investors eager to pump money into an economy that expanded a blistering 9.4% in the last financial year.
Foreign investment nearly tripled in the year to March to $16 billion from $5.5 billion in the previous year.
“The rupee appreciation is sharp and here to stay,” investment bank Credit Suisse warned in a recent report. “The impact is material for many and can no longer be ignored as cyclical.”
Aircraft import procedures eased
MUMBAI: Liberalising the procedure for import for the civil aviation sector, the Reserve Bank of India on Friday allowed airlines to make advance payment up to $50 million towards purchase of aircraft, helicopters and other aviation equipment.
The airlines, operating scheduled air transport services, can now make “advance remittance, without bank guarantee or an unconditional, irrevocable standby letter of credit, up to $50 million, for direct import of each aircraft/helicopter/ other aviation related purchases,” the RBI said in a notification here. KYC norms
The central bank has also asked the authorised dealer banks to undertake the transactions after following the Know Your Customer guidelines with respect to the Indian importer and the overseas manufacturer.
The airlines, operating scheduled air transport services, can now make “advance remittance, without bank guarantee or an unconditional, irrevocable standby letter of credit, up to $50 million, for direct import of each aircraft/helicopter/ other aviation related purchases,” the RBI said in a notification here. KYC norms
The central bank has also asked the authorised dealer banks to undertake the transactions after following the Know Your Customer guidelines with respect to the Indian importer and the overseas manufacturer.
Arecanut farmers pushed into debt trap
Kasaragod, July 2 (PTI): Steep fall in prices, poor yield, shortage of skilled labourers and mounting cultivation costs have pushed arecanut growers, who enjoyed a respectable status here in the past, into a deep debt trap.
The Centre's decision to impose a hefty duty on arecanut imports has had little impact, with the price remaining abysmally low in relation to mounting costs, the farmers said.
The arecanut from Kerala's North Malabar region and South Canara district of Karnataka was known for its high quality.
The price, which was Rs 200 per kg in 1999, went down to Rs 50 to Rs 55 a kg in 2001-02 and now fetches Rs 60 and Rs 70 a kg after stringent grading of the nut.
This is quite inadequate in relation to inflationary pressure and mounting labour charges, M Ranjith, a young farmer in the hilly belt of this northern district, told PTI.
"One can sustain only if arecanut fetches at least Rs 100 per kg in view of rising expenses in taking care of trees and spraying of copper sulphate solution to prevent pest attacks," Ranjith, who manages around 5,000 areca trees, said.
Unlike coconut, arecanut trees have to be irrigated regularly and are more prone to natural calamities.
While prices of manure and pesticides registered a steady rise over the years, successive governments have failed to provide adequate subsidy, said Mohammed Kunhi, another farmer.
Charges of tree climbers and extraction of arecanut from the shell have also risen. There was an acute shortage of skilled labourers as new generation shy away from taking up the traditional job, said Ranjith.
While areca climbers' wage is about Rs 250 a day, another Rs 300 per day has to be paid for shell extraction after which the commodity has to be disposed off immediately at prevailing market rate as quality will be hit if exposed to moisture.
Adding to their misery is the 'yellow leaf' disease as several areca trees in hilly tracts of Kannur and Kasaragod districts had to be cut down. Though government had promised that the disease would be contained and adequate compensation paid to the affected, not much seems to have been done.
"Situation continues to worry farmers with no tangible solution at sight," an agriculture research official said as former Chief Minister Oommen Chandy visited the areas.
Stating that fall in prices was due to lack of regulation of import from ASEAN members like Thailand, Sumatra, Malaysia and Sri Lanka, Kodoth Balakrishnan Nambiar, a planter in bordering Kodagu district of Karnataka called for taking stringent steps to check import of low-quality nuts.
Nambiar said the recent decision to impose 100 per cent duty on arecanut imports has not helped growers. Many of them are on the verge of suicide as unscruplous traders resort to under-invoicing to offset impact of additional import cess.
"The authorities seem to be siding and facilitating the commission agents and firms from importing nations by allowing them to mix their low grade arecanut with indigenous produce and help them find easy market in North Indian states, especially, Madhya Pradesh, Uttar Pradesh and Gujarat, where arecanuts are widely used for various purposes," Nambiar said.
The current impasse can be resolved only if the ministries concerned took firm steps to mitigate the sufferings of areacanut growers in the region, he added.
The Centre's decision to impose a hefty duty on arecanut imports has had little impact, with the price remaining abysmally low in relation to mounting costs, the farmers said.
The arecanut from Kerala's North Malabar region and South Canara district of Karnataka was known for its high quality.
The price, which was Rs 200 per kg in 1999, went down to Rs 50 to Rs 55 a kg in 2001-02 and now fetches Rs 60 and Rs 70 a kg after stringent grading of the nut.
This is quite inadequate in relation to inflationary pressure and mounting labour charges, M Ranjith, a young farmer in the hilly belt of this northern district, told PTI.
"One can sustain only if arecanut fetches at least Rs 100 per kg in view of rising expenses in taking care of trees and spraying of copper sulphate solution to prevent pest attacks," Ranjith, who manages around 5,000 areca trees, said.
Unlike coconut, arecanut trees have to be irrigated regularly and are more prone to natural calamities.
While prices of manure and pesticides registered a steady rise over the years, successive governments have failed to provide adequate subsidy, said Mohammed Kunhi, another farmer.
Charges of tree climbers and extraction of arecanut from the shell have also risen. There was an acute shortage of skilled labourers as new generation shy away from taking up the traditional job, said Ranjith.
While areca climbers' wage is about Rs 250 a day, another Rs 300 per day has to be paid for shell extraction after which the commodity has to be disposed off immediately at prevailing market rate as quality will be hit if exposed to moisture.
Adding to their misery is the 'yellow leaf' disease as several areca trees in hilly tracts of Kannur and Kasaragod districts had to be cut down. Though government had promised that the disease would be contained and adequate compensation paid to the affected, not much seems to have been done.
"Situation continues to worry farmers with no tangible solution at sight," an agriculture research official said as former Chief Minister Oommen Chandy visited the areas.
Stating that fall in prices was due to lack of regulation of import from ASEAN members like Thailand, Sumatra, Malaysia and Sri Lanka, Kodoth Balakrishnan Nambiar, a planter in bordering Kodagu district of Karnataka called for taking stringent steps to check import of low-quality nuts.
Nambiar said the recent decision to impose 100 per cent duty on arecanut imports has not helped growers. Many of them are on the verge of suicide as unscruplous traders resort to under-invoicing to offset impact of additional import cess.
"The authorities seem to be siding and facilitating the commission agents and firms from importing nations by allowing them to mix their low grade arecanut with indigenous produce and help them find easy market in North Indian states, especially, Madhya Pradesh, Uttar Pradesh and Gujarat, where arecanuts are widely used for various purposes," Nambiar said.
The current impasse can be resolved only if the ministries concerned took firm steps to mitigate the sufferings of areacanut growers in the region, he added.
Indian investors stay away from gold ETFs
NEW DELHI/LONDON: India, the world’s top gold consumer, has barely scratched the surface for exchange traded funds (ETFs) and it will be a long haul to tempt buyers clinging to jewellery to switch to rules-ridden paper gold.
Though the country consumes 800 tonnes a year – nearly a fifth of the world’s annual gold supply – in jewellery and physical metal, the funds have attracted investments of less than five tonnes since their listings three months ago.
In contrast, an ETF launched in the US in 2004 attracted investment equal to eight tonnes of gold on the first day and more than 100 tonnes in about a week.
Global gold funds now collectively hold more gold than the Chinese central bank, the world’s tenth-largest holder with 600 tonnes.
Analysts said bad timing and rigid government rules were equally to blame for not winning over more Indian investors.
“It has been launched at the wrong time when gold prices have started dipping. People are sitting with surplus cash, but the volatility has kept investors away,” said Mumbai-based Gnanasekhar Thiagarajan, director of Commtrendz Risk Management.
“Vibrant equity markets have also kept investors away from gold exchange traded funds (ETFs),” he said.
The Mumbai Stock Exchange’s main index surged 47% in 2006 and another 5% this year. Gold rose 24% in 2006 but is only up 1.6% so far this year.
Analysts said investment in Indian gold ETFs was a sure bet, provided investors were willing to hang on for a longer period and shed their desire to buy it physically. The interest was being stymied by lack of aggressive marketing.
“The awareness of this type of investment vehicle is still low. Also, if the ETFs have to reach the rural public, the account opening procedures and documents should be kept simple,” said SI Kannan, analyst with Kotak Commodities.
Mandatory requirements for an income tax identification number made the system difficult for illiterate farmers who buy gold. Rules that prevent commodity firms from giving price guidance were also hampering growth, analysts said.
Analysts said that other issues such as restricting trading in ETFs to Indian stock trading hours prevented investors from taking guidance from global price trends, especially from gold futures in the US.
Stuart Thomas, managing director of US-based World Gold Trust Service, said the poor response was also a result of the structure of the Indian products.
“With the market size of India, with growth in India, with the affinity for gold, I would call those products sub-optimal,” said Thomas, who heads the firm that has launched a gold ETF, which accounts for 75% of gold accumulated by global ETFs.
“It’s really a structural issue more than anything else. I think with the right product in that market with the right structure, you have got the massive offtake there,” he said.
Analysts said the design of the products – only in local currency, controls on imports and exports of gold bars, limitations on the foreign exchange trade and several rules imposed by the equities market regulator – scared investors.
“What has prevented us from really doing something in India is that the current regulations are not favourable for us to roll out our products the way we think they should be,” said Pierre Lassonde, chairman of industry-funded World Gold Council, which has sponsored and promoted several gold ETFs in the world.
“It doesn’t give the buyer the protection, it doesn’t give the buyer the fungibility that we have in other products.”
Only about a dozen authorised banks and government trading houses are allowed to import and sell gold in India. Shipments of gold bars are banned, but gold jewellery can be exported.
But promoters of Indian ETFs, UTI Asset Management and Benchmark Asset Management, remain optimistic following a pick up in trading, though volumes were still small.
“We have about 10 kg of gold, or 10,000 units being traded every day on the exchange,” said Swati Kulkarni, vice-president of UTI Asset Management. “In May, 5,000 units were being traded.
In two years, I would think it will be a popular product.” Rajan, Mehta, managing director of Benchmark, which launched the first gold ETF in March, said its growth had been steady.
“It is a cultural shift and it takes time.
Though the country consumes 800 tonnes a year – nearly a fifth of the world’s annual gold supply – in jewellery and physical metal, the funds have attracted investments of less than five tonnes since their listings three months ago.
In contrast, an ETF launched in the US in 2004 attracted investment equal to eight tonnes of gold on the first day and more than 100 tonnes in about a week.
Global gold funds now collectively hold more gold than the Chinese central bank, the world’s tenth-largest holder with 600 tonnes.
Analysts said bad timing and rigid government rules were equally to blame for not winning over more Indian investors.
“It has been launched at the wrong time when gold prices have started dipping. People are sitting with surplus cash, but the volatility has kept investors away,” said Mumbai-based Gnanasekhar Thiagarajan, director of Commtrendz Risk Management.
“Vibrant equity markets have also kept investors away from gold exchange traded funds (ETFs),” he said.
The Mumbai Stock Exchange’s main index surged 47% in 2006 and another 5% this year. Gold rose 24% in 2006 but is only up 1.6% so far this year.
Analysts said investment in Indian gold ETFs was a sure bet, provided investors were willing to hang on for a longer period and shed their desire to buy it physically. The interest was being stymied by lack of aggressive marketing.
“The awareness of this type of investment vehicle is still low. Also, if the ETFs have to reach the rural public, the account opening procedures and documents should be kept simple,” said SI Kannan, analyst with Kotak Commodities.
Mandatory requirements for an income tax identification number made the system difficult for illiterate farmers who buy gold. Rules that prevent commodity firms from giving price guidance were also hampering growth, analysts said.
Analysts said that other issues such as restricting trading in ETFs to Indian stock trading hours prevented investors from taking guidance from global price trends, especially from gold futures in the US.
Stuart Thomas, managing director of US-based World Gold Trust Service, said the poor response was also a result of the structure of the Indian products.
“With the market size of India, with growth in India, with the affinity for gold, I would call those products sub-optimal,” said Thomas, who heads the firm that has launched a gold ETF, which accounts for 75% of gold accumulated by global ETFs.
“It’s really a structural issue more than anything else. I think with the right product in that market with the right structure, you have got the massive offtake there,” he said.
Analysts said the design of the products – only in local currency, controls on imports and exports of gold bars, limitations on the foreign exchange trade and several rules imposed by the equities market regulator – scared investors.
“What has prevented us from really doing something in India is that the current regulations are not favourable for us to roll out our products the way we think they should be,” said Pierre Lassonde, chairman of industry-funded World Gold Council, which has sponsored and promoted several gold ETFs in the world.
“It doesn’t give the buyer the protection, it doesn’t give the buyer the fungibility that we have in other products.”
Only about a dozen authorised banks and government trading houses are allowed to import and sell gold in India. Shipments of gold bars are banned, but gold jewellery can be exported.
But promoters of Indian ETFs, UTI Asset Management and Benchmark Asset Management, remain optimistic following a pick up in trading, though volumes were still small.
“We have about 10 kg of gold, or 10,000 units being traded every day on the exchange,” said Swati Kulkarni, vice-president of UTI Asset Management. “In May, 5,000 units were being traded.
In two years, I would think it will be a popular product.” Rajan, Mehta, managing director of Benchmark, which launched the first gold ETF in March, said its growth had been steady.
“It is a cultural shift and it takes time.
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