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Thursday, September 20, 2007

Govt negotiating cap on duty free vanaspati import

NEW DELHI: The government today said it is negotiating with Sri Lanka a deal to operationalise a cap on the duty free import of vanaspati from the island nation.

Commerce and Industry Minister Kamal Nath in his meeting with visiting Sri Lankan Minister of Enterprise Development and Investment Promotion Sarath Amunugama expressed the hope that the negotiations on the issue would be concluded soon.

While India has put a Tariff Rate Quota (TRQ) on vanaspati import from Sri Lanka, its operationalisation is yet to begin. In the TRQ arrangement, a limit is put on the quantity of duty free import that a country allows under the bilateral trade agreement.

India and Sri Lanka have a free trade agreement which was said to be misused for dumping of vansapti manufactured in the neighbouring country to the detriment of Indian producers.

India has also given a TRQ of three million pieces of garments to Sri Lanka without any condition of sourcing of fabrics and port-restrictions. Further cooperation between the two nations include bilateral cooperation agreement on product, quality, certification and testing that has been signed between Sri Lankan Standards Institute and Bureau of Indian Standards, an official release said.

Trade between the two countries increased from 1,497 million dollars in 2004-05 to 2,590 million dollars in 2005-06 and is valued at 2,462.28 million dollars in 2006-07.

Fertiliser scarcity may nip Rabi crop

NEW DELHI: In a fresh blow to food security, there may be an impending shortage of fertilisers in the coming rabi season if India is unable to immediately buy close to 10 lakh tonnes (LT) more from the world market.

The biggest crisis is expected in di-ammonium phosphate (DAP), where India has become highly dependent on foreign manufacturers.
A worried government is now planning to itself import an extra 6 LT urea and 1 LT DAP, and give the highest priority to ships carrying fertilisers at all important ports till November, when the critical sowing period starts. Six crops — rice, wheat, cotton, sugarcane, rapeseed and mustard — use more than two-thirds of the total fertiliser supply in the country.

India needs almost 41 LT DAP in the coming rabi season for which it is necessary to ensure a supply of at least 43 LT. Since the likelihood of sufficient supply of DAP is remote, the department of fertilisers has sought permission from the Cabinet to import substitutes such as mono-ammonium phosphate (MAP) and triple super phosphate (TSP).

State trading agencies have been authorised to start importing MAP to make up the shortfall in DAP. Indian Potash (IPL) has already bought 1.65 LT MAP overseas and is ready to contract more once the Cabinet gives its go-ahead.

Government estimates say in addition to the imports already contracted by private companies and IPL, India will need to source at least 1.12 LT DAP/MAP to maintain adequate supply of phosphatic fertilisers.

However, shifting to MAP would not be easy. “Before MAP can be marketed directly to farmers, the issue of subsidy, MRP, etc, will have to be resolved. A Cabinet note on the issue has been prepared separately by the department of fertilisers. In the meantime, the steering committee of secretaries is requested to authorise additional imports of 1.5 LT of DAP/MAP,” the department said.

In the case of urea, the farmers’ favourite, India needs to import 32.17 LT for the rabi reason. This does not include imports from Oman India Fertiliser Co (Omfico). The steering committee of secretaries has already permitted imports of 20 LT. Since the actual demand estimate for urea is still not final and the country has a buffer stock of 6.25 LT, the department of fertilisers believes further import of 6 LT may be sufficient for the season.

The demand for muriate of potash (MoP) is likely to cross 16 LT this rabi. As India is totally dependent on foreign companies for MoP, it will need to import at least 15 LT this winter. The import is expected to made entirely by private companies.

Most of the imported fertiliser will start arriving at ports from next month. The department of shipping had given priority berthing to fertiliser cargoes up to September. But with the anticipated rush at ports, the department of fertiliser is demanding the priority status be extended till November-end. While this will allow rapid transportation and delivery of fertilisers across the country, it may play havoc with imported wheat cargoes.

India to import record Nickel this year

MUMBAI: Increasing consumption of stainless steel in the wake of India’s construction and economic boom may force the country to import more nickel this year.

The Indian Stainless Steel Development Association expects a rise of 10-15 percent in nickel imports. The Association president N C Mathur said India will buy nearly 50,000 tonnes of the metal this year.

“India’s construction boom is driving the nickel import output,” Mathur said. India had imported 40,000 tonnes of nickel last year.

Indian industry uses two-thirds of nickel to make stainless steel and the country does not produce the metal.

Majority of India's consumption is of low nickel content stainless steel, which use 1-4 percent of the base metal.

Mathur said that the annual stainless steel consumption in India is expected to expand by about 12 percent in the coming year from about two million tonnes now.

Nickel is a highly volatile traded commodity due to its importance as a critical input in stainless steel manufacture. Rising demand and limited supply is the major feature of global nickel industry at present. Russia tops in global nickel output followed by Australia, Canada and New Zealand. China, US and European Union are the main consumers of nickel.

Global consumption of nickel is expected to rise 7 percent to 1.34 million ton in 2006. This may further go up to 1.38 million in 2007. Global production is estimated to be 1.32 million ton in 2006 and is likely to reach 1.37 million in 2007.

Brown-Forman sees India sales share doubling in 5 years

NEW DELHI, Sept 19 (Reuters) - U.S. wine and spirit company Brown-Forman Corp (BFa.N: Quote, Profile, Research) (BFb.N: Quote, Profile, Research) sees sales in India contributing 3 percent of its annual income in the next five years, double the figure now, a top official said.

"The Indian market is extremely important for us. It is the world's largest whisky market," Amrit Singh, area director of the maker of Jack Daniel's Tennessee Whiskey, told Reuters on the sidelines of a conference.

In 2007, Brown-Forman's global sales were $2.81 billion. For 2008, an average of analysts' forecasts suggest sales of $3.14 billion, according to Reuters Estimates.

Singh said the Indian government could gain more revenue through increased sales of imported spirits if it reduces import tariffs.

With rising incomes, greater international exposure and more choice in the market, more and more Indians have been willing to buy premium alcohol brands.

But high import tariffs, which can add as much as 300 percent to prices, have dampened growth in demand for foreign brands in India, one of the world's biggest spirits markets.

In July, India withdrew an additional customs duty for wines and spirits after both the European Union and the United States filed challenges at the WTO's Dispute Settlement Body.

"It is in India's interest if it gets faster", Singh said, referring to the pace of reductions in tariffs.

Robust Re reinforces rate revision rumblings

NEW DELHI: The rupee may continue its upward march for sometime to come even as the currency touched a nine-year high of Rs 39.875 to a dollar on Thursday.

Economists across the board concur that the exuberance of Indian equity markets and wider interest rate differential attracting a "deluge" of overseas funds, will mount pressure for an interest rate cut. The central bank, which also has to deal with the issue of overall forex reserves, may however, find this a tough call.

Some experts also opined that RBI may have to resort to a hike in cash reserve ratio. While exporters have been feeling the pinch , import-heavy industries, including petroleum and capital goods, have been seeing an upside.

The Customs collections may be a likely benificiary of the strengthening rupee. Economists say that the trend is expected to continue as it is triggered more on account of structural issues such as strong economic fundamentals rather than cyclical flows.

ICICI Bank chief economist Samiran Chakrabarty said: “The unhinging of rupee from 40.50 levels is more due to the Fed rate cuts and is not anything specific to rupee. Other currencies have been also impacted due to this generalised weakness of the dollar. So relative to a basket of currencies, the appreciation is not significant. Under such circumstances, willingness of RBI to intervene is limited.”

The rupee appreciation is benefiting foreign investment while domestic industry is at a disadvantage. A rate cut thus, becomes even more imperative. Says economist Surjit Bhalla: “The hardening of rupee is a cause for concern. Fundamentals do not justify this appreciation. RBI not justified in keeping the interest rates high. There should be a rate cut by at least 200 basis points,”

Experts feel that rupee may settle down to a level of Rs 40.20/40.30 end after the initial euphoria over the Fed rate cut subsides. Crisil has forecast the rupee to be Rs 40.5 to a dollar. “Intervention by RBI hasn’t been very significant.

In fact, intervention at this stage would have been futile in this time of temporary exuberance following the Fed rate cut. Situation will ease out after this knee jerk reaction to Fed rate cut. Fundamentals of Fed rate cut have been ignored. I think correction should come and rupee should settle at Rs 40.30/40.20 to a dollar level,” says HDFC Bank chief economist Abheek Barua.

Export-driven domestic industry such as textiles, IT, gems and jewellery already hit hard by appreciating rupee may bleed further. But, the government is confident of meeting the export target for the fiscal and has ruled out any downward revision. Exporters feeling the pinch have already upped their pitch for another package to mitigate the impact of rising rupee. Industry has called for a long-term strategy to tackle burgeoning forex reserves in place.

A hardened rupee augurs well for country’s import bill. The import bill especially on account of oil and capital goods imports could shrink marginally giving some relief to the government. Oil imports account for a third of country’s total imports. “Last month, when global oil prices shot up sharply, a strengthening domestic currency provided a cushion.

Without that, the government would have been under more pressure to raise the retail prices of petroleum products. Rupee and stock prices may find it difficult to sustain such sharp increase in the coming days,” said CRISIL principal economist D K Joshi .

Similarly, sectors depending on such imports may also cheer the northward movement of rupee. For companies which have raised money overseas and have begun their payouts, a higher rupee is a news they will celebrate as it would entails lowered outgo.

Echoing similar views, leading economist Saumitra Chaudhury feels it may be too early to draw any conclusion. "At present, the picture on forex front is very volatile and it may be too early to draw any conclusion. The situation globally is in a state of flux following the Fed rate cut with most currencies trying to adjust. Economic activity especially individual enterprise is sensitive to forex fluctuation and may get impacted. But, RBI will extend support", Mr Chaudhury said.

Arun Kaul, GM (treasury), Punjab National Bank, said, "The RBI stance would be dependant on the extent of flows and the kind of flows, the way trade is going to behave. If flows are large, we expect RBI to intervene.

Indian luxury mkt may boom to $30 bn by '15

NEW DELHI: No stranger to Bharat, luxury is all set for an unprecedented flourish here as the Indian consumer has overcome the guilt pangs associated for ages with indulgence. The size of the luxury market in India is estimated at around $3.5 billion, and what’s best, given the right impetus, it could easily leapfrog to $30-billion by 2015.

Indians are lapping up luxury assets, services and goods with voracious appetite, according to a comprehensive survey done by AT Kearney for The Economic Times. Indians splurge $2.9 billion on luxury assets (essentially private jets and luxury homes, cars or yachts and art), spend another $953 million on luxury services and top it by buying luxury goods worth $377 million, said the survey which was unveiled here on Thursday at ET’s first-ever luxury conference, Dialogue on Luxury.

Be it private jets, art, yachts, luxury homes, top-of-the-line cars, spas, fine dining, travel, holidays, jewellery, state-of-the-art electronics, wines & spirits, apparels or personal care products like perfume, the confident Indian consumer is going for it all. “I have arrived and I want it,” is what resurgent India’s creamy layer feels.

The typical luxury brand consumer is in the 25-34 age bracket, usually an industrialist. The survey indicates that there is no guilt feeling associated with spending on luxury, according to Neelesh Hundekari of AT Kearney. Briefing participants at the conference he said there was strong growth in consumption of key luxury items and the potential was stronger. The Indian consumer wants to get the best before others, demands value for money through tough negotiations, and looks forward to recognition and respect.

The conference was kicked off by commerce & industry minister Kamal Nath and Lady Lynn Forester de Rothschild, founder & CEO of EL Rothschild LLC, the audience included designers, hoteliers, luxury brand marketers, decision-makers, aviation specialists, corporate honchos and Delhi’s connoisseurs.

Apart from industrialists, the big spenders identified in the survey include professionals, self-employed and top guns working for leading corporates. Consumers of luxury are located across the nation, be it Kanyakumari or Kancheepuram in the south, Jalandhar and Lucknow in the north, Surat and Pune in the west or Asansol in the east. Mumbai, Delhi and Bangalore are the top three cities in terms of rupee millionaires, said Mr Hundekari as the audience soaked in the findings and thirsted for more.

A very interesting fact highlighted by the survey was the potential of India to be a source of luxury goods for consumers across the world. Manufacturing of luxury items in India can grow to $500 million and India’s strengths include traditional craftsmanship and low labour cost.

There are a number of challenges, too, for the luxury business and this include paucity of trained manpower, regulatory issues and high taxation, the survey pointed out. The import duty on premium cars, for example, stood at 205% while wines & spirits invite 185% customs levy.

The survey also pointed out that that import duty was high in the case of personal care items, fragrances, leather accessories and watches. Lack of quality retail space was another reason hampering growth of the industry. While development of quality space will happen once real estate picks up, the industry needs to spend on training to generate quality manpower. Poaching may not help and such tendencies will only hurt the entire industry.

On the regulatory side, the survey also highlighted that restrictions on foreign direct investment (FDI) in retail was hindering growth of the industry. Since the luxury market is not organised, the organisations concerned are not working together on industry issues. As a result growth remains below potential and regulatory issues are not being pursued vigorously.

As compared to markets like the US, Japan, Germany and even China, the size of the Indian luxury market is small but the growth potential is tremendous. The number of high networth individuals is increasing and the tendency to opt for global brands increases as more and more Indians travel abroad, the survey said.

Stand by pledge given to UPA: Karat tells Govt.

Madurai, Sept. 21 (PTI): The CPI(M) on Thurday night suggested that the central government has to choose between the commitments given to UPA or go by "dictates" of the United States on the issue of Indo-US nuclear deal.

Though the CPI(M) had asked the government not to proceed with the nuclear deal for the next six months, "a junior-level American official was asking the government to take a decision," CPI(M) General Secretary, Prakash Karat, said addressing a meeting after unveiling the statue of veteran Communist leader, P Ramamoorthy.

"Whether government will stand by the commitment given to the UPA and the people, or act as per the dictates of the US official....is not known," he said.

Karat said his party would try to convince the UPA government that the Indo-US nuclear deal was aginst the interests of the country and ask it not to proceed further.

"The deal will affect India's sovereignty, interests of the country and its people and we will campaign against the deal through out the country. It is left to the government to decide whether to go ahead with the agreement or not," he said.

"The Communist party, which supported non-alignment policy of the government and fought against American imperialism, would not agree to any type of strategic alliance with the USA - whether it is nuclear deal or otherwise," he said.

Karat said the CPI(M) opposed the deal because majority of the MPs opposed to it and the government was not even willing for a debate.

Besides, the cost of nuclear power would be four times higher than the cost of thermal power. "Setting up 20 nuclear plants will be like setting up 20 Enron companies which priced the cost of power at Rs 5 to 7 per unit," he said.

By signing a 40-year deal with the "undependable America, India will become America's slave for 40-years following their policies - whether it is foreign relation or economy," Karat alleged.

While the Left was not opposed to nuclear power, Karat said "the government should study the economics, cost and environmental impact before giving its green signal."

"Even now, America is dictating terms, like India should not import gas from Iran and the gas pipeline project should be shelved. It is also mounting pressure on the government on foreign direct investment in sectors like insurance, bank and agriculture, he said.

He said CPI(M) would oppose disinvestment in any public sector or government undertaking which earned profit.

Critcising the import of wheat at Rs 1600 per quintal, he said while the government was offering Rs 850 per quintal for Indian farmers, it was paying more for imported wheat.

No one can be deprived of electricity

The news item "Slums near rail tracks supplied electricity" (11 September) has inspired me to write this letter for the interest of the electricity consumers.
The State Electricity Board has provided electricity to the slum dwellers adjacent to the railway tracks running from Barasat to Madhyamgram. Swapan Mondal, DRM of Eastern Railway, has said: "The legal status of the colonies next to the railway tracks is disputed and as a matter of fact, its electrification should be treated as illegal." My response is on the very particular word or point "illegal".
I was a full time member of the Hooghly District Consumer Redressal Forum for five years. During my tenure, I had to deal with hundreds of disputes relating to electricity. Electricity is an essential service like water and no one can be deprived of this service. Supply of electricity to an illegal occupant does not establish any right to the encroacher or illegal occupant to the dwelling place. Here I do like to quote the conclusive part of a judgment on electricity by Calcutta High Court. "Even a trespasser will get electricity if he or she lives at the place for a pretty long time." Only a certificate from the local MLA/ municipal commissioner is necessary in confirmation of his/her long stay. If a man/ woman or his/her family resides illegally in a house, the family is entitled to get electricity. We had to handle or settle a large number of disputes between tenants and landlords involving electricity. The house owner cut the line and the tenant applied to the SEB/CESC directly for a new connection. The power authority concerned refused to supply electricity to the tenant on the plea that the owner of the house had objection to it.
According to the law on consumer forum the objection of the house owner is untenable. Here I quote a judgment. "The supply of electricity has become a matter between the occupier and the licensee under the electricity Act and landlord as the owner cannot ordinarily stand in the way." (Ratnamala Devi vs Ratan Singh - Section 12(2), amendment (1959), EA 1910, LR 1990 Cal 26). We replied on those two judgments.
In this particular case, the SEB has not done any wrong by supplying electricity to the shanty dwellers. The objection of the landowner (Easten Railway) is untenable. The railways can evict the illegal occupiers, but cannot object to the supply of electricity.
~ Yours, etc., Kalipada Basu,
Chinsurah, 12 September.
Self-delusion
Sir, ~ In self-delusion, Indians are past masters. Those who clamour for India's superpower status and energy sustainability ("Left ignorant about historical facts", 13 September) should study former Supreme Court judges Mr Krishna Iyer, Mr SB Sawant and Mr H Suresh's statement that Article 5.6 (a) of the 123 Agreement stated in no uncertain terms that amendments to the United States laws, including Hyde Act of 2006, would be needed to enable India to obtain reliable and uninterrupted access to fuel.
"As it stands, the 123 Agreement of August 2007 does not in any way provide binding fuel supply assurance. The agreement will be binding only when ratified by Parliament. There is no provision in the Constitution which gives such authority to the executive."
They also added that according to Article 2.1, "the 123 Agreement was subject to all the present internal laws of the US" and that "any action taken by the government to implement the nuclear deal without the authority of Parliament is unconstitutional". Any further comments from the Indian experts of historical facts are superfluous.
~ Yours, etc., GP Ray,
Kolkata, 13 September.
Price rise unchecked
Sir, ~ Amidst turmoil and crisis in the current politics of India, the prices of essential commodities are shooting up. The ordinary people are finding it increasingly difficult to make both ends meet.
In Parliament, Union finance minister Mr P Chidambaram promised to check the price-rise, but failed miserably to do any thing. Not only that, the government has formed a committee under renowned economist Mr Abhijit Sen to examine the reasons behind the price rise. The committee has submitted its report, but the government has not said anything either in its favour or against it.
On the other hand, the government has decided to import wheat. My question is: why import wheat? Is there any scarcity of wheat in the country? The government has argued that import of wheat is for puffing up of store-houses. How strange! This year production of wheat has increased by 60 lakh tons. The government usually buys wheat from peasants to puff the store-houses.
This year the government has fixed the minimum procurement price of wheat at Rs 850 per quintal, whereas the market price is higher. This is why the peasants have sold out the wheat in the open market. Now the government has decided to import wheat at Rs 1,600 per quintal to reach the target. Are not the peasants being deprived? This pitiable thing has happened in the past also. It is in this background that prices of foodgrain and other essential items are soaring.
The recent survey report of the Chamber of Commerce is: in the last 12 months the market price of wheat, milk, tea, spices, vegetables, fish and meat have increased by 23 to 25 per cent. In this period the per capita income of the commoner has come down by 1.09 per cent, whereas the living standard of high-income groups has increased.
The price rise is a burning issue and all political parties should stand united to combat this menace, burying all other issues for the time-being.
~ Yours, etc., Hemanta Kumar Roy,
Belghoria, 12 September.
Teachers' grievance
Sir, ~ Allow me through the columns of your esteemed daily to draw the attention of the education department of the state government to a long standing grievance of the primary school teachers.
I like to bring to the notice of the education minister (school) the fact that according to the government order (No. 1531 Edu(S) dated 7 October 1985), which has been thoroughly revised in 2001, the upper age limit fixed for the appointment to the posts of assistant teachers in non-government secondary schools "shall not be applicable to the approved in-service teachers of recognised primary schools and the approved in-service non-teaching staff of recognised secondary schools/madrasas".
But unfortunately the in-service primary teachers are not allowed to appear in the SSC examination if their age exceeds 37 years, though the in-service non-teaching staff of recognised secondary schools or madrasas get this opportunity of age relaxation. Then why should the primary school teachers, who are working under the state government, be deprived of this opportunity?

I'm not worried by criticism over wheat import, says Pawar

New Delhi : Food and Agriculture Minister Sharad Pawar said Thursday that he was not worried by criticism from various quarters over the government's plans to import wheat, as his job was to provide food grain to the public at reasonable prices.

"Despite the (estimated) 74.9 million tonnes of wheat output this year, we have to look at imports. And the reason is that our wheat stocks are not up to the mark," he said, speaking at the inaugural session of the National Conference on Emerging Platforms for Agriculture Marketing.

The two-day conference is being organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the ministry of agriculture.

"As food minister, I have to take responsibility to provide wheat to the public at reasonable prices. That is why I am not worried (by the criticism). Or else, the government should provide budgetary support so that I can provide food grains to the public at reasonable prices," he said.

The opposition Bharatiya Janata Party (BJP) as well as the Left have demanded that the government institute an inquiry into the decision to import wheat when there was adequate domestic stock.

Earlier this month, Communist Party of India-Marxist (CPI-M) MP Brinda Karat had written to Prime Minister Manmohan Singh to protest the government's decision to import 790,000 tonnes of wheat at an average price of $390 per tonne.

The government had also come under fire for its proposed move to import five million tonnes of wheat in April this year.

Pawar also said that a number of states have amended their respective Agriculture Produce Marketing Committee (APMC) Acts for promoting investment in marketing infrastructure, motivating the corporate sector to undertake direct marketing of agricultural produce and for facilitating a national integrated market.

"By now, 18 states and union territories (UTs) have amended their APMC Acts and Bihar has repealed the Act. Seven other states and UTs do not have any APMC Act. We expect the remaining states would complete these amendments by March 2008," he said.

While issuing a model agricultural marketing law for guidance to the states in 2003, the centre had requested the state government to amend their APMC Acts.

"Certain sections feel if such restrictions (like APMC) are removed, farmers will benefit," he said.

Stating that agricultural marketing, especially perishables, is a key driver for achieving higher growth in agriculture, Pawar said, "Market-driven production is the order of the day and an efficient and seamless supply chain management has become a necessity for us.

"To fulfil these objectives in potential areas, the government of India has recently initiated the process of setting up terminal markets under a central sector scheme. The hub and spoke model of modern terminal market including electronic auctioning system and state-of-the-art infrastructure facilities coupled with operational efficiency through synergy between the best of private and public sector practices is planned through the state governments," he said.

Pawar also said that for prompt and reliable market information of different commodities, electronic spot markets could provide a viable alternative to the existing practice of the mandi system.

Earlier, FICCI Agriculture and Rural Development Scheme chairman P.M. Sinha appealed to the government to encourage the private sector to engage in a comprehensive backward linkage with farmers to improve crop productivity.

Stating that for both fruits and vegetables, there is enormous wastage, he said, "We need to ensure that the private sector is encouraged to put the entire supply chain from sorting and grading... up to the consumer location in place."

In his welcome speech, former FICCI president Onkar Kanwar called for a stable exim policy on farm products.

"Let us give our farmers complete freedom to sell anywhere, at home or abroad," he said.