Engineering goods push exports higher to $26 bn in November

Healthy off-take of India's engineering and petroleum products pushed exports higher to $26.19 billion in November, from $23 billion in October and $20.06 billion during the corresponding month of last year, official data showed on Friday, even as the country's strength in services was reflected in their higher exports continuing in October.

According to the Ministry of Commerce and Industry, exports during last month exhibited a growth of 30.55 per cent on a year-on-year (Y-o-Y) basis.

"Exports during November 2017 have exhibited high positive growth of 30.55 per cent in dollar terms vis-a-vis November 2016," the Ministry said in a statement.

"This is on the pattern of positive growth in exports in last thirteen months with a dip of 1.12 per cent in October 2017 vis-a-vis same period last year."

The data pointed out healthy growth in exports of "engineering goods (43.76 per cent), petroleum products (47.68), gems and jewellery (32.69), organic and inorganic chemicals (54.28), and drugs and pharmaceuticals (13.39)."

"Non-petroleum and non gems and jewellery exports in November 2017 were valued at $19,247.56 million as against $15,104.42 million in November 2016, an increase of 27.43 per cent," the statement said.

However, the country's imports during the month under review also increased by 19.61 per cent to $40.02 billion from $33.46 billion in the corresponding period last year.

Segment-wise, the data showed that India's oil imports during November shot up by 39.14 per cent to $9.55 billion, from $6.86 billion in the same month last year.

Non-oil imports during last month stood at $30.47 billion with a growth of 14.57 per cent over non-oil imports of $26.59 billion in November last year.

Consequently, India's trade deficit widened to $13.82 billion during last month, as against $13.39 billion in November last year.

As per Reserve Bank of India data on Friday, Indian services exports in October this year at $14.15 billion resulted in a positive trade balance on this account for the month at $5.45 billion, over the balance of $5.28 billion in the previous month.

Higher export relief for labour-intensive sectors

NEW DELHI, DEC 5: 
The mid-term review of the Foreign Trade Policy (2015-20) has brought in additional relief worth ₹8,450 crore annually for the labour-intensive and micro, small and medium enterprises (MSME) sectors.

Exporters of labour-intensive items, such as leather and footwear, agriculture and marine products, handmade carpets, telecom and electronics components, and medical and surgical equipment, will now be eligible for 2 per cent higher incentives across-the-board under the popular Merchandise Export from India Scheme (MEIS), under the review released by Commerce and Industry Minister, Suresh Prabhu on Tuesday.

A number of services such as accountancy, architecture, legal, education and restaurant, too, will get similar relief under the Services Export from India Scheme (SEIS).

The incentives come at a time when exporters are struggling under the new Goods and Services Tax (GST) regime introduced in July. Prabhu said the government was committed to redress the problems. “It is not a one-time exercise but an ongoing effort. We will continuously revisit issues, identify challenges and address them on a real-time basis,” the Minister said.

Acknowledging that exporters had suffered due to problems in GST implementation, Prabhu said the government would sort it out together with exporters. “No new legislation can be made perfect in one go. I ask exporters to bear with us and be our partners in dealing with the problems,” he said, adding that a number of problems had already been sorted out.

Exporters who were upset by the drop in goods exports in October 2017, and were expecting a further fall over the next few months due to lower duty drawback rates (of input tax reimbursement) and slow refunds, seem more optimistic now.

“The higher incentives should start reflecting in export numbers from January. However, we are disappointed that a number of sectors were left out. Problems for exporters exist across sectors and the relief should have been for all,” said Ganesh Kumar Gupta, President, FIEO.

Other initiatives like the extension of validity of MEIS scrips from 18 months to 24 months and the provision of zero GST on sale of scrips will help the industry in a big way, Apparel Export Promotion Council Chairman Ashok Rajani said.

The MEIS is the most popular incentive for exporters, under which identified sectors are given duty exemption scrips that are fixed at a certain percentage of the total value of their exports. The scrips can be used to pay duties on inputs, including Customs duties.

An e-wallet system to address the liquidity problem being faced by exporters is likely to be operational from April 1, 2018, PK Das, Member, CBEC, assured exporters.

Finance Secretary Hasmukh Adhia pointed out that Input Tax Credit and IGST refunds for exporters were being expedited and stressed that the GST regime will be beneficial for exporters in the long run.

The government has also introduced a new, trust-based self-ratification system to allow duty-free inputs for export production on the basis of self-declaration.

With exports of goods lower than $300 billion in the last two years, the government is under pressure to give the sector a major boost. Exports in 2016-17 were $276.54 billion, compared with $314.14 billion in 2013-14.

The review of the FTP (2015-2020) was due earlier this year, but was delayed due to the implementation of the GST in July and the problems faced by exporters under the new dispensation taking centerstage.

India to step beyond renewable goal with China-scale tenders

In a bid to exceed Prime Minister Narendra Modi’s climate pledges, India announced that it will tender enough renewable energy projects over the next three years to surpass 200 gigawatts of green capacity build by 2022.

India declared a three-year program towards tenders for renewable energy projects that will meet its original target of 175 gigawatts of clean-energy capacity within five years, in addition to plans to spur local solar equipment manufacturing that will help push past the goal. It’s also looking at ways to export more wind turbines, a measure that may benefit Suzlon Energy LtdBSE 3.66 %.
“Our renewable road-map doesn’t include plans for floating solar projects and offshore wind installations, and we will comfortable exceed 200 gigawatts by 2022," Power Minister R K Singh said in New Delhi.
With renewable energy targets second only to those set by the government of China, India has a long way to go from a current base of 60 gigawatts to reach its ambition of 175 gigawatts in five years. The South Asian nations needs to expand its current solar capacity seven-fold to reach the 100 gigawatts by 2022. It would have to double wind installations to touch 60 gigawatts over the same period.
The plan to exceed these targets will see tenders of more than 80 gigawatts of solar projects and 30 gigawatts for wind by the 2020 financial year, Anand Kumar, secretary at the new and renewable energy ministry, said in New Delhi.

Solar target timeline targets would unfold as follows:
♦ The current fiscal year ending March 31 will see new solar tenders of 16.4 gigawatts
♦ Solar tenders of 30 gigawatts each to come out in financial years 2019 and 2020
♦ Almost 10 gigawatts floating solar capacity to be built on reservoirs
♦ Solar equipment manufacturers will establish local units to supply domestic market

Wind energy goals would require:
♦ India tendering almost 4 gigawatts wind projects by end of the fiscal year
♦ New tenders of 10 gigawatts each in financial years 2019 and 2020
♦ Plans to set up capacity through wind-solar hybrid projects
♦ Additional tenders for 5 gigawatts of off-shore wind projects
♦ India is also considering getting export-import bank support to help wind turbine makers increase exports, Kumar added.

India’s exports rise faster than imports in September

NEW DELHI: India’s external trade turned positive, perhaps for the first time, with growth in exports surpassing that of imports for the first time, in September 2017, bringing festive cheer for exporters and policy-makers. Merchandise exports from the country moved to a higher growth trajectory of 25.67 per cent with September exports reaching $28.61 billion, helped by better performance by all the top 10 commodity groups, ranging from engineering items to textiles. Although exports have been in the positive zone for the past 13 month, it is for the first time that growth in exports surpassed that of imports. The trade deficit, too, narrowed in September by 0.95 per cent to $8.98 billion against 9.07 billion in September last year, but the overall trade deficit during the April-September 2017-18 period stood at $72.13 billion. Cumulative exports during April-September 2017-18 stood at $147.19 billion against cumulative imports of $219.32 billion, leaving a gap of $72.13 billion.
Import growth rate was slightly lower than export growth, with gold imports declining by 5 per cent. Imports into the country increased 18.09 per cent in September 2017 to $37.59 billion, according to an official data released on Friday. Imports during September 2017 were valued at $37.60 billion (Rs242,282.96 crore) which was 18.09 per cent higher in dollar terms and 14.02 per cent higher in rupee terms over the level of imports valued at $31.84 billion (Rs212,486.28 crore) in September 2016. Cumulative value of imports for April-September 2017-18 stood at $219.32 billion (Rs141,1872.70 crore) against $175.34 billion (Rs1,173,664.70 crore), recording a positive growth of 25.08 per cent in dollar terms and 20.30 per cent in rupee terms over the same period last year. Exports during September 2017 were valued at $28.61 billion (Rs. 184387.36 crore ), showing a growth of 25.67 per cent in dollar terms and 21.35 per cent in rupee terms compared to exports valued at $22.77 billion (Rs151,950.74 crore) in September 2016. Apart from engineering goods exports, which posted a sharp increase of 44 per cent during the month to $7.32 billion, other sectors that registered growth included gems and jewellery, petro products, organic and inorganic chemicals, readymade garments, drugs and pharmaceuticals, cotton yarn/fabs/made-ups, handloom products, marine products, rice and electronic goods. Oil imports, at $8.18 billion were 18.4 per cent higher than in September 2016. Non-oil imports, at $29.40 billion, were 17.9 per cent higher. Gold imports came in at $ 1.71 billion.

India Exports Imports

Gold import surges over 2-fold to USD 16.95 bn in Apr-Sep

New Delhi, Oct 15 () Gold import surged by more than two folds to USD 16.95 billion during the first half of 2017- 18, according to the commerce ministry data.
Gold import, which has a bearing on the country's current account deficit (CAD), was worth USD 6.88 billion in April- September 2016-17.
In September this year, import of the precious metal dipped by 5 per cent to USD 1.71 billion from USD 1.80 billion in the same month of the previous fiscal.
Contraction in gold import last month helped narrow the country's trade deficit to a 7-month low of USD 8.98 billion.
However, the import of the metal is expected to increase on account of the festival season, which has started this month.
Increase in inbound shipments of gold also bloated the current account deficit (CAD) to USD 14.3 billion, or 2.4 per cent of the GDP, in the three months to June in 2017-18.In general terms, CAD refers to the difference between inflow and outflow of foreign exchange that has an impact on the exchange rate.
Worried over surge in gold imports from South Korea, with which India has a free trade agreement, the government restricted inbound shipments of the precious metal.
India is the world's second biggest gold consumer after China. The import mainly take care of demand of the jewellery industry.
At present, gold import attracts 10 per cent duty. The gems and jewellery industry along with the commerce ministry have time and again urged the finance ministry to consider a cut in the import duty.

$400 billion & counting: India puts up a special show

MUMBAI | KOLKATA: Four years after a currency crisis singed Indian financial assets, the country’s foreign exchange reserves have surged to a record $400 billion, up 45% from the trough, bolstering the hope that there’s enough cushion to face any headwinds originating in global markets.
India now ranks eighth in foreign exchange reserves in a list that’s headed by China ($3.09 trillion) and Japan ($1.2 trillion).
The record amount of reserves accumulated, mainly through the flow of funds from portfolio investors and foreign direct investment in manufacturing as well as services, reflects the strength of India’s macro economy and investor faith in growth.
But the swelling dollar corpus has meant a stronger rupee, hurting exports amid rising imports, thus posing a currency management challenge for the Reserve Bank of India (RBI).
The current account deficit (CAD) widened to 2.4% of gross domestic product in the June quarter, up from 0.1% in the year-ago period, the central bank said. To be sure, a recovery in global demand helped India’s exports rebound in August after slowing in July, the government said on Friday in a separate data release. But imports outpaced exports and grew 21%, widening the trade deficit to $11.6 billion from $7.7 billion in the year-ago period.
“Record high foreign reserves, mainly borne out of strong portfolio inflows, reinforce investors’ positive view on the economy, beyond the attraction of higher yields and a stable currency,” said Radhika Rao, economist at DBS Bank in Singapore. “With the central bank intervening heavily in the forwards space, the reserves stock is bound to climb further as those swaps mature.” Foreign exchange reserves stood at $400.73 billion for the week ended September 8, RBI said on Friday. Of this, about 6% was contributed by currency movements with the dollar depreciating across a range of currencies.
India was among those at the receiving end of global financial turmoil in 2013 when then US Federal Reserve chairman Ben Bernanke roiled the markets with comments on the possible tapering of the quantitative easing that began after the 2008 global financial crisis.

Rupee Appreciation Affects Trade 
The rupee plummeted to a record 68.85 against the dollar and reserves slumped to a low of $275 billion, prompting the government and central bank to embark on a series of crisis-management measures. Among these was a special threeyear deposit scheme for non-resident Indians (NRIs) with a hedge facility that brought in about $27 billion, which helped stabilise the currency.
Since then, the focus on inflation containment at 4% (with a 2 percentage point band on either side), restricting the fiscal deficit and macroeconomic reforms have helped soothe investor nerves.
Foreign portfolio investments have been strong with equity investments at Rs 42,659 crore in 2017 and Rs 1.32 lakh crore going into debt. This has resulted in the rupee strengthening 6% this year, making it the best performer among major emerging economies. It should be noted that the rupee slumped to 68.86 in November 2016 before recovering. It closed at 64.09 to the dollar on Friday.
The currency appreciation is making imports more attractive while exports are becoming uncompetitive. The latest RBI data shows that the current account deficit, the excess of imports over exports, was at $14.3 billion in the June quarter, up from $0.4 billion a year earlier, and $3.4 billion in the March quarter.
“The widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit of $41.2 billion brought about by a larger increase in merchandise imports relative to exports,” RBI said in a statement.
“The sharp surge in the current account deficit comes as no surprise, with the spike in gold imports prior to the introduction of GST (goods and services tax) responsible for half of this uptick,” said Aditi Nayar, economist at ICRA, the Indian unit of Moody’s. “With the size of the current account deficit in Q1 nearly as high as the FY2017 level of $15 billion, the FY2018 deficit may double to around $30-32 billion or 1.2-1.3% of GDP.” 

India’s exports to Japan halve to $3.85 billion in four years

India’s trade deficit with Japan has widened to $5.9 billion in 2016-17 against $2.7 billion in 2013-14.New Delhi: Amid growing bonhomie between Japan and India —Asia’s second and third largest economy, respectively—lies the dark reality that in just four years, Indian exports to Japan have almost halved to $3.85 billion in 2016-17, from $6.81 billion in 2013-14.

Japanese Prime Minister Shinzo Abe is currently on a two-day state visit to India and aims to further strengthen the strategic partnership between the two countries. Abe was received by Indian Prime Minister Narendra Modi in Ahmedabad.
The Comprehensive Economic Partnership Agreement (CEPA) signed by India and Japan in February 2011 and implemented from August 2011 was expected to boost bilateral trade in goods and services. However, India’s merchandise exports started contracting in four out of five years between 2012-13 and 2016-17. As a result, India’s trade deficit with Japan has now widened to $5.9 billion against $2.7 billion in 2013-14. In 2016-17, India’s exports to Japan contracted 17.5%, and its imports fell by 1%.
Commerce ministry analysis of data for the period 2009-10 to 2013-14 indicates that preferential imports under the CEPA still form a small proportion of total imports. In 2013-14, it stood at 22.4% of total imports under the India-Japan CEPA.
“The negative or slow growth in trade with Japan is a matter of concern for India, in view of the fact that there is high potential for faster progress on goods and services trade,” the Indian embassy in Tokyo says on its website.

Even the foreign trade policy statement 2015-20 released by the commerce ministry alludes to non-tariff barriers faced by Indian exporters. “While on the one hand, the Japanese market has not seen growth in the product areas of India’s interest, Indian business entities are facing problems in market access. These problems can be briefly said to be arising out of language constraints faced by Indian companies in Japan, highly demanding product and service standards, regulations that require business modalities making market access a costly venture, and a relative lack of intensive effort on the part of Indian business,” it said.
“The other route of access of India’s export sectors into Japan will require language proficiency, negotiating a simplified framework for market access and continuous trade promotion efforts on the part of businesses and the government,” it added.

India’s primary exports to Japan have been petroleum products, chemical elements, fish and fish preparation, non-metallic mineral ware, metalliferous ores and scrap, clothing and accessories, iron and steel products, textile yarn/fabrics, machinery, feeding-stuff for animals.

India’s primary imports from Japan are machinery, iron and steel products, electrical machinery, transport equipment, chemical elements, plastic materials, manufactures of metals, precision instruments, rubber manufactured, coal and briquettes.
Bilateral trade in services between India and Japan also remains subdued. India’s exports of IT and IT enabled services to Japan account for less than 1% of Japan’s IT services market and India also has an overall trade deficit in services with Japan unlike the surplus position it has with many developed countries.

“The CEPA sub-committee on services could take up several implementation issues including those relating to expeditious issue of visas for IT and other service providers, clarification of ‘technology services’ in the bilateral double taxation agreement, regulatory issues relating to financial services, particularly insurance and progress on the built-in agenda in CEPA including in respect of nurses and healthcare workers and mutual recognition agreements among professional bodies,” said a study of India-Japan trade published by New Delhi-based think tank Research and Information System for developing countries.
Pravakar Sahoo, professor at the Institute of Economic Growth, said the CEPA has been a failure when it came to boosting India’s exports to Japan. “Since tariff lines of Japan were already close to zero, it is India who gave more market access to Japan through significant tariff cuts,” he said.

However, Sahoo said Japan has very strict quality controls and Indian exporters need to comply with those regulations to increase exports to this lucrative market.

The commerce ministry plans to run special programmes for trade promotion in Japan in identified sectors like textiles, garments, information technology services, pharmaceuticals, leather products and agro-processed products, according to the FTP statement. Biswajit Dhar, professor of economics in the Jawaharlal Nehru University, said India should look at higher investment from Japanese companies along the Delhi Mumbai Industrial Corridor.

“Building of the DMIC which has been languishing for years needs to be fast-tracked. Industries along the corridor could help us boost investment led exports,” he added.

India to import 2MT Rice and Wheat to meet domestic demand

With the normal monsoon in many areas in India, the sowing of kharif crops like Rice, Pulses, Coarse Cereals, Sugarcane and Cotton are progressing well. Even though some areas in India received excess rainfall which caused flood and some were affected by drought, the overall sowing increased by about 3 percent.
It is anticipated that this increase is not enough to meet the demand supply gap in India. in order to meet that domestic demand and to control the market prices until January next year, government has decided to imports 2 million tons of Rice and Wheat.
In the 2 million ton of imports, 1.5 million tons of Rice would be imported from Cambodia and Thailand, while the rest 0.5 million tons of Wheat will be imported from Russia and Ukraine. The imports will be done within January 31 next year.
The government also stated that no additional food grain imports will be allowed, as additional imports will affect the farmers around the country, and the prices will also go down significantly.

Rice and Wheat exports imports

Govt puts urad, moong dal imports under restricted category

India is the world’s largest pulse producer and importer.Earlier this month, the government had also put imports of pigeon peas and toor dal under the restricted  category.
The government on Monday put imports of urad and moong dal under the restricted category and fixed a cap for its in-bound shipments up to three lakh tonnes. The move will help in stabilising domestic prices that have fallen below the minimum support level and are hurting farmers. The Directorate General of Foreign Trade (DGFT), under the commerce ministry, also said import of this dal is subject to annual quota of three lakh tonnes.
“Import of urad and moong dal is revised from free to restricted,” the DGFT said in a notification. It, however, said this restriction will not apply to the government’s import commitments under any bilateral and regional agreement.
Moong production touched a record 2.07 million tonnes (mt) in 2016-17 crop year that ended June as against 1.59 mt in the previous fiscal. India is the world’s largest pulse producer and importer. Earlier this month, the government had also put imports of pigeon peas and toor dal under the restricted category.

Import of urad and moong dal

Exports need to grow at 26.5 % annually for India to grab 5% share of the world trade

Exports need to grow at 26.5 per cent annually for the next five years for India to reach a “respectable’’ 5 per cent share in world trade from the existing 1.7 per cent it has been stuck at since 2011, according to the second part of the Economic Survey for 2016-17.

This could be achieved only through reforms in trade policy by diversifying exports, rationalising tariffs and developing world class export infrastructure, it added.

Making a case for lowering average applied tariffs, the Survey stated that there is scope for reduction by selectively bringing down tariffs across many lines, while retaining higher tariffs for sensitive and important items.

On a bold note, it further proposed that bound tariffs (ceilings) committed to at the World Trade Organisation could be reduced which can help India to take a more pro-active role in multilateral and bilateral negotiations.

India’s negotiating team at the WTO, at present, is focussed on getting a fair deal in the area of agriculture subsidies and protecting sensitive items against import surges and has not shown any interest in negotiating tariff reduction.

Trade policy
Highlighting the importance of the forthcoming review of the country’s Foreign Trade Policy next month, the Survey said that the review exercise is particularly important in the light of recent international developments and special efforts are needed to not only review but accelerate India’s exports.

India’s exports grew 4.7 per cent in 2016-17 after two years of continuous decline.

In a suggestion that the exporters might not treat with enthusiasm, the Survey proposed that some export promotion schemes could be phased out if tariffs are reduced to realised or near realised levels, while others could be streamlined as many duties have been subsumed under GST.

The duty drawback rates (refunds given to exports in lieu of input duties paid) can also be revised downwards and the revenue saved could be used for export marketing efforts.

To increase exports, the Survey made a case for a demand based export basket diversification rather than a mere supply based strategy. It also stressed that world class export infrastructure and logistics, especially port-related, need to be developed on a war-footing.

For greater States’ participation in exports, devolution of funds to States need to be linked with their export effort, it suggested.

Green shoots
On a positive note, the Survey said that some green shoots have started to appear on the trade horizon with world trade growth projected at 3.8 per cent and 3.9 per cent in 2017 and 2018, India’s exports continuing to be in positive territory for the fourth consecutive month in May and in double digits in April-May 2017. All external sector indicators like reserves cover for imports, external debt to GDP ratio, foreign exchange reserve cover for external debt and debt servicing ratio, too, are in the comfort zone.

It, however, cautioned that rising trade deficits on the domestic front and rising protectionist tendencies on the global front are things to watch in the short term.
On currency fluctuation, the Survey pointed out that while the rupee has been one of the most stable currencies among EMEs, the appreciation of the real effective exchange rate (REER) indicates that India’s exports have become slightly less competitive.

Lauding the government’s move to bring FDI in most sectors under automatic approval route, except a small negative list, the Survey said that it resulted in FDI equity inflow of $43.4 billion in 2016-17, which is not only an increase of 8 per cent over the previous year, but also the highest ever equity inflow.

Lessons in tourism for India, from Indonesia

PUNE: There is a lot India can do to attract more tourists from Indonesia. Against 3,76,000 Indians travelling to Indonesia in 2016, India could manage to attract only 35,000 tourists from the south east Asian nation to India in the same year, data compiled by the Bureau of Immigration, India, stated.
This huge gap can be filled only if Indian authorities take up a more aggressive approach and start promoting India as a health and education hub to lure more tourists to their land, Saut Siringoringo, counsel general, Consulate General of The Republic of Indonesia, said.
"Indian travellers now rank fifthe among all sources of foreign tourist visitors to Bali," the Indonesian tourism ministry said in a compendium, titled `Indonesia country profile - Trade, Tourism & Investment opportunities'. High ranking officials representing the Indonesian tourism ministry are in India and are travelling to select cities to woo more Indian tourists, which is something Indian authorities should also indulge in.
The Indonesian authorities expect at least half a million Indian tourists travelling to their country this year.
"To achieve this goals, Indonesia will place emphasis on digital promotions, air connectivity and construction of 20,000 home stays in tourism villages across the archipelago," the ministry said.
"Of these 5 lakh potential arrivals, we expect to get at least 60% to come to Bali alone," said IGN Rai Suryawijaya, chairman of Badung tourism promotion board.
More and more Indians prefer going to Bali because it closely resembles India on culture and religious background. So, the officials are now out to promote "top 10 new destinations," dubbing them as "10 new Balis."
Even in terms of bilateral trade, data shows, India needs to do a lot more to bridge the huge trade deficit.
The Indo-Indonesian bilateral trade touched $12.96 billion in 2016, in which India imported about products worth $10.09 billion while managed to exports product worth $2.87 billion.
Here again, Indonesia has a piece of advice for India, when it says - "there is considerable potential for expanding trade in the areas of IT, pharmaceuticals and healthcare sectors, among others".