India may import more US oil as demand rises

India is expected to forge a closer cooperation with the US in the energy sector and import more oil due to increase in demand, analysts said.

Earlier this week, India received its first ever shipment of US crude when a very large crude carrier docked at Paradip port in the eastern state of Odisha.

This is one of the first shipments to India since the US stopped oil exports in 1975 and follows recent commitments to US oil purchases by Indian state refiners.

Indian Oil Corporation and Bharat Petroleum have placed orders for over 2 million barrels from the US, according to a statement from the US Embassy in India posted on their website.

“We look forward to working together on further sales of US crude and exploring opportunities to expand the role of natural gas in India,” said Mary Kay Carlson, Charge d’Affaires at the US Embassy in New Delhi.

The development comes as India seeks to diversify its oil imports due to growing demand in the country.

Petroleum consumption in India is likely to grow by about 6 per cent in 2017-18, Moody’s investors Service said in a report last year.

“India due to its growing economy and increasing population has been seeking to diversify its oil imports and American oil offers an opportunity for India to reach its supplier diversification goals,” Justin Dargin, global energy expert a University of Oxford in London, told Gulf News by email. “In the mid to long-term, we can expect to see closer cooperation in the energy sector between the two countries. India will undoubtedly begin to import more oil from the US.”
Currently, India depends almost entirely on production from Opec to meet its energy needs. Just six countries — Saudi Arabia, Iraq, UAE, Kuwait, Nigeria and Venezuela make more than two thirds of its imports, analysts said.

Why India's import of US shale oil is a big deal

As the Very Large Crude Carrier (VLCC) docked at Paradip Port in Odisha on Monday to unload its 1.6 million barrels of shale oil, history was created. This was the first time since the US allowed exports of its oil after a ban of 40 years that it has supplied to India. But the move is significant in many other ways than just the symbolism attached to it.

India and other Asian countries were dependent to a large extent on oil production in west Asia by the Organisation of Petroleum Exporting Countries (OPEC). Because of the proximity to Asian economies, these OPEC countries charged a premium for the oil they supplied.

Taking into account that the cost of transportation from any other major oil producing countries would be prohibitive, OPEC countries got away with this. India has been raising the issue of the premium with OPEC countries over the last three years. Being the third-largest oil consumer, India demanded at a meeting of OPEC members and non-members that the premium be removed. The minister of petroleum and natural gas, Dharmendra Pradhan, said at the meeting that the global oil industry stood at a delicate crossroads and that any attempt to frustrate or assign lower importance to Indian demand would be detrimental to the suppliers.While the OPEC nations were still deliberating on the action to be taken, India moved ahead by ordering its first consignment of 2 million barrels of shale oil for around USD 100 million. This move again was not just symbolic in order to put pressure on the OPEC countries, but it made economic sense, too.As the cartel of OPEC nations was trying to keep oil prices higher by deliberately cutting production, US oil fields were firing on all cylinders. As a result of higher supply, the spread between Dubai Oil and those from Brent and WTI (West Texas Intermediate) fields fell in favour of the western oil fields. This made importing oil from the US cheaper than those from west Asia.

The government played an important role in bringing transportation costs down as it eased restrictions on importing oil compulsorily through ships owned by Indian companies. Using a VLCC to transport oil reduced the cost of transportation and made the decision economically viable.

The refiner, in this case, Indian Oil Corporation (IOC), benefited not only from the lower price of crude but also from a better quality of the oil. Shale oil, also known as tight oil, gives the best yield for the most lucrative middle distillates. In other words, the gross refining margins (GRM) of refineries will improve if the shale oil is used. Little wonder then that Reliance Industries too has booked 1 million barrels of WTI and Eagle Ford crude each.Finally, the geopolitical benefit that India gains by purchasing US crude also needs to be taken into account. The deal to buy US oil was struck in a meeting between Prime Minister Narendra Modi and US President Donald Trump. For India, importing crude oil also helps in bringing down the USD 24-billion trade deficit which Trump has been pointing to in his attack on India’s impact on US jobs.

In the context of around 1,500 million barrels of oil imported by India, the present import is too small to move the needle, but it is surely going to turn heads in the OPEC world as the cartel struggles to find new markets and environmental awareness puts pressure on oil demand.

Govt, industry to brainstorm on measures to boost exports

NEW DELHI, OCTOBER 3: 
The export sector’s woes finally seem to have nudged the Centre into action. On Friday, when the GST Council meets to iron out the sector’s problems, three key Union ministers will hold a brainstorming session with officials, exporters and industry bodies to identify measures to lift exports on to a higher growth trajectory.

Commerce and Industry Minister Suresh Prabhu, Textiles Minister Smriti Irani and Chemicals & Fertilisers Minister Ananth Kumar will hold talks with representatives from key ministries and departments, including Finance, Heavy Industry and MSME, as well as exporters’ and industry bodies, a government official told BusinessLine.

“The inputs from the session will also be used to frame the mid-term review of the Foreign Trade Policy (FTP), which is already delayed. The focus will be on how India can go for a quantum jump in exports,” the official said.

Exports have fallen woefully short of the FTP targets announced in April 2015, which projected annual exports of $900 billion by 2020. However, exports have hovered around $300 billion in the last two years.

Liquidity challenges after the GST regime kicked in and the rupee’s volatility have made the going tougher for exporters.

“The Commerce Ministry realises it is time for a course correction in order to move exports to a higher growth trajectory. Not only will steps need to be taken to address the immediate problems, effective schemes have to be devised to increase their competitiveness,” the official said.

New challenge
With the World Trade Organization declaring earlier this year that India’s per capita Gross National Product (GNP) had exceeded $1,000 for three years in a row (2013, 2012, 2015), the country will now be ineligible for export incentives that only poorer countries are allowed.

“The Ministry will have to look at new options together with affected ministries, such as Textiles, in order to ensure that action is not taken against Indian exports by other WTO member countries,” the official said.Exporter wishlist
Meanwhile, the GST Council is expected to consider some of the requests made by the export sector, which includes exemption from Integrated GST (IGST) on imports of inputs used in exports (under schemes such as Export Promotion Capital Goods and Advance Authorisation); exemption from GST for merchant exporters and wider usage of duty exemption scrips (earned under incentive schemes such as Merchandise Export from India Scheme).

“In the meeting with the Centre on increasing exports, we will highlight problems of the export sector, give possible solutions and suggest a strategy to increase exports,” said Ajay Sahai, Director General, Federation of Indian Export Organisations (FIEO).

1ST US CRUDE OIL SHIPMENT REACHES INDIA

Nearly three months after Prime Minister Narendra Modi and US President Donald Trump agreed to enhance energy cooperation through Strategic Energy Partnership, India on Monday received its first ever consignment of crude oil from America ever since it had stopped oil exports to New Delhi in 1975.

The first consignment of the US crude oil cargo of 1.6 million barrels bought by Indian Oil Corporation was received at the Paradip Port in West Bengal. A sample of the crude was symbolically presented to Sunjay Sudhir, Joint Secretary (International Cooperation) in the Ministry of Petroleum and Natural Gas. Katherine B Hadda, US Consul General in Hyderabad, senior officials from Ministry of External Affairs and Indian Oil were also present at the ceremony. The consignment was brought by MT New Prosperity, a Very Large Crude Carrier (VLCC). IOC will process the crude at its East-Coast base refineries, located at Paradip, Haldia (both West Bengal), Barauni (Bihar) and Bongaigaon (Assam). The second shipment is expected in a month's time.

Calling it as a new chapter in the history of Indo-US trade, particularly in the oil and gas sector, Sudhir said that the inclusion of the US as a source for crude oil imports by India's largest refiner will go a long way in mitigating the risks arising out of geo-political disruptions. He added that the new arrangement would also usher in price stability and energy security for India, which is witnessing robust growth in demand for petroleum products.

"This is one of the first shipments to India since the US stopped oil exports in 1975, and follows recent commitments to US oil purchases by IOC and Bharat Petroleum (BPCL)… These crude oil shipments to India have the potential to boost bilateral trade by up to $2 billion," the US embassy in New Delhi said in a statement.

IOC, which became the first Indian public sector refiner from India to source US crude, has placed a cumulative order 3.9 million barrel from the US. Bharat Petroleum and Hindustan Petroleum, India's two other public sector refiners have also placed orders for about 2.95 million barrels and 1 million barrels, respectively, for their Kochi and Vishakhapatnam refineries. The total volume of the crude presently contracted by Indian public sector refineries with US is 7.85 million barrels.

Indian companies, both public and private, have made sizeable investments in US Shale assets with a total investment of approximate $ 5 billion. Indian companies have also contracted MMTPA of LNG from the US and the first shipment is expected to be delivered to India in January 2018.

"This event marks a significant milestone in the growing partnership between the US and India.  The US and India are elevating our cooperation in the field of energy, including plans for cleaner fossil fuels, renewables, nuclear, and cutting edge storage and energy efficiency technologies.  We look forward to working together on further sales of U.S. crude and exploring opportunities to expand the role of natural gas in India," said Mary Kay Carlson, Chargé d'Affaires at the US Embassy in New Delhi.

During their June 26 meeting in Washington, Modi and Trump committed to expanding and elevating bilateral energy cooperation through a Strategic Energy Partnership. The leaders called for a rational approach that balances environment and climate policy, global economic development, and energy security needs. Trump affirmed that the US continues to remove barriers to energy development and investment in the US and to US energy exports so that more natural gas, clean coal, and renewable resources and technologies are available to fuel India's economic growth and inclusive development, the US Embassy said.

India exporters struggle with Modi’s new tax system

NEW DELHI: Narendra Modi’s push to boost Indian exports is being undermined by the problems plaguing his government’s new tax system, companies have warned, with tens of thousands of exporters struggling to meet their short-term funding needs. The Indian prime minister unveiled a new goods and services tax in July, which ministers hope will significantly boost economic output by turning the country into a single market for the first time. But it has been beset by technical problems and design flaws, threatening business confidence and contributing to a sudden drop in gross domestic product. In September, it emerged that businesses lodged claims for tax credits worth nearly $10bn for the first month of the GST — far greater than ministers had been expecting.
As they look to increase tax revenues, officials have delayed paying credits to exporters, who have to pay their tax and then claim the cash back under the new system. Under the old regime, exporters did not have to pay tax at all on the supplies they bought. “Small and medium exporters are finding it especially tough, as they are not able to take out bank loans to fund their working capital while they wait for tax credits to be paid,” Ajay Sahai, director-general of the Federation of Indian Export Organisations (FIEO), said. Mr Sahai estimates there are about 100,000 small and medium-sized exporters, up to 40 per cent of which are now facing difficulties. The problems threaten Mr Modi’s aim of boosting exports, which he has made a part of his economic policy under the “Make in India” slogan. Until recently that policy had been relatively successful, with exports rising 4.7 per cent in 2016-17 to $274.7bn — the steepest in five years. But that progress has stalled. In September the Reserve Bank of India announced India’s current account deficit had jumped to a four-year high of $14.3bn, as imports rose at double the pace of exports. Meanwhile economic growth has also slowed, falling from 7 per cent at the end of 2016 to just 5.7 per cent for the quarter ending on June 30. The dip has triggered a rare bout of infighting within the ruling Bharatiya Janata party, with Yashwant Sinha, the former finance minister, accusing the government of making a “mess” of the economy.

Future of textile MSMEs- B2C exports

E-commerce has grown rapidly in recent times and is expected to reach new geographies, soon encompassing all markets, says Rajveer Singh.

The e-commerce market is booming. The Chinese e-commerce sector has grown significantly and has a higher share compared to India. Indian businesses are adopting e-commerce rapidly. However, the rate of expansion is still small as compared to their Chinese counterparts.

The first lesson from the table below is that there is tremendous potential for Indian micro, small and medium enterprises (MSMEs). They can improve their e-commerce transactions in the domestic and global markets by increasing participation in India's extensive e-marketplace.The textile industry holds a significant position globally as textile was the first manufactured item to be exported. Due to size and reach, it has enormous capacity to generate employment and income.

The Indian apparel industry is amongst the largest in the world with a huge manufacturing base and large raw material pool. It is a major contributor to our economy in the domestic and exports markets. By 2021, textile and apparel exports from India to developed nations is expected to touch the US$ 82 billion.

As per the Export Import Data Bank, Ministry of Commerce and Industry:

1. Exports under HS Code 61, i.e. articles of apparel and clothing accessories - knitted or crocheted -- has grown 10.54 per cent from Rs. 50,15,336.86 lakhs in 2015-16 to Rs. 55,43,985.49 lakhs in 2016-17.

2. Exports under HS Code 62, i.e. articles of apparel and clothing accessories not knitted or crocheted, has jumped 1.2 per cent from Rs. 61,02,945.08 lakhs in 2015-16 to Rs. 61,76,253.29 lakhs in 2016-17.

Exports from India are routed majorly to countries like the United States of America, the United Kingdom, United Arab Emirates and Germany. Men's or boy's suits, ensembles, jackets, trousers; women's or girl's suits, ensembles, blazers, dresses, skirts; babies' garments and clothing accessories, T-shirts and singlets represent the significant chunk of India's apparel exports.New technologies are transforming the way people buy and sell. The digital revolution is at its cusp in India, so this is the time for MSMEs to wake up to the tremendous potential of e-commerce apparel exports. Various major initiatives introduced by the Government of India like Digital India, Skill India, Make in India, and Startup India are gaining momentum, indispensable in driving the growth of long-term e-commerce. Apparel export figures for 2016-17 show that the digital economy has moved from potential to mainstream. It is no longer just another channel but the channel to be mastered. The network of apparel in Asia-Pacific forecast for 2016-2021 is expected to be US$ 167.7 billion, a growth rate of nine per cent.

apparel and clothing accessories

India received its first ever shipment of US crude oil

India today received its first ever shipment of US crude oil with state-owned Indian Oil Corp (IOC) importing a 1.6 million barrels parcel at Paradip in Odisha.

MT New Prosperity, a very large crude carrier (VLCC), with a capacity to haul two million barrels of crude, left US Gulf Coast on August 19 and arrived at Paradip port.
"IOC will process the crude at its refineries located at Paradip, Haldia (in West Bengal), Barauni (in Bihar) and Bongaigaon (in Assam)," the company said in a statement.

A function was held at the Paradip port to mark the arrival, which was attended by officials of IOC, oil ministry and the US Embassy.

"IOC, which became the first Indian public sector refiner to source US crude, has placed a cumulative order 3.9 million barrel (of US crude)," it said.

State-owned Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) have also placed orders for about 2.95 million barrels and 1 million barrels of US crude respectively for their Kochi and Vizag refineries.
"The total volume of the crude presently contracted by Indian public sector refineries is, therefore, 7.85 million barrels," the statement said.

This is one of the first shipments to India since the United States stopped oil exports in 1975, and follows recent commitments to US oil purchases by Indian state refiners, a separate statement issued by US Embassy said.

"US crude oil shipments to India have the potential to boost bilateral trade by up to USD 2 billion," the Embassy statement said.

Indian companies, both public and private, have invested about USD 5 billion in US shale assets. They have also contracted 5.8 million tonnes per annum of liquefied natural gas (LNG) from the US and the first shipment is expected to be delivered to India in January 2018.

The Indian government has encouraged state-controlled refiners to buy US and Canadian crude from the US Gulf coast as it looks at cheaper alternatives that have emerged due to global supply glut.

While in the first purchase IOC is importing 1.6 million barrels of high sulphur crude Mars from the US and 400,000 barrels of Western Canadian Select oil, in the second it has bought 1.9 million barrels of US crude, half of it being shale oil. The second shipment is expected in a months time.
India, the world's third-largest oil importer, joins Asian countries like South Korea, Japan and China to buy US crude after production cuts by oil cartel OPEC drove up prices of Middle East heavy-sour crude, or grades with a high sulphur content.

Buying US crude has become attractive for Indian refiners after the differential between Brent (the benchmark crude or marker crude that serves as a reference price for buyers in western world) and Dubai (which serves as a benchmark for countries in the east) has narrowed.

Even after including the shipping cost, buying US crude is cost competitive to Indian refiners, an industry official said.

The IOC deal cames within weeks of Prime Minister Narendra Modi's June-end visit to the US when President Donald Trump talked of his country looking to export more energy products to India.MaryKay Carlson, Charg d Affaires at the US Embassy, termed the oil imports as a significant milestone in the growing partnership between the US and India.

"The United States and India are elevating our cooperation in the field of energy, including plans for cleaner fossil fuels, renewables, nuclear, and cutting edge storage and energy efficiency technologies. We look forward to working together on further sales of US crude and exploring opportunities to expand the role of natural gas in India," Carlson said.

During their June 26 meeting in Washington, Trump and Modi committed to expanding and elevating bilateral energy cooperation through a strategic energy partnership.The leaders called for a rational approach that balances environment and climate policy, global economic development, and energy security needs, the US Embassy statement said.

"President Trump affirmed that the United States continues to remove barriers to energy development and investment in the United States and to U.S. energy exports so that more natural gas, clean coal, and renewable resources and technologies are available to fuel India's economic growth and inclusive development," it added.

To encourage US crude purchases, the government has allowed refiners to use a foreign rather than an Indian-owned vessel for the purchase. Indian refiners typically have to use domestic vessels for their crude imports.