2016

Compiled By Mr. Sathish B R Indian Institute of Export Management

READING THE TEA LEAVES: HOW ASSAM’S GARDENS ARE RIDING THE CASH CRUNCH For most of the 792 tea estates in Assam, demonetisation and the State government s order to move over to bank transfer of wages by January was a serious disruption to their routine.But for NJ Borah, Manager of Namsung estate of Rossel Tea (near Jeypore of Dibrugarh), it came as a golden opportunity to remove some headaches and also bring home decent savings.An average tea garden in Assam pays fortnightly wages of Rs. 10-15 lakh. The cash is transferred to gardens against insurance and police protection.

B/L-16/12/2016

AGRI MINISTRY CLEARS MARKET INTERVENTION FOR ARECANUT The Union Agriculture and Farmers Welfare Ministry has sanctioned a market intervention scheme (MIS) for arecanut.A press release by the Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco)

Ltd said that the Ministry has sanctioned MIS for arecanut by fixing Rs. 251 a kg as the price for the white variety and Rs. 270 for the red variety in Karnataka. The Ministry has forwarded the notification to the Karnataka government for further action, it said.According to the scheme, a maximum quantity of 40,000 tonnes of arecanut may be procured under the scheme by the state agency.

B/L-17/12/2016

RUBBER EXPORTS GAINING MOMENTUM: BOARD Owing to price advantage, exports of rubber from the country has picked up momentum, according to the Rubber Board.The domestic price of natural rubber (NR) had been ruling high over international market prices since December 2013.Sheet rubber prices were significantly higher during the last three years and a marked difference of Rs. 35/kg was noticed between the RSS-4 grade and the comparable grade in Bangkok market during July 2016. This glaring price gap between the Indian and international prices came down in the third quarter of 2016.From the second week of November 2016, the international prices of NR shot up and is

currently hovering at higher levels compared to Indian prices.The spurt in international rubber price was due to the increased demand for rubber from China, upward trend in crude oil price, appreciation of the US dollar, etc.Natural rubber is predominantly an export commodity in the major producing countries such as Thailand, Malaysia, Indonesia, Vietnam, etc and a price-sensitive item to speculative news from major consuming countries like China, India , Japan, etc.

B/L-19/12/2016

SMALL TEA GROWERS WRITE TO MINISTER; SEEK FAIR PRICE, CROP INSURANCE Seeking a fair price for their produce and crop insurance, scores of registered small tea grower societies in Assam and other tea-growing States have written to Commerce Minister NirmalaSitharaman.Highlighting their contribution to employment generation and exports on the ocassion of the 12th International Tea Day on December 15, the letter written by these societies, located in Tinsukhia, Nagaon, Karbi Anglong, Golaghat, Sonitpur, Udalguri, and other States, also demanded participatory enforcement of price sharing

formula, better price for quality of leaf supplied, and making certified organic manure and pesticides available . B/L-20/12/2016

MCX ALUMINIUM MOVES SIDEWAYS WITH NEGATIVE BIAS ON FALL IN PRICES Following a sharp fall in the first week of December, the aluminium futures contract on the Multi Commodity Exchange (MCX) found support at around Rs. 115 per kg and started the move sideways. Last couple of weeks, the contract has been moving sideways in a narrow range.On Friday, the contract fell 1.3 per cent, encountering a key resistance at Rs. 118.5. With this fall, the contract has retrained its sideways movement in the band between Rs. 115 and Rs. 118.5. Experiencing selling pressure, the contract continued to decline and fell 0.6 per cent to trade at Rs. 116.3 on Monday.

B/L-21/12/2016

FARMERS DEMAND 40% DUTY ON WHEAT IMPORTS The Centre s decision to scrap import duty on wheat should be revoked immediately, farmer leaders from Punjab, Haryana, Madhya Pradesh, Uttar Pradesh

and Outer Delhi — all members of farmers body Bhartiya Kisan Union (BKU) — have demanded.Instead,

A 40 per cent cess should be imposed on imports to prevent distress sale during harvest, they suggest. The decision taken at a time when many farmers have more or less completed their sowing is cruel and anti-people and will lead to distress sale during harvest, said Ajmer Singh, State President of BKU Punjab, addressing a press conference on Tuesday.

B/L-22/12/2016

COMMERCE MINISTER HOPEFUL OF POSITIVE EXPORT GROWTH NEXT YEAR The lacklustre show of exports from the country for almost past two years is no deterrent for the government, which is confident that it will see a "positive and solid difference" in exports in 2017 commerce Minister said. The minister's optimism came against the backdrop of a positive growth recorded by the exports in the last three months. Since December 2014, exports fell for 18 straight months till May 2016 due to subdued global demand and slide in oil prices. Shipments started witnessing growth only in June this year, but again entered the negative zone in July and August. In September, October and November, it registered growth though. According to the commerce ministry's latest data, exports in November grew 2.29% to $20 billion. Exporters, too, expressed optimism for shipments in the new year. Federation of Indian Export Organisations (FIEO) said that out of the 30 key product groups, close to 20 are exhibiting positive trends in the

past couple of months. "If such a trend continues, India can achieve $280 billion or even more in exports in the current fiscal," FIEO president said. There is a word of caution. He felt that poor demand pickup, slump in commodities prices, currency war may become more prominent in posing a greater challenge to exports in 2017. To be sure, improvement in outbound shipments will depend largely on demand revival in global markets. Experts say the uncertain global economic recovery may pose challenge to the country's export sector. The major markets for Indian exporters — the US and Europe — are yet to show strong signs of demand revival. The two regions account for over 30% of the shipments. "Global economy is not going to grow. The world market is nervous," said professor at the Jawaharlal Nehru University, adding that demonetisation will also impact exporters, particularly from the MSME sector. This sector contributes about 45% to India's total exports. "Exports are expected to remain in depression for the first half of this fiscal. The government would have to extend support to boost exports," it said. Labour-intensive sectors,

including of handicrafts, have already flagged their concerns related to the impact of currency withdrawal. Ease of doing business too is another key parameter for higher export numbers. Though the government has taken steps to improve that by reducing the number of documents required for import and export of goods, more is required. According to the multilateral body, global trade growth should hit 3.6% in 2017, but the figure is still below the average 5% since 1990. The main reasons for the decline are fall in global demand and commodity prices, impacting terms of trade for exporters. The drop in crude oil prices had resulted in consequent decline in prices as well as export realisations for petroleum products. These are major product items of exports for India.

FIEO NEWS

EXPORTS UP 2.29% IN NOV, BUT GOLD IMPORTS PUSH UP TRADE DEFICIT TO TWO-YEAR HIGH Exports

rose for the third straight month in November, recording a growth of 2.29 per cent, though the trade deficit shot up to about twoyear high of $13 billion mainly due to increase in gold imports. Exports of engineering products rose by

14.10 per cent, petroleum by 5.73 cent and chemicals by 8.3 per cent compared to the same month last year, according to official data released. Imports too increased by 10.44 per cent to $33 billion. Rise in gold imports by 23.24 per cent to $4.36 billion in November pushed the trade deficit to a two-year high of $13 billion as against $10.33 billion in the same month last year. It was in November 2014 when trade deficit hit a high of $16.86 billion. Exporters body Federation of Indian Export Organisations (FIEO) said that although growth is encouraging, uncertain global conditions still remains a challenge. Though the sentiment still remains low in the global market, factors like US Fed rate hike and demonetisation have also in some way added to the woes of the exporters which may be seen in the figures of coming months, said FIEO President. The country s merchandise exports during April-November period of the current fiscal recorded a growth of 0.10 per cent to $174.92 billion. Imports, however, contracted by 8.44 per cent to $241.1 billion, leaving a trade deficit of $66.17 billion as against $88.57 in AprilNovember 2015-16. Oil imports last month grew by 5.89 per cent to $6.83 billion and non-oil imports by 11.7 per cent to $26.18 billion. Since December 2014, exports fell for 18 consecutive months till May 2016. Shipments witnessed growth only

in June this year, but again slipped in July and August. Exports started recording positive growth from September.

FIEO NEWS

SERVICES EXPORT DIPS 4.79% IN OCTOBER

After registering a growth in September, India's services export dipped by 4.79 per cent to USD 13.11 billion in October, according to RBI data. There was a growth of 3.4 per cent in exports in September this year. Services import too declined by 7.51 per cent to USD 7.68 billion during the month under review. On cumulative basis, total services export was USD 37.79 billion during the April-October period this fiscal. The services sector contributes about 55 per cent to the country's gross domestic product.

FIEO NEWS

INDIA WAITING FOR DATES FROM EU TO NEGOTIATE FTA: COMMERCE MINISTER

India is waiting for dates from European Union to negotiate the long pending Free Trade Agreement as well as a fresh Bilateral Investment Treaty, Commerce and Industry Minister said. The proposed Broadbased

Trade and Investment Agreement (BTIA) or FTA has been pending for long. "India has repeatedly asked for dates for negotiations with the EU... This FTA has gone through several stages," the minister said. Minister indicated that the delay in resuming talks could be because EU is now looking more at getting the investment treaty "quickly done". The European Commission (EC) had raised concerns over negotiations for a fresh Bilateral Investment Treaty (BIT). Commerce Minister said the government has come out with the revised model text for BIT and all existing investment protection agreements will be null and void from March 31, "so govt wants countries to do that". Launched in June 2007, BITA negotiations have seen many hurdles with both sides having major differences on crucial issues like intellectual property rights, duty cuts in automobile as well as spirits and a liberal visa regime. On other FTAs which India is negotiating, Commerce Minister sought feedback from industry chambers on those and ways to increase share of India in the global trade to 3.5 per cent by 2020 from about 2 per cent currently. Minister also expressed concerns about the increasing protectionism in the world. "There is very high degree of protectionism across the globe," Minister said adding India is opening up but in a calibrated

manner. Talking about quality and standards of products, she said Indian industry needs to increase standards and its compliance to boost its competitiveness in the world market. Commerce Minister further said that the Commerce Ministry will soon call the meeting of Board of Trade to discuss issues related to exports.

FIEO NEWS

EXPORTS MAY TAKE 'MOMENTARY' HIT POST DEMONETISATION: COMMERCE SECRETARY

India's exports are likely to witness a momentary "setback or slowdown" following the demonetisation and ensuing cash crunch, a top official has said. "It is a fact that perhaps the demonetisation process, as was pointed out, it may cause a momentary setback or momentary slowdown (to India's exports)," Commerce Secretary said. On whether the government has assessed the extent of impact on shipments, Commerce Secretary said that Commerce Ministry has entered into a consultative process with all the export promotion councils to understand the level of adaptation to the effects of demonetisation. "In the long run, Govt will all see the gain

of this (demonetisation) as well as combining with the movement of GST that we should be seeing substantive strengthening of our status," Secretary said. Addressing an awards ceremony organised by engineering exporters' body EEPC India, Commerce Secretary expressed concern over the increasing agglomeration of the engineering exports at the lower ends of the value chain and the "somewhat unsettling" decline in the value addition. Secretary urged the engineering exporters to introspect on the issue and to focus on research and development to move up the value chain. Commerce Secretary said the Commerce Ministry is focusing on facilitating technology upgradation for boosting exports by bridging the gap between the leading R & D laboratories in the country and the industry and identifying specific products through which value addition can take place. "Govt has identified as part of this process several important industrial clusters," it said. After recording negative growth for about twoyears, exports have started recording positive growth. The outbound shipments continued to grow for the second month in a row, expanding by 9.59 per cent to $23.51 billion in October on healthy growth in shipments of jewellery and engineering products. "The engineering sector is actually leading the reversal of

the decline of exports over the last two years and has allowed us in October to register a growth of 9.6 per cent overall in the exports from India. India's exports are expected to reach USD 280 billion by the end of this fiscal as against USD 261.13 billion in 2015-16. Commerce Secretary also launched a mobile app put together by EEPC India which contains information about various initiatives, policies, events and market index prices.

FIEO NEWS

NOTE BAN TAKES AWAY PAKISTAN COTTON EXPORT RELIEF CUSHION While Pakistan recently lifted the ban on cotton imports from India, Indian exporters are unable to capitalise on the move. Last year, of the initial three million bales (one bale is 170 kg) of export orders during the October-December period, 1.5 million bales were to Pakistan. With daily arrivals still under pressure, exporters are unable to take orders. Pakistan had banned import from India in the fourth week of November, citing quality issues. The ban was lifted a few days ago as industry urged the Pakistan government to do so. According to the Indian cotton industry, Pakistan might import 700,000-800,000 bales in 2016-

17. Last year, India had exported 2.5 million bales to Pakistan, which had faced a crop failure. After demonetisation, several mandis are not fully operational as arrivals have dwindled. Cotton arrivals are down 25-30 per cent from last year, despite a slight improvement in early December. Last December, daily arrivals had stood at 200,000 bales; this year, it is 140,000-150,000 bales a day. This month, arrivals increased by about 30,000 bales after farmers began accepting payments through cheque. While India is the best choice for Pakistan for cotton imports, Indian exporters are unable to profit from it. Demand is there from Pakistan and other countries but Indian exporters are not in a position to fulfil the demand. More, as supply is tight, exporters are not in a condition to fulfil their commitments they made for November and December. Exporters are not booking new contracts, as they are not sure about supply, said cotton exporters. After the note ban, cotton prices had gone up to Rs 40,000 per candy of 355 kg, now ruling at Rs 38,800-39,200 per candy. This year, India had booked export contracts of 2.2 million bales for October, November and December delivery but, the country had exported about 500,000 bales only by the end of November. According to exporters, in this scenario, India s

total exports might decline by 20-25 per cent at the end of the year. Cotton Fibres exporter, said, India exports per cent of cotton during October and March every year. The industry expects six million bales of cotton exports in the current cotton year (October-September) but in this scenario, exports might not be over . million bales. Raw cotton has been trading at Rs 990-1,060 per 20 kg in Gujarat, with prices going up by Rs 20 per 20 kg in December so far.

FIEO NEWS

'INDO-CHINA TRADE VOLUME TO TOUCH $65 BN DURING 2016' The bi-lateral trade volume between India and China is expected to be over $65 billion for 2016 and focus by China will be in financial, infrastructure, electronics and Information Technology sectors, a senior Chinese official said. "The bilateral trade stood at $52.14 billion till January to September 2016 and we expect the trade volume will touch $65 billion during 2016 " said Commercial Counselor, Consulate General of The People's Republic Of China. China emphasised that the key sectors in India which were focused by China are financial, infrastructure, electronics and IT. Chinese companies will display their

products and machines covering a range of sectors at twin trade shows being held here next week. Over 1,000 of the topmost Chinese suppliers will be part of China Machinex, where they will display over 20,000 products during the event. China Machinex is a global series of China products show annually held across nine counties - Brazil, Turkey, South Africa, Poland, Egypt, Kazakhstan, Jordan,UAE and India.

FIEO NEWS

RCEP: IMPASSE AT INDONESIA TALKS MAY PUT MORE PRESSURE ON INDIA India has some more time to decide on the final offers on reducing import tariffs for the 15 partner countries of the regional comprehensive economic partnership (RCEP) — which includes China and the 10-member ASEAN — as the recent negotiating round in Indonesia failed to deliver a consensus on the broad numbers. The next round of negotiations scheduled in Kobe, Japan, in February 2017, however could bring in more pressure on India to increase its level of ambition on overall tariff liberalisation as Australia and New Zealand have already raised the pitch for greater market access. Last week s negotiating round in Indonesia failed to

deliver results in terms of broad numbers for tariff reduction in goods as Australia and New Zealand were not satisfied with the numbers being discussed. Since the two countries have near zero tariffs on most goods, they would want all RCEP members to eliminate tariffs on as many goods as possible, a government official said. The other members of the RCEP are Japan and South Korea. India, on the other hand, does not want to offer very high levels of liberalisation to China, Australia and New Zealand — the countries with which it does not have free trade agreements. There is a general agreement between all members that there would be one offer for all, but of course there has to be deviations as it is not possible to offer the same levels of openness to all countries for all products. What India can offer to existing FTA partners such as the ASEAN or Japan, cannot be the same as what we offer to China, Australia and New Zealand, the official said. The deviations can be worked out only when there is an agreement on the overall level of tariff cuts for all members which would serve as the base. New Delhi had initially offered to eliminate tariffs on 80 per cent of items for ASEAN, 62.5 per cent of items for Japan and South Korea and 42.5 per cent of items for China, Australia and New Zealand, but the offers will be reworked now with an attempt to move

towards a common base. If India had progress in the talks in Indonesia, members could have worked on final offers in February in Japan, which could have been then followed by a Ministerial meet in March as was being originally planned. But now members would try to achieve in Japan what they failed to achieve in Indonesia and the Ministerial meet seems likely only in August, the official added. There was also not much movement in the area of services with members not improving substantially upon their earlier offers. Despite New Delhi s attempts to get countries to make meaningful offers to liberalise movement of workers, most members did not respond positively.

FIEO NEWS

SPICES BOARD, MPEDA PITCH FOR BOOSTING EXPORTS TO GERMANY Aiming to broaden the trade links with Germany, the Spices Board, in association with the Marine Products and Exports Development Authority (MPEDA), hosted an interactive session with German Consul General. The Consul General pointed to the strong ties between the two countries and indicated that trade relations would continue to grow in her address to a gathering of

marine exports representatives from Kerala, Tamil Nadu, Andhra Pradesh and Karnataka. German Consul General said that Germany is a frontrunner in consuming organic products. Indian Ocean is a strategic economic zone as the Indo-German ties have strengthened. Germans are happy with the products from India especially because they meet the international standards, it added. MPEDA Chairman advocated for boosting the spice and marine products exports and pressed for a transparent quality check procedures during the exports. India has been striving hard to meet the prescribed quality standards by European Union and I am happy that we are exporting our products with very less rejection of consignments. Going organic is the buzzword of the town and we are now exporting pesticide-free products, MPEDA said during the interactive session. MPEDA also added that there is an increase demand for value added products in Germany, which accounts for 25 per cent of the total EU imports from India. Pepper, mint products, oil and oleoresins form a good share of the imports. Marine exports to Germany were to the tune of 5,211 metric tonnes worth $ 39.69 million during 2015-16. Frozen shrimp was the major item of export (80 per cent by quantity and value) followed by frozen

cephalopod and fish.

FIEO NEWS

INDIA'S SOYMEAL EXPORTS TO HIT 3-YR HIGH AS SOYBEAN OUTPUT JUMPS

India's soymeal exports in 2016/17 are likely to jump to three-year highs as a sharp price correction due to a rebound in soybean production makes overseas sales competitive, said industry officials. Higher exports from India could trim shipments of South American soymeal into Asia, and also shore up local soybean prices, which fell below a government-fixed support level in physical markets recently. India's soymeal exports could jump to more than 2 million tonnes in the 2016/17 year that started on Oct. 1, from 261,501 tonnes shipped in the previous year, President of industry body Solvent Extractors Association of India said. "Now, Indian values are more or less aligned with world values and that's why exports are taking place." This year, India is expected to harvest 66 percent more soybeans at 11.5 million tonnes as the south Asian country received normal rainfall, estimates the Soybean Processors Association of India (SOPA).

FIEO NEWS

PARLIAMENTARY PANEL FOR CUT IN INTEREST RATES FOR EXPORTERS

A parliamentary panel has suggested that interest rates should be brought down to help exporters which are facing problems in global markets. The Department Related Parliamentary Standing Committee on Commerce has appreciated the various products offered by banks to facilitate a robust export credit framework "but it also strongly feels that the rate of interest on such credit may be brought down". 7 INTRADE UPDATE It also said that the banks must ensure regular exporters meet and have tie-up with various credit information bureaus to obtain information on the overseas parties for the benefit of export business customers. The committee said that EXIM Bank should reach hinterland areas so that export infrastructure may be created giving a boost to exports from those areas. To reduce transactions cost, it said there are

lots of difficulties for completion of paperwork by traders at the Land Customs Station. The local traders still lag behind in their marketing capabilities, it said adding "proper training and guidance in these areas need to be given to the traders". It said the infrastructure built for export purposes at the trading points needs a lot of improvement in terms of the structure, purpose and the same must be built by "reputed agencies or firms" in order to provide world class facility. It has recommended that the Department of Commerce should engage the State government to resolve the problems. "The committee is of considered view that on the lines of imported products, a system may be devised for export products too where the excise authorities after verifying the product for export may issue 'goods checked and sealed certificate' which may be deemed adequate to cover compliance for all the 17 Acts and Rules," it added.

FIEO NEWS

FOREX RESERVES DOWN BY $887.2 MILLION TO $362.987 BILLION: RBI

India's foreign exchange reserves declined by $887.2 million to $362.987 billion in the week to December 9 due to fall in foreign currency assets, the Reserve Bank said. In the previous week, the reserves had declined by $1.431 billion to $363.874 billion. They had touched a life-time high of $371.99 billion in the week to September 30, 2016. Foreign currency assets (FCAs), a major component of the overall reserves, dipped by $873 million to $339.258 billion. Gold reserves remained steady at $19.982 billion in the reporting week, RBI said. The special drawing rights with the International Monetary Fund decreased by $5.4 million to $1.438 billion, while India's reserve position with the Fund dipped by $8.8 million to $2.307 billion, the apex bank said.

FIEO NEWS

RBI IMPOSES RESTRICTIONS ON WITHDRAWAL FROM CERTAIN BANK ACCOUNTS Tightening the noose around people who misused banking

channels to park unaccounted money, the Reserve Bank imposed certain restrictions on withdrawal if more than Rs 2 lakh has been deposited after November 9 in an account which has a balance of over Rs 5 lakh. As per a RBI notification, withdrawal or transfer of funds will not be permitted in accounts without quoting of PAN or submission of Form 60 (persons who do not have PAN). The Reserve Bank also said monthly withdrawal limit of Rs 10,000 will be maintained even if a 'small account' has witnessed increase in annual permissible deposit of Rs 1 lakh. The notification follows after it was brought to the notice of the RBI that "strict compliance" with KYC (Know Your Customer) provisions is not being ensured in some cases. In respect of KYC compliant accounts where the required Customer Due Diligence (CDD) procedure has been complied with, RBI said banks and NBFCs should ensure compliance regarding quoting of PAN/obtaining of Form 60 for all transactions. "No debit transaction, transfer or otherwise shall be allowed in accounts which do not comply with the above mentioned requirements. "To begin with, this rule shall be strictly applied in accounts where both the thresholds listed -- (i) balance of rupees five lakh or more; and (ii) the total deposits (including credits by electronic or

other means) made after November 9, 2016, exceed rupees two lakh," RBI said. RBI further said if any account is rendered ineligible for being classified as a small account due to credits/balance in the account exceeding the permissible limits, withdrawals may be allowed within the limit prescribed for small accounts. The monthly limit for withdrawal and transfer from a small account is Rs 10,000. Also, aggregate of all credits in a financial year cannot exceed Rs 1 lakh. Basic Savings Bank Deposit Accounts (Jan Dhan accounts are akin to BSBDAs), which are not KYC compliant accounts are to be treated as 'small accounts', the RBI added.

FIEO NEWS

BANK CREDIT PLUNGES BY RS 61,000 CR

The demand destruction unleashed by the November 8 demonetisation drive saw the bank credit shrinking by a whopping Rs 61,000 crore, or 0.8 per cent, during the fortnight to November 25, according to the latest RBI data. But at the same time, the note ban also had a positive effect, as borrowers, including some default accounts, paid back as much as Rs 66,000 crore during the same period. In

sharp contrast, during the same fortnight, banks received huge inflows as people deposited as much as Rs 4.03 lakh crore into the accounts, which as of December 9 crossed Rs 12 lakh crore, putting all calculations of the Government into a tizzy. The outstanding credit of banking system stood at Rs 72.92 lakh crore as of November 25, according to the Reserve Bank data. The yearon-year credit growth was just 6.6 per cent, down from 9.3 per cent a year ago. Deposits rose 4 per cent in the fortnight to Rs 105.177 lakh crore, pushing the annual growth to 15.9 per cent as against 9.8 per cent a year ago. In the fortnight to November 11, deposits grew Rs 1.31 lakh crore or 1.3 per cent, according to the RBI data.

FIEO NEWS

CASH SQUEEZE: ADB SLASHES INDIA’S 6 GROWTH ESTIMATE TO 7%

The Asian Development Bank (ADB) has trimmed its 2016 growth estimate for India to 7 per cent from the previous 7.4 per cent on account of demonetisation, weak investment and agricultural slowdown. But India s growth forecast for was kept at 7.8 per cent. Economic growth in developing Asia remains broadly stable, but a

slight slowdown in India has trimmed the region s growth outlook for , said the new ADB report. In a supplement to its Asian Development Outlook 2016 Update report, ADB has downgraded 2016 growth for Asia to 5.6 per cent, below its previous projection of 5.7 per cent. For 2017, growth remains unchanged at . per cent. India s tempered growth projection to 7 per cent from the previously forecast 7.4 per cent in 2016 is due to weak investments, a slowdown in the country s agriculture sector, and lack of available cash due to the government s decision to ban highdenomination banknotes, ADB said. The junking of old 500 and 1,000 rupee notes will likely affect largely cash-based sectors in the country, including small and medium-scale businesses. The effects of the transition are expected to be short-lived and the Indian economy is expected to grow at 7.8 per cent in , it said. ADB said South Asia is the most dynamic part of the region, with growth expected at 6.6 per cent this year, down from the previous forecast of 6.9 per cent. South Asia s growth is estimated at 7.3 per cent in 2017. China, it said, is on course to grow 6.6 per cent this year and 6.4 per cent in 2017.

FIEO NEWS

FINANCE MINISTER HINTS AT LOW TAX RATES DUE TO DEMONETISATION, DIGIPAYMENTS

Finance minister held out hope of tax cuts in the future as higher revenue gets generated by a cashless system that will allow transactions to be tracked, following the November 8 demonetisation announcement. "Future transactions would be substantially digital and once they are substantially digital they get caught in the tax net," Minister said. "Therefore, the future taxation level (collection) would be much higher than what is currently being collected." Finance Minister said cancelling the old Rs 500 and Rs 1,000 notes will help India move toward a "less-cash" economy and rising digital payments will deliver multiple benefits. The government was rapidly replacing old currency with new notes and significant amounts will be injected into the banking system over the next three weeks. "There are economic costs of dealing in cash, there are social costs of dealing in cash. These are the costs which the system has to bear," Minister said, adding that demonetisation was a system overhaul by the government. "It is Government s strategy that from high

cashdominated economy we should become a lesscash economy where the amount of paper currency comes down… Cash will still exist and there would be a greater digitisation." "Obviously, with all these advantages, the social cost also on the system will go down. Therefore, the cash used for bribery, for counterfeit currency, for terrorism, for evading taxes itself will go down," Minister said. Along with other reforms, particularly the proposed goods and services tax (GST) and tying cash spending to PAN declaration, "the levels of corruption in society" will drop, Minister said. "It is going to bring down cash transaction in society and it's going to bring down levels of evasion as far as taxation is concerned."

FIEO NEWS

INDIAN ECONOMY WELL CUSHIONED TO ABSORB FED RATE HIKE IMPACT

CEA The government expects India s financial markets to stabilise after initial ripples due to the US Federal Reserve s decision to raise rates, but belives the rate increase has reduced room for the Reserve Bank of India (RBI) to cut rates as that could weaken the rupee. Economic Affairs Secretary(EAS) said Indian markets have already factored in the impact of the increase. "0.25% Fed rate hike will be absorbed as this has been factored in. But all other emerging market economies will come under pressure, a top finance ministry official said but added this has reduced monetary room for India. The more we lower our interest rates, the risk of flight of capital will be higher, EAS said. India sees lower interest rate amongst other emerging market economies but India has to balance it out so that it does not impact the rupee, the official added. CEA said: Indian economy is very well cushioned to absorb the impact. Of course, there will be some reassessment and money will flow from

emerging market to the US at least for some time. But in that, India will be less affected than other countries. US Fed raised the target for federal funds rate 25 basis points to between 0.50% and . %. Projection for growth outlook remains fairly stable and only marginally improved. Markets had factored in the rate hike and we expect that our markets, the currency market, to stabilise after initial ripples or volatility. Whatever has happened today is not unusual and our markets will remain fairly stable, EAS said. The rupee fell 42 paise to 67.85 against the US dollar in the morning trade and closed the day 40 paise down at .`67.83. India s $ - billion forex reserves are expected to provide cushion against some outflows due to rise in interest rates in the US.

FIEO NEWS

Gems and jewellery exports to EU worth $3 bn at risk Gems and jewellery export to the European Union worth upwards of $3 billion a year is at risk due to the country’s exclusion in the list of Generalized System of Preferences(GSP), a practice which offers tax incentives from origin to destination countries. India enjoyed customs duty benefits to the tune of 2.5-4 per cent and value added tax between 20 and 25 per cent in various countries in the EU in the last three years of theGSP regime, ending this month. As a result, our gems andjewellery export jumped to $3.6 billion in 2014-15, though it then declined by

10 per cent to $3.

2 bn 20

15-16,

due

to unfavorable market conditions. Net gems and jewelleryexports from India In the revised list, however, the EU has excluded this sector from the GSP list. This means, all customs and VAT applicable for non-GSP commodities would be applicable forgems and jewelleryexport from India. TheEU takes eight per cent of our overall annual export of gems and jewellery, worth $39 bn. The decision will definitely hit our exportsto the EU, said Praveen Shankar Pandya, chairman, Gems and Jewellery Export Promotion Council. This exclusion comes as the sector faces challenges, due to the global economic uncertainty. With the applicable duties, gems and jewellery exports from India would be uneconomical for European consumers, worries a city-based exporter.

Business-Standard

India may not meet 2020 export target; policy review ahead

NEW DELHI: The government is set to review its ambitious plan to achieve goods and services exports of $900 billion by 2020 as it becomes evident that the target is likely to be missed, given the current global scenario. The government had set the ambitious target last year for goods and services exports, which were about $421billion in 2014-15. The exports target looks difficult to meet. I can’t say what the new target will be at this point of time, but we will do a mid-year review of the foreign trade policy soon, said a senior commerce ministry official. The review, aimed at taking corrective steps by assessing the impact of export sops on various sectors, will begin soon. Looking at the global challenges, $900 billion is completely ruled out. In fact, whether we can reach $750 billion exports is also a question, said another official privy to the details. However, no decision has been taken on revising the existing target or setting a new one. Growth of India’s total goods exports in April-November 2016-17 was flat compared with the same period in the previous financial

year. Services exports dipped 4.79% to $13.11 billion in October, according to Reserve Bank of India data. For FY17, industry expects merchandise exports to be $270-280 billion and services exports at less than $150 billion. The World Trade Organisation trimmed its forecast by over 1percentage point as it expects global trade in 2016 to grow at the slowest pace since the financial crisis. The downgrade follows a sharper-than-expected decline in merchandise trade volumes in the first quarter, it said in September. The organisation expects global trade to grow 1.7% this year compared with its previous forecast of 2.8% and an estimate of 3.9% made in September 2015.

The Economic Times

Pepper exports lose sting on higher prices; imports up 18% Pepper exports via Kochi port fell by 43.54 per cent during January-October 2016, while imports increased by 18.25 per cent. As against 19,116 tonnes in January-October 2015, shipments through Kochi port stood at 10,792 tonnes in the same period this year. Whereas, the imports soared to 14,515 tonnes from 12,275 tonnes last year, according to Cochin Chamber sources. Much of the Indian imports have been from Vietnam this year.

According to Vietnam General Department of Customs, India has imported 10,399 tonnes — up 33.82 per cent over the previous year and became the third top importer, Kishor Shamji, an exporter, told BusinessLine.

At the national level, total exports might have touched around 11,800 tonnes and the imports at 16,500 tonnes, he said. Around 90 per cent of the Indian pepper exports, of late, is re-export of imported pepper after doing value-addition such as extraction, grinding and sterilisation. Main reason for the decline in exports is the high prices which are ruling much above other origins and as a result, many buyers of Malabar pepper have switched over to Indonesian and Vietnam produce. Consequently, we have lost many of our export markets and it has now become a difficult task for the exporters to regain the lost market from our competitors, he said. Export sources attributed the high pepper prices in India to strong domestic demand without a corresponding growth in production. Add to this is the low productivity and higher production cost in the major growing state Kerala where the productivity per hectare is around 300 kg, they added. Spot pepper slips

Spot pepper prices slipped further as farmers were releasing their produce. Dealers have slowed down buying hoping for a further fall in prices, while industries — which needs the material now — were buying, market sources told BusinessLine. On the terminal market, 11 tonnes were traded at ₹650-670 a kg. Spot

prices fell further by ₹300 a quintal

to ₹66,900 (ungarbled) and

₹69,900 (garbled). January,

February and March contracts on the IPSTA stayed unchanged at ₹65,000, ₹63,000 and ₹58,000 a

quintal. Export prices were at $10,600 a tonne c&f for Europe and $10,850 for the US.

Business line

http://www.eximbankindia.in/

Established by the Government of

India, EXIM BANK commenced

operations in 1982 under the

Export-Import Bank of India Act,

1981 as a purveyor of export credit,

mirroring global Export Credit

Agencies. Today, the EXIM Bank

serves as a growth engine for

industries and SMEs through a wide

range of products and services. This

includes import of technology and

export product development,

export production, export

marketing, pre-shipment and post-

shipment and overseas investment.

Services include • Buyer's Credit under NEIA • Corporate Banking • Line of Credit • Overseas Investment Finance • Project Finance