Category: Trade

Welcoming the much-needed booster for the exports sector, FIEO President, Mr Sharad Kumar Saraf said that the announcement made by the Hon’ble Finance Minister Ms Nirmala Sitharaman has come at a time when there are signs of worsening global economic conditions pointing further toward downward revision of global trade growth. Slew of new measures announced for the exports sector in the form of incentives & refund of taxes, export finance, export facilitation, free trade agreements, engineering and handicrafts will not only go a long way in enhancing the growth prospects of the sector in the short-term but will also give it a much needed boost in the medium-term and long-term and will stimulate the overall economy added Mr Saraf.

FIEO Chief said that the new scheme of Remission of Duties or Taxes on Export Products (RoDTEP) with revenue burden of up to Rs 50,000 crores for the government, will completely replace all Merchandise Exports from India Scheme (MEIS) from January 1, 2020 with the expectation that the new scheme will more than adequately incentivize the exporters than the existing schemes put together. The new scheme looks attractive as it will neutralise all duties and levies suffered by the export products. Giving three months lead time till 31st December to the existing MEIS will remove the uncertainty creeping in the minds of the exporters and will greatly help to finalise their export orders, Mr Saraf said. Further fully electronic refund module for quick and automated refund of ITC by September, 2019 will help the exporting community in not only speedy and timely refund of their GST but will also help them in getting their long pending refund of their ITC thereby mitigating their working capital requirements, said Mr Sharad Kumar Saraf.

Mr Saraf stated that besides measures taken to improve credit outflows from banks and transmission of interest rate cuts being effected by banks will go a long way in improving the cost and availability of credit, as the flow of credit to this sector has been under pressure since long. Expanding the scope of Export Credit Insurance Scheme (ESIC) by ECGC will enable reduction in overall cost of export credit including interest rates especially for MSMEs. Announcement on the revised Priority Sector Lending (PSL) norms for export credit, will release an additional ?36,000 crore to ?68,000 crore as export credit along with an active monitoring by an interministerial working group in the Department of Commerce, tracked through a dashboard will also help in keeping track of the overall export financing for the sector added FIEO Chief.

Mr Sharad Kumar Saraf also said that leveraging technology to reduce turnaround time at ports and airports through seamless digitization process of export clearances is also a welcome step, which will further reduce transaction cost and time. Holding of annual mega shopping festivals like Dubai Shopping Festival to will not only boost exports but will also help in creating value for Brand India products from labour-intensive sectors like Gems & Jewellery, Handicrafts, Yoga, Tourism and Textiles.

President FIEO said that online “Original Management System” for exporters will enable them to obtain Certificates of Origin, which is further expected to improve ease of doing business for exporters. Time-bound adoption of mandatory technical standards will not only elevate quality and performance, enhance competitiveness and address issue of sub-standard imports but will also give boost to Indian products overcoming nontariff barriers. Besides initiative on affordable testing and certification infrastructure will reduce cost of adoption of standards and certification for meeting international standards under different FTAs. And last but not the least, FIEO Chief is of the view that announcement on the FTA utilization mission headed by senior officials from Department of Commerce will be set up and will work with FIEO and other export houses to utilize concessional tariff in each FTA. The initiative which was one of the demands of the Federation will be able to enhance awareness of preferential duty benefits MSMEs and disseminate and facilitate compliance requirements under FTAs for both importers and exporters.

Oct-Nov-Dec | 2019 OPEN TRADE TRADE ASEAN persuades India to speed up talks on RCEP Pressure is piling up on India from other members of the Regional Comprehensive Economic Partnership (RCEP), especially the ASEAN, to end its stalemate with China on market opening offered under the proposed pact.

Trade Ministers of Thailand and Indonesia and the Secretary-General of the 10-member ASEAN group met Commerce and Industry Minister Piyush Goyal in New Delhi on Tuesday to discuss ways to speed up the negotiations so that the pact is in place by the year-end, a government official told BusinessLine.

The RCEP, comprising 16 members, including the ASEAN, China, India, South Korea, Japan, Australia and New Zealand, was expected to be signed last year. Things, however, got delayed for a number of reasons such as India’s reluctance to offer substantial market access to China, disagreement between members over services offers and new governments in some countries like Malaysia.

“The troika from ASEAN countries that met Goyal was focussed on finding ways to move ahead in the negotiations so that the RCEP gets implemented in 2019. The visitors were told that while India would do its best in fast-tracking its discussions with other members, including China, it couldn’t ignore the interests of its industry,” the official said.

The Indian manufacturing sector including steel, engineering goods and automobiles, in its discussion with the Commerce Ministry recently, demanded that India should not offer zero duties on more than 42 per cent of traded items to China as most domestic producers will not be able to handle the increased competition.

However, New Delhi has already tentatively offered to eliminate duties on 74 per cent items from China (and also New Zealand and Australia) as part of the RCEP deal.

What has brought things to a standstill between India and China is Beijing’s demand that New Delhi should eliminate duties on more than 90 per cent items from the country, as it is willing to do in case of the ASEAN, Japan and South Korea, and is not ready to accept a lower offer.

“There will possibly be discussions between Indian and Chinese officials in a bid to break the deadlock over market access prior to the next round of RCEP talks in China later in July and the meeting of Trade Ministers in the country early August,” the official said.

China has already hinted that other members should go ahead with a mega trade pact if India continued to dilly-dally by proposing a free trade pact between ASEAN + 3 which includes China, South Korea and Japan.

New Delhi is hesitant about opting out of the RCEP pact because, if concluded, it would be the largest free trade bloc in the world accounting for 25 per cent of global GDP and 30 per cent of world trade, giving members huge opportunities to expand trade and investment within the region.

The Indian Army has approved the opening of a new trading point with China at Dumchelle in Ladakh, the third such along India’s disputed, albeit peaceful 3,488-km border with China in a confidence building measure ahead of Chinese President Xi Jinping’s October visit.

Although the Indian Army’s spokesperson did not respond to queries, three officials familiar with the matter said on condition of anonymity that the army has cleared the opening of the post, and that it is up to the government now.

The Trading post could open as soon as the end of the year and that work has already started on the customs check point and the road to it. The only thing left is for the Cabinet Committee on Security to sign off.

Dumchelle is in Southern Ladakh, and is strategically located between Chushul , one of the five designated Border Personnel Meeting (BPM) meeting points between the Indian and Chinese armies, and Demchok in Southern Ladakh.

The two other recognised trading points with China are Lipulekh in Uttrakhand and Nathu La in Sikkim. Predetermined, locally made items are traded through these points with an aim of boosting the local economy.

President Xi is scheduled to be in India in October for an informal summit with Prime Minister Narendra Modi. Opening up another trading point along the disputed Line of Actual Control (LAC) would be a major confidence building measure, analysts said.

Although the Dumchelle trading point will be new, trade at the border town between residents of Ladakh and the Tibetans from the other side has a long history. Goods are bought and sold at Dumchelle regularly. In addition, there is a three-week-long fair at Dumchelle where locals from both sides participate.

In the past, the Chinese People’s Liberation Army (PLA) has even used the hotline, which connects military commanders on both sides of the border and which is used to sort out minor issues, to discuss dates of the fair. “It is an informal arrangement between the two sides,” a senior serving Indian Army officer said.

“It is a traditional trade route. In the past, the army has written to the government advising it to either completely stop the trade or formalise the exchange,” a government official added.

The current trade through Dumchelle is informal and designating it a trading point will automatically lead to “supervision of the goods flowing through this area. Also, there could be revenue implications for the government,” this person said. “Ladakh is flooded with Chinese made goods, much of which is traded through this particular point.”

India-China ties which hit a low during the 73-day long stand-off between the armies of the two countries in the Doklam plateau in Sikkim in 2017 warmed after the historic informal summit at Wuhan between Prime Minister Modi and President Xi in April 2018. Both leaders agreed to give “strategic” guidance to the respective militaries to reduce border tensions.

Nonetheless, caution on either side is understandable. The LAC is not demarcated. To address this, the two countries have agreed to elaborate mechanism that includes banner drills and communication between local commanders through established “hotlines” to ensure minor issues do not escalate into major ones.