Period: upto- February 4, 2002
Ø
Events
Ø
Policy
Measures And Proposals
a)
Bilateral
b)
Multilateral
Ø The closing exchange rate of the rupee to the US $ in the spot market was Rs 48.54 on 1 Feb 2002.
Ø The inflation rate for the week ending January 19th 2002, for which the data was released by the Ministry of Commerce & Industry, stands at 1.32%.
Ø India’s foreign exchange reserves increased $27 million to $49,252 million, a record high, during the week ended January 25, 2002. In the previous week, reserves had swelled $298 million to cross the $49 billion mark.
Ø Quick estimates of GDP for 2000-01 released by the Central Statistical Organisation reveal a growth rate of 4%. (for details read analysis and comments
Ø The Fiscal Deficit for the period Apr-Dec 2001 stands at 77% of budgeted estimates according to the data released by the Controller General of Accounts. (for details read analysis and comments
Ø The ministry for commerce and industry released the ‘Medium term Export Strategy 2002-07’ this week. (for details read analysis and comments
Ø According to the data released by the Ministry of Commerce and Industry the export growth for April-December 2001 stands at 0.6%(for details read analysis and comments
Ø The Ministry of Commerce and Industry has cleared 19 FDI proposals(for details read analysis and comments).
Ø Net Foreign Institutional Investment for the month of January was $145.9 million. FDI for the month of October was $204 million. Total Foreign Direct Investment in India has registered an increase of 26.3% over the period Apr-Oct 2001.
GDP Growth for 2000-01 Lowered to 4%
The Central Statistical Organization’s quick estimates have put the GDP growth for 2000-01 at 4 per cent, as against the revised estimate of 5.2 per cent. The CSO had earlier estimated the GDP to grow at 6 per cent for 2000-01. This decline in GDP, at factor cost at constant prices, is quite sharp compared to the 6.1 per cent achieved during 1999-2000. At current prices, the GDP growth rate for 2000-01 was estimated at 8 per cent. At constant prices, the growth in national income was estimated at 3.7 per cent. This would translate into a growth of 7.8 per cent during 2000-01.
Despite
the negative growth rate in agriculture (-0.4%) and banking & insurance
(-2.2%), a growth rate of 4 per cent has been achieved for 2000-01 because of
the high growth rate in the manufacturing (6.7%), construction (6.8%),
communication (15%), real estate, ownership of dwelling, business services (9%)
and other services (7.4%).
Per
capita income for 2000-01 in real terms has been estimated at Rs 10,254, against
Rs 10,067 for 1999-2000, an increase of 1.9 per cent. Private final consumption
expenditure for 2000-01 works out to Rs 7,960 at constant prices against Rs
7,929 a year ago. Gross domestic savings at current prices have increased to
23.4 per cent of GDP in 2000-01 as against 23.2 per cent during 1999-2000. Gross
capital formation, however, has declined from 26.7 per cent to 26.3 per cent at
current prices in 2000-01.
Amidst economic slowdown, exports in December 2001 grew marginally by 1.11 per cent over the same month in 2000. They stood at $3.69 billion against $3.65 billion in 2000. The cumulative exports during the first nine months of current financial year grew by just 0.64 per cent in dollar terms at $32.6 billion over $32.4 billion in the corresponding period in the previous fiscal.
The trade deficit, too, in the first nine months registered a moderate reduction and is estimated at $5.8 billion which is lower than $5.9 billion in the same period last fiscal.
Sharp reduction in oil imports in the first nine months by 14.64 per cent kept the overall imports in a narrow range at $38.3 billion over $38.2 billion in April-December 2000 -- representing a growth of 0.31 per cent.
Oil imports during April-December 2001-02 are valued at $10.6 billion compared to $12.4 billion in the same period last financial year.
Fiscal Deficit 76.5% of Budget Estimates from Apr-Dec
2001
At the end of December
2001, the fiscal deficit was at Rs 890.14 billion is 76.5 per cent of budgeted
estimates, against 58.1 per cent same period a year ago. Revenue deficit has
shot up to 84.4 per cent of budgeted targets, against 52.7 per cent last year.
Increase
in fiscal deficit during the current fiscal is attributable to lower collection
of receipts. While in December revenue collections pick up as it is a tax
collection month, in December 2001, total receipts fell to Rs 232.29 billion
compared to Rs 236.50 billion in December 2000. On a cumulative basis, in the
nine-months of fiscal 2001-02, total receipts increased by a mere 3.2 per cent,
against a budgeted estimated growth of 11.8 per cent. Total receipts collection
till December 2001 at Rs 2589.09 billion was at 55.9 per cent of budgeted
estimates, while that in the corresponding period was 61.7 per cent of budgeted
estimates.
Total expenditure increased nearly 38 per cent year-on-year to Rs 331.10 billion. This is on account of a sharp rise in revenue expenditure, mainly interest expenses, during December 2001. Interest expense increased by 93 per cent year-on-year to Rs 121.74 billion in December 2001.
The
centre has borrowed Rs 1225 billion till date, which is 103.1 per cent of its
annual gross budgeted borrowings of Rs 1188.52 billion. Net borrowings have been
completed to the extent of Rs 840.01 billion, constituting 108.6 per cent of the
annual budget of Rs 773.53 billion.
In
January 2002, revenue collection is expected to improve as the government has
raised excise duties on petrol and diesel and there is also the inflow of nearly
Rs 13 billion (including dividend tax) from the 750 per cent special dividend it
will receive from Videsh Sanchar Nigam Ltd (VSNL).
The Minister for Commerce and Industry, Mr Murasoli Maran, will be leading an investment promotion delegation to Italy and the Netherlands in the second week of February.
Chairing
separate interactive sessions of the Foreign Investment Implementation Authority
(FIIA) with investors from Italy and the Netherlands, Mr Maran indicated that
his delegation would comprise a business team with technical and financial
collaborations and other interests in these countries.
The
Department of Commerce has launched a new independent website http://sezindia.nic.in
The Website gives detailed information on the policy and procedure and other
related information on Indian Special Economic Zones (SEZs). The new Website
provides links to the Website of other functional SEZs. The Website would
facilitate quick and easy access to information on Indian SEZs to the
prospective investors.
POLICY MEASURES AND PROPOSALS |
India
Aims at 1% Share in Global Trade
The department of commerce has unveiled the medium term export strategy for the period 2006-07. The Union minister for commerce and industry, Murasoli Maran, said that in order to attain 1 per cent share in global trade, India would have to achieve a compound annual growth rate of 11.9 per cent in exports. Institutional mechanisms will be set up to achieve the target, which will be subject to periodic reviews. Emphasis on micro and macro strategies will be laid out to make the environment congenial for exporters.
The
new strategy is based on the assessment of changing global trade scenario on
India’s real and revealed comparative advantages. This will assess the import
basket of major importing countries and thereby identify potential export items
in which India has a comparative advantage. A list of 220 export items at a
four-digit level has been analysed as a potential export basket of India to
major importing economies. USA, EU and Japan are the focus for these potential
export items.
Sector-specific
strategies have been worked out on these 220 items in consultation with the
export promotion councils and commodity boards. The export strategy also takes
into account international developments and complexities arising from the new
world order under WTO.
Ø
An effective and
responsive trade defence mechanism to be developed like the anti dumping duty.
Ø
WTO compatible
policies to be taken to support the agricultural sector.
Ø
FDI policy framework
to be continuously evaluated to promote exports.
Ø
Effective tax rebate
schemes to be given to exporters by implementing a comprehensive VAT system at
every level.
Ø
Transaction costs to
be reduced by implementation of the EDI system.
Ø
Export infrastructure
to be developed by identifying and prioritising specific infrastructure projects
within SEZs.
Ø
Strategic free trade
agreements to be forged after analysing the complementarity in trade between
partner countries.
Ø
Labour policy to be
made more flexible by examining the role of government in labour markets.
Ø
Bank credit to be
enhanced to the exports sector.
Ø
Policies with respect
to SEZs to continue with the addition of new features.
Ø
Market assistance
programmes to be expanded to provide for internal dissemination of information.
Ø
Based on the
experience of `Focus LAC`, regional focus to be provided to areas like Africa.
The
government will be taking additional steps to capitalise on opportunities in the
services sector based on WTO negotiations. This will be taken in addition to the
strategic policies in merchandise sector.
The
commerce minister expressed his confidence that if these strategies could be
implemented, it would be possible for India to achieve a market share of 1 per
cent in global trade within five years.
Qualification
Norms for Major Port BOT Projects Relaxed
The
Ministry of Shipping has eased the qualification criteria for the entry of
private operators keen on taking up projects in the major ports sector through
the build, operate and transfer (BOT) route. According to an order, the Ministry
has stated that the cash accrual of the bidders shall be equal to 25 per cent of
the estimated project cost during the immediately preceding three-year period as
against the 50 per cent stipulated earlier.
Further, it was decided that the net worth might be 50 per cent of the project cost for the purpose of qualifying the bidders. In the case of joint ventures, the modified net worth criteria should be satisfied jointly by all the constituents of the joint venture, the Government sources said.
The
Shipping Ministry had also decided to do away with the experience criteria for
the qualification of bidders. Accordingly, any private entity will be allowed to
bid for a project if it fulfilled the prescribed financial criteria. The
qualification criteria had been relaxed with the aim of widening the
participation of private operators for developing port projects instead of
restricting the entry to a few established players.
RBI
Relaxes Export Realisation Norms
In a move that will enable exporters to give credit to overseas buyers for a longer time, the Reserve Bank of India has permitted authorised dealers to extend the period of realisation beyond six months from the date of export for amounts up to $100,000. However, exporters must submit a declaration that they will realise the export proceeds during the extended period.
The
extension may be granted up to three months at a time and while considering the
extension beyond one year from the date of export, the total export outstanding
should not be more than 10 per cent of the average of export realisations during
the preceding three financial years, said RBI.
For
cases where the export invoices are under investigation by the Enforcement
Directorate or the Central Bureau of Investigation, or other investigating
agencies and where the invoice value exceeds $100,000, it would require prior
approval of the RBI.
The
cases that are not covered by these instructions would also require prior
approval from the RBI.
FDI
in Tobacco Sector Likely
The Centre is likely to allow foreign direct investment in tobacco sector as joint ventures to promote production of tobacco leaf for niche markets and export-oriented cigarette manufacturing units said the Chairman of the Tobacco Board.
The Board had asked the government to consider allowing FDI in the tobacco sector in a global scenario that was marked by intense competition and qualitative restrictions, which were adversely affecting exports from India.
As part of the efforts to boost tobacco exports by bringing in international expertise, capital and emerging practices, the "contract farming" system was also being considered, the chairman of Tobacco Board said.
Reforms
to Continue: Sinha
Finance minister Yashwant Sinha has expressed determination to continue with the economic reforms and pay special attention to areas, including power sector, in which they have made less impact.
Speaking
before a gathering of US business representatives and investors in New York, Mr.
Sinha described the progress of reforms in the power sector as
‘disappointing’ and conceded much more needs to be done in this area to
attract investment.
During
his 30-minute presentation, Sinha gave details of the first generation reforms,
what had been achieved and spoke about the challenges ahead.
India,
Russia and China to Have Closer Economic Ties
A trilateral cooperation between India, China and Russia is now taking shape in the aftermath of 9/11.The trilateral cooperation idea was bounced off the Chinese premier Zhu Rongji when he was here a couple of weeks ago, and unlike in 1998, when China had swiftly squashed the suggestion by former Russian prime minister Primakov, this time, the ideas have fallen on fertile ground.
The economic component of the relationship is interesting to the extent that it will include joint projects in medicine and biotechnology, both India and China acquiring considerable expertise in these fields.
India and Russia will also be working out common positions on reconstruction in Afghanistan, a project both countries are deeply involved in.
More of bilateral issues will dominate the discussions between Ilya Klebanov and the Indian leadership later this week. Apart from emergency defence procurements during the current crisis, India and Russia will also hold meetings on joint production of civil aircraft and transport/cargo aircraft.
While these discussions will probably take off from the Tokyo meeting of last month, more substantive discussions on Afghanistan are likely when the foreign secretary travels to Moscow on 14th February leading the Indian delegation on the joint working group on Afghanistan.
Plan
to Boost Joint Ventures with Egypt
The
Confederation of Indian Industry (CII) is studying the possibility of Egyptian
and Indian companies working together in the COMMESA, EU and West Asian markets
through joint ventures and joint production units in Egypt to help boost exports
for the two countries.
‘Rules
of Origin for Textile, Apparel Goods’ -- India Drags US to WTO
India has dragged the US to the World Trade Organisation (WTO) dispute body over denial of free access to its textile and apparel products export. According to the complaint lodged by India with the Dispute Settlement Body (DSB) of WTO, the denial of free access is through changes that the US has made to the rules of origin for textile and apparel exports between 1996 and 2000. It is for the third time that India has raised this issue at WTO.
The dispute dates back to June 1997 when the US amended its rules of origin of textile and apparel products in 1996 after the Agreement on Rules of Origin 1994 under the then General Agreement on Tariffs and Trade (GATT).
India
had initially lodged a complaint on this in June 1997 and again in January 1999.
Besides India, Pakistan, Japan, Honduras and a few other countries have also
been affected by this amendment. The GATT Agreement stipulates that the rules of
origin should not be used as instruments to pursue trade objectives and create
restrictive, distorting or disruptive effects on international trade.
Swiss
Cos Keen on Collaboration with Indian Entrepreneurs
Swiss companies have shown interest in collaborative ventures with Indian entrepreneurs in areas such as environmental technology, food processing, packaging and engineering, in which the Swiss entrepreneurs excel.
A
large business delegation of Swiss businessmen and trade representatives planned
to visit India soon to gain first hand information on the existing potential for
Indo-Swiss collaboration in diverse sectors of industry, trade and services. The
Swiss Business Hub, India, set up in New Delhi under the aegis of the Embassy of
Switzerland, is the new network partner of "Ssec Business Network
Switzerland", and offers specific services to Swiss and Liechtenstein
enterprises, besides aiming at strengthening of and developing business
relations with India.
Some
of the potential areas of collaboration, according to the chamber, could be
plastics and chemicals, agro and food processing, IT, media and
entertainment-based industry.
Taiwan
Wooing India Inc with Hardware Tech
The National Association for Software and Services Company (NASSCOM) has identified the emerging areas of chip design, embedded software, multimedia and telecom software, for co-operation between India and Taiwan.
Addressing
a Taiwanese delegation at a seminar on "Technology Brokerage'', Mr Karnik
said companies from both countries could work together in these areas by forging
relationships through joint ventures strategic alliances and joint product
development and marketing.
India's
software expertise when married to Taiwan's hardware capability would create a
win-win situation for both the countries, he added.
Additionally,
Taiwan could also outsource to India in the areas of software development and
maintenance, quality assurance and system review and audit, telecom solutions
and chip design, Mr Karnik said.
Maharashtra
to Get Rs 5.4-Billion World Bank Aid
Maharashtra will receive Rs 5.36-billion World Bank funding in the next fiscal year for fiscal reforms programme, Mr Vilasrao Deshmukh, Chief Minister, has said. He said this was out of Rs 14 billion required by the State under the 10th Five-Year Plan outlay.
Speaking
at the National Committee Meeting of the Federation of Indian Chambers of
Commerce and Industry (FICCI), Mr Deshmukh said that the State Government was
looking at fundamental changes in policies and procedures. He added that special
economic zones (SEZs) were being developed at Dronagiri in Navi Mumbai. SEZs
were also being planned at Aurangabad, Nagpur, Sinnar and Guhagar.
‘Growing
Support for Globalisation’ Says WEF
The World Economic Forum (WEF), has published what it describes as "the largest-ever public opinion poll on globalisation'' showing that people increasingly favour economic globalisation — even as the World Social Forum (WSF) meeting in Porto Alegre, Brazil, has come out strongly against the supposed inevitability and benefits of corporate-led globalisation.
According
to WEF, its poll, involving 25,000 in-person or telephone interviews across
mainly the Group of 20 countries conducted between October and December. The
majority of people in most countries surveyed expect that more economic
globalisation will be positive for themselves and their families. Across the
world, over six in 10 see globalisation as beneficial while one in five sees it
as negative. Positive
views of globalisation have grown over the past year, especially in North
America and Europe;
Citizens,
especially those in poorer countries, have high expectations that globalisation
will deliver benefits in a number of economic and non-economic areas.
CORPORATE SECTOR NEWS |
Agro
Sector Export’s Rise to Rs 108 Billion
Exports from the agro and food processing sector in the country have gone up from Rs. 28.5 billion in 1991-92 to an estimated Rs 107.7 billion in 2000-01. The agro and food processing sector in India employs around 18 per cent of the country’s industrial force and it ranks fifth in terms of its contribution to the GDP. India’s strength in the agro-processed foods sector include supply of raw material as well as trained and cheap manpower.
APEDA
Eyes Africa for Meat Products
The Agricultural and Processed Foods Export Development Authority (APEDA) is planning to tap the virgin markets of Africa to export meat products from the country. The Chairman of APEDA, said the African market is opening up and offers major potential for Indian meat exports. “We consider Africa as an opportunity as the demand for meat products has increased there. On account of mad cow disease (BSE) in Europe, the imports from that region to Africa has reduced drastically,” he added.
India
exports meat and meat products mainly to Malaysia, Philippines, Egypt, Jordan
and the West Asian countries.
Ansal
Housing Plans Rs 2.3 Billion Lanka
Housing Project
Ansal Housing and Construction Ltd (AHCL), the Delhi-based Rs 1.5 billion company is planning a new housing project in Sri Lanka. The total cost of the project is estimated at Rs 2.25 billion and the total dwelling units to be constructed will be 6,000. The project is coming up on a 800-acre land on the outskirts of Colombo, in Horana, using eco-friendly technologies.
Chenab
Information Technologies Ties Up with VeriSign
Chenab Information Technologies, has become a business partner to VeriSign/Safescrypt for the implementation of VeriSign's Authentication Certificates (Server ID) for Internet/intranet portals. VeriSign, a US company, is the world leader in Internet security. The server ID product provides assurance to the user that the site he has logged in to is genuine and belongs to the appropriate organisation and that the information exchanged is confidential and cannot be hacked.
HCL
Infinet Pact with Atesto Technologies
HCL
InfiNet, the Internet service providing (ISP) arm of HCL Infosystems Ltd, has
tied up with US-based Atesto Technologies Inc to offer online testing services
for Web infrastructure.
This alliance will help HCL InfiNet to enlarge the range of value-added services it provides as the company is positioning itself as more than just an ISP. Atesto Technologies offers online testing services that will help clients test out their Web portals and other Web products by just logging on to `atesto.com'.
Pharmacia
to Up Stake in Abbott India
US-based drugmaker Pharmacia has made an open offer to buy a further 20 per cent in Abbott Laboratories India from public shareholders at Rs 243 a share.
The announcement follows agreement signed by Pharmacia to buy Abbott Laboratories Inc's 51.5 per cent holding in its Indian subsidiary for $13.5 million.
Satyam
Set to Foray into China
Satyam
Computer Services Ltd has announced the launch of its operations in China,
marking the entry into mainland as a part of the Asia-Pacific expansion
strategy.
The
company is set to establish a software development centre in cooperation with
the Shanghai Pudong Software Park in order to serve its global clients who
operate in China and related markets. With this, Satyam has increased its market
presence in 36 countries.
The
Italy-based Alder Spa's proposal to acquire 26 per cent stake in Aurangabad-based
Endurance Transmission Systems (India) Ltd involving an investment of Rs 299
million has also received the Minister's approval.
The
other 15 proposals, which have been cleared, pertain to sectors such as heavy
electrical equipments, consultancy and software development and involves a
combined investment of around Rs 30 million.