News, leads and analysis related to India’s trade and all that’s happened on the policy front during the month of March 2015

Railways

FDI

Fueling the growth engine 

Indian Railways might soon be on a fast track for improved services and performance. For, Ministry of Railways has already received investment commitments to the tune of Rs.10,000 crore from private sector companies for the development of 19 projects under participative models of domestic and foreign direct investment (FDI). Giving this information to parliament, Minister of State for Railways Manoj Sinha, however, stated that there has been no specific investment proposal since the opening of FDI in rail transport last year. It’s worth noting that the ministry had issued sectoral guidelines for domestic investment and FDI in November, 2014, identifying various areas for private participation. These areas include suburban corridors; high-speed rail; dedicated freight lines; rolling stock, including train sets and locomotive manufacturing facilities; and railway electrification. The guidelines cover signaling system, freight terminals, passenger terminals, testing facilities and laboratories, non-conventional sources of energy, mechanised laundry, rolling stock procurement and bio-toilets. The ministry had also issued a participative policy for rail connectivity and capacity augmentation in December, which provides five models for building rail connectivity.

Import Dependence

Coal

As dark as the mines

India has adequate coal reserves for meeting its coal requirements. Total coal reserves as on April 1, 2014, was 301.56 billion MT, of which, 125.91 BT was in the proven category and the rest is indicated and inferred categories. Giving this information in the Rajya Sabha, Piyush Goyal, Minister of State for Power, Coal & New and Renewable Energy stated that at the present juncture, the actual production of coal, however, falls short of the overall demand. Accordingly, the gap between total consumption and domestic supply is being met through imports, he said. The domestic production of coal has been constrained due to problems in expanding the capacity arising from difficulties in land acquisition, geo-mining conditions, difficulties in obtaining environmental clearances, restrictions arising out of imposition of Central Environmental Pollution Index guidelines and non-availability of forest clearances in time, he said and added that law and order condition in some areas and lack of adequate infrastructure have also been constraining factors in some major coalfields.

Currency Volatility

Trade

Losing out in a race to debase

Expressing concerns over the 15% drop in India’s trade in the month of February, M. Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO), has said double digit-decline in exports both in the months of January and February, 2015, has made him apprehensive of Indian exports reaching even the $320 billion figure for FY2015. According to Ahmed, due to the sharp appreciation of the rupee against the euro, exports to EU have suffered and might continue to suffer in the near future. Indian exporters are losing out, particularly to China, thanks to it maintaining a strong peg on its currency, while Indian exporters struggle with an appreciating rupee, he added. While urging the government to come out with the new FTP as soon as possible, Ahmed has also called for the immediate introduction of interest subvention for exporters. It’s worth noting that in March, the rupee hit its lowest against the euro since mid-2012.

India-China

Trade Corridor

Building bridges, literally

This is one news that will definitely raise a few eyebrows. At an event organised by the Indian Chamber of commerce, Lu Wenxiang, standing Deputy Governor of China’s Yunnan province, informed that China was planning to come up with a project linking Banshao on the India-Myanmar border with Myitkyina in Myanmar to re-link it with the historic Stilwell Road in India. “The implementation of the road project between Myitkyina to Banshao is going to be carried out, so that the famous Stilwell Road is expected to be re-linked again.It will become another international thoroughfare connecting China, Myanmar and India,” he said and added that his country has already built a secondary highroad from Tengchong County in China to Myitkyina and the upcoming project linking the Stilwell Road and Myitkyina will help facilitate trade in the BCIM (Bangladesh-China-India-Myanmar) corridor. It’s worth noting that Nujiang, owing to its geo-strategic advantage along the BCIM route, is expected to become a major forerunner for the project.

India-Kyrgyzstan

Textile Trade

First step towards a start

India and Kyrgyzstan have signed a MoU to cooperate in textile trade. Signed by India’s Textiles Minister Santosh Kumar Gangwar and Kyrgyzstan’s Minister of Energy and Industry Kubanychbek Turdubaev, the MoU is expected to increase cooperation in the development of trade, economic and investment relations; technical and commercial collaboration and joint trade missions; encouragement of investments; mutual assistance in R&D; technical collaboration in product development and manufacturing, testing and certification; and mutual assistance in skill development, training and retraining of personnel, joint scientific, industrial and other meetings and exchanges. It’s worth noting that trade between the two nations is yet to hit double digit (in $ million), with almost no exports from the Central Asian country to India.

Milk Exports

European Union

When EU sneezes, India catches cold?

With European Union (EU) ending its three-decade old milk quota system, global dairy product prices are expected to come under pressure. Introduced in 1984 to address the issue of over production within EU, the system had set production quotas for each member country, violation of which used to attract a levy. But with the quota system becoming history from the 1st of April, 2015, production is expected to rise in countries like Germany, Poland, Ireland and Denmark, which is expected to have a ripple effect on global dairy products prices, including that of India. It’s worth noting that although India doesn’t export much of dairy products to EU, its dairy product exports were worth Rs.547.4 crore in FY2014, most of it to Bangladesh and African countries like Algeria and Yemen.

Smart Cities

MoU

Importing smart living

Hitachi India Limited and Siemens Limited have signed a MoU with CII to form a consortium that would create pilot projects and replicate them throughout the country for setting up 100 smart cities. The MoU was signed by Hitachi’s Managing Director Ichiro Iino, Siemen’s Managing Director Sunil Mathur and CII Director General Chandrajit Banerjee, in the presence of DIPP Secretary Amitabh Kant. Speaking on the occasion, Chandrajit Banerjee said the MoU provides a platform for coming together of leading technology companies such as Hitachi and Siemens and will enable the implementation of the vision of 100 smart cities. Amitabh Kant said learnings gathered from the best practices across the world in the management of water, public resources, public spaces and technology etc., shall be shared while implementing the smart cities concept in India. He also made clear that the smart city initiative will be taken forward by technology driven companies.