News, leads and analysis related to India’s trade and all that’s happened on the policy front during the month of February 2016
POULTRY IMPORTS
Time to brace for the inevitable
Come June and the American chicken leg may be back on the Indian platter once again, giving local poultry farmers a run for their money. Keeping WTO’s June 2015 ruling in mind, poultry farmers have been cautioned to brace for US chicken imports by June this year. It must be recalled that last June, India had lost its case against USA at WTO. US had contested India’s move to ban the import of poultry meat, eggs and live pigs from US citing concerns over avian influenza. The ruling had given India 12-18 months to lift the ban. While the ruling had brought cheers to the US poultry industry, it sparked concerns among domestic poultry farmers who expect a sharp dip in business. India, in 2007, had banned US poultry following which the latter had dragged New Delhi to WTO. Indian poultry industry produces more than 40 million tonnes of chicken annually; danger is, once imports begin, Indian suppliers could lose about 40% of their domestic business.
GROWTH FORECAST
New year, new growth
The New Year might not have started on a good note for the global economy, but there is a silver lining for India. Bringing back some cheer, the bi-annual report of the World Bank titled ‘Global Economic Prospects’ has projected India as a bright spot amid a gloomy outlook for developing countries. Chinese growth is predicted to slow further. The Bank pegs growth of the Indian economy at about 8% in 2016 and expects China’s economy to grow at a more modest 6.7%. “In contrast to other major developing countries, growth in India remained robust, buoyed by strong investor sentiment and the positive effect on real incomes of the recent fall in oil prices,” the World Bank report states. According to the report, the simultaneous slowdown of all economies (except India) will have a significant spillover effect on the rest of the world. Better growth prospects compared to other developing countries will keep foreign investor sentiment in favour of India. The report also said that the South Asian region would remain shielded from growth fluctuations, going up by 7.5% in 2016-18, as opposed to 7% last year.
LOGISTICS
Ready, steady and delivered!
Looks like the great Indian e-commerce war is going to get fiercer this year. After rival Flipkart’s tie up with Viacom 18 for licensing for foreign brands, India’s largest online marketplace, in terms of sellers, Snapdeal announced the beefing up of its logistics quotient. The company, in an effort to overtake Flipkart as India’s largest e-commerce portal, is said to be focusing on cutting delivery times by spending more on better data analytics and demand forecasting. The online shopping giant enables 150,000 sellers to market over 12 million products across 500 categories at competitive prices and discounts. The online retailer is now fulfilling 60% of orders from its own centers, as opposed to 7% a year ago.
BORDER HAAT
Breaking barriers for trade
If all goes well, the India-Bangladesh border will soon have more border haats to help boost trade between the two countries. The Union Cabinet recently gave its nod to a memorandum of understanding (MoU) for setting up more border haats. The agreement on the mode of operation of such markets was signed by the two countries six years ago during the visit of the Prime Minister of Bangladesh to India. The two neighbors had agreed to set up border haats in select areas in order to allow trade in certain products. It is expected that setting up of such border haats will help in improving the economic well-being of the marginalised sections of society. Currently, four border haats are operational on the Indo-Bangladesh border – one each in Kalaichar, Balat (Meghalaya border), Kalasagar and Srinagar (Tripura border). Both countries have agreed to set up two more border haats in Tripura and four more in Meghalaya.
Relaxing import restrictions
Once again, the apple of India’s eye
Here’s a piece of some juicy news for exporters of Washington apples to India! The US exporters who were expecting to take a hit costing them millions of dollars, following India’s decision in September 2015 to redirect all apple imports through Nhava Sheva (Jawaharlal Nehru) port in Mumbai, now have a reason to celebrate. For, the Indian government has now allowed inbound shipments of apples through sea ports and airports in Kolkata, Chennai, Mumbai and Kochi. The Director General of Foreign Trade (DGFT) has also permitted its imports from land port and airport in Delhi, besides land borders. The government’s announcement comes at an apt time for exporters of Washington apples to India as the harvesting season in US begins in January and runs through March. Last season, India had imported 5.6 million boxes worth $100 million of these apples and a significant amount of the shipments had passed through ports that were thereafter closed for imports of apples (in Sept 2015). In the last four months of 2015, given the restriction, import shipments of Washington apples fell by 70%.
RICE EXPORTS
Time to look east
It looks like India’s rice exports, both in terms of volume and value, will take a tumble this fiscal. The drop in export realisations has been due to big importing countries like Nigeria and Iran reducing their purchases from India. As per trends, rice exports have already fallen by 7.3% in volume and 18% in value during the April-November period in 2015 as compared to the corresponding period in 2014. Despite basmati shipments going up in terms of volume by 23% (India had exported 11.92 MMT of rice in FY15), the decline in grain prices led to a fall of 13% in rupee terms in India’s basmati exports.
Non-basmati shipments too fell by 20% in volume, and 25% in value in rupee terms. With exports expected to fall further, exporters are bracing up for tough times. In light of this situation, India has been exploring new markets and has found a friend in Indonesia which can help the former make up for lost ground. The East Asian country is struggling with a shortage of the cereal, with the rice planting season in Indonesia being pushed back due to El Niño, and is now considering importing rice from India.
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