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

Seafood exports

New high

From our seas to theirs

India’s seafood exports have hit a new all-time high, reaching $5.51 billion (Rs.33,441.61 crore) in FY2015. This represents an 11% y-o-y jump, despite a sharp drop in shrimp prices during the last quarter of the year. Even in volume terms, FY2015 was the first year when the country’s seafood exports crossed the 1 MMT mark, hitting 1.05 MMT. In fact, in FY2015, India’s seafood exports also hit an all-time high in rupees terms. When it comes to the export markets, United States led the way with a 26% share of the pie (in US dollar terms), followed by Southeast Asia. Similarly, despite a fall in prices in the last quarter, frozen shrimps retained the No.1 rank, accounting for 34.01% (in quantity) and 67.19% (in US dollar) of the total export pie.

It’s worth noting that India’s seafood exports have grown at a CAGR of 14.06% in US dollar, 17.54% in rupees and 8.58% in volume terms over the last 10 years, although in absolute terms they are not even half of that of top seafood exporting countries like China and Norway.[sociallocker id="9714"]

Cosmetics

Testing on animals

Animals are beautiful too!

You might soon find it difficult to lay your hands on your favourite imported lipstick! Wondering why? Having already imposed a ban on imported products that have been tested on animals, the government has now asked an undertaking about the same from importers who source foreign beauty products. Tightening its grip, Drugs Controller General of India (DCGI) has also asked importers to produce an undertaking from the supplying nation, as well the original manufacturer of the cosmetic stating, “The product has not been tested on animals anywhere in the world on or after November 12, 2014.” It’s worth noting that, last year, the Indian government had not only banned the test of cosmetics on animals in the country, but had also imposed a ban on the import of cosmetics that have been tested on animals anywhere in the world. The latest move seeking undertakings comes in the wake of reports that a number of companies were flouting the rules and still importing cosmetics that had been tested on animals. What’s more, the DGCI has directed all ports, beauty associations and state controllers to ensure the originality of the undertakings being submitted by importers.

Maggi noodles

Export ban

Took more than two minutes

In what could be a big boost to its sales, Nestle India is in the process of resuming exports of its Maggi 2-Minute noodles to various overseas markets after it got a nod for the same from the Bombay High Court. The ban on the sale of the instant food, however, continues in the Indian market. It’s worth noting that India’s favourite instant noodles’ sales were banned by FSSAI on the 5th of June, 2015, after high levels of lead and taste-enhancer monosodium glutamate (MSG) were found in its samples. And this country-wide ban had also led to a stoppage of exports. However, following the Bombay High Court’s order, Nestle India has started working on the logistics to resume exports at the earliest. It’s also worth noting that before the ban, the company used to export Maggi noodles to United States, United Kingdom, Singapore, Australia, New Zealand and Canada. The Bombay High Court’s relief comes shortly after UK’s FSA gave a go ahead to all Maggi noodles variants’ exports to the country.

Declining exports

Council for Trade Development

Desperate times, desperate measures

Worried over the continuous dip in exports, the Indian government has constituted a council comprising state trade and commerce ministers and important trade officials. Named The Council for Trade Development and Promotion and to be chaired by Minister of State for Commerce and Industry Nirmala Sitharaman, the council will provide a platform to state governments and union territories to pursue export strategies to complete that of the Centre. It’s worth noting that in a worrying trend that has raised serious question marks over the government’s ambitious targets, India’s merchandise exports dipped for the seventh month in a row in June 2015 to just $22.29 billion, which represented a 15.82% fall as compared to the same month last year. While no arrest of this downtrend seems to have woken up policymakers from their slumber, FIEO has already started warning that unless stopped this would lead to heavy job losses in the country.

FDI

Make in India

From a trickle to a deluge

In a clear indication of the growing faith of overseas investors in India’s economy, the country, for the first time, has become one of the top ten global destinations for Foreign Direct Investment (FDI). According to World Investment Report 2015 released by United Nations Conference on Trade and Development (UNCTAD), in 2014, India moved up six places in the list of top receivers of FDI to secure the ninth rank. The report said that this jump in the rankings was a function of FDI inflows into the country rising by 22% to $34 billion. Expecting Prime Minister’s pet ‘Make in India’ initiative to revitalise the country’s economy, which a lot of foreign investors would like to benefit from, the report also showed optimism on FDI inflows into India during the current year. It’s worth noting that, thanks to a deluge of foreign direct and foreign portfolio investment into India, the country’s forex reserves continue to make fresh all-time highs on a weekly basis, which ironically, is affecting its exports by putting upward pressure on the rupee.