India Trade March 2018 issue

India Trade

China proves to be an inspiration for many, including India. Recently, NITI Aayog, India’s think tank, has released a three-year draft action agenda which suggests that India should create two Coastal Employment Zones (CEZ) – one on the east and the other on the west coast – by taking a cue from China.

During a media briefing, NITI Aayog Vice Chairman Arvind Panagariya said that these zones will not only add to employment, economic activity and exports but also provide a more-focussed approach towards developing a ‘business-friendly ecosystem’.

The mandate of the two CEZs will include ease of doing business and ease of exporting – as well as swift clearance of environment applications and water & electricity connection applications. Also, limiting the number of CEZs to only two zones would help prevent ‘spreading out of the already limited resources’.

The three-year draft plan has dwelled on the issue of unemployment in depth, stating that underemployment is a more serious problem than unemployment in India, and that a large portion of our employed population is stuck in low-productivity low-wage jobs. To address the issues of unemployment and underemployment, the three-year action agenda has recommended a plethora of reforms, including an easing of the visa regime and development of attractions for the tourism sector, a sector that has the potential to generate a significant amount of employment. NITI Aayog has also recommended that tourism should be included in the lowest GST bracket.

The NITI Aayog was set up by the government to replace the Planning Commission. Prime Minister Modi had advised NITI Aayog to prepare the Fifteen Year Vision, Seven Year Strategy and Three Year Action Agenda. The three year agenda is valid for FY2018-2020.

Mobile phones

Make in India

Say ‘hello’ to local

The next time you buy a branded mobile phone the chances are high that it may be an India made product. Till a couple of years back, imported mobile phones had flooded the market. In order to encourage the production of more ‘Made-in-India’ phones, the Ministry of IT and Electronics has notified a Phased Manufacturing Programme (PMP) for mobile phones. The programme will give fiscal incentives to indigenous manufacturers of mobile phone sub-assemblies and components of mobile phones like die cut parts, mechanics, key pads, microphones and receivers and USB cables. According to a government circular, the programme is aimed to “promote depth in manufacturing of domestically produced handsets.” In order to encourage more domestic manufacturing, the Indian government had, in 2016, announced an increase in import duty on various mobile components like chargers and adapters. In keeping with the objectives of PMP, in response to Apple’s request to provide import concessions for components and phones for manufacturing in India, the government has asked the popular tech behemoth to consider the PMP route to get the benefits of manufacturing in India.

The PMP initiative originated from a proposal by the Fast Track Force put together by the Ministry of Electronics and Information Technology, GoI, which targets to increase domestic mobile production to 500 million handsets by 2019. It also hopes to increase exports to 120 million handsets by 2020.

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Foreign Direct Investment

Setting up an Indian platter

India Trade

Hoping to pull in more FDI into the food processing sector, a delegation from India recently made a two-day trip to US. Led by Jagdish Prasad Meena, Special Secretary, Ministry of Food Processing Industries, the team spent two days in Chicago, America’s food processing hub. The team visited several food services, logistics and restaurant companies in a bid to encourage them to invest in India. Meena encouraged American companies to “take advantage of India’s liberalised FDI policies and pre-existing food processing infrastructure”.

Many big international brands such as Kraft, Kellogg, Danone and Nestle have already invested in India and the food processing industry grew at a CAGR of 11% between FY2011 and FY2016. Yet, India processes barely 10% of its total food production, and the culprit it seems is the lack of technical expertise especially in the area of food logistics. In a bid to attract FDI and promote technology transfer the government has allowed 100% FDI in the sector.



Trade development

Business first

Despite stirring up a bit of a controversy by proposing multi-lateral dialogue to resolve the Kashmir issue, Turkish President Recep Tayyip Erdogan was all business, when it came to trade, during his recent visit to India.

In a meeting with Indian Prime Minister Narendra Modi, President Erdogan expressed his desire to increase trade with India to at least $10 billion a year at the earliest – the current annual bilateral trade between the two stands at $6.5 billion and is tilted heavily in favour of India. Erdogan also pitched for giving an impetus to the stalled free trade agreement between the two countries. Meanwhile, both India and Turkey agreed that more trade and foreign direct investments in areas such as technology, MSMEs and energy can give a strong thrust to bilateral relations.

Erdogan was accompanied by a large business delegation that attended the India-Turkey Business Forum. At the forum he invited Indian businesses to invest more in Turkey, describing the country as an ‘ideal hub’ for investment and production given its strategic geographical location.

India Trade




Is black gold losing its sheen?

India Trade

In a move that could bring down India’s imports bill by about Rs.17,000 crore, the government is aiming to cut down imports of coal by public sector undertakings (PSUs) like National Thermal power Corporation (NTPC). The goal is to bring down the imports of thermal coal to zero in FY2018. According to reports, while the government is initially looking at bringing down imports of thermal coal by PSUs to zero, it will also try and convince the private sector to follow suite. Meanwhile, the Coal Ministry is expected to compensate the PSUs with an increased access to domestic thermal fossil fuel sources. Concurringly, production of thermal coal in India has been on the rise over the last year. Coal Secretary, Susheel Kumar, has gone on record to state that the Coal Ministry will supply so much coal to the PSUs that they will have no need to resort to imports any longer.

A leading importer of coal, India’s imports of coal have declined drastically in recent years. Import of thermal coal (steam coal) fell from $9,689.20 million in FY2015 to $6,794.07 million in FY2016, a 29.87% decline. In FY2017, as of February 2017, imports stood at just $6,343.65 million.