Economic slowdown: Govt plans urgent steps to boost exports August 13 , 2019

NEW DELHI: The Government is weighing a raft of measures — including “full reimbursement” of various imposts on exports and relaxed lending norms to improve credit flow —
to reverse a slide in the growth of outbound shipments in recent months, sources said recently. While the Commerce Ministry has already circulated a Cabinet note to phase out the flagship Merchandise Exports from India Scheme (MEIS) with a more WTO-compatible regime under which various State and Central levies on inputs consumed in exports will be reimbursed, the Government will likely top it up with an assurance that all embedded taxes borne by exporters will be fully refunded.
“The new scheme will be a dynamic one, so that all sorts of embedded taxes will be reimbursed once exporters bring them to notice. A Government panel will examine their demand and take appropriate action. The idea, as we have stated, is that exports must be zero-rated as per the global best practices,” a source said.
Though the goods and services tax (GST) regime has subsumed a plethora of levies, some still exist (petroleum and electricity are still outside the GST ambit, while other levies like mandi tax, stamp duty, embedded Central GST and compensation cess etc remain unrebated). Similarly, the Reserve Bank of India (RBI) is willing to ease priority-sector lending guidelines for exporters. Currently, exporters with a turnover of up to Rs 100 crore each are eligible for credit under the priority sector norms. This limit is likely to be scrapped or doubled so that more exporters are benefited. The maximum sanctioned limit of loans is also likely to be raised to Rs 40 crore per borrower from the current Rs 25 crore. Even the cap on export credit at 2% of banks’ total loans could be relaxed soon.
However, the Central Bank has refused to endorse a proposal to allocate a part of its foreign exchange reserves for export credit — as is being demanded by some exporters — to boost flow of loans on the ground that such a move is fraught with risks, a source said.
Once tweaked, the revised priority sector lending norms and certain enabling guidelines are expected to release additional credit of anywhere between Rs 35,000 crore and Rs 68,000 crore for exporters, according to an RBI assessment. Recently, Commerce and Industry Minister Piyush Goyal told the  Rajya Sabha that banks’ outstanding export credit, which rose from Rs 1,85,591 crore in
March 2015 to Rs 2,43,890 crore in March 2018, dropped to Rs 2,26,363 crore at the end of March 2019.
Goyal has already held a series of meetings with exporters to address their concerns, and some of the steps being mulled will be finalised soon. The measures are proposed at a time when India’s merchandise export growth collapsed to just 0.6% in April, 3.9% in May and -9.71% in June. Citing persistent risks from a global trade war, the IMF recently trimmed its 2019 trade growth forecast by a sharp 90 basis points from its April projections to 2.5%, against the actual rise of 3.8% in 2018.
As for the plan to reimburse levies, such a scheme has already been implemented in garments and made-up exports. However, its scope and reach will be expanded now. Exporters will be refunded levies through freely transferable scrips. For the remission of State levies for garment and made-up exports, the Government had allocated Rs 3,664 crore in FY19. However, the compensation level under this scheme was expanded in March to include Central levies as well; even some embedded taxes were factored in.
So the potential revenue forgone is now estimated at around Rs 6,300 crore annually. The Government’s potential revenue forgone on account of the MEIS is estimated at Rs 30,810 crore a year.
However, Government officials have repeatedly stated that the entire allocation or potential revenue forgone on account of various such schemes (including MEIS) doesn’t qualify as export subsidies, as in most cases, they are meant to only soften the blow of imposts that exporters have been forced to bear due to a complicated tax structure. The US has dragged India to the WTO, claiming that New Delhi offered illegal export subsidies and “thousands of Indian companies are receiving benefits totaling over $7 billion annually from these programmes”. Indian officials have rejected such claims.
According to FIEO President Sharad Kumar Saraf, for our exporters to become competitive, the Government needs to ensure that transaction costs are cut drastically, embedded taxes are fully offset, raw materials are made available at reasonable prices and credit is extended at cheaper rates. “Land acquisition needs to be made easier and companies must not be dragged into unnecessary legal hurdles,” he added.

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MSME Ministry issues guidelines for schemes for promotion of MSMEs in NE region and Sikkim August 13 , 2019

NEW DELHI : The Ministry of Micro, Small and Medium Enterprises (MoMSME) has issued guidelines for Promotion of MSMEs in the North Eastern region and Sikkim of the Central sector scheme “Technology and Enterprise Resource Centres”.
The MoMSME has been working for the development of MSMEs in the Country and felt for a need  for special  treatment as far as development of MSMEs in North Eastern Region  & Sikkim  is concerned.
With this objective in mind, a special  scheme for 'Promotion of MSMEs in North Eastern Region
and Sikkim was approved on August 02, 2016.
After  merger of the four Schemes viz. (I) Tool Room and Technical  Institutions;  (ii) Promotion of MSMEs  in North Eastern Region and Sikkim; (iii) Infrastructure  Support to
MSME-Testing  Centres / Testing Stations/  Training  Institutes / Workshop & MSME  Development Institutes (Field Institutes) and (iv) Capital Outlay on Public Works,  a new Central Sector Scheme of "Technology  and Enterprise  Resource Centres"  was formulated  and the same was  appraised  by the EFC in its meeting  held on  January 16, 2018.
The Scheme has been approved by the Competent Authority. The sub-components of the scheme are to - Set up of new and modernization  of existing Mini Technology Centres; Development  of new and existing Industrial  Estates; Capacity  Building  of Officers along with some other activities.
For scheme for Setting up of new and modernization of existing Mini Technology Centres envisages financial assistance to State Governments for setting up new and modernization of existing Mini Technology  Centres.
The quantum of financial assistance will be equal to 90% of the cost of machinery/ equipment/ buildings, not exceeding Rs. 10.00 crore.
However, the Government of India funding would not be admissible towards cost of land and building’s cost will be maximum to the extent of 20% only.

DGFT notifies Mechanism to apply for additional claims under MEIS August 13 , 2019

NEW DELHI : Directorate General of Foreign Trade (DGFT) in a notification notified Mechanism to apply for additional claims under Merchandise Export from India Scheme (MEIS) for certain  HS codes for which-enhanced rates with retrospective effect were applicable.
The Directorate has notified higher rates for certain HS Codes during the Mid Term Review of the Policy, for export made from November 1, 2017.
“Certain exporters had realized payment for exports made on or after 01.11.2017 after having made exports under those HS Codes and have also claimed MEIS benefits from the Directorate, before the said Public Notices were notified,” said DGFT.
DGFT in a trade notice has asked such exporters to claim the differential 2% rates as enhanced.
Difficulties, if any, in the implementation of the mechanism may be brought to the notice of this Directorate, said the DGFT notice.

FFFAI calls for collaboration with Nepal Freight Forwarders Association to increase bilateral trade

KATHMANDU : Speaking at the Silver Jubilee Celebration function of Nepal Freight Forwarders Association (NEFFA) held on July 29 at Kathmandu, Mr S Ramakrishna, Chairman, Federation of Freight Forwarders’ Associations in India (FFFAI) urged for greater collaboration between FFFAI and NEFFA for mutual benefits and enhancement of bilateral trade. On this occasion the FFFAI Chairman recommended the following points:
•             FFFAI and NEFFA should work together in disseminating the best practices of each Country.
•             Both the associations should boldly speak about the difficulties that each border faces and how to mitigate the same, by representing jointly to each Government for which FFFAI stands committed.
•             On the Inland water ways there should be a meeting participated by India, Nepal and Bangladesh Freight Forwarders and should give Joint proposal to all Governments to extend the treaty, which already exists with Bangladesh, to Nepal too, especially for Jogighopa and Pandu Multimodal Logistics Parks being open up in the North Eastern India.
•             Both FFFAI and NEFFA should have mutual co-operation of trust to help each other in recovery / settlement of payment issues.
Currently, freight forwarders in Nepal are showing concerns over irrational charges levied by Shipping lines operating container services between India-Nepal route, including labour charges, additional surcharges and demurrage charges resulting in increase in logistics cost.
In addition, congestion at dry ports and exorbitant registration charges to use of Government’s cargo tracking system remain other areas of concern. Earlier, on July 28 Mr Ramakrishna also attended India-Nepal Logistics Summit which was jointly organised by Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Ministry of Industry Commerce and Supplies and Maritime Gateway, in association with Nepal Freight Forwarders Association (NEFFA). At this Summit discussions were held on infrastructure developments, issues related to transit time between Nepal and Indian ports, warehousing facilities in Nepal, issues related to tariffs charged by logistics service providers and requirement of automation of customs and border clearance.

Strong Indian Coal imports bring cheer to Panamax owners : Drewry

LONDON: Foreseeable strong Indian coal imports is expected to lend continued support to rates in the panama bulk sector in the coming quarters, following already climbing rates so far this year, according to analyst Drewry.
With the Indian Government’s plan to invest heavily in infrastructure, domestic coal demand will prompt firmness in coal imports, leading to increased rates in the panama market.
“Panamax rates have skyrocketed in 2019 and are likely to rise in the coming quarters supported by strong demand for coal imports in India,” said Rahul Sharan, Dry Bulk Lead Research Analyst at Drewry.
The Baltic Panamax Index (BPI) started off at close to 1,500 points at the beginning of 2019 before dipping to just over 500 points in February. But ever since, the BPI has gained strength and risen steadily until end-June before a surge in July and closing at 1,753 points on 5 August.
India’s Finance Minister had said in early-July that the Government plans to invest $285bn annually over the next five years on infrastructure – a surge of more than 150% compared with the past investment.
The investment initiatives will result in a massive surge in demand for steel, cement and power. The spurt in demand for cement has already generated huge requirements for non-coking coal imports this year.
India’s cement production has increased to more than 337 million tonnes in FY2018-19, a rise of more than 13% from the previous financial year.
“It takes about 200 kilograms of coal to produce one tonne of cement. Therefore, to produce 337 million tonnes, the Indian cement industry consumed 67 million tonnes of coal in FY2018-19. With the new Government firmly in place with emphasis on infrastructure, the demand for cement is expected to surge over the next few years. Additionally, with increased industrial production, coal demand for power generation will also expand,” Sharan explained.
“Moreover, domestic coal production has been increasing at a very slow pace, leaving power companies to depend on coal imports. For instance, domestic coal production increased 5% until May 2019, but imports surged 29%,” he added. Hence the inability of domestic coal producers to match domestic demand will keep Indian imports high over the next few quarters.
However, Sharan pointed out that the Indian Government plans to commercialise coal mining, which will boost domestic production and cut imports.
But “this will take time and until then coal consumers will have to rely on imports for a large part of their requirements”, according to Sharan.

Gateway of opportunities opens up for Trade and Investment in J&K and Ladakh post revoking of Article 370: FIEO President

NEW DELHI: The strong will and action of the Government under the dynamic leadership of Prime Minister Shri Narendra Modi and Home Minister Shri Amit Shah to scrap Article 370 has paved a new era of growth both for the people of Jammu & Kashmir and Ladakh region said FIEO President, Mr Sharad Kumar Saraf. Scrapping Article 370 will not only bring in huge trade and business opportunities for both the regions but will also help get the troubled region  to stand on its feet added Mr Saraf.
FIEO Chief said that this bold step taken by the Government at the Centre would allow flow of investments into the state in sectors like tourism, real estate, carpets, handicrafts, sports goods, horticulture and food processing and will also help in promoting trade and commerce specially exports of these products and services from the region. Jammu and Kashmir including Ladakh region are an area of strong potential for development as it enjoys a range of natural resources and immense talent. Strong and dedicated efforts from the Government, trade and industry including handholding of local businesses is the need of the hour today to further help to push its growth rate and create new jobs and livelihoods in the region said Mr Sharad Kumar Saraf. This multiplier effect would increase the employment opportunities and contribute to India's overall prosperity and growth & development of the country.
FIEO President further adds that opportunities, which exists in the other key sectors also includes pharmaceuticals, IT/ITeS, electronics and leather. Shortcomings with regard to post-harvest food processing of apples, saffron, almond, walnut and other fruits and dry fruits, as well as the acute lack of health care and educational facilities in the state mainly due to lack of private sector participation will soon be overcome by this bold step taken by the Government.
With this FIEO also plans to provide handholding to cater to the needs of the exporting community of both the region of J&K and Ladakh.
Mr Sharad Kumar Saraf further says that now with both Article 370 and 35A gone, J&K will be governed by the same rules as the rest of the Country, which means any Indian citizen can buy property in the State, take up a job and most importantly, invest in industry and trade initiatives in the State. Truly a historic decision as it opens the gateway for development and peace in Jammu and Kashmir, said a FIEO release.

Trade suspension will hit Pakistan, not India: Traders & FIEO

NEW DELHI: Islamabad’s decision to suspend trade with New Delhi will hit Pakistan not India due to latter’s low dependence on exports to its neighbour, officials and traders have said.
In a new low in bilateral trade relations, Pakistan Prime Minister Imran Khan has decided to suspend trade relations with India in a five-point plan, in response to India’s move to end special status for Jammu & Kashmir and split it into two Union Territories.
“Trade was practically closed for sometime. So, there will be no impact especially on agricultural products,” said an official.
In the first quarter of FY20, India’s exports to Pakistan were $452.5 million and imports were $7.13 million. In FY19, total exports to Pakistan were $2.06 billion, while imports were $495 million.
“The suspension of trade relations will hit Pakistan more as our exports to them have a very limited profile because they did not give us MFN status and violated global trade rules,” said Ajay Sahai, Director General, Federation of Indian Export Organisations.
India’s major items of export are organic chemicals, cotton, plastics and dyes, while imports are fruit and edible nuts, and mineral fuels. Export of tomatoes to Pakistan had stopped long ago.
Sahai explained that such goods have a ready market in South Asia and Middle East which will enable India to divert such exports immediately without much cost.
“This is a unilateral move and a unilateral loss,” said Mohit Singla, Chairman, Trade Promotion Council of India. A Delhi-based exporter said that trade through Dubai remains open.
However, Sahai added that shipments in the pipeline will take a hit and it is not clear whether the goods in transit or lying at the ports would be recalled in such a deteriorating situation.