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23 Jul 2018

India May Target $400 Bn Exports In Two Years

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Buoyed by a pick-up in exports in April-June quarter this year, the central government may target $400 billion annual merchandise exports in two years. India clocked about $300 billion merchandise exports in 2017-18 after dipping to $275 billion in the 2016-17 – a near 10% annual growth. India achieved $313 billion exports in 2013-14 and in subsequent years, exports have shown a declining trend in the face of global slowdown. In the first quarter of this fiscal, exports have seen a pick-up, with May witnessing a 20% growth and June 18%. This has prompted the Union commerce ministry to formulate a strategy in consultation with Federation of Indian Export Organisations (FIEO) to push annual merchandise exports to $400 billion in two years. A sustained 20% exports growth from now will easily push India's merchandise exports to a little over $350 billion this year, and $400 billion in the next fiscal should be achievable, according to FIEO president Ganesh Kumar Gupta. A 20% exports growth is sustainable, Gupta told DNA Money emphasising that the strategy needed to be aimed at high potential markets such as Africa and Latin America. Indian textiles, handicraft, handlooms, leather, engineering goods, pharmaceuticals and automobiles have a huge potential. "Even China is importing from India a lot of items like handicraft and carpets, and the US-China trade war too has opened up a window of opportunity to push exports to both Beijing and Washington. However, this needed to be worked upon," he said. The commerce ministry-FIEO joint strategy will be readied shortly, he said. India had prepared a strategy paper in 2013-14 after sustained high exports growth for almost a decade. At that time the target was to achieve $500 million exports in three years. But it was not implemented as exports slowed down due difficult global situation. Lately, global trade has started looking up. Widening trade deficit, which is expected to hover around $200 billion this financial year due to surging oil, gold and electronics exports, has "forced us to evolve this new strategy", Gupta said. Economist H A C Prasad, who recently retired as senior economic advisor in the finance ministry, has come out with a study paper on the challenges and policy initiatives needed to take India's merchandise exports to a new high. Prasad, who was earlier economic advisor in the commerce ministry, said in the paper that with green shoots in merchandise exports it is only appropriate to raise India's share in world exports to a 5%. At present, India's share in world merchandise exports is a mere 2% as against China's 14%. Global trade is cruising at 4.5% and it may remain at that level for the next couple of years, but for a temporary blip due to the trade war. It is time for India to try and cash in through sustained exports reforms. To reach the 5% share, merchandise exports should hit $882 billion by 2022, which means India's export growth rate needed to be around 27% CAGR for five years. This is not impossible as India has had higher exports growth than this during 2004-09, Prasad said. To boost trade, India has to make its exports demand based rather than supply based as at present. In most of the top imports of the world, the presence of India's exports is very small. In 2015, India's exports share in the top 100 items was not that impressive, and only in five of those items the share was more than 5%. A demand based exports strategy will enable to increase its share in those 100 items. India has huge potential increasing farm exports. The strategy is to raise farm exports from the present $40 billion annually to $100 billion with improved packaging and shelf life through better cold storage facilities. India had a record 375 million tonne horticulture production in 2017-18, which is expected to improve further with good monsoon. India farm production cost is the cheapest in the world and with an improved market strategy, India could step up farm exports in no time. This will also improve farm income, a government official, who did not want to be named, said. Some specific steps were needed to improve ease of doing business for exporters, besides reduction in transaction cost, delay in ports to make Indian exports competitive, Gupta said, adding a lot has been done but some unfinished tasks have to be attended to.

20 Jul 2018

GST Drawback Scheme Likely From OCT 1 As Exports Slip

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The government may soon roll out duty drawback on goods and services tax (GST) to benefit small and medium exporters as fault lines increasingly surfaced in India’s exports despite high growth in May and June this year. This rollout is expected from October 1, along with an e-wallet scheme, as job creating exports sectors such as leather, handicrafts, handlooms, carpets, textiles and gem and jewellery have continued to decline despite merchandise exports clocking 20% growth in May and nearly 18% in June this year. Ganesh Kumar Gupta, president, Federation of Indian Export Organisations, told DNA Money Gupta said a three-member committee headed by G K Pillai, former home and commerce secretary, is working out the GST duty drawback rates and is expected to submit its report in the next few weeks. After vetting, the government is likely to roll them out out by October 1. The Pillai committee was set up after a parliamentary standing committee pitched for fresh concessions to labour-intensive exporting sectors to mitigate compliance burden in transitioning to the GST regime. Gupta said e-wallet scheme too is expected to be announced by October 1. Under the e-wallet mechanism, a notional credit would be transferred to exporters’ accounts based on their past record and the credit can be used to pay taxes on inputs. Earlier duty drawback, a popular scheme to refund taxes like excise, customs and countervailing duties paid on intermediary items for exports, was withdrawn with the launch of GST on excise and countervailing duties. It was, however, continued for customs. The large exporters may still prefer GST where one gets offset for taxes paid on intermediaries. Small exporters find it difficult and cumbersome to pay GST as it involved additional expenditure on auditing and the like. India achieved highest ever merchandise exports of over $320 billion in 2013-14. In the face of global recession, exports declined, touching a low of $275 billion in 2016-17, but picked up to $300 billion in 2017-18. Since April this year, growth has been in double digits, touching 20% in May. India sustained over 20% exports growth during 2004-09, when GDP growth too averaged over 9% annually. Gupta said that high exports growth in the last couple of months was mainly due to exports of petroleum products, chemicals and pharma. As global oil prices were high, Indian petroleum exporters reaped benefits and overall exports looked impressive in dollar terms. “The concern in India’s exports is that employment generating sectors such as textiles, handlooms, leather and handicrafts continued to witness the declining trend. Gem and jewellery, another employment generating sector, too has been doing badly though there is a small pick-up in recent months,” Gupta said. “This is not good,” he said, adding the trade deficit is widening mainly because of oil, gold and electronics imports and there are fears that it will touch a record $200 billion this financial year. So the government will have to look at measures to prop up exports. Re- introduction of a duty drawback scheme along with e-wallet scheme will small and medium exporters to reverse the falling exports in these sectors, experts said. About 45% of India’s exports are from MSME sector, which has been badly hit due to demonetization and the rollout of GST. MSME exports create jobs as well. The parliamentary panel had asked the finance ministry to allow exporters to use the old system of refunds through the so-called duty drawback scheme. It also said GST compliance burden was causing job losses in labour-intensive export sectors. Gupta said a delay in GST refunds too created a huge problem to small and medium exporters. After FIEO’s representation and Prime Minister Narendra Modi’s concern over falling exports, GST refunds have picked up since March this year. Till June, GST refunds of Rs 43,000 crore have been made to exporters. This delay in refunds was blocking working capital for small and medium exporters. Rotation of funds became difficult for them. Two GST refund drives of a fortnight each have already been conducted and the third began this week. E-sealing of containers is a major problem for exporters in all the Indian ports, as they are yet to acquire scanners. As a result physical examination of containers is being done and this was putting a lot of exporters into difficulty and delaying shipments, Gupta said, adding, continuing with the earlier practice of physical examination by customs officials at factory site will prevent this duplication of work and delay in shipment. The old practice could continue till scanners are procured at ports.

16 Jul 2018

Wärtsilä to assist Transocean with thruster maintenance optimisation and dry-docking cost reductions

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"Wärtsilä and Transocean will optimise the maintenance of all Wärtsilä thrusters installed within the Transocean fleet, while seeking to significantly reduce dry-docking costs by extending the service intervals of the thrusters. The agreement aims to deliver fewer interruptions to operations, which will result in benefits for both parties. The performance-based agreement builds on the Wärtsilä Propulsion Condition Monitoring Service (PCMS), that collects performance data from the thrusters and delivers it to a Wärtsilä Expertise Centre for analysis. Service experts analyse the data and determine a flexible maintenance schedule for each piece of equipment based on the actual condition of the equipment. The agreement covers five semi-submersible rigs and one drillship, each of which has six to eight thrusters. Each thruster will be overhauled once during the 13-year agreement period. Spare parts and personnel, as well as the installation of the PCMS also fall within the scope of the agreement. “We are deepening our co-operation with Transocean. As the oil & gas market turns around, we will be there every step of the way to support Transocean with efficient solutions for its fleet,” says Kourtney Dever, GM Sales-Offshore & Marine, Wärtsilä. “By improving thruster condition and enhancing the efficiency of maintenance, we show our commitment to providing high performance throughout the equipment lifecycle.” Transocean offers offshore drilling services worldwide. The company specialises in technically demanding environments, specifically ultra-deepwater and harsh environment."

16 Jul 2018

War for geopolitical supremacy named trade war

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"The Trump administration’s declaration of a trade war with friends and foes alike should not have come as a total surprise. The unpredictability and instability created by this presidency has long become a source of concern and is resulting in new international alliances being formed and old adversaries coming together in a changing geopolitical landscape. US President Donald Trump’s abrupt announcement on slapping steel and aluminium tariffs on the European Union, Canada and Mexico as well as China came after messages from Washington that the Western allies may get exemptions and the confrontation with Beijing was winding down. The contradictions and confusion are due both to deep divisions between the president’s economic advisors and the frequency with which he himself has been changing his mind. A classic example of this has been Treasury secretary Steven Mnunchin saying that the punitive measures against China had been put “on hold” only for Mr Trump’s trade advisor, Peter Navarro, to dismiss the statement as an “unfortunate sound bite”. The president refused to take any action over the undermining of a senior member of his cabinet by Mr Navarro just as nothing was done after reports that members of the American team negotiating with Beijing were found to be shouting at each other in the corridor outside. The first retaliatory shots on this commercial conflict are being fired with the European Union issuing a list of US products to face tariffs, from Harley Davidsons to peanut butter. Canada is planning to impose duties of up to 25 per cent on $13bn (£9.7bn) worth of American goods including steel, yoghurt and whiskey and Mexico focusing on steel, pork, fruit and cheese from the US. Amid rising alarm and stock markets crashing, Mr Trump holds that “trade wars are good”. Some countries are not keen to wait around to find out where all this ends, and are instead taking precautionary steps. China and India, engaged in decades of acrimony, have seen a hurried bolstering of relations. Iran, with Trump reneging on the nuclear agreement and threatening a new raft of sanctions, has turned to Russia and China for trade and security. Mexico is seeking allies in Latin America to counter the re-emergence of US bullying. The European Union’s decision to hit back is another sign that plummeting relations with Washington are unlikely to get better as long Mr Trump is in the White House. One of the most significant developments was the summit in Wuhan, Chairman Mao’s old summer retreat, between Xi Jinping of China and India’s Narendra Modi coming not long after their countries’ troops were involved in a standoff at the disputed border area of Doklam. Beijing may be the primary target of US tariffs, but there have been vocal threats from Washington of swingeing duties on Indian goods as well. Both China and India have benefited greatly from globalisation with technological and social progress intrinsically linked to the strides being made economically. The GDPs of the two countries will exceed those of the G7 nations in the next two decades and has led to increased rivalry between the world’s two most populous nations. But they are being drawn together by deepening apprehension that Mr Trump’s actions will have a cataclysmic effect. It is ironic that India is being pushed towards China by Washington after years of efforts by successive American administrations to turn Delhi into a strategic ally against Beijing through a raft of economic, political and military initiatives. The US only recently succeeded in getting India to become part of a revamped quadrilateral alliance with America, Japan and Australia to combat Chinese hegemony in the region. Mr Trump has often spoken of the special relationship he has quickly forged with Mr Modi, with the Indian prime minister becoming the first foreign leader to have a working dinner at the White House during the current administration. But Japan’s Shinzo Abe was also said to have had such a special relationship – that did not stop the US president from accepting bilateral talks with Kim Jong-un against the position of Tokyo and, indeed, of previous US administrations, that the North Korean regime must give specific undertakings before such a meeting is held. Iran is another subject of confrontation between the US and its allies. The other signatories to the nuclear deal – Britain, France, Germany, Russia and China – have repeatedly stated that it is working, as does the UN. Strategies are being discussed on how to counter the Trump administration threat to penalise companies which continue to trade with Iran. But Washington seems to think that the European states will be cowed into backing down. John Bolton, Trump’s new national security advisor, has asserted “Europeans will see that it’s in their interests to come along with us. As the American sanctions kick in … it will have an even broader effect.” We have yet to see whether the European nations admit defeat on this. But there are other economic powers who have important trade with Iran. The country is third biggest supplier of oil to India’s booming economy while China is the biggest importer of Iranian oil. Both Beijing and Delhi have said they will continue buying oil as have other major consumers, South Korea and Japan. China is on its way to becoming a major beneficiary of America’s Iran policy, with the strong possibility that it will take over the $5bn contract for the South Pars gas fields with the French multinational, Total, likely to pull out because of the threat of US fines. Tehran is now looking towards Russia and China: the Moscow-led Eurasian Economic Union has signed a deal with Iran to lower tariffs on hundreds of goods and becoming part of a free-trade zone."

14 Jul 2018

5-year peak: Goods trade deficit hits 5-year high in June

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"Merchandise trade deficit scaled a 61-month peak of $16.6 billion in June, as a higher net oil import bill offset gains from a contraction in gold and precious stone imports, showed official data released on Friday. This could exert further pressure on current account deficit (CAD) that touched 1.9% of GDP in Q4FY18, slightly lower than 2.1% in the previous quarter but much higher than 0.4% a year earlier. Imports grew 21.3% in June, the fastest pace in five months. Exports growth slowed sequentially but still touched a decent 17.6% in June, as a rise in oil prices helped boost outbound shipment value. Even engineering goods, chemicals and pharmaceutical products registered decent expansion. The fact that even after discounting petroleum and gems and jewellery segments, exports rose a decent 15.1% should comfort policymakers. For the first three months of the current fiscal, non-petroleum and non-gems and jewellery exports grew 13.6% from a year earlier, although overall goods exports rose 14.2% during this period. A weak rupee after the US Federal Reserve hiked the interest rate by 25 basis points last month might brighten export prospects. The rupee has been hovering around the 68-69-mark against the greenback. But analysts say the key to any improvement in export competitiveness will be how much the currencies of its peers depreciate against the dollar in such a scenario. More importantly, with the US and China having targeted each other’s goods in a fresh escalation of a global trade war, India’s exports, like that of many others, could come under pressure. The World Trade Organisation (WTO) has forecast trade growth at 4.4% for 2018, down from 4.7% in 2017. The data showed merchandise exports rose to $27.70 billion and imports advanced to $44.30 billion in June. Garments exports continued to drop, although the textile segments witnessed a double-digit expansion. The major drivers of exports (barring petroleum) were engineering goods (14.2%), chemicals (30.3%) and drugs and pharmaceuticals (14.7%). Petroleum exports grew a massive 52.5%, thanks to the price rise. Petroleum imports, too, rose 56.6% in June, driven by an over 60% jump in Brent crude oil prices in the last month from a year earlier. Having grown steadily in recent months after a crackdown against illegal abattoirs in Uttar Pradesh, meat, dairy and poultry product exports again dropped 15.4% in June. The commerce ministry data showed services exports, too, contracted 7.9% in May to $16.17 billion in May from a rise of 4.3% in the previous month. Services imports dropped 6.5% to $10.21 billion in May from a year earlier, against a 6.2% rise in the previous month. Aditi Nayar, principal economist with Icra, said: “Similar to the trend in the previous month, the labour-intensive textiles sector recorded a mixed trend with expansion in yarn/fabric/made-ups offset by weakness in ready-made garments. Moreover, the growth in exports of gems and jewellery was subdued at 3% in June 2018.” High trade deficit in recent months due to an improvement in imports may continue to pressure the CAD. However, the CAD could worsen to $16-17 billion, or around 2.5% of GDP in Q1 FY2019, from $14 billion a year earlier, Icra’s Nayar said. FIEO president Ganesh Kumar Gupta expressed concern over subdued growth in exports by MSMEs in some labour-intensive segments. “These MSME exporters are still feeling the pinch of a liquidity crunch as banks and lending agencies have continuously been tightening their lending norms,” he said."

14 Jul 2018

Whatever In National Interest Will Be Done: India On Import Of Iran Oil

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"Amid concerns over the import of oil from Iran following US sanctions, India today said whatever is mandated to be done in its national interest will be done. In response to a question on the comments made by Iran Deputy Ambassador and Charge d'Affaires Massoud Rezvanian Rahaghi at a seminar on Tuesday that New Delhi would stand to lose ""special privileges"" if it cut import of Iranian oil following US sanctions, Ministry of External Affairs spokesperson Raveesh Kumar said his remarks were ""misquoted"" and that the Iranian side had issued a clarification in this regard. The Iranian embassy released a statement yesterday that Tehran would do its best to ensure security of oil supply to New Delhi, asserting that it had been a reliable energy partner for India. ""For India, Iran is an important partner for energy and connectivity. In the clarification by the Iranian embassy, they have explained a lot of things.... It got reported, it got misquoted and they thought there was a need to clarify. They have understood our position and of course, and we do share a very strong relationship,"" Mr Kumar said. He added that India is in touch with Iran on several issues, including on the fallout of the US withdrawal of the Joint Comprehensive Plan of Action (JCPOA) or the nuclear deal signed between Iran on one side and the US, China, France, Germany, Russia, the United Kingdom on the other. In response to another question on whether there was any development on the US reaching out to India over the issue of reduction of imports from Iran, Mr Kumar said, ""They had indicated. In fact, a statement was made by the US State Department that they would like to get in touch with or they are prepared to engage in discussions with various countries in the matter. They did not specify India."" He further said, ""We do welcome such engagements. We have taken a note of it. We will see what necessary steps we need to take in this. One thing is very clear that whatever is mandated to be done in our national interest, those things we will be doing."" Iran is India's third-largest oil supplier after Iraq and Saudi Arabia. Iran supplied 18.4 million tonnes of crude oil between April 2017 and January 2018 (first 10 months of fiscal 2017-18). The US has told India and other countries to cut oil imports from Iran to ""zero"" by November 4 or face sanctions. The Trump Administration brought back sanctions against Iran after pulling out the US from the Iran nuclear deal. Shipping to Iran and ports in the country are also coming under the US sanctions. Mr Kumar did not respond to a question on whether there was any reduction in the oil imports. He said these are operational questions and should be addressed to the Ministry of Petroleum and Natural Gas. Mr Rahaghi had also said that it was unfortunate that Indian investment promises for expansion of Chabahar port and its connectivity projects had not been accomplished so far and that it was expected that India would take immediate necessary measures in this regard if its cooperation and engagement in the port was of strategic nature. Mr Kumar said India is committed to the development of Shahid Beheshti Terminal of Chabahar port."

11 Jul 2018

New performance indicator enables effective fuel savings, increased efficiency and early damage detection in diesel engines

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"New performance indicator enables effective fuel savings, increased efficiency and early damage detection in diesel engines Reliable results even at elevated pressure ranges up to 350 bar Fuel consumption in shipping and the associated costs are enormous – it is not without reason that many operators pursue a slow steaming strategy. But this is not a permanent solution. In the “Safety and Shipping Review 2015” Allianz Global Corporate & Specialty warns that this technology shortens the life of the engine and increases polluting emissions. So rather than restrictions, increased efficiency is more effective in reducing consumption and preventing permanent damage. One possibility for this is the “indexing” of the engine – the dynamic pressure measurement in the combustion chamber of the diesel engine at the indicator valves – the PREMET X measuring device presented by CM Technologies GmbH at this year’s SMM in Hamburg, makes it possible to precisely determine the cylinder pressure at every cylinder position, the actual injection and ignition timing, as well as other aspects of the combustion process. Based on the results, the injection can be optimised and fuel consumption reduced. Furthermore, nearly all wear processes can be monitored and maintenance planned accordingly. Innovative sensors from Kistler Switzerland are used for maximum reliability, making it possible to measure pressures up to 350 bar. "

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