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09 Jul 2018

Unattended ship wreck near Paradip pose threat to navigation

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The "Black Rose" wreck near Paradip is still lying unattended. The sunken ship was yet to be dismantled and it appears that authorities 'lack interest' to remove the wreckage of the ship. As the salvage operation of the wreckage of the ship was still incomplete, it continued to pose the serious danger to the environment and marine species. Besides, the partially-submerged vessel was also posing a threat to shipping operations as there were no proper lighting arrangements near the wreck site. Presently, more than 85 percent of the sunken ship is submerged under water while 15 percent showed above the surface of the sea. Boats returning to the shore during the night were facing problems and already two to four boats have met with the accident at the spot in the past. Though earlier a massive operation was undertaken to prevent oil spill by spending crores, no such concrete measures have been taken towards removal of the wreckage. Recently, a CBI inquiry was ordered following allegations that the vessel was engaged in the illegal transportation of iron-ore and other minerals by forging documents. Besides, an involvement of some high profile politicians from the State is also alleged.

09 Jul 2018

China-US trade war may hit Indian rupee, exports

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"Will India get caught in the trade crossfire between the US and China? Most experts and economists believe it would depend a lot on how India plays the game. They all agree that the rupee is sure to feel the tremor of the US-China face-off, but whether it will turn into an opportunity or a challenge would be an outcome of New Delhi's policy reaction to it. D K Srivastava, chief policy advisor, EY India, told DNA Money that if the trade war between the two major economies escalated and took a ""more permanent shape"" then India would have to alter the current structure of its exports. He believes that any impact of the trade tussle between US and China would depend on the policy New Delhi adopts. ""It (trade war) will definitely have an impact (on India). It is both a challenge and an opportunity. Its effect on us depends on the policies that we adopt,"" said the EY economist. Srivastava believes that if India stayed away from engaging in a tariff war with the US, it can widen its trade volume with it even as it tried to reduce the $23-billion trade surplus. ""If we also start engaging in a tariff war (with the US) it would be detrimental. We must adjust our policy so that a tariff war does not ensue because the US is also questioning India's trade surplus. Even if that (trade surplus with the US) is squeezed but if the volume of trade increases it would be better for us. We should import and export more with US,"" he said. As per the Directorate General of Commercial Intelligence and Statistics (DGCIS), Kolkata, India's exports was highest to the US for the two-month period of April and May this year at Rs 58,221.46 crore. China came third at Rs 17,614.44 crore. In case of imports, it was just the opposite with China at the top of the list with Rs 73,348 crore and US in the second spot at Rs 36,002.46 crore. The government numbers show that India's trade deficit with China has risen to $51 billion in 2017-18 from $16 billion in 2007-08. In contrast, we have a trade surplus of $23 billion with the US. Ajay Sahai, director general & CEO, Federation of Indian Export Organisations (FIEO), sees little chance for India to substitute Chinese exports to the US for now. This is because India is not a major exporter of the products that have come under the US scanner in its trade battle with China. ""Yes, US is imposing tariff on Chinese goods and China is retaliating. But it may not help us. If you look at the profile of products, which have been covered so far, we are not a major exporter of these products. There may be a few products, but I don't think they are going to make any difference,"" said the exporters' lobby body chief. The Trump administration has imposed 25% levy on more than 800 Chinese products, including industrial machinery, medical devices, electronic goods, auto parts and others. It had earlier clamped down on steel and aluminium imports into the US. Beijing, on its part, has slapped tariff curbs on 545 US items, including agricultural products, vehicles and aquatic products. EY's Srivastava said export opportunity for India may show up in a significant way once trade war may assume a full-blown proportion. ""Immediately this will take some doing, but once we recognise that, this might be a medium- to long-term opportunity,"" he said. For Sahai, the bigger worry was the shrinking global trade due to the US-China squabble, which could erode India's already small export base. ""These kinds of protectionist measures and counter measures are expected to reduce the growth of global trade. This has a greater impact on India because it could adversely hit its exports,"" he said. Sahai, however, took comfort in the fact that India was not an export-oriented economy as exports contributed just 20% to the GDP; ""most other countries in Asia will be much more impacted compared to India because its exports accounts for only 20% of the GDP. This is much lower than the 40%-plus contribution of exports to the GDP in other counties. In that sense, we are a little insulated from these developments"". Another big concern for him was the impact of the trade war on the Indian currency, which could likely weaken more. ""These kinds of situations, which are developing, will further spur the flight of capital from emerging markets to the US. This could result in depreciation of most currencies,"" said the FIEO executive. Aditi Nayar, principal economist, Icra, said emerging market currencies will follow the Chinese yuan. ""Emerging market currencies including the Indian rupee will take a cue from the impact that trade tensions have on the yuan,"" she said. Srivastava also believes that as US and China engage in a trade war, Indian currency will come under pressure. ""Even without the trade war, US has followed policies that would have increased the flow of dollar back into the US, and so Indian rupee will come under pressure. I, however, think that, to some extent, the rupee was overvalued. The ongoing depreciation of rupee might help India's exports, but it's fall might need to be arrested at some point in time,"" he said. FIEO's Sahai also sees the US-China standoff sparking inflation as global commodity prices shoot up. This could send inflation in India, which is already at an elevated level due to higher crude prices, soaring. According to him, higher global prices will push up input and raw material costs for domestic manufacturers and make them less competitive in the international market. ""It is not a very positive sign for India. At best, if you can get some product into some market; that can be the only positive. But it does not outweigh the other disadvantages,"" he said. Sahai said if the trade war led to depletion in exports, it could even pull down GDP growth to that extent. Srivastava was more optimistic about the GDP growth as he feels India could record over 7% economic growth despite the trade war. His only caveat; it would depend on how New Delhi turned the whole situation to its advantage. ""We might be able to achieve the projected more than 7% GDP growth rate despite these developments, but again it depends on how we utilise this opportunity,"" he said. "

09 Jul 2018

Garment exports fall 17% this year, MSP hike may drag them down further

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"Garment exports from India have degrown 17% in 2018 and the situation could further worsen as input costs are on the rise. According to industry players, various aspects have led to declining exports and entities involved are struggling for survival. Speaking to DNA Money, Rahul Mehta, founder and director, Creative Group and president of Clothing Manufacturers Association of India (CMAI), said, ""That is a worrying factor because apart from anything else, the garment industry is the highest employer after agriculture. It all began last year post implementation of the goods and services tax (GST). Withdrawal of 5% duty drawbacks has made our products non-competitive in export markets to the extent of 7-8%."" Exports, according to Ashok G Rajani, chairman, Midas Touch Export Pvt Ltd, have taken a beating mainly in the United Arab Emirates (UAE). ""The duty drawback has virtually wiped out our competitiveness and there is no advantage there. Additionally, there is 5% value added tax (VAT) in UAE which further makes us non-competitive. Even in markets like Europe and America, we are not experiencing any major growth in exports. Overall, we are in a state of depression as far as the trade is concerned,"" said Rajani. Apparel is an extremely competitive product and neighbouring countries enjoy other advantages like free market access to Europe and other countries, something Indian garment manufacturers don't have. ""Withdrawal of 5% duty drawback creates a substantial difference. We are working closely with the government on explaining the challenges. There are certain taxes that are embedded / not refundable and the authorities are actively considering a refund of these taxes paid. There is a drawback committee looking into all these matters and it is work in progress as we speak,"" said Premal H Udani, managing director, Kaytee Corporation (P) Ltd. Udani added, ""We are hoping that in another month or so we will receive tax money that we are paying but were not refunded. That should improve our competitiveness in the export market and descaling should stop."" However, not everyone in the industry seems to share the optimism. The government constantly being in election mode, said a top executive from a garment export firm, is not looking at the garment manufacturers' plight. And while the industry bodies have been knocking the doors of every possible authority, there seems to be some disconnect along the value chain. ""It appears there is a lack of understanding on the issues faced by the garment manufacturers and exporters. We are in a state of suspended animation,"" said the executive, adding that while the government wants to help they have their hands tied-up. Apart from GST issues, the apparel industry is also impacted by a steep rise in raw material costs. Cotton and yarn prices, in particular, have escalated 20% over the last two months and that is adding to the pressure. ""Now with minimum support price (MSP) being raised, the cost will increase further. Cotton being one of our core raw materials for export of garments, increase in procurement cost will further impact the business. This apart, there is an increase in overall operational costs as well which is driving prices north and that's making the business a difficult and challenging task,"" said Mehta. A lot of cotton and yarn is being exported to competing neighbouring countries and that's another challenge faced by garment manufacturers, leading to scaling down of production and operations. ""We are one of the few countries with a presence in the entire fibre-to-fashion value chain and hence should not become an apparel importing nation. Increased raw material export to competing countries is a matter of great concern. This can be mitigated by incentivising value addition in the home market or rather dis-incentivising raw material exports. We should not be reliving the British era of exporting raw materials and importing finished goods. China is a classic example with $150 billion apparel market. It exports only 5% of its entire cotton and yarn produce, and that too only to its satellite countries where it has set up garment manufacturing factories. Compared to China, raw material exports in India are very high in the range of 25% to 30% and mainly going to competing countries,"" said Udani, adding that raw material prices also impact the domestic manufacturers and it's not a very rosy time for the industry. While bigger players with sustaining power are able to swim through the present challenging business environment, a lot of exporters in the micro, small and medium enterprise (MSME) segment are having a tough time holding the fort. ""In fact, 80% of entities in domestic and export business are MSMEs so you can easily gauge the impact. Some have closed down their units, while others have reduced production from five units to two units to deal with the prevalent market conditions and so on. Exports are low so production is low and this has impacted existing and potential employment generation opportunities as well,"" said Mehta. While bigger players like Kaytee Corp, Midas Touch Export etc., are currently sustaining their operations their business is not completely immune to the challenging market. ""Being larger in size, we are able to withstand the pressure on business so far. But, how long will we be able to so, is something we don't know. That's why we are hoping that the government will listen to our plea sooner rather than later and support this employment-generating industry,"" said Udani adding that business profitability is getting eroded. Despite the challenging business environment, there is a temporary relief for the garment exporters owing to the strengthening of the US dollar against the rupee. ""It was Rs 64 to a dollar last year and now it has gone up to Rs 68.5, that's a weakness of rupee against the dollar by 7-8%. It helps to an extent but not beyond that,"" said Mehta. Domestic industry, though sluggish at present, is showing upward trajectory and appears to have overcome demonetisation, GST and other roadblocks. More or less the domestic industry seems to have settled down. However, garment imports from Bangladesh, Sri Lanka, Vietnam etc., have increased which is a worrying situation and impacting domestic production, said the CMAI president. To give a boost to domestic business, the association is organising a 'National Garment Fair' that will take place from July 16 to 19, 2018. ""We are hoping participants will be able to transact business worth Rs 750 crore during the four days thereby beating the sluggishness in the market,"" said Mehta."

06 Jul 2018

U.S. sends two destroyers through Taiwan Strait amid tensions with China

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"Two U.S. warships have passed through the Taiwan Strait, the first since July last year, in a move likely to be seen in Beijing as a show of support for Taipei by Washington. The USS Mustin and USS Benfold guided-missile destroyers, which are both home-ported at the U.S. naval base in Yokosuka, Kanagawa Prefecture, were the first such American vessels to pass through the strait since the USS John McCain made the transit in July 2017. The move comes amid a trade war between the U.S. and China and escalating tensions between Taiwan and China, which has warned that it will defend — by force if necessary — its “One China” principle under which the self-ruling island is seen as part of China’s own territory, awaiting reunification. Capt. Charlie Brown, a spokesman with the U.S. Pacific Fleet, confirmed the voyage, but played down its significance. “U.S. Navy ships transit between the South China Sea and East China Sea via the Taiwan Strait and have done so for many years,” Brown told The Japan Times. Taiwan’s Defense Ministry had earlier announced the sailing, identifying the two warships by their hull numbers and saying they had entered the southern part of the strait and sailed in a northeasterly direction. “The military is monitoring the situation in neighboring areas, and has the confidence and abilities to maintain regional stability and defend national security,” it said in a statement late Saturday. The Chinese government had no immediately comment. China has ramped up its military presence near Taiwan, sailing its sole operating aircraft carrier through the strait in January and March and holding large-scale exercises near the self-ruled island in recent months. The U.S. Navy has not sailed an aircraft carrier in that area since 2007. Although the U.S. does not have formal diplomatic ties with Taiwan, it is its most powerful ally and top arms supplier. China’s hostility toward Taiwan has grown since the 2016 election of President Tsai Ing-wen, a member of the island’s pro-independence Democratic Progressive Party. Beijing suspects Tsai wants to push for formal independence, which would cross a red line for Communist Party leaders in China, although Tsai has said she wants to maintain the status quo and is committed to ensuring peace. Beijing has also managed to deplete Taipei’s diplomatic allies, luring away four since Tsai came to power and leaving it with only 18 countries worldwide that recognize it over China. China has also been angered over recent warming relations between the U.S. and Taiwan, after Trump signed legislation paving the way for mutual visits by top American officials and the U.S. government green-lighted a license required to sell cutting-edge submarine technology to Taipei. The U.S. State Department has also reportedly requested the deployment of a detachment of marines to help safeguard new facilities of the American Institute in Taiwan, Washington’s de facto consulate in lieu of formal diplomatic ties, in Taipei. U.S. Marines usually guard missions in countries with which Washington has formal diplomatic ties. Collin Koh, a specialist in regional naval affairs at Singapore’s S. Rajaratnam School of International Studies, said the warships’ transit was likely a message from the U.S. that it continues to support Taiwan. “These days, Taiwan has been under quite a bit of pressure from China— the snatching of multiple countries from Taiwan’s already paltry pool of formal diplomatic allies within a short span of time, regular aerial and naval ‘island patrols,’ even cyberattacks on the island,” Koh said. “It has reached a point where there’s rising calls within the U.S. political and defense establishment to help Taiwan stave off this pressure.” Koh also said the move was unlikely to be a one-off, adding that Beijing would continue to apply pressure on Taipei. “Taiwan is a key ‘core interest’ of Beijing and recently we see more strident resistance voiced out in Chinese state media against perceived U.S. moves to undermine such interest,” Koh said. “So there’ll be no rolling back by China.” Taiwan, he added, is at the forefront of key issues for China — perhaps even more important to Beijing than its territorial row with Tokyo in the East China Sea over the Japanese-controlled Senkaku Islands, known in China as the Diaoyus. “If we need to do a comparison, Taiwan certainly ranks above other topical hot-button issues such as even the East and South China sea disputes,” Koh said. And Taiwan is surely a litmus test for (Chinese President) Xi Jinping’s repeated exhortation to protect China’s national sovereignty and territorial integrity.”"

03 Jul 2018

HC pulls up DG Shipping, Indian Maritime varsity over "malpractices" in MTI

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" The Bombay High Court has recently reprimanded the Director General of Shipping and Indian Maritime University on the functioning of the Maritime Training Institute (MTI) at Powai over several alleged ""malpractices"" in the field of specialised education like maritime courses. A division bench of Justices S C Dharmadhikari and Ms Bharati Dangre made this observation while hearing a writ petition filed by three students of MTI, who had sought direction from the court to the Institute to grant them ""necessary reliefs"" so that they can clear diploma course, for which they had secured admission in the year 2015, and their careers would not get ""jeopardised"". In its order dated June 18, the bench noted that, ""...we want to ascertain from the Director General of Shipping as to whether it is aware of the functioning of such institutes as are before us and whether the Maritime University has been vigilant enough to take steps to prevent any malpractices or maladministration particularly in the field of a specialised education like maritime courses."" The matter will come up for further hearing in the court on July 5, a statement issued by the lawyer of aggrieved students said here. As reported earlier, the students -- Parth Singh, Amrik Singh and Avinash Kumar Vatsh -- had enrolled themselves with the Institute for the 29th batch of Diploma in Nautical Science course for the period of one year from February 23, 2015, till December, 2015. And for the purpose, they had paid a sum of Rs 6.37 lakh each as the fees for the course. Of the total amount, they had to pay an advance of Rs 1 lakh and the remaining Rs five lakh in two installments of Rs 2.50 lakh each -- one on the first day of joining the course (on February 23, 2015) and another on the first day of commencement of the second semester of the course (on July 23, 2015) -- to MTI, Powai. They were also assured of training onboard a ship during the course. The students further stated in the plea that they were selectively targeted in such a way that they were not allowed to clear the subjects nor were given passing marks by adopting such rules that were not applicable to them. Moreover, the Institute itself did not comply with those rules, thus subjecting the aggrieved students to the discrepancies and irregularities in applicability of the rules and regulations and thus causing intentional delay in not clearing the subjects even after lapse of two and half years. Furthermore, Course officer Captain Sushant had on many occasions caused physical and mental harassment to these students along with others. Hence, a police complaint was also filed with the Powai police station against him. However, due to coercion and pressure from Capt Sushant, the complaint was later withdrawn. Consequently, the said Course officer became vindictive and started harassing the students by giving marks which could be as low as between 2 and 4 in the internal assessment or by not uploading their marks for internal assessment. According to the said procedure, the maximum mark of each theory paper was of 100 marks and out of the same, 30 per cent marks were for internal assessment and 70 per cent marks for the university examination. However, due to the change in the marking pattern, they could not clear the examination. Also, there were gross illegalities in evaluating the answer-sheets of these students. They were not awarded the grace marks and consequently, they have not been able to clear some of the papers as on date. It was clearly indicated that they have been discriminated among their own batch mates and for the same batch. The result of their examination held in December 2017 was declared on March 3, 2018, but because of the illegalities and irregularities adopted by the Institute, the students could not clear the papers which had remained uncleared. The students have prayed to the court, through their lawyer K Sunil, to direct the Institute to give them pass marks in the papers in which they had appeared but could not seek re-evaluation. They have also prayed for granting training on board the ship. Besides MTI, the other respondents in the petition included The Director General of Shipping, Shipping Corporation of India Limited, Indian Maritime University and T S Chanakya. The petition was earlier heard by the bench of Justices B R Gavai and Ms Bharati Dangre, which had sought the reply from the opposite parties on June 7. HC pulls up DG Shipping, Indian Maritime varsity over ""malpractices"" in MTI"

02 Jul 2018

GST: Collections increase to Rs 95,610 crore in May

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"The gems and jewellery industry is expecting the government to sort out few issues, including 3 percent GST on gold import for export purpose, to give a boost to the industry as the new tax regime completes one year of rollout. ""Overall, GST has been good for the gems and jewellery export industry, even as there were some teething problems in the initial period,"" the Gem and Jewellery Export Promotion Council (GJEPC) vice chairman Colin Shah told PTI. ""However, things have settled down after that. Earlier, we had to pay Octrai, VAT and customs duties, not we just have GST, which is simple and presents less of paper work,"" he added. He said things are now better for the diamond sector with the 0.25 percent GST. The only issue is with the import of gold for export purpose, he said. ""The process is a bit cumbersome where the banks are charging us 3 percent GST, for which we are getting reimbursement through input credit. But to make things easier, we are want it to be GST free. So far the government has been supportive and have resolved all our issues and we have been assured that this issue will also be considered,"" Shah said. World Gold Council Managing Director, India, Somasundaram PR said GST is a major fiscal reform since India's liberalisation in the early 1990s. ""While gold consumers will face a slightly higher tax rate, and the industry is going through a period of adjustment, we see the net impact on the gold industry as being positive. We expect GST to accelerate the process of making India's gold market more organised and transparent, which should be good for consumers."" This will support gold demand in the years to come, he said. ""The positive aspect about the transition has been the government's response to several feedback from the industry to make it work. However, there still remain areas that need to be addressed to make GST simpler in order to promote organised trading and exports if India has to emerge as the jeweller to the world and gold's economic contribution substantially enhanced,"" he added. All India Gems And Jewellery Domestic Council Chairman Nitin Khandelwal opined that GST has been a boon for the industry as it has to pay only one tax. ""Initially for the first 2-3 months things were difficult as jewellers did not understand the new system. We have spread awareness across the country on GST compliance through seminars, workshops and published materials for the domestic players. We have also developed an online programme on GST, which has helped an wider audience,"" he said. Whatever issued the industry had, the government took them into consideration, he said. ""Now there are few small issue like no input credit on hotels when we travel outside the state to participate on shows. When it is one country one tax, so we should get it across the country as we are getting it in our home state. However, the government has assured us to take it up and we have full confidence that the issue will be sorted soon,"" he added. India Bullion and Jewellers Association (IBJA) Director and Chairman and Managing Director of PNG Jewellers Saurabh Gadgil said: In the first 2-3 months of GST rollout there were problems as it happened on short notice without any preparation and jewellers were confused over the new system. However, gradually as things become streamlined the industry gained from it with things becoming more transparent, he added. Any reform needs time to settle down, but so far the transition has been smooth and things have become simpler, he said. ""There are still many issues which will be sorted by the government over time, including too many slabs. We need to rationalise them. Most countries who have GST have maximum 2-3 slabs and going forward I am sure the government will work towards it,"" he added. "

28 Jun 2018

Cochin Shipyard expects to double ship repair revenue in 3 yrs

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"Cochin Shipyard expects its ongoing and upcoming expansion projects will help it free up more space for repairing large international vessels and double its revenue from ship repairing operations to Rs 12 billion in the next three years. The company, which is expanding its ship repairing capabilities to Mumbai and Kolkata, is also looking at setting up a facility in the Andaman Nicobar islands, said Cochin Shipyard CMD Madhu S Nair. The plans include a Rs 9.70-billion International Ship Repair Facility (ISRF) in Kochi to increase the repair throughput by around 70 per cent and to equip the company for repairing an additional 80 vessels a year. It has also announced a geographical expansion to set up ship repair facilities in collaboration with the Mumbai Port Trust in Mumbai and another one in Kolkata in collaboration with the Kolkata Port Trust. Further, a joint venture with Hooghly Dock and Port Engineers Ltd, where it holds around 74 per cent stake, targeting construction and repair of inland water and coastal vessels is also expected to be operational soon. “With the expansion, we will have a capacity to repair around 150 ships in Kochi, from the current around 80-100 ships depending upon their size. The Kochi facility can have more larger ships for repairing since the smaller ones can be moved to the ISRF,” said Nair. At present, the Mumbai facility has a capacity for around 40 ships. Once it is revamped, it might have a greater capacity. “We are expecting our revenues from ship repairing to grow to around Rs 12 billion in the next three years. Last year, it was around Rs 6.23 billion and it was a growth from Rs 3.7 billion two years back,” Nair added. Another major expansion project is a Rs 17.99-billion new large drydock for construction of complex, technology-intensive large vessels such as LNG carriers, offshore drillships, and larger aircraft carriers, along with repairs of offshore rigs and semi-submersibles. Construction work of the plant and machinery has been awarded to Larsen & Toubro Ltd and the target of completion is June 2021. The company’s major ship repair projects in hand include an aircraft carrier for the Indian Navy, a Defence Research Vessel and an ONGC drill rig. "

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