PHD Research Bureau
January 2016
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January 2016
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Executive Summary (TIF January 2016) Developm ents pertaining to foreign trade and investm ents in India rem ained significantboth atthe dom estic leveland internationallevelduring the previous m onth. According to the recent UNCTAD’s Global Investm ent Trends M onitor,FDI flow s to India nearly doubled, reaching an estim ated US$59 billion in 2015. The report highlighted that this is on account ofm easures undertaken by the governm ent to im prove the investm ent clim ate in the
country. The Union Cabinet,chaired by the Prim e M inister ShriNarendra M odihas given its ex-post facto approvalfor the approach adopted by India atthe Tenth M inisterialConference ofthe W TO held in Nairobi,Kenya during 15-19 Decem ber 2015. The outcom es ofthe Conference,referred to as the 'Nairobi Package' include M inisterial Decisions on agriculture,cotton and issues related to least developed countries (LDCs). India undertook a “stock-taking exercise” for a free trade agreem ent w ith the EU.The purpose of the m eeting w as to assess w here both sides stand and how India and the EU should go forw ard w ith the proposed pact. India’s exports for the m onth ofDecem ber 2015 stand atUSD 22.3 billion as com pared to USD 26.2 billion in Decem ber 2014 registering a grow th of(-)14.7% .During Decem ber 2015,the im ports are registered at USD 34 billion as com pared to USD 35.3 billion in Decem ber 2014, registering a grow th of(-)3.8% . Pertaining to bilateral trade developm ents India has signed a protocol w ith Czech Republic to prom ote bilateral cooperation in the field of heavy industry,especially in industrial cooperation and facilities construction. The governm ent has given ex-post facto approval for signing M oU betw een India and Singapore to establish m utualcooperation in the field ofcivilaviation,w hich w ill initially cover,the airports ofJaipur and Ahm edabad and M em orandum ofUnderstanding (M oU) betw een India and Bangladesh for setting up ofBorder Haats on India-Bangladesh Border am ong
others. W ith regard to policy developm ents,for faster clearance of im ported food products, including supplem ents and nutraceuticals, the governm ent has decided to w aive off sam pling from consignm ents ofgeneralfood products atports,airports and other points ofentry.The Governm ent has initiated a probe into alleged dum ping ofan autom obile com ponent,axle for trailers by China in the dom estic m arket in order to protect dom estic players in the autom obile sector against cheap im ports.M adras High Courthas granted a stay on a notification by the Director GeneralofForeign Trade (DGFT)restricting im ports ofapple only through Nava Sheva portin M aharashtra. 1st m eeting ofthe Councilfor Trade Developm ent and Prom otion w as held in the Capitalw herein around 10 States and senior officials from other States participated and the Union Com m erce & Industry M inister Sm t. Nirm ala Sitharam an expressed the hope that the Council w ill help in developing a fram ew ork for m aking the States active partners ofthis M inistry in boosting India’s exports. January 2016
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Contents S. No.
Topic
Page No.
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Developm ents in India’s Foreign Trade
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2
Developm ents in India’s Foreign Investm ents
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3
Developm ents in BilateralTrade and Investm ents
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4.
India and W TO
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5.
Policy Developm ents
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6.
M iscellaneous
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1.
Developments in India’s foreign trade
1.1
Exports
1.1.1 Merchandise exports decline by (-) 15% in December, 2015 - India’s exports for the m onth ofDecem ber 2015 stand at USD 22.3 billion as com pared to USD 26.2 billion in Decem ber 2014 registering a grow th of(-) 14.7% .During Decem ber 2015,the im ports are registered at USD 34 billion as com pared to USD 35.3 billion in Decem ber 2014,registering a grow th of(-) 3.8% .The balance oftrade stands at around USD (-)11.7 billion during Decem ber 2015 as com pared to USD (-)9.2 billion for Decem ber 2014. Value of Foreign Trade Period
USD Billion December
October
November
21.4
20
22.3
(-)17.5
(-)24.4
(-)14.7
31.1
30
34
(-)21.2
(-)30.3
(-)3.8
(-)9.8
(-)9.8
(-)11.7
Exports FY16 Grow th (% ) Imports FY16 Grow th (% ) Trade balance FY16
Source: PHD Research Bureau, compiled from Ministry of Commerce and Industry, Govt of India
1.1.2 November, 2015 services exports stand at USD 12 billion - India’s services exports for the m onth ofNovem ber,2015 stand ataround USD 12 billion and services im ports stand at USD 5.7 billion in Novem ber 2015.The trade balance in services stands at USD 6.3 billion for the m onth of Novem ber 2015. 1.1.3 Cotton exports registered a robust growth in November 2015 - Cotton fibre exports from India registered a robust grow th of around 160% (m -o-m ) to 214 m illion kg or 1,263.835 bales valued at US$291 m illion in Novem ber 2015. Pakistan and Bangladesh w ere the largest im porters of cotton w ith com bined volum es at 950,000 bales am ongst the 17 countries that im ported cotton from India. 1.1.4 Oil meal exports fell 86% due to high prices – According to the Solvent Extractors’ Association ofIndia (SEA) exports ofsoya m ealw ere registered at 61,556 tonnes in the first nine m onths of 2015-16,dow n 86% from 4,44,736 tonnes in the sam e period last year.W hile,the exports ofsoya m ealduring the m onth ofDecem ber 2015 stood at5,667 tonnes (1,94,012 tonnes) w itnessing a steep fallof97% over the sam e period last year.The sharp decline in the exports is attributed to non-com petitive price ofthe oilm eals in the dom estic m arket. 1.1.5 Foreign Tourist Arrivals in December 2015 grow at 3.2% (y-o-y) - FTAs during the m onth of Decem ber 2015 w ere 9.13 lakh as com pared to FTAs of 8.85 lakh during the m onth of Decem ber 2014 and 8.22 lakh in Decem ber 2013.There has been a grow th of3.2% in Decem ber 2015 over Decem ber 2014.FTAs during the period January-Decem ber 2015 w ere 80.16 lakh w ith a
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grow th of 4.4% , as com pared to the FTAs of 76.79 lakh w ith a grow th of 10.2% in JanuaryDecem ber 2014 over January-Decem ber 2013.
1.2
Imports
1.2.1 Steel imports rose 23% in December , 2015 - India's steelim ports rose by 23% to 0.94 m illion tones (M T)in Decem ber 2015 as com pared to 0.76 M T in Novem ber 2015.This neutralized the m easures taken by the governm entto check cheap inbound shipm ents ofthe product. Im ports oftotalfinished steelstood at8.389 M T in the April-Decem ber period of2015-16 fiscal,a grow th of 29.2% com pared to sam e period oflastyear. 1.2.2 Urea imports up by 10% in April-December to 68.71 lakh tonnes - Urea im ports registered an increase by 10% to 68.71 lakh tonnes in the firstnine m onths (April-Decem ber 2015) of the current financialyear.The country had im ported 62.57 lakh tonnes of the fertiliser in the sam e period (April-Decem ber) of2014-15.The country’s annualurea dem and is 30 m illion tonnes, w hile the production is stagnantat22 m illion tonnes.
2.
Developments in India’s Foreign Investments
2.1 FDI flows to India nearly doubled, reaching an estimated US$59 billion: UNCTAD According to the recent UNCTAD’s Global Investm ent Trends M onitor,FDI flow s to India nearly doubled, reaching an estim ated US$59 billion in 2015. The report highlighted that this is on accountofm easures undertaken by the governm entto im prove the investm entclim ate. 2.2 Net FII investments stands at about (-) USD 1243 million in Dec 2015 - The net FII investm ents in the m onth ofDecem ber 2015 stand at about (-) USD 1243 m illion as com pared to around (-) USD 1641 m illion in Novem ber 2015.The netFIIinvestm ents registered a y-o-y grow th of about (-) 162% in Decem ber 2015 over investm ents at about USD 1998 m illion in Decem ber 2014.The netFIIinvestm ents registered a grow th ofabout(-)140% in Novem ber 2015 (Y-O-Y). 2.3 Chinese city launches India centre to promote investments - W enzhou,one of the richest Chinese cities, has launched the India China Econom ic and Cultural Centre (ICECC) to prom ote investm ents in India.Over 120 leading entrepreneurs from W enzhou w ho are looking at investing in India attended the cerem ony held by the m unicipalgovernm ent.A totalof 10 M oUs w ere signed betw een leading com panies from W enzhou and their Indian counterparts to prom ote trade,investm ents and culturalcooperation w ith India in 2016.
3.
Bilateral Trade and Investment Developments
3.1 India and Czech Republic signed a protocol to help India modernize heavy industry India has signed a protocol w ith Czech Republic to prom ote bilateral cooperation in the field of heavy industry, especially in industrial cooperation and facilities construction. The protocol includes m odernization of the existing facilities in India by the Czech com panies, including m odernization of three plants of Heavy Engineering Corporation and a Central Public Sector Enterprise (CPSE) under the Departm ent ofHeavy Industries atRanchi,set up w ith Czech support in early 1960's. January 2016
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3.2 MoU between India and Singapore in the field of Civil Aviation - The Union Cabinet under the Chairm anship of the Prim e M inister Shri Narendra M odi has given its ex-post facto approval for signing a M em orandum of Understanding (M oU),w hich w as signed in Novem ber, 2015 betw een Airports Authority of India (Representing Governm ent of India) and Singapore Cooperation Enterprise (Representing Governm ent of Singapore) in Civil Aviation during Prim e M inister’s visit to Singapore.The objective of this M oU is to establish m utual cooperation in the field ofcivilaviation,w hich w illinitially cover,the airports ofJaipur and Ahm edabad. This cooperation w illbe extended to other airports w ith m utualconsent.The salientfeatures ofthe M oU include collaboration in CivilAviation Sector in the areas of:(a) M aster-planning and design , (b) Traffic developm ent , (c) Com m ercial developm ent , (d) Service quality im provem ent , (e) Training and developm ent , (f) Cargo handling and M anagem ent ,(g) M aintenance, repair and overhaul(h)Operation and m anagem entand (i)Any other areas w ith m utualconsent. 3.3 FTA with EU - India took up ‘stock-taking exercise’ - India undertook a “stock-taking exercise” for a free trade agreem ent w ith the EU.The purpose ofthe m eeting w as to assess w here both sides stand and how India and the EU should go forw ard w ith the proposed pact.Betw een 2007 and 2013,about16 rounds ofnegotiations have happened,butafter thatno negotiations have been held.The EU flagged their outstanding issues and w ould now take stock and decide how to proceed on this. The Indian side raised the issue of data security status, M ode-IV ceilings (m ovem entofprofessionals),seam less intra-corporate m ovem entand realm arketaccess in term s ofsanitary and phyto-sanitary (norm s related w ith plants and anim als);and technicalbarriers to trade m easures adopted in EU.The negotiations w illproceed once a decision is taken on w hether there is enough ground to m ove ahead.The talks w ere expected in August last year,butthey w ere deferred by India,expressing disappointm entand concern over the EU banning sale ofaround 700 pharm a products,clinically tested by GVK Biosciences. 3.4 Memorandum of Understanding(MoU) between India and Bangladesh for setting up of Border Haats on India-Bangladesh Border - The Union Cabinet has given its ex-post-facto approval for the M em orandum of Understanding (M oU) betw een India and Bangladesh for the follow ing :-(i) M oU and M ode ofOperation ofBorder Haats signed on 23.10.2010 w ith Bangladesh for setting up Border Haats on India-Bangladesh Border, (ii) addendum to the M oU signed on 15.5.2012; (iii) to establish new Border Haats after identification of suitable locations in consultation w ith Governm ent of Bangladesh and concerned State Governm ents and (iv) to m odify/revise the term s and condition ofthe above M oU/Addendum in consultation w ith relevant State Governm ents/CentralGovernm entagencies and Governm entofBangladesh. 3.5 EU’s extension of import ban on veggies upsets India - The European Union (EU) has extended the ban on im port offour vegetables, bitter gourd,eggplant,taro plant (arbi) and snake gourd from India by another year despite efforts m ade by the country to put in place stringent quality controland packaging m easures.
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4.
India and WTO
The Union Cabinet gave its ex-post facto approval for the approach adopted by India at the 10th Ministerial Conference of the WTO - The Union Cabinet,under the chairm anship of our Hon'ble Prim e M inister ShriNarendra M odihas given its ex-post facto approvalfor the approach adopted by India at the Tenth M inisterial Conference of the W TO held in Nairobi,Kenya during 15-19 Decem ber 2015.The outcom es of the Conference, referred to as the 'Nairobi Package' include M inisterialDecisions on agriculture,cotton and issues related to leastdeveloped countries (LDCs).
5.
Policy Developments
5.1 The government has decided to adopt easier norms for import of food items - For faster clearance of im ported food products, including supplem ents and nutraceuticals, the governm ent has decided to w aive off sam pling from consignm ents of general food products at ports,airports and other points ofentry.Instead,only risk-based sam pling w illbe done to ascertain com pliance. The m ove is in line w ith international standards aim ed at easing trade betw een countries by aw arding speedier clearances to products thatdo notinvolve serious health concerns, w hile focusing on specific item s w hich are identified on the basis of"pre-defined risk param eters", as specified by food and drug regulatory agencies.The custom s departm ent could then introduce these param eters into its ow n system to draw random sam ples atports,w hile im m ediately clearing those thatdo notraise an alarm . 5.2 The Government has started probe into dumping of Chinese auto part - The Governm ent has initiated a probe into alleged dum ping of an autom obile com ponent, axle for trailers by China in the dom estic m arket in order to protect dom estic players in the autom obile sector against cheap im ports.The Directorate GeneralofAnti-Dum ping and Allied Duties (DGAD) stated that it has found a sufficient prim a facie evidence of dum ping of the product from China therefore,the authority hereby initiated an investigation into the alleged dum ping,and consequent injury to the dom estic industry to determ ine the existence,degree and effect ofalleged dum ping and to recom m end the am ountofantidum ping duty,w hich iflevied,w ould be adequate to rem ove the injury to the dom estic industry it said.The period ofinvestigation is from April2014 to June 2015. 5.3 Madras High Court has granted a stay on imports of apples from NhavaSheva - The M adras High Court has granted a stay on a notification by the Director Generalof Foreign Trade (DGFT) restricting im ports ofapple only through Nava Sheva portin M aharashtra.According to the notification ofthe DGFT,the im porters in Chennaiw ere not able to im portfresh apples,w hich has been contracted and dispatched,through the PortofChennai. 5.4 Government increased import duty on certain medical devices - To provide im petus to dom estic m edical devices sector, the governm ent increased im port duty on certain specified m edical devices equipm ent to 7.5% from 5% earlier. Sim ultaneously, the exem ption from additionalcustom s duty (SAD) on these m edicaldevices has also been w ithdraw n,and they w ill now attract4% SAD. 5.5 The central government encouraged the States to form export policy - W ith a view to giving a concerted push to India's declining exports,the central governm ent asked the states to form ulate respective export prom otion policies focusing on products or services of interest to supplem entthe Centre's efforts atboosting the country's outbound shipm ents. January 2016
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6.
Miscellaneous
6.1 1ST Meeting of Council of Trade Development and Promotion held in New Delhi Consultations held for developing a Framework for making States Active partners in boosting India’s exports - 1stm eeting ofthe Councilfor Trade Developm entand Prom otion w as held in the Capitalw herein around 10 States and senior officials from other States participated and the Union Com m erce & Industry M inister Sm t.Nirm ala Sitharam an expressed the hope that the Councilw illhelp in developing a fram ew ork for m aking the States active partners ofthis M inistry in boosting India’s exports.Sm t.Nirm ala Sitharam an asked the State Governm ents to give inputs for creating facility for testing,certification,trace-back,packaging and labelling.She advised the States to enhance their co-operation w ith CentralAgencies for setting up com m on facilities like testing labs, training institutes as w ell as packaging and storage support to industry. The Com m erce M inister told the States that there w as a need to diversify India’s services exports basket by enabling m ore sectors and to reach m ore m arkets.Other areas like M edicaltourism ,nursing and healthcare, education, audio-visual m edia also afford an excellent potential w hich can be harnessed. 6.2 Ministry of Shipping initiates Project Green Port - W eighing in the environm ental perspective for sustained grow th,the M inistry ofShipping has started ‘Project Green Ports’w hich w illhelp in m aking the M ajor Ports across India cleaner and greener.‘ProjectGreen Ports’w illhave tw o verticals -one is ‘Green Ports Initiatives’related to environm entalissues and second is ‘Sw achh Bharat Abhiyaan’.The Green Port Initiatives include tw elve initiatives w hich w illbe im plem ented under strict tim e bound fashion in order to achieve the targets. Som e of these initiatives are preparation and m onitoring plan ,acquiring equipm ents required for m onitoring environm ental pollution etc.Under Sw achh BharatAbhiyaan,the M inistry has identified 20 activities w ith certain tim e-line to prom ote cleanliness at the port prem ises.Som e of the activities include cleaning the w harf,cleaning and repairing ofsheds and so on. 6.3 Africa can export duty, quota-free cotton -African countries can now exporttheir cotton to developed countries duty and quota free as from January 2016 follow ing a globaldealfinalized in Nairobiat the W orld Trade Organisation (W TO) m inisterialconference.The m inisters agreed on a deal that w ill allow the Least Developed Countries (LDCs) to export m ore cotton to developed countries.This w illhelp the LDCs,m ainly those in sub-Saharan Africa,to gain greater access to nonproducing foreign m arkets because ofthe suppressed custom s and taxes. 6.4 Chemical and plastic industry export promotion bodies to hold a trade EXPO - The M inistry ofCom m erce and Industry has granted RS.3.6 crore for the three-day event CapIndia,to be organised from M arch 20 in M um baiby the Plastics ExportProm otion Council,Basic Chem icals, Pharm aceuticals and Cosm etics ExportProm otion Council(Chem excil),Chem icaland Allied Export Prom otion Council of India (Capexil) and Shellac & Forest Products Export Prom otion Council (Shefexil).The four associations accounted for US$35-billion exports in the last fiscalw hile in the firstseven m onths ofthe currentfiscaltheir exports w ere dow n 5% per centatUS$20 billion. 6.5 High-level US trade mission set to visit India - The US Departm ent of Com m erce reported that a high-levelAm erican trade m ission is set to visit India next m onth w ith the aim of increasing bilateral trade focussing on technologies, system s and services in key sectors like security,transportation and pow er.US Deputy Secretary ofCom m erce Bruce Andrew s w ould lead the delegation of18 Am erican com panies on a Sm art Cities Infrastructure Business Developm ent M ission to India from February 8-12. January 2016
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PHD Research Bureau
Study/Project Team Dr. S P Sharma ChiefEconom ist& Director ofResearch Ms. Rashmi Taneja Senior Research Officer
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