India was one of the first Asian countries to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ set up in Kandla in 1965. However, this first mover advantage was lost in time as China utilized the opportunity to create profitable business model while Indian Special Economic Zones (SEZs) became loss-making units having vacant lands and underperforming units, with several factors like multiplicity of controls and clearances, absence of international level infrastructure, unstable fiscal regime and lack of focus of the political class hindering their progress. For those unaware, SEZs are specifically delineated duty-free enclave and are deemed to be foreign territory for the purposes of trade operations and duties and tariffs. In other words, SEZ is a geographical region that may have economic laws different from a country’s typical economic laws. The main objective of the SEZ scheme was and remains generation of additional economic activity, promotion of exports of goods and services, promotion of investment from domestic and foreign sources, and creation of employment opportunities along with the development of infrastructure facilities. As mentioned earlier, while SEZs were set up to provide a hassle-free environment for exports and to replicate China’s success in using SEZs to boost manufacturing and employment, the policy backfired and far from turning India into a powerhouse of manufacturing exports, the control-free industrial enclaves became centres of land-grabbing and corruption. With a view to revive the Indian SEZs, the Commerce Ministry in June 2018 had set up a panel to make India’s SEZ policy more compatible with WTO rules. The panel led by Bharat Forge Chairman Baba Kalyani and having Ravindra Sannareddy, MD, Sricity SEZ Ltd; Neel Raheja, Group President, K. Raheja Group; Arun Misra, MD, Tata Steel SEZ Ltd. Anita Arjundas, MD, Mahindra Life Space Developer; Ajay Pandey, MD and Group CEO, GIFT City SEZ Ltd; Srikant Badiga, Director, Hyderabad Phoenix Developer and other government representatives was formed to suggest measures to cater to the needs of exporters and make India’s export policy more WTO friendly in the light of the US challenging India’s export subsidy program at the WTO. The group has evaluated and submitted its report in November 2018 on the SEZ policy in which it has suggested measures to cater to the needs of exporters in the present economic scenario and to make the SEZ policy WTO compatible and has also suggested course of correction in SEZ policy. The committee has recommended several measures, including continuation of tax incentives, migration of SEZs to employment and economic enclaves, and creation of link infrastructure and maintenance for enclaves. It has also suggested that the incentives should be linked with employment, investment, technology/innovation, and infrastructure status for these zones to improve access to financing. The Commerce Ministry is of opinion that the suggestions of the committee are very constructive and it plans to hold formal consultations with the finance ministry and other ministries so that the implementations of the committee’s recommendations may be done without any delay. The Union Minister for Commerce and Industry Mr. Suresh Prabhu is taking keen interest in this regard, which is an indicator towards early implementation of recommendations. It is to be recalled that in the month of March 2018, the US had challenged almost India’s entire export subsidy regime in the WTO including the merchandise exports from India scheme; export-oriented units scheme and sector specific schemes, including electronics hardware technology parks schemes; special economic zones; export promotion capital goods scheme; and a duty-free imports program for exporters. India and the WTO have engaged in consultations thereupon but the two sides have failed to resolve the matter bilaterally. India is of opinion that the country should not be singled-out just because it is growing faster, and should be given a chance to phase out export subsidies over a period of eight years, as was the case with other countries. The WTO has set up a dispute panel to give its verdict on the matter. India’s SEZ Policy was implemented from the first of April, 2000. This was followed by passing of the Special Economic Zones Act, 2005 by the Indian Parliament in the month of May 2005 and the Special Economic Zone Act was enacted after receiving the President’s assent on the twenty-third of June, 2005. It was on the tenth of February, 2006 that the SEZ Act, 2005, supported by SEZ Rules, came into effect. Ever since 2011, when the Minimum Alternate Tax or MAT was imposed on the SEZs, the commerce ministry has been consistently lobbying with the finance ministry to exempt the SEZs from this. However, the matter has been dragging and it was only consequent to the dispute with the US that the Commerce Ministry geared up to find some solution in a time-bound manner. The recommendations of the Baba Kalyani led panel are aimed at reviving and revamping the Indian SEZs and their implementation will require several concrete measures towards policy change by the various ministries concerned. Only time will tell whether the steps taken will be significant enough to take the SEZs out of their present mess or whether it will turn up to be just another brush up exercise aimed at quelling the WTO objections.
India-Viet Nam trade relations on surge
It was only in September 2018 that Prime Minister Narendra Modi had visited Viet Nam. This has been followed by the visit of President Ram Nath Kovind to Viet Nam from November 18-20, 2018. The Vietnamese Prime Minister Nguyen Xuan Phuc was the Chief Guest at India’s Republic Day celebrations in January 2018 and only a few weeks later President Quang came on a visit to India. It seldom happens that four senior-most heads of two countries visit each other within a year. But Viet Nam is an exception, feels Vietnamese newly appointed Ambassador to India Pham Sanh Chau and sees it signifying the strong emerging relations between India and Viet Nam. During his recent visit to Viet Nam, President Ram Nath Kovind and his counterpart Nguyen Phu Trong agreed to further strengthen bilateral strategic co-operation in defense and oil and gas sectors. The two leaders reiterated the importance of building a peaceful and prosperous Indo-Pacific region on the basis of respect for national sovereignty and international law. The Indian President also stressed on enhanced cooperation between the two countries in the areas of agriculture, pharmaceuticals, textiles and IT adding that agriculture has been a key sector of cooperation where India is privileged to support the Vietnamese agricultural revolution through the establishment of Cuu Long Rice Research Institute. It is to be recalled that only recently a high-level delegation headed by the Minister of Agriculture in Viet Nam had met a delegation from Trade Promotion Council of India (TPCI) to discuss ways and means to enhance bilateral trade in the field of agricultural produce. Mr. Kovind during his trip to Viet Nam reiterated the need to develop agricultural trade further stating that over 45 per cent of India-Viet Nam bilateral trade between the two countries. Agro-processing, agro-chemicals, farm machinery, bio-technology and high-tech farming hold immense potential for bilateral co-operation, the President said and added that Indian industry can learn from Vietnam’s success in crops such as coffee, pepper, cashew, fruits and vegetables. The President also said that the Indian pharmaceuticals industry, the third largest in terms of volume and the world’s largest provider of generic drugs, can partner Vietnam in providing quality health-care, medicines and medical devices for the public health system at an affordable cost. Viet Nam is a key to India’s ‘Act East’ policy. The relations between the two countries in the Indo-Pacific which includes the South China Sea assume strategic importance amidst China’s increasing assertiveness in the area. On other hand, India and Viet Nam share a vision of a rules-based order and seek peaceful resolution of disputes in the region, the President said. It is to be recalled that China claims almost all of the South China Sea. Viet Nam, the Philippines, Malaysia, Brunei and Taiwan have counterclaims over the South China Sea. “Our shared vision seeks peaceful resolution of disputes, with full respect for legal and diplomatic processes in accordance with principles of international law, including those reflected in the United Nations Convention on the Law of the Sea,” the President opined. Earlier, speaking on President Ram Nath Kovind’s visit to Viet Nam, Ambassador Pham Sanh Chau had said that the relationship between the two countries was of trust and mutual regard. This relationship is not just strategic but is based on common interests, he had said, reiterating further that the visit of Indian President will further cement this relationship. Mentioning the years of turmoil that Viet Nam has gone through, Pham Sanh Chau had said that Viet Nam “has been the battleground of superpowers. We do not want to become battleground between various powers once again. It is not our policy to align with any country against any country. We are not prepared to an alliance with any country to fight any other country. Having faced a long-drawn deceptive war in the past, our people won’t allow that to happen.” As regards to purchase of Brahmos and other military equipment from India, the Ambassador had mentioned that while he would be happy if India supplied Viet Nam’s defense requirements, but “the final decision will be with Vietnamese companies as Viet Nam adopts a model of market economy with socialist orientation.” Pham Sanh Chau was all praise for the joint exercises that have recently taken place between India and Viet Nam and stressed that Viet Nam’s preparedness was necessary for maintenance of peace, security, freedom of navigation and freedom of over-flight in South China city. Economic cooperation between India and Viet Nam has grown remarkably in recent years and there is still great potential to develop it further particularly when RCEP comes into play which will allow the two countries to further develop cooperation. RCEP however has been pushed to 2019 in the recent ASEAN summit taking place. Oil and gas too were important to Viet Nam and the country is ready to welcome all cooperation in this regard with capable Indian companies, he added. He however stressed that there were bottlenecks in export of 5 Vietnamese fruits to India and he will use his stay in New Delhi to expedite procedures for India to open market for 5 fruits and simultaneously for facilitating export of some Indian fruits to Viet Nam. On his immediate priorities, he said his first priority was to get a direct flight commenced from India. The timing of flight that was being offered by Indian authorities were not suitable to commence a flight, he said, when asked to elaborate on why there was still no direct flight despite such deep relations that the two countries enjoy. Talking on the change in leadership in Viet Nam, he said the impact of the change in leadership has been huge and very positive. “It will be a great boost towards strengthening the relationship between India and Viet Nam when President of India gets a welcome by the new leadership of Viet Nam. “We continue to give great importance and respect to our friends from India; the foundations of this relationship were laid
Reforming WTO on the focus
Ministry of Commerce and Industry is in talks with the various countries associated with World Trade Organization (WTO) to work out the way forward for reforming the organization. This initiative has been taken in view of the stress that is evident on multilateral trading system leading to surging of a number of fresh trade-restrictive measures, which affect global trade and economic growth. Suresh Prabhu, Minister of Commerce and Industry is of opinion that WTO needs to undergo the reform process to improve further. “The WTO has to change, and change for the better. We are preparing an agenda that does not exclude any country in the process of making the WTO better,” the minister said at a meeting recently. The minister claimed he has personally met 150 trade ministers to move a reformed WTO agenda forward and will keep pushing for resolution of long-pending issues such as farm subsidies and food security at the WTO but would also be open to new issues being addressed. India and a number of other developing countries are pushing for a permanent solution to the problem of food procurement subsidies to ensure that members don’t get penalized in cases where subsidies over-shoot the existing caps. These countries have been demanding that either the caps on these subsidies be removed or the method for calculating the subsidies be changed and linked to the present market prices. Some developed countries have since long been making a case for inclusion of issues such as e-commerce, investments and gender in the multilateral agenda but India has so far been opposing these attempts. India has also not been part of groups that have been formed to discuss these issues. Even the appointment of appellate body in the WTO dispute resolution mechanism is blocked, which has potential to weaken one of the central pillars of the WTO. Industry is also grappling with the sort of complementary domestic policies and global trade governance rules that would be necessary to exploit the potential benefits from technology and applications. “I am getting a positive response from all concerned, including the Director General of WTO, in our endeavour to take all counties on-board,” Mr. Prabhu said, adding further that the expansion of global trade hinges on rules and processes determined by the WTO and unless global trade expands, national economies will not benefit. It is important that all substantive issues that have been agreed to at the Doha and other trade rounds, as well as new issues that have cropped up, pertaining to the various countries’ interests and resolutions are addressed in a time-bound manner.
Global warming, if not contained, will threaten economic growth
Global temperatures are already up by about 1 degree Celcius (1.8 degree Fahrenheit) from pre-industrial level and are rising at a rate of 0.2 degree Celcius a decade. If effective measures are not taken and the temperatures rise to 2 degree level, economic growth will be hampered in many developed and developing countries, due to costs associated with floods or droughts, storm surges, salt spray damaging crops or an increase in human deaths from heat-waves. If emissions continue at their present rate, human-induced warming will exceed 1.5 degree Celcius by around 2040. The Paris climate agreement, adopted by almost 200 nations in 2015, set a goal of limiting warming to “well below” a rise of 2 degree Celcius above pre-industrial times while “pursuing efforts” for the tougher 1.5 degree goal, which if made possible, will expose about 10 million fewer people in coastal areas to risks from natural calamities. The economic loss too will be severally reduced in such an eventuality. The deal has been weakened after the US President Donald Trump decided last year to pull out and promote US fossil fuels. The voices to limiting global warming first emanated on global platform in 2009 and since then are steadily increasing. Over a hundred Small Island Developing States, Least Developing Countries and many others are most vociferous. These groups achieved a victory of sort through placing the 1.5 degree Celcius limit alongside the legally binding goal to hold global temperatures “well below 2 degree Celcius above pre-industrial levels” in the Paris Agreement earlier this year, Salient points of the Paris Agreement are as follows: The Paris Agreement builds upon the Convention and for the first time brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort. The Paris Agreement central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. Additionally, the agreement aims to strengthen the ability of countries to deal with the impacts of climate change. To reach these ambitious goals, appropriate financial flows, a new technology framework and an enhanced capacity building framework will be put in place, thus supporting action by developing countries and the most vulnerable countries, in line with their own national objectives. The Agreement also provides for enhanced transparency of action and support through a more robust transparency framework. The Paris Agreement requires all Parties to put forward their best efforts through nationally determined contributions (NDCs) and to strengthen these efforts in the years ahead. This includes requirements that all Parties report regularly on their emissions and on their implementation efforts. The agreement also recognises the importance of averting, minimising and addressing loss and damage associated with the adverse effects of climate change; acknowledges the need to cooperate and enhance the understanding, action and support in different areas such as early warning systems, emergency preparedness and risk insurance. Observational records show that half a degree increase in global temperature in the recent past has resulted in substantial increases in extreme weather events. Ocean systems are particularly vulnerable to climate change, and there is already clear evidence for loss and damage inflicted by climate change on ocean systems. Experts opine that the 1.5 degree Celcius goal is not out of reach, but it means that global forest cover must be rapidly expanding by the early 2030s, rather than continuing in a state of contraction. If social barriers can be overcome, such as the impact on agricultural communities, so-called “nature-based solutions”, such as reforestation, can help to limit peak warming because their scale-up can be considerably faster than the comparable transformation of energy technologies. If these steps are taken, it will provide an additional carbon sink of more than 10Gt per year by 2070. Unless significant amount of Carbon Dioxide is reduced from the atmosphere, it will be difficult to achieve this objective and the best way to do so is to plant the required number of trees. Immediate focus is necessary to look at major emitting sectors and understand what can be done – and how fast – to come up with a list of the most important things to do in the next 30 years, in a phased manner, to bend the emissions curve downwards. It is essential to move to renewable energies, such as wind, solar and hydro power in a big way. According to estimates, the surge towards renewable energies would have to be by 60 percent from 2020 levels by 2050 to stay below 1.5 degree Celcius with the condition that “primary energy from coal decreases by two-thirds”. This means that by 2050, renewable must be supplying between 49 and 67 percent of primary energy. Recent thrust by Indian Government to enhance use of renewable energies and promote alternative sources of transport like the cycle-on-rent scheme which is coming up in a big way in Delhi is meant for this purpose. A lot more need to be done though these are small steps in the right direction!
“FSSAI is creating a regulatory environment for the food sector”
A convoy of vehicles including several cyclists starts moving from Leh in the Northern corner of Jammu & Kashmir and traverses amidst snow-fall and occasional incidents of firing and stone-pelting to reach the capital Srinagar. Another similar caravan starts from Trivandrum, comes to Kanyakumari in the extreme South and moves towards Bangalore – the Karnataka capital – amidst hired drummers and at times an elephant accompanying the enthusiastic cyclists. One such leg is flagged by the Chief Minister of Jharkhand at Ranchi and travels between the most remote stretches of land and among people celebrating the famous Chhath festival. While the Yatra moving in the North East, passes through difficult terrain, on an occasion hears sound of a bomb blast in some distant place, and rushing forward to reach the next village or the next city. And the convoy that started in Panjim in Goa moves along the villages on the Western Coast of India to reach Mumbai amid great fanfare and festivity. Six such caravans are currently moving in six different regions of India, mobilizing people as they move, volunteers getting enrolled to cycle a few hundred kilometers, eating and sleeping in the restaurants and hotels on the wayside who volunteer to provide their services. All have one aim and objective: focusing on three key themes i.e. eating safe, eating healthy and eating fortified food. The ‘Eat Right India’ movement started by FSSAI (Food Safety and Standards Authority of India) is a collective effort of key stakeholders and citizens to ensure that people have access to safe and healthy diets. It is aligned with the Government’s recent focus on public health through its key programs, namely ‘Ayushman Bharat’, ‘Swachh Bharat Mission’, and ‘Poshan Abhiyaan’. These activities are being complimented by Eat Right Melas, Conventions and National Poster Competition, and an Eat Right award. Tells Pawan Kr. Agarwal – the dynamic CEO at FSSAI who is the man behind this countrywide drive to inculcate the most important messages concerning our health and well-being: “The ‘Eat Right India’ movement is a collective effort of key stakeholders and citizens to ensure that people have access to safe and healthy diets. This movement targets both the demand and supply side i.e. citizens and food businesses, under an overarching supportive policy framework to create an enabling environment.” The ‘Eat Right India’ movement employs simple, powerful and innovative messages aimed at bringing about behavioural change and initiate capacity building programs to engage and enable the citizens to not only make the right food choices but also demand safe and healthy food. This movement also focuses on nudging the food industry to follow safe food practices, reformulate their food products into healthier ones and actively promoting safe and healthy food choices. The Swasth Bharat Yatra, which involves the relay cycle-athons moving in six regions across the country are part of the overall ‘Eat Right India’ movement that FSSAI has initiated. Tells Pawan Agarwal: “This is a huge task because unlike the West where food businesses are mostly in the organized sector, with large food chains and even retail organized through superstores, Indian food sector is still fragmented where large-scale street-vending is common. Unlike in the West, where regulatory approach is around enforcement, here in many cases businesses are not even aware of safety requirements. Awareness building and capacity building therefore become extremely important part of our efforts. People’s understanding of food safety concerns is very limited. And they are not demanding safe and healthier food from the businesses. Unless they demand, why should businesses comply! Therefore, ‘Eat Right India’ movement is about creating awareness, tell the people what are the safety concerns, what food is healthy and what food should be avoided or taken in moderation, safe food, issues of food safety, issue of personal hygiene and surrounding hygiene, issues of micro-nutrient deficiencies, deficiencies of vitamins in diet and addressing them through balanced diet or fortified staples of food.” ‘Eat Right India’ though is just one part of the story. Through tireless efforts of Pawan Agarwal during the last two and a half years, FSSAI has been able to shift the paradigm from prevention of food adulteration to food safety and is now leapfrogging in creating a regulatory environment for the food sector in the country. Though food adulteration still remains a hug concern in India and the perception still remains that the conditions have deteriorated, says Agarwal, the truth is that it is not so widely prevalent and is being controlled to a large extent. “Fact of the matter is that things have improved as far as adulteration is concerned. Now the paradigm is on food safety across the value chain. If the food has not been safely processed, contaminants or toxins can come inadvertently, and the food becomes unsafe even when no adulterants are there.” “In food safety paradigm, we are creating standards and perimeters and bench marking them with global standards,” says the CEO adding that we are rapidly moving towards food safety paradigm where we work as partners of the food industry and not as policing over the food industry. This shift is rapidly happening. “Overall the big picture is that right from setting standards to enforcement machinery so that it is more objective, fair and transparent, to improving our lab systems, and also building businesses to capacity building and finally awareness building, in case of food businesses and also consumers across the country, action is being taken on all fronts to raise the standards of food safety in our country and bring them at par with world standards,” concludes Pawan Kr. Agarwal. All food related companies are now welcome to invest in India as the regulatory environment is now becoming helpful and considerate, as long as the basic regulations are being met and prescribed food safety concerns taken care of.
Doubling India’s economy to USD 5 trillion
Aim is high but we are already on the course! India that was ranked 142 among 190 nations on the World Bank’s ease of doing business ranking in 2014 has climbed to 77th rank this year. And there seems no stopping! Prime Minister Narendra Modi has now set an ambitious target of India breaking into top 50 countries in the World Bank’s ‘Ease of Doing Business’ ranking and is aiming to nearly double the size of India’s economy to USD 5 trillion. According to him, this growth has been achieved because the policy paralysis has ended and his government was giving policy-based governance that has helped catapult the country from to the 77th position this year. In the World Bank’s annual ‘Doing Business’ 2019 report, India secured 77th position. New Zealand tops the list, followed by Singapore, Denmark and Hong Kong. The United States is placed at 8th and China ranked 46th. Neighbouring Pakistan is placed at 136. India has improved its ranking by 53 positions in the last two years and 65 places in four years since 2014. Union Minister for Commerce & Industry Suresh Prabhu too is upbeat at this development. After all, it is his ministry which has done most of the hard-work to lead India to such levels of growth. He is of view that the overall mission of the government, led by Prime Minister Narendra Modi, is public good. Speaking at a public function recently, Suresh Prabhu placed his full trust in central leadership and said he is confident that India will come in the first 50 ranks in the next fiscal. Prabhu also announced that the Government is creating ‘sub-national’ Ease of Doing Business parameters which will be measured at the district level because that is where the local industries are flourishing. “It is going to be bottom-up approach,” he said. Taking India’s economy to level of USD 5 trillion and leading India to come in the first 50 ranks in the World Bank report for next fiscal is going to be an uphill task. Talking to top industrialists including Mahindra Group Chairman Anand Mahindra, Vedanta Resources Executive Chairman Anil Agarwal, CII President Rakesh Bharti Mittal, Kotak Mahindra CEO Uday Kotak, PayTM founder Vijay Shekhar Sharma and ASSOCHAM President BK Goenka among others, the Prime Minister said the government was working on a new industrial policy to blend realities with progress. “A policy which can understand the industry… This policy will be in line with the vision of a new India,” the PM said. PM Modi also launched the Ease of Doing Business Grand Challenge with Startup India Portal as the platform. The objective of this challenge is to invite innovative ideas based on Artificial Intelligence, Internet of Things, Big Data Analytics, Block Chain Technology and other cutting-edge technologies to reform the Government processes. This announcement was made in a meeting ‘Reflections on Ease of Doing Business’ organized by Department of Industrial Policy and Promotion (DIPP) with an aim to gear up for India’s ranking to leapfrog on the ‘Doing Business’ index next year and boost the country’s investment attractiveness. The Government has also prepared a Working Group tasked to develop a roadmap towards achieving a five trillion dollar economy by 2025. The group has been constituted by the Department of Industrial Policy and Promotion in the Ministry of Commerce and Industry with participation from the government and industry. India is one of the fastest growing major economies and is currently ranked as the world’s sixth largest economy. Earlier this year, as per the World Bank figures, India pushed France into seventh place to become the world’s sixth-biggest economy. India is now eyeing to climb ahead of United Kingdom to reach the fifth spot. However, as said, it will not be an easy task to move ahead from here. The higher we reach, the tougher it becomes. The top 50 countries have most business-friendly systems and India will have to transform all government-pubic interfaces, policies and programs, and not just the 10 measured by World Bank, if it wishes to further climb the ladder. Says Ajay Srivastava, an experienced policy analyst associated with Ministry of Commerce & Industry: “The concept of replacing an existing system with a new one faces resistance at many levels. Love for incremental improvements in the existing system is the primary block. Fear of losing cost already incurred is another. To be successful, such projects must be led by a person with a technology background and proven expertise in delivering complex projects. Simultaneous focus on both the bottoms up and top down approaches will transform governance and make doing business hassle free for ordinary citizens and business alike.” Citing an example, Srivastava says: “An exporter requires permissions from many government and business agencies like Customs, DGFT, shipping companies, banks, insurance companies and inspection agencies. Time and cost go up as she has to approach each organization separately. Creating a national trade network (NTN) that enables exporters to obtain all approvals, permissions, loan sanctions et all online will reduce time and cost of exporting. This will enable lakhs of small manufacturers to export directly. Today, they rely on middlemen.” There is a momentous task ahead and combined efforts of all will enable India to reach the next goal towards its movement towards zenith.
ASEAN countries to facilitate cross-border e-commerce transactions
Economic ministers from the Association of Southeast Asian Nations (ASEAN) entered into the grouping’s first ever agreement on e-commerce to facilitate cross-border e-commerce transactions within the region. The agreement was finalized after hectic nine rounds of negotiations with the main objectives being to facilitate cross-border e-commerce transactions, to foster an environment of trust and confidence in the use of e-commerce and to broaden cooperation among ASEAN countries to further develop and intensify the use of e-commerce to drive regional economic growth. Delivering his opening remarks at the 17th ASEAN Economic Community Council meeting, trade and industry minister Chan Chun Sing said: “This agreement will help bolster the trust and confidence of ASEAN consumers in e-commerce and drive adoption. In doing so, we will enable ASEAN businesses to grow domestically, regionally and globally,” he said. The minister also referred to non-tariff barriers, including logistics and cross-border digital regulations that remain as challenges for small and medium-sized enterprises looking. He also talked of encouraging paperless trading between businesses and governments, which can generate more rapid and efficient transactions between ASEAN countries. During the meeting, the member countries committed to implementing domestic regulatory frameworks, to being transparent, to cooperating on tech, infrastructure and logistics, education, consumer protection, legal safeguards, banking, payment, transaction and trading systems and data regulation usage and flow and at the same time also showing commitment towards being technology neutral to ensure that businesses in each market are free and able to make tech choices that best fit the open market and their needs. This agreement will undoubtedly spur further growth of online sales across the region. The region has witnessed sustained economic growth and has a young, digitally-savvy population. Consequently, ASEAN countries’ internet economy is expected to hit US$ 200 billion by 2025, of which E-commerce is expected to grow to US$88 billion. Several foreign players like Amazon and Alibaba have got lured to the region seeing its great potential. At the same time, ASEAN-based companies like Singapore’s Lazada and Indonesia’s Tokopedia too have grown significantly to capture a significant market-share. The new agreement will provide access to a wider range of products to the consumers of the region. A better range will be available at more competitive prices. Moreover, this agreement is likely to spur local entrepreneurs to create new products and to venture online to access a large and more diverse market. Even small and home businesses will get a bigger market and a broader consumer base. The agreement has also put in place online dispute resolution mechanisms to facilitate e-commerce claims and consumer disputes. Marketplaces will have to come up with framework policies, tracking and tools so as to avoid abuse, fraud and fakes. This also means that trust and credibility will play an important part. Al this will help gain the consumer confidence and spur further growth of online sales across the region. Companies will eventually get more business. It is expected that the global cross-border sales will reach 627 bn by 2022. The Asia-Pacific region is expected to be the largest contributor in terms of growth.
Developing trade with Iran amidst US sanctions
India has thousands of years of historic cultural and trade relations with Iran, several centuries before the Americas were discovered. Irony of economic circumstances necessitate India and the rest of the world to listen to the dictates of one country, whose President unilaterally decides to back out of an agreement his own predecessor had signed, after hectic parleys over the Iran nuclear deal. The age-old cultural and trade links were only getting strengthened and India was seeking to boost its overall agricultural exports to Iran when the sanctions came in. This recent upsurge in bilateral trade could have impacted the agricultural exports, particularly rice and tea industry, if India had yielded to the pressure. In 2017-18, Iran was India’s largest tea export destination by value, at about $100m of bulk tea, amounting to export of 31m kg of tea. Several countries have already buckled to the pressure and even the European Union and firms, who were showing some teeth to protect trade with Iran by establishing the Special Purpose Vehicle (SPV), have been doubly warned that doing so would incur US punishment. Consequently, Brussels which was looking forward to have the SPV legally in place by November and operational early next is still in deciding phase as no country has offered to host it. But everyone is not bowing to pressure! Though Iraq has sought US approval to allow it to import Iranian gas for its power stations, Iran and Iraq are talking of raising their annual bilateral trade to $20 billion from the current $12 billion, through enhanced focus on electricity, gas, petroleum products and activities in the field of oil exploration and extraction and a better road and rail connect between the two countries. China, Russia and Turkey are already not paying any heed to the US dictate. Germany and France are pondering ways and means to set up a Euro-based trading system to continue trading with Iran while India had found a way of coming out of dollar paying system even when the earlier sanctions were imposed on Iran. It is the US’s own unilateral policies aimed at strengthening the dollar that are actually weakening it as countries try to find ways and means of moving out of the stranglehold. With a view to decrease their dependence on the dollar, India and Japan have agreed to raise the value of currency swap from the $50 billion (agreed in 2013) to $75 billion during PM Narendra Modi’s recent visit to Japan. This means India can now readily borrow up to $75 billion from Japan in exchange for rupees, signaling even lesser dependence on dollar. More and more countries are slowly realizing that they will have to move away from their dependence on dollar; a scenario that couldn’t be expected a decade back. Trade pundits are of opinion that if India stands firm, as it has done in the past, there will be enhanced scope for trade between India and Iran after the implementation of the US backed sanctions. Trade in rupee through Vostro account of UCO bank could retain the current trade and may even get a boost if India eyes the opportunity judiciously and use the trade gap to focus on exporting products that Iran requires, some of which it was importing from other countries who have not entered into a Vostro-like deal with Iran and who have fallen to the pressure to restrict their trade with Iran. Experts in the know feel it is good opportunity for India to broaden the basket of Indian exports to Iran to better utilize the Rupee funds. It is imperative that India takes this decision in its own interest for if it would not do so, Chinese firms will fill the gap. Already, Iranian markets can be seen flooded with Chinese products, which is Iran’s biggest importer of oil. Keeping these factors foremost, India’s ambassador to Iran Saurabh Kumar recently held a meeting with the head of Tehran Chamber of Commerce, Industries, Mines and Agriculture to discuss ways of continuing Iran-India trade under re-imposed US sanctions. Both sides felt that the US sanctions may present a new window of opportunity for Iran-India ties and the new focus of mechanisms to facilitate cooperation between Iran and India should now be on banking and financial cooperation. “Sanctions create many problems, but they have also created this opportunity for us to tap into neglected capabilities and capacities,” Khansari said. Saurabh Kumar presented a list of 1000 goods items that Iran had been importing from various countries and which India exports to the world. Iran can now start importing those items from India. Kumar said that based on the US exemption, India can import from Iran 300,000 barrels of crude oil per day for the next six months. Half of this money will be wired in rupees to accounts belonging to the Iranian banks in Indian banks. Iran can, in turn, purchase the essential goods such as food, medicine and humanitarian trade goods that are exempt from sanctions. The remaining half of the oil money may be exchanged into Euros or other foreign currencies for Iran to receive and transfer, the Indian ambassador said, stressing that a mechanism has to be developed for this money to be transferred out of India. The list of 1000 goods items that India presented will serve as a ready-reckoner for Iranian authorities to decide the products that they may require. India-Iran remained essential trading partners even when sanctions were imposed on Iran previously, as India exported primary edible products such as rice, meat and tea, and fairly imported crude from Iran. India needs to focus on new set of products to export to Iran, which have so far remained tyro. They include: organic and inorganic chemicals, animal feed products, perfumery and cosmetic items, pneumatic and radial tyres, optical and medical instruments, machineries for mechanical appliances, sweet corn, ready to eat packed foods, value added processed food like wafers and cookies, automated agri machines and appliances, radars, wooden
The new Vietnamese Ambassador to India presents his credentials
Ambassador Pham Sanh Chau, the newly appointed Ambassador of Vietnam to India organized a lavish reception at the Embassy of Vietnam in New Delhi after presenting his credentials to the Hon’ble President of India. Several Indian dignitaries and prominent businessmen were present in the credential ceremony that was held in the evening. A 3-member TPCI delegation led by Suresh Kumar Makhijani, Jt. Director General at TPCI welcomed the Hon’ble Ambassador on his formal appointment. He also presented the warmest greetings on behalf of the TPCI Chairman Mohit Singla. The TPCI delegation was accompanied by Aziz Haider (Director) and Sagar Bansal (Consultant). Speaking on the occasion, the Hon’ble Ambassador of Vietnam said he was proud of the fact that his country Vietnam has a Comprehensive Strategic Partnership with Vietnam and said he was committed to a stronger relationship with India. Born in Myanmar in 1961 and brought up in the Middle East, Ambassador Pham Sanh Chau spent much of his career as a diplomat in Europe. Other than being a diplomat, he is an educator with diverse international experience in multilateral affairs, cultural diplomacy, education and world heritage. He acknowledges that India is an unknown territory for him but sought the support of the distinguished guests present in the reception so as to perform more efficiently during his stay in India. Stressing on the ideals of professionalism, deliverance, capacity building and overall happiness, the Hon’ble Ambassador said these are the basic elements of performance for his staff and he will use these while dealing with the officials in India. “I am looking forward to the success of the visit of the President of India to Vietnam,” he added. The Hon’ble Ambassador also talked of the great number of similarities that exist between India and Vietnam and referred to Buddhism which originated in India but reached Vietnam about 2000 years back with such a force that today most of Vietnam follows Buddhism. As a tribute to age-long relationship between the two countries, Ambassador Pham Sanh Chau had called upon Indian artists to perform in the credential ceremony. Prominent among those present were Aftab Seth, former Indian diplomat who served as ambassador of India to Greece, Japan and Vietnam. Another guest of honour was King Ceasor Augustus Mulenga, the Hony Consul of Vietnam in Uganda, who travelled from Uganda to be present in the credential ceremony. About 50 Buddhist monks from Vietnam who are currently training in India were also present. India and Vietnam hold key positions in South Asia which is currently witnessing a rapid growth spurt with great resurgence in investor interest. The two countries have in recent past strengthened their relationship in the areas of trade and commerce as well as in their understanding of political and security issues.
Country Profile- Czech Republic
Czech Republic is located in the Central Europe and is a landlocked country and recognised as a manufacturing powerhouse. It is an export led economy. The United Nations Development Programme ranks Czech Republic 27th in terms of Human Development Index with the value of 0.888. It is ranked 35th in ‘Ease of Doing Business report’ 2019 by World Bank with 1st rank in trading across borders. As per World Economic Outlook Database, 2018 estimate Czech Republic is ranked 50th in world in GDP in PPP terms at a value of US$ 368.7 billion while ranked 49th in GDP in nominal terms at a value of US$ 238.0 billion. The per capita GDP of Czech Republic in PPP terms is estimated to be US$ 36784 and in nominal terms it is estimated to be US$ 22468 in 2018 by World Economic Outlook Database. TRADE STATISTICS In 2017, Czech Republic imported US $162.06 billion worth of goods. Its export was over US $ 180.01 billion in value in 2017 which accounted for 1.0 % of the total exports in the world. As per ITC trade map Czech Republic ranks 28th among the top world exporters, list is led by China. The top trading partner of Czech Republic in 2017 was Germany, followed by Poland and China. India does not rank in the list of top 10 trading partners of Czech Republic, but has a significant trade with Czech Republic with an export by India to Czech Republic of US$ 393.5 million, while imports by India from Czech Republic was at US$ 630.8 million, resulting into a trade deficit of US$ 237.3 million for India. CZECH REPUBLIC’S MERCHANDISE TRADE WITH WORLD Czech Republic’s exports from the world have followed its path of imports throughout, as can be seen in the graph below. The country has maintained a trade surplus throughout the past decade. In 2017 it had a trade surplus of US $ 18.0 billion, the trade balance is positive but doesn’t follow an increasing trend. In the last 10 years trade surplus was highest in the year 2014 at US$ 21.1 billion. Barring the dip in trade surplus in 2015 trade balance of Czech Republic on an average showed an increasing trend throughout the decade. CZECH REPUBLIC’S EXPORT TO THE WORLD Czech Republic’s total export in 2017 amounted to US $180.01 billion. Its top export products at HS-6 digit level last year were Motor cars and its parts under different heads of HS code 87, automatic data-processing machines and telephones for cellular networks. More than 21% of Czech Republic’s total export is motor vehicle, cars and related parts, making it one of the biggest exporter of the same. CZECH REPUBLIC’S IMPORTS FROM THE WORLD Czech Republic’s import basket is primarily led by Telephones for cellular networks Crude petroleum oil, Data-processing machines, Medicaments and Electronic integrated circuits which together made up the Top 5 imports of Czech Republic.(Total imports – US $ 162.06 billion) at HS-6 digit level. INDIA- CZECH REPUBLIC MERCHANDISE TRADE India’s trade balance with Czech Republic in the past decade may be divided into 3 phases – pre 2016, 2016 and post 2016. Till 2015, trade balance was negative i.e. there was a huge trade deficit till 2015 for India vis a vis Czech Republic. In this phase it primarily saw an (negative) upward trend till 2011 reaching a deficit of US$ 462.0 million, declining since then, till 2015. In 2016, India had a trade surplus with Czech Republic of US$ 4.8 million. Again in 2017 trade deficit plummeted to US$ 237.2 million for India vis a vis Czech Republic. India’s export and import followed a ‘scissor’ shaped trend year on year in the last decade conjoining in the year 2016. INDIA’S EXPORT TO CZECH REPUBLIC India’s total exports to Czech Republic amounted to US $ 393.5 million in 2017. Its top five exports at HS-6 digit level were Medicaments, Cast articles of iron or steel, Engines and motors, Parts and accessories for tractors and Men’s or boys’ shirts of cotton. It amounts to 29% of the total export to Czech Republic from India. INDIA’S IMPORT FROM CZECH REPUBLIC India’s total import from Czech Republic in 2017 was US $ 630.8 million. India’s import was dominated by Gear boxes and parts, Parts and accessories for tractors and motor vehicles, Spark-ignition reciprocating piston engine, Parts and accessories of machines for sizing man-made textile and Drive-axles. The top 5 products amount to 22% of total imports by India from Czech Republic. Czech Republic is an important trading partner of India in Europe especially for manufacturing products. During the last visit by the Indian President, he himself iterated that Czech strengths in manufacturing and advanced technology make the country a natural fit to partner Indian economic growth and next-generation development. Czech Republic ranks 64th among foreign investors in India. Cumulative FDI inflows from Czech Republic stood at US $ 24.45 million between April 2000 to March 2017. Czech Republic is among the few European Economies that have registered a high economic growth rate. It is a preferred destination for Indian investors looking for opportunities in Europe. Bata, the most popular footwear company in India has its roots in Czech Republic. Czech Republic is renowned for its high-tolerance machinery and related manufacturing as well as engineering and technical skills in manufacturing. Czech Republic’s technology and engineering prowess may boost India’s “Make in India” initiative and ascertain its movement up the value chain. Czech Republic and India has moved further and have initiated engagement in exploring opportunities in sectors such as civil aviation, civil nuclear energy and solar energy. It is a step in the right direction.
