Synopsis The government is developing a verification system for exporters under the RODTEP scheme to ensure compliance with countervailing duties. This system will involve a joint mechanism with DGFT, DGTR, and DoR officials to check subsidy allegations on Indian products. New Delhi: The government is working on a verification system to help exporters deal with countervailing duty cases on domestic products over the RODTEP scheme, an official said. The exercise is important as countervailing or anti-subsidy duties were imposed on certain domestic units by the US and European Union (EU). The products which were investigated by these countries involved reimbursement of levies like electricity duty, VAT on fuel or APMC taxes under the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP). The scheme is a WTO (World Trade Organisation) compliant measure The official explained that the duties have been imposed on certain units only and that too because they could not produce the right documents to the investigation authorities. The commerce ministry is helping Indian exporters to keep proper documentation to deal with these cases. "We will be giving guidance notes from DGTR (directorate general oftrade remedies) to units so that whenever an investigation happens, they should be in a position to give the proper documents," the official said. Besides checking the documents of units, investigation authorities also look at the official verification mechanism to ascertain whether the government is randomly checking the incidence of duties or not. On the government side, the official said, "We are trying to put up a joint verification mechanism of DGFT (Directorate General of Foreign Trade), DGTR and DoR (Department of Revenue), where officials would randomly verify certain units on the issue and keep record". The system would help to verify the claims which a unit is availing under the RodTEP scheme. "Suppose we are giving RodTEP reimbursement of 1.7 per cent, then I need to convince myself from time to time that the unit's actual incidence of duties is not below 1.7 per cent," the official explained. "So we will be setting up this verification system. We will keep the records to show that we also have an official verification to check the incidence of duty," Before imposing countervailing or anti-subsidy duty (CVD), a country carries out detailed investigations on products which it believes that its trading partner is subsidising for export purposes. Subsidising exports is a kind of unfair trade practice. Countervailing duties can only be imposed if the investigating agency of the importing country determines that the imports of the product in question are subsidized and are injuring a domestic industry. Imposition of this duty does not prohibit or restrict imports. World Trade Organisation (WTO) allows its member countries to use these tools to provide a level-playing field to their domestic players. The US had conducted countervailing investigations and submitted final determination on three Indian products -- paper file folders, common alloy aluminium sheet, and forged steel fluid end blocks. The European Commission too had conducted a similar probe on certain graphite electrode systems from India. The Indian government and the affected exporters have strongly defended the subsidy allegation against various programmes and schemes of the government, both at central and state levels, in their written and oral responses during the conduct of investigations. RoDTEP scheme has been implemented for exports from January 2021 to refund, currently un-refunded taxes/duties/ levies, which are not being refunded under any other mechanism, at the central, state and local level, but which are incurred in the process of manufacturing and distribution of exported products. The scheme is being implemented by the Central Board of Indirect Taxes and Customs (CBIC), Department of Revenue, in an end-to-end IT environment.
Source: The Economic Times
Increasing demand at the top-end for luxury and investment goods has upended the trade dynamics in the gems and jewellery, textiles and clothing sectors, according to a five-year analysis of India’s merchandise trade. These sectors are in focus because of their high employment generation potential. Between FY19 and FY24 exports of textiles and clothing fell 7.10% to $34.84 billion, while imports increased by 20.33% to $8.90 billion suggesting challenges in the global market competition and a steady local market growth for imported goods, according to an analysis by the founder of Global Trade Research Initiative (GTRI) Ajay Srivastava. Similarly, exports of diamonds, gold and products decreased 18.78% during that period to $32.85 billion while imports rose 21.25% to $78.47 billion, reflecting shifting dynamics in luxury and investment goods markets. A big proportion of gold and diamonds and their products which enter India gets consumed locally; only around 35% or less of it is processed for export as jewellery, according to GTRI. The five years from 2018-19 to 2023-24 saw two years of COVID, conflicts in Ukraine and Middle East and now the Red Sea crisis. In these five years India’s total merchandise exports increased by 32.41% to $437.07 billion while imports rose 31.39% to $675.44 billion. These years also saw China emerging as India’s trading partner in terms of merchandise imports and exports at $ 118.4 billion. China is closely followed by the US with trade at $ 11.3 billion. The better performing sectors during the period under review are electronics and telecom products, agriculture products, metals and ores and chemicals. The sectors that are inputs for manufacturing did well both on the export and import front, according to the GTRI analysis. Exports of electronics, computer and telecom products surged by an impressive 170.32% to $34.41 billion, and imports grew by 52.37% to $79.31 billion. Agriculture, meat and processed food products exports grew 32% to $48.30 billion in FY 2024 while Imports in this sector rose 63.93% to $31.97 billion. Exports of ores, minerals and petroleum increased 80% to $ 94.04 billion while imports went up to $230.18 billion, a 31.55% rise, indicating strong domestic demand for these resources. Machinery exports were up 43.37% to $30.06 billion and imports were up 30.97% to $57.42 billion, reflecting increased investment in manufacturing capabilities. Chemicals and pharma exports increased 32% to $60.94 billion while imports rose from 26.2% to $62.89 billion, underscoring a steady growth in both domestic production and consumption. Auto sector exports saw a moderate increase of 15.47% to $20.90 billion and imports grew by 23.56% to $7.61 billion, showing growth in both production and market expansion. The auto sector is the only major sector that is exporting much more than it is importing.
Source: Financial Express
Synopsis India and Iran signed a 10-year agreement to manage the Chabahar Port, enhancing regional connectivity and providing an alternative to China's Belt and Road Initiative. The US warned of potential sanctions for dealing with Tehran but stated it would let India address its foreign policy objectives. The deal strengthens bilateral relations and facilitates trade with Afghanistan and Central Asia, with plans to integrate the port into the International North South Transport Corridor. India's investment in Chabahar's infrastructure aims to improve trade routes and access to Central Asian markets. Just hours after India signed a 10-year agreement to manage the Chabahar Port in Iran, the United States issued a warning, underscoring the "potential risk of sanctions" for "anyone" engaging in business dealings with Tehran. Vedant Patel, Principal Deputy Spokesperson for the US State Department, however said that the US would let the Indian government speak on its foreign policy objectives. "We are aware of these reports that Iran and India have signed a deal concerning the Chabahar Port, I would let the government ofIndia speak to its own foreign policy goals, vis-a-vis the Chabahar Port as well as its own bilateral relationship with Iran," Vedant Patel said in the press briefing on Monday (local time). "I would just say...US sanctions on Iran remain in place and we will continue to enforce them," he said. "Any entity, anyone considering business deals with Iran, they need to be aware of the potential risk they are opening themselves up to, potential risk of sanctions," Patel said. You Might Also Like: India’s counter to Pakistan’s Gwadar port: New Delhi signs 10-year Chabahar Port pact with Iran India-US relation has been on 'friendly' terms with officials from both sides acknowledging the deepening ties between India and the United States. The relation is not only shaped by shared interests and common ambitions but also by the personal bond between their leaders Prime Minister Narendra Modi and President Joe Biden. India and Iran signed the 10-year contract on Monday for the management of Chabahar port, finalising what’s seen as a gamechanger in regional connectivity, rivalling China’s Belt and Road Initiative and being an alternative to Pakistan's Gwadar port. The decade-long lease agreement enhances the bilateral relations between the two nations and fosters confidence and trust among regional trading communities. The port serves as India’s crucial connection to Afghanistan, Central Asia, and the broader Eurasian region. There are plans to integrate Chabahar with the International North South Transport Corridor (INSTC), linking India to Russia through Iran. This initiative will allow India to circumvent Pakistan and reach Afghanistan, opening up access to Central Asian countries. The deal was signed between Indian Ports Global Limited (IPGL) and the Port & Maritime Organisation (PMO) of Iran for operating the Shahid-Behesti port within the Chabahar Port Development Project. Under the contract, IPGL will equip and operate the port for the duration of the contract. At the end of the 10-year period, both sides will extend their cooperation in Chabahar. IPGL will invest about $120 million in equipping the port, officials said. India has also offered a rupee credit window equivalent to $250 million for mutually identified projects aimed at improving Chabaharrelated infrastructure, they said. Foreign minister S Jaishankar hailed the pact and said the US didn’t have any concerns regarding the matter. “The US has no issues with Chabahar,” he said in Mumbai. “And frankly, if something’s between me and Iran, it’s between me and Iran.” India had been trying to convince Iran for many years about the need for a long-term agreement, he said. The Chabahar Port, a flagship project between India and Iran, plays a vital role as a transit hub for trade with landlocked Afghanistan and Central Asian nations. India has played a significant role in both the development and operation of this port. Investing in its infrastructure, the Indian government has worked to enhance the port's facilities, making it a feasible route for transporting Indian goods to Afghanistan and Central Asia.
Source: The Economic Times
India’s factory output growth slowed to 4.9% in March from a downgraded 5.6% uptick in February, despite benevolent base effects from the previous year when the Index of Industrial Production (IIP) had shrunk 1.9%. Output from mines slid to a 19-month low growth of 1.2%, while manufacturing growth picked up from 4.9% in February to 5.2%, still marking a five month-high. Electricity generation rose 8.6% but over a contraction in March 2023. The National Statistical Office, which will release fresh GDP growth estimates for 2023-24 this month end, will thus factor in a 5.8% uptick in industrial output through FY2023-24, moderately higher than the 5.2% rise recorded in the previous year. Most of this annual increase came from mining, up 7.5%, while manufacturing saw a milder pick up to 5.5% from 4.7% in 2022-23 and electricity generation growth eased to 7.1%. Production growth was strongest for capital goods as well as infrastructure and construction goods for the second straight year — not surprising given the ramp up in government infrastructure spends to pump prime the economy till private capex recovers. However, for private investments to take over the economy’s growth engine, household consumption signals are critical and there is little comfort here for the second year in a row. Production of consumer durables and non-durables rose just 3.6% and 4%, respectively, on top of a meagre 0.6% and 0.7% uptick in 2022-23. This matches with the 3% growth estimated in private consumption spends over last year, and their production this March was still below pre-COVID levels. Hopes of an above-normal monsoon may prop up rural demand dented by last year’s erratic rainfall, although tight credit conditions could impair urban consumption. As some economists have stressed, consumption recovery since the pandemic has been uneven, driven by demand for higher-end goods and services from upper-income households, while lower-income homes have turned reluctant spenders even for fast-moving consumer goods. Job creation and real wage growth for those already employed are imperative for a broad-based demand recovery that triggers private capex. The concern here is that employment-intensive manufacturing segments such as apparel, computers and electronics, furniture and leather products, have contracted in 2023-24, with weaker exports only explaining part of this downturn. The latest IIP data also reflect flagging momentum — growth slid to a three-quarter low of 4.9% between January and March. The next government must prioritise addressing the broader challenges haunting hesitant consumers and reviving platforms for reticent investors to voice their concerns freely.
Source: The Hindu
The Indian government plans to give focused attention to promoting the country's textile exports, which declined for the second consecutive year in 2023-24, according to Textiles Secretary Rachna Shah. India's textile and apparel exports fell by 3.24 per cent to USD 34.4 billion in the April 2023-March 2024 period, compared to USD 35.5 billion in the previous year. In 2021-22, exports from the sector stood at over USD 41 billion. Shah cited challenges like the Red Sea crisis as contributing factors to the export decline last year. However, she noted that some exporters have reported improved order books in the first quarter of the current fiscal year, suggesting potential for better shipments in the coming months. The government has set an ambitious target of achieving USD 100 billion in textile exports by 2030. To boost exports, Shah said the focus would be on products with higher global trade potential, aided by the Production Linked Incentive (PLI) scheme. Other measures being considered include exploring new markets and leveraging opportunities from free trade agreements (FTAs) that India has signed with various countries. Despite geopolitical challenges, Shah expressed optimism about higher textile exports, citing improving global demand and order positions for apparel and made-ups in the first quarter. India has been losing ground in the global garment trade to countries like Bangladesh and Vietnam due to factors such as lower labor costs and larger operational footprints, as well as benefits from FTAs.
Source: KNN
India’s imports from its key free trade agreement (FTA) partner nations grew at a faster pace compared to total inbound shipments entering the country, according to a report. Imports from the FTA partners saw a nearly 38 per cent increase, totalling $187.92 billion in 2023-24 (FY24), which was faster when compared to the 31.4 per cent jump to $675.45 billion in the country’s overall imports. The growth in shipments spans a five-year comparison, from 2018-19 (FY19) to FY24, Delhi-based think tank Global Trade Research Initiative (GTRI) said. On the other hand, India’s total outbound shipments to its FTA partners grew at a slower pace compared to total merchandise exports. Exports from FTA nations increased by 14.48 per cent to $122.72 billion, while total exports saw a 32 per cent growth at $437 billion. This includes India’s trade agreements with South Korea, Japan, Australia, United Arab Emirates (UAE), Mauritius, the 10-member Association of Southeast Asian Nations (Asean) nations, and the South Asian Free Trade Area. These countries constituted 28 per cent of India’s total trade — exports and imports — during FY24. Undeniably, the data shows all exports from an FTA partner; part of this may not use concessions given under the trade pacts. Besides FTAs with Australia, UAE and Mauritius came into force in 2022 and 2021, respectively. “This growth highlights the significant and varied impact of FTAs on India’s global trade dynamics,” GTRI said in a report. The trade agreement with Asean, which kicked in in 2010, saw growth in imports at a faster pace than exports. Exports to Asean countries grew from $37.47 billion in FY19 to $41.21 billion in FY24, marking a 9.96 per cent increase. On the other hand, imports from Asean saw a 34.3 per cent jump, totalling $79.67 billion. “Exports to South Korea rose by 36.38 per cent, from $4.71 billion to $6.42 billion, and imports increased by 26.12 per cent, from $16.76 billion to $21.14 billion. Exports to Japan showed a modest increase of 6.06 per cent, from $4.86 billion to $5.16 billion, while imports rose by 38.56 per cent, from $12.77 billion to $17.7 billion. The report further said that exports started at $330.1 billion in FY19, dipped to $291.8 billion by 2020-21 (FY21) due to the pandemic-related disruptions, recovered sharply to $422 billion in 2021-22 (FY22), and peaked at $451.1 billion in 2022-23 (FY23). “A slight dip to $437.1 billion in FY24 suggests stabilisation,” it said. Imports were more volatile, starting at $514.1 billion in FY19, falling to $394.4 billion in FY21, and then surging to $716 billion in FY23, before slightly decreasing to $675.4 billion in FY24.
Source: Business Standard
The bilateral trade between Bangladesh and Bhutan experienced a remarkable increase, doubling to $22.1 million in the fiscal 2022-23 following the enactment of a preferential trade agreement (PTA) earlier in 2022. This is as per reports, which added this significant development marks Bangladesh’s inaugural PTA, as the country previously lacked any free trade agreements (FTA) with other nations. The successful implementation of the PTA with Bhutan has garnered positive outcomes, particularly evident in Bangladesh’s export figures, which soared to $9.5 million in FY22, surpassing previous records. Economists hailed the PTA’s success with Bhutan as a pivotal milestone, emphasising its potential for replication in agreements with other countries. Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), underscored the necessity of such agreements in the contemporary global landscape, noting the myriad advantages they offer to businesses. With Bangladesh poised to transition from a least developed country (LDC) to a developing nation in 2026, Moazzem advocates for the prioritisation of FTAs and PTAs with neighbouring countries to offset potential trade benefits lost post-transition. The PTA with Bhutan, signed on 6 December 2020 and enacted on 1 July 2022, facilitates duty-free access for numerous products from both nations, fostering bilateral trade relations.
Source: Fibre2fashion
