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Chilli exports likely to exceed FY08 target: Assocham 

Assocham expressed that chilli exports from India are likely to surpass government target to touch 200,000 tonnes in 2007-08 on strong demand in countries such as Bangladesh, Malaysia, Sri Lanka and the US. India has already exported over 120,000 tonne of chilli in the first seven months of the current fiscal. Demand for Indian chilli is growing by over 20-25 per cent in markets of Bangladesh, Malaysia, Sri Lanka and the US due to its quality, price competitiveness as well as its medicinal value. The government has fixed a target of exporting 135,000 tonnes of the spice this year. India exported about 148,500 tonnes of chilli valued at Rs 807.75 crore last year. Malaysia is the largest importer of Indian chillies followed by Bangladesh, Sri Lanka and the US. Chilli exports account for 48 per cent in volume terms and 28 per cent in value of the total spices export from India. India's annual chilli production is around 14 lakh tonnes and the country is the world's largest producer of the spice. The main hubs of chilli production are Andhra Pradesh, Himachal, Jammu and Kashmir, Karnataka, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Uttranchal and Uttar Pradesh. The government should lower subsidies and provide fiscal assistance to motivate its chilli growers. China imported over 900 tonnes of chilli from India in 2006-07. Malaysia imported 43,625 tonnes, Bangladesh (28,425 tonnes), Sri Lanka (21,822 tonnes) and the US (13,058 tonnes). The export varieties include chilli powder, dried chilli, pickled chillies and chilli oleoresins.

Courtesy:  The Economic Times, 12^th April 2007.

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India world’s third largest economy: OECD 

The Organisation for Economic Co-operation and Development said that economic growth is losing steam in the industrialised world after a strong run and the US Economy is slowing hard but not sliding into recession. In a twice-yearly report, the OECD said China, India, Russia and other rising stars would continue to grow fast if not quite as furiously as before, and that the financial market troubles were the biggest, and simply unquantifiable, risk right now. It commended recent interest rate cuts by the US central bank to help the world's largest Economy weather a housing slump and crisis in subprime mortgage loans that has since snowballed into a more global credit market crunch, hitting mostly banks. The European Central Bank and Bank of Japan should forget about raising interest rates for the next year or more and the Bank of England should cut rates. High oil and food prices did not herald unmanageable levels of inflation and pressures on that front were expected to ease off with time even if the OECD was counting on oil remaining at an average $90 per barrel next year and still-high food costs. The OECD forecast annual US economic growth of 2.0 per cent next year before a return in 2009 to the 2.2 per cent expected in 2007, but the immediate dip in growth would be sharper than those figures suggested. "Several shocks have hit OECD economies recently: financial turmoil, cooling housing Markets and higher prices of energy and other commodities," the report said. "2007 is set to become the fourth year of above-trend growth in the OECD area but activity is now moderating." The OECD forecasts for its 30 largely industrialised member countries but its report covered emerging market economies such as China too and said they would continue to provide support for overall economic growth despite the U.S. woes. Growth in the 13-country euro zone was set to slow to 1.9 per cent next year from 2.6 this year and Japan to 1.6 per cent from 1.9 in 2007, figures which pale beside the 10.7 per cent expected in China or 6.5 per cent in Russia in 2008. Nonetheless, the OECD said the situation -- credit crunch unknowns aside -- remained "relatively benign" and that the end of an international housing boom in many countries in addition to the United States did not spell catastrophe. In Europe, housing investment has turned down in Ireland and to a lesser extent Spain while a downturn in British housing would carry the same risks of a consumer spending hit as are currently feared most in the United States, the report said. "While the slowdown in housing Markets which is now evident in most OECD countries will damp growth prospects it is expected to act as a severe brake in only a few." The OECD said the direct impact to the Economy of the hit to the financial services sector was not likely to be major but the risk was from higher-priced access to scarcer credit. Nobody could say for now how things would unfold on that front. Yet again, the hot spots of economic activity would be China and the likes of India, now fast becoming a force to be reckoned with, the OECD said. According to one measure, India was now the world's third largest Economy behind China and the first-place United States, the OECD said. India has risen from sixth place in 1990 based on that measure.

Courtesy: The Financial Express, 6^th December 2007. 

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UPDATES

India must build now to sustain growth: ADB
 

Asian Development Bank opined that India's Economy will continue to buzz next year despite US credit worries and high oil prices, but sustained rapid expansion could only be built on better roads, ports and power supplies. India's Economy is largely driven by domestic demand and exports were now more service and technology orientated, which made them less vulnerable to volatility in the United States. The Indian Economy, the world's fastest growing major Economy after China, has grown at an average 8.6 percent in the past four years and is likely to grow at similar levels in the current fiscal year as well. But this scorching pace has left roads, ports and airports choked with traffic and goods, and chronic power shortages across the vast South Asian nation threaten long-term growth. India needs to urgently implement key infrastructure projects, and it was imperative to build effective public-private partnerships. – The Financial Express, 4^th December 2007.

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India, Pak trade up 92% in 2006-07

Trade between India and Pakistan almost doubled to 1.67 billion dollars in 2006-07 over the previous year. Bilateral trade during 2005-06 was 868.79 million dollars, which grew 92 per cent in the subsequent fiscal. For the April-June period of the current fiscal, India's exports to Pakistan were to the tune of 406.49 million dollars. Imports from Pakistan for the first quarter of 2007-08 stood at 68.17 million dollars, he said, adding that bilateral trade during the period was 474.66 million dollars. The government is considering mandatory labeling of ice-cream which uses synthetic vanilla or artificial flavours, with a view to help vanilla farmers and increase use of natural vanilla. Due to price competitiveness, synthetic vanilla is sold at a low price whereas natural vanilla was expensive. The government is also considering a proposal for domestic promotion of natural vanilla in dairy industry. – The Economic Times, 4^th December 2007
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Singapore pact: Products list yet to be notified 

Even after the Union Cabinet gave its nod to the amendment of India-Singapore Comprehensive Economic Cooperation Agreement (CECA) for tariff elimination/reduction on 555 products which was said to have taken effect on December 1, nobody has any clue to the composition of such preferential products. There are niceties and draft protocol involved in this exercise as the import of such liberalised products would evoke domestic concerns from affected industries, mostly manufactured products. Trade policy analysts contend that India’s openness of trade and policy liberalisation would lose much of its force if exchange of products under bilateral economic cooperation agreement for tariff concessions/elimination is not put on the Web site immediately after such conventions are ratified by the Union Cabinet. – The Hindu Business Line, 5^th December 2007

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Canada to increase trade with India

With an aim to boost Indo-Canadian trade relations, British Columbia said that it seeks partnership in the areas of energy, mining, education, tourism and technology with the Indian corporates. Canadian companies are working closely with their Indian counterparts in fuel saving by providing lower emission buses to the Delhi Transport Corporation. The bilateral trade in goods between the two countries reached two billion dollars last year. British Columbia is investing 13 billion dollars in infrastructure development and would share its expertise for developing urban infrastructure projects of India. - The Economic Times, 5^th December 2007
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India mulls FTA with China

India is considering a Free Trade Agreement (FTA) with China but a decision will be based on sensitivities of domestic industry. India has FTAs with five countries and six operational Preferential Trade Agreements. Besides, 11 FTAs are under negotiations and seven other are under consideration. The country has been in negotiations with ASEAN for a FTA for the past three-and-half years and Government's guiding principle has been to protest sensitive segments of the economy particularly agriculture, textiles and small-scale industries. Te FTA with Thailand that liberalised trade on 82 items has seen imports from Thailand rise three-fold in the past 30 months while exports have risen only two-fold. Inverted duty structure where the raw material attracts the highest duty rates and finished product lowest led to the surge in import of auto and electronic components from Thailand, he said adding the anamoly is being looked into. In the FTA being negotiated with ASEAN, only pepper trade is being offered to be liberalised while cardimom and coconut will continue on negative list. Even on pepper, the import duty is to be brought down from 70 to 50 per cent by 2018. – The Economic Times, 5^th December 2007.
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Exchange Rates

The Exchange Rates for the week of December 4 - December 10, 2007 are available at the following link

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WTO NEWS

WTO Negotiators Look To 2008, Though Doha Deal Prospects Remain Slim 

Until recently, trade officials from many governments were warning that the Doha Round trade talks would die or go into indefinite hibernation without a breakthrough agreement on cutting tariffs and subsidies by the end of the year. The troubled WTO negotiations now look set to remain alive, if not quite kicking, into 2008, despite the unusually early start to the US election campaign. Nevertheless, it remains far from clear whether Members will be able to bridge differences that have divided them for years in order to strike an accord. Even if they succeed, support in Washington for ratifying a multilateral trade deal is uncertain at best. New draft framework deals from the chairs of the WTO negotiating committees on agriculture and industrial goods trade are expected "somewhere around the end of January". These draft negotiating texts, intended to serve as the basis for final-stage negotiations, had initially been expected by early December. The delay was positive, a result of progress in the agriculture talks. The more issues that Members can agree on now, the fewer will be left up to the chairs' conjecture, or for ministers to decide. – ICTSD, Vol 11, No. 42, 5^th December 2007.

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India rejects market access draft at WTO

The industrialised country coalition, comprising the United States, the European Union, Japan, Canada, Iceland, New Zealand, Norway and Switzerland, circulated a document calling on the Chair for Doha Industrial Market Access Negotiations for no change in the draft modalities issued in July this year. The chair is holding meetings with key members to prepare a revised draft that will be issued in late January next year. The developed countries said the chair’s existing draft proposals captured all elements of the Doha mandate which require industrialised countries to take bigger commitments than developing countries in cutting industrial tariffs based on the principle of less-than-full reciprocity. The chair had proposed that industrialised countries reduce their industrial tariffs by using a coefficient between eight and nine in the Swiss formula. Under the Swiss formula, countries with high tariffs, especially in the developing world, will cut them by a bigger margin than the industrialised countries which have low tariffs. For example, India’s average industrial trade tariffs that are bound at the World Trade Organization at little over 30 per cent will come down to a below 13 per cent as against the average bound industrial tariffs in industrialised countries coming down to below 3 per cent from the existing 6 per cent. Several developing countries who are members of the NAMA 11, of which South Africa, India, Brazil, Argentina, Indonesia are key members, called for substantial changes in the draft parameters on the ground that they were fundamentally flawed and went against the mandate. A non-group of developing countries like Costa Rica, Singapore, Chile, Pakistan, Colombia, Mexico, however, supported the proposals given their low industrial tariffs. – Business Standard, 6^th December 2007.

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