Food grain production likely to fall by over 5%

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Food grain production likely to fall by over 5%

The country’s food grain production in the current season ending June is likely to decline by 5.4 Per cent from a record output of 265.04 million tones (mt) the year before.

Weather vagaries

According to the third advance estimate released by the Agriculture Ministry here on May 13, 2015, total food grain output will be 13.92 mt lower at 251.12 mt for this season, the lowest since 244.49 mt produced in 2010-11.

Rice output is estimated at 102.54 mt, down from 106.65 mt last season, while that of wheat, the main Rabi crop*, which was damaged across swathes of northern, central and western India due to unseasonal rainfall and hail storms between end-February and early April, has been pegged at 90.78 mt from 95.85 mt last season, the lowest in the last three years.

Total production of coarse cereals is expected to decline by 2.87 mt to 40.42 mt, while the estimate for key pulses stands at 17.38 mt – down from 19.25 mt.

“It may be noted that production of Kharif crops** during 2014-15 suffered due to bad monsoon. Unseasonal rains/hailstorm during February-March 2015 had significant impact on production of Rabi crops. As a result of setback in Kharif as well as Rabi seasons, the production of most of the crops in the country has declined this season,” said an official release.

Production of oilseeds is also likely to be lower by 5.37 mt – from 32.75 mt to 27.38 mt, while cotton output will also likely decline marginally to 35.32 million bales (of 170 kg. each) but will be “higher by 2.85 million bales than the average production of last 5 years.”

Only sugarcane production is likely to rise by 4.42 mt to 356.56 mt from 352.14 mt, which could further depress prices of sugar in the domestic market with a fifth consecutive season of surplus production already in the offing.

Contingency plans

According to the Met Department, this year could witness another below normal monsoon due to the El Nino weather effect even if the rain is likely to arrive on time and hit the Kerala coast by June 1.

Minister of State for Agriculture Sanjeev Kumar Balyan said that the Centre is ready with contingency plans for 580 districts in case of acute weather disturbances.

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Rabi crop* : Crops sown in winter (November – April) and harvested in the spring (May/June) Kharif crop** : or Monsoon crop which sown in rainy season (May/June – October/November)

Source: The Hindu, Business Line, New Delhi Edition, May 13, 2015

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India to seek Chinese market access for non-basmati rice

India is hopeful that China will provide market access to its non-basmati rice – blocked till now as quality norms have not been defined between the two countries – during Prime Minister Narendra Modi’s visit later this week.

“The solution to the problem is simple. We have suggested to China that the protocol that exists for exporting basmati rice should be adopted for exporting non-basmati rice as well,” a Commerce Ministry official told BusinessLine.

China, which began importing rice four years ago and annually imports about 5 million tons, has not granted access to Indian non-basmati rice. The absence of defined phyto-sanitary norms between the two countries is cited by the China as the main reason for not importing from India.

China, however, has been sourcing its rice from countries such as Pakistan, Vietnam and Thailand. In fact, the steady increase in its purchases from these countries has kept the Vietnamese prices firm.

“We see a potential to export up to one million tons of no-basmati rice to China, provided they grant us market access,” said BV Krishna Rao, Managing Director, Pattabhi Agro Foods Pvt Ltd, the country’s largest non-basmati rice exporter.

Rao, who represents the Agri Exporters Association, said India can offer better quality, price and a wider variety to China.

The Commerce Ministry has already sent the documentation for establishing the quality protocol by the AQSIQ – the Chinese quality management institute that gives approvals for a variety of imports – to Beijing.

“The AQSIQ required certain documents to extend the protocol existing for basmati rice to non-basmati, and we already sent them,” the official said.

When the Prime Minister visits Beijing on May 14, India is hopeful that the required quality protocol would be implemented.

Though China has opened up its market for Indian basmati in 2012, hardly any direct shipments have taken place, industry sources said. China is still in the process of registering the Indian mills, although some basmati rice shipments are being exported indirectly through Hong Kong.

------------------------------------------------------------------------- Source: The Hindu, Business Line, New Delhi Edition, May 13, 2015

PM will push China to cut trade deficit

Prime Minister Narendra Modi is expected to pitch for concrete steps from China to check the growing trade deficit as India’s neighbor has failed to act on a series of measures it promised over the past few years.

Sources said the prime minister’s team of officers has pointed to specific areas – ranging from pharmaceuticals to information technology and bovine meat – where China has not come good on its promises and continues with barriers that block India’s exports. Similarly, Modi – who begins his first visit to China as PM today – is expected to press for investments in Gujarat and Maharashtra, for which a MoU was signed during Chinese president Xi Jinping’s visit to India last year. China, which is India’s largest trade partner, had proposed to invest around $20 billion in industrial parks over next five years.

Investment from across the border, where rules are expected to be simplified by the ministry, is seen to be crucial to reduce the trade deficit by substituting imports with local production and also gen-


-erate jobs. But, the widening trade deficit is the big worry as it is inching close to the $45 billion mark for the first time. China’s decision to go slow on cotton imports in view of the large stockpile along with a surge in exports of iron and steel, has added to the deficit. Similarly, the mining ban has affected iron ore exports from India.

At the same time, several goods such as pharmaceuticals remain a no-go area for Indian exporters due to the rules erected by Chinese authorities. “You cannot complain about the rules being targeted against any country but they do impact India adversely,” said a senior officer.

For instance, the rules are such that Indian medicines cannot be purchased under the Chinese government procurement program as they stipulate that only certain amount of generic drugs could be purchased for patented medicines. Since Indian companies specialize in generic or off-patent medicines, they can make little headway in the patented drug business, which is largely controlled by the American and European giants. While China had assured that it would review rules, the norms are yet to be eased.

Similarly, the sources pointed out that the China had signed a memorandum regarding import of bovine meat, which will open the market to Indian beef and buffalo meat. Under the deal, Chinese authorities were to come and inspect Indian facilities for quality standards before opening up exports but officials said the visit is yet to materialize.

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Source: The Times of India, New Delhi Edition, May 14, 2015

Government retains 51% FDI in multi-brand retail

Government has retained the previous UPA regime’s decision allowing foreign retailers to open multi-brand stores with 51 per cent ownership, in its consolidated FDI policy released today (May 13, 2015.)

The Department of Industrial Policy and Promotion (DIPP) issued a consolidated foreign direct Investment (FDI) policy document on May 12, 2015, retaining the policy on FDI in multi-brand retail that allows up to 51% foreign investment.

Bharatiya Janata Party (BJP) government had opposed opening of multi-brand retail to foreign investment but has not reversed the UPA policy.

The document includes all changes in India’s FDI policy over the last year. The 119-page consolidated document will make policy simple and in one place for investors.

The consolidated FDI circular released on the May 12, incorporated the changes in the last one year, including liberalization of sectors such as railways, defense, medical devices, insurance and construction. DIPP is the nodal agency for the FDI policy. FDI in defense has been raised to 49% from 26%. It can even go up to 100% in select cases.

Changes in FDI policy are made through the year by issuing press notes. The UPA government started the practice of consolidating these changes in a single document twice a year. This is the first document issued by the new NDA government.

Subsequent to assuming power, NDA has allowed 100% foreign investment in railway infrastructure, construction, operation and maintenance of suburban corridor projects through PPP, high-speed trains, dedicated freight lines, railway electrification and mass rapid transport systems.

“In the last eight - nine months, we have opened up every single aspect of India’s economy.


We have opened up our defense sector, construction, insurance, medical devices and other than multi brand retail. India today is the most open economy in the world.” DIPP secretary Amitabh Kant had said earlier in the day.

------------------------------------------------------------------------- Source: The Economic Times, New Delhi Edition, May 13, 2015

India needs to sign more FTAs to counter mega trade pacts EU, US are planning

India is negotiating seven free trade agreements (FTAs) with countries such as Russia, Australia and Peru that could help it deal with possible loss of share in traditional markets such as the US and the EU that are negotiation mega regional trade pacts.

“We need to look at FTAs with countries in South-East Asia, Latin America, CIS and Africa that will provide us with export destinations to compensate for erosion of preferences in traditional markets,” Additional Secretary in Commerce Ministry JS Deepak said at a seminar on changing global economic scenario organized by industry body FICCI (Federation of India Chamber of Commerce and Industry).

Two proposed mega regional trading agreements – a Trans-Atlantic Partnership between the EU and the US (TTIP) and a Trans-Pacific Partnership between countries such as the US, Canada, Japan, Malaysia, Australia, Mexico and Vietnam (TPP) are expected to pose stiff challenges for India which is not part of the two pacts.

“Transatlantic partnerships will throw challenges to countries like India and China. We need to make Indian products more competitive and develop more FTAs,” Commerce Secretary Rajeev Kher pointed out.

A successful FTA with the 10-member ASEAN and its six free trade partners under the proposed Regional Comprehensive Economic Partnership (RCEP) could help India be part of the global value chain.

“As part of RECP, India could be part of the global value chain at the lower end to begin with that would give a boost to employment generating manufacturing end exports,” Deepak said. Although RECP is not as ambitious as the TPP or the TTIP, it accounts for 50 per cent of the world’s population, 30 per cent of world trade and 30 per cent of world’s GDP, he added.

WTO concerns

Kher expressed concern over slow progress in finalizing the agenda for the Nairobi ministerial meeting of WTO members in December, which is to include a number of important issues such as food security which is of primary concern to India.

“What is happening essentially (at the WTO) is a debate on the agenda for the ministerial meeting. The deadline of July is approaching fast, but we seem to be going nowhere. This is a clear indication that in the multilateral fora, we will continue to show that we are busy without producing much,” Kher said

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Japan, Europe against India’s ‘safeguard’ probes on steel imports

The EU and Japan have criticized India for “frequent and frivolous” use of safeguard measures – imposition of higher duties to protect domestic industry against import surges – and have asked New Delhi to review its use of the tool.

The countries also questioned India’s recent safeguard investigation on certain steel products, in a recent meeting of the WTO’s Committee on Safeguards.

“The EU has alleged that many of the investigations have been initiated on weak grounds and asked India to review its use of safeguard measures,” an official who attended the meeting told Business Line.

Of the total 30 safeguard actions notified by countries at a recent meeting of the WTO’s Committee on Safeguards, India accounted for five, but later dropped two.

In 2014, too, safeguard investigations initiated by India were one of the highest at 14.

Japan, the EU and Russia expressed concerns about India’s safeguard investigation on seamless pipes, tubes and hollow profiles of iron or non-alloy steel, arguing that imports had not surged.

India, in its defense, said that while imports had decreased, they were still sufficiently high compared to the base year. A number of members, including the US and China, are affected by duties on steel products.

Safeguard duties, which are basically levies in addition to the existing import duties, can be imposed on items that witness a surge in imports; there by hurting the domestic industry.

Easy to establish

India has been depending more on this measure to protect its domestic industry as it is easy to establish. Imposing anti-dumping duty, which is the other form of penal duty that the WTO allows, is more difficult as one has to prove that the imports are actually happening at prices lower than what is being charged in the seller’s home country.

“India is very careful that all conditions laid down by the WTO are met before safeguard duties are imposed. It abandons a lot of investigations when there is room for doubt,” a Commerce Ministry official said.

India announced at the meeting that it had terminated its safeguard investigation on cold rolled flat products of stainless steel. Japan welcomed the announcement but said it still has systemic concerns about India’s safeguard investigations.

The country also announced termination of its safeguard investigation on slab stock polyol, used in manufacture of pillows and mattresses. It is mostly imported from the US and Japan.

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Documents

Food grain production likely to fall by over 5%