Apr 2005 Press Release

India’s merchandise exports during the financial year (April2004 to March 2005) have reached nearly US $ 80 billion – being valued at US $ 79593.59 million ($ 79.59 billion), indicating a record growth of 24.41% over the level of US $ 63978.78 million ($ 63.9 billion) during April-March 2003-04. This is substantially higher than the 21.31% export growth in April-March 2003-04 over April-March 2002-03. The export growth rate target of 16% originally set for the year 2004-05 (corresponding to a value of US $ 73.4 billion) has thus been exceeded by as much as 50%. Some more trade returns are expected in the next few weeks and the total export figure is thus expected to register a further increase. In rupee terms, the exports were Rs.357076.54 crore during April-March 2004-05, which is 21.72% higher than the value of exports during April-March 2003-04.

Exports during March 2005 are valued at US $ 8513.53 million, which is 8.28% higher than the level of US $ 7862 million during March 2004. This is over and above the 52.63% export growth in March 2004 over March 2003. In rupee terms, the exports were Rs.37196.06 crore, which is 5.09% higher than the value of exports during March, 2004.

India’s imports during April-March 2004-05 are valued at US $ 106121.18 million (US $ 106 billion) representing an increase of 35.62% over the level of imports valued at US $ 78250.86 million in April-March 2003-04.

Oil imports during April-March 2004-05 are valued at US $ 29084.88 million which is 41.19% higher than oil imports valued at US $ 20599.19 million in the corresponding period last year. Non-oil imports during April-March 2004-05 are estimated at US $ 77036.30 million, which is 33.62% higher than the level of such imports valued at US $ 57651.67 million in April-March 2003-04.

Imports during March 2005 are valued at US $ 10083.90 million representing an increase of 25.52% over the level of imports valued at US $ 8033.86 million in March 2004. In rupee terms, the imports increased by 21.82%.

The trade deficit for April-March 2004-05 is estimated at US$ 26527.59 million, which is higher than the deficit at US $ 14272.08 million during April-March 2003-04.

Tables giving details of exports, imports and trade balance, according to the provisional estimates of Directorate General of Commercial Intelligence & Statistics (DGCI&S) are attached.

IMPORTS & EXPORTS : (PROVISIONAL)
(Unadjusted for late returns)
		(US $ Million)
	March	April-March
EXPORTS
_________
2003-2004*	7862.60	63978.78
2004-2005	8513.53	79593.59

%Growth 2004-2005/2003-2004	8.28	24.41

IMPORTS
_________
2003-2004*	8033.86	78250.86
2004-2005	10083.90	106121.18

%Growth 2004-2005/2003-2004	25.52	35.62

TRADE BALANCE
_______________
2003-2004*	-171.26	-14272.08
2004-2005	-1570.37	-26527.59
*Final figures as given by DGCI&S

IMPORTS & EXPORTS : (PROVISIONAL)
(Unadjusted for late returns)
		(Rs Crores)
	March	April-March
EXPORTS
_________
2003-2004*	35395.78	293366.76
2004-2005	37196.06	357076.54

%Growth 2004-2005/2003-2004	5.09	21.72

IMPORTS
_________
2003-2004*	36166.77	359107.66
2004-2005	44057.08	476201.92

%Growth 2004-2005/2003-2004	21.82	32.61

TRADE BALANCE
_______________
2003-2004*	-770.99	-65740.90
2004-2005	-6861.02	-119125.38
*Final figures as given by DGCI&S

INDIA-JAPAN TRADE CAN REACH $ 10 BILLION IN THREE YEARS – KAMAL NATH ADDRESSES BUSINESS INTERACTION WITH JAPANESE PRIME MINISTER

Addressing a business interaction and luncheon meeting with the Japanese Prime Minister Mr. Koizumi here today, Shri Kamal Nath, Union Minister of Commerce & Industry, said that India and Japan could easily reach a trade level of US $ 10 billion within three years, given the complementarities of the two economies. Trade between India and Japan had been stagnating at a level of US $ 4 billion annually for the past eight years while trade relations between India and other Asian countries of the region such as China and Korea had shown remarkable growth, he observed.

Shri Kamal Nath reiterated the suggestion that India and Japan should work on a limited agreement on trade in agriculture covering such items of export interest to the two countries that did not adversely affect the interests of their farmers. “The export of India’s agricultural produce to Japan has a great potential. The key point is that these are agricultural products, which do not threaten domestic farmers in Japan. These non-competitive imports, which do not compete with domestic production, include marine products like tuna & shrimp, poultry products, fresh tropical fruits like mangoes & grapes. Market access for such Indian agricultural products in Japan should be a win-win situation for both the countries”, he said. The Minister had mooted the proposal for a limited agreement on agriculture with Japan during his recent visit to Tokyo when he had not only called on the Prime Minister Koizumi, but also had extensive discussions with Foreign Minister Machimura, Agriculture Minister Shimamura, Finance Minister Tanigaki and METI Minister Nakagawa.

Referring to investment, Shri Kamal Nath said: “The actual cumulative inflow of investment from Japan has been less than 2 billion dollars. Japanese investment in India, despite a large number of joint ventures and collaborations is still low. There is a vast potential for higher levels of Japanese investment in India in a variety of sectors like Infrastructure, Telecom, Power and Construction where Japanese businessmen can make use of the growing opportunities in this country. In the changed context where both countries are seeking a new and expanded economic partnership, it is important that we especially emphasise and promote FDI by Japanese firms”.

Recalling his meeting with Japanese Prime Minister in Tokyo a fortnight ago, when Mr. Koizumi described India as “a country of possibilities”, Shri Kamal Nath said “that phrase struck me as deeply incisive and prophetic. It is my ardent desire that we structure our commercial engagement in such a way that for Japan India becomes not only a country of possibilities, but also a ‘country of opportunities’.”

SB/MRS

Shri Kamal Nath, Union Minister of Commerce & Industry, has indicated that the first meeting of the Inter State Trade Council which has been set up to ensure greater involvement of states in the country’s external trade is to be convened soon. Presiding over the Parliamentary Consultative Committee of the Ministry of Commerce & Industry, here this morning, Shri Kamal Nath said the Inter State Trade Council, the setting up of which was announced as part of the Annual Supplement of the Foreign Trade Policy 2005 would provide an institutional mechanism for making the states a partner in India’s export effort. The agenda of today’s meeting was a general review of the Ministry of Commerce & Industry (Department of Commerce and Department of Industrial Policy & Promotion). Members of the Committee including S/Shri Sudhangshu Seal; Mohammed A Shahid; M.P. Veerendra Kumar; and Sambasiva R Rao participated along with Shri EVKS Elangovan, Minister of State for Commerce & Industry, Shri S.N. Menon, Commerce Secretary and other senior officials.

Shri Kamal Nath in his remarks and Shri Menon in his presentation flagged the following (a) India’s merchandise exports have touched a record level of US $ 80 billion during 2004-05 with a growth rate of 24% which is the highest ever in US dollar terms; (b) the growth was achieved despite appreciation of the rupee vis-à-vis US dollar and high fuel prices, besides moderation in demand from some of India’s major export destinations, reflecting the resilience of the Indian economy; (c) India’s share in the world merchandise exports which was 0.66% in 2000 has increased to 0.82% in 2004, according to the WTO Annual Trade Statistics; (d) Around 80% of India’s merchandise exports come from manufactured products; and (e) there has been a sustained increase in the productivity of the manufacturing sector through fresh investments, technological changes etc. For the first time, the Foreign Trade Policy had recognised trade as a driver of greater economic activity and of incremental employment rather than just earning foreign exchange, the Minister said and also pointed to the synergy between merchandise and services exports as services activities linked to manufacturing got a substantial boost through rise in merchandise exports.

Stating that the biggest challenge is to sustain the export growth momentum and inflows of foreign direct investment (FDI), Shri Kamal Nath said, “FDI is of utmost importance in bridging the investment gap. Without FDI, we will not be able to maintain our 7 or 8% growth figures. FDI, especially greenfield FDI which is incremental to Indian capital, is very important for the country’s economic growth… With 20% rise in the retail sector, should we not try and create a modern retail sector in the country? I know there are strong feelings about FDI, as for instance in telecom (in the past). But today everybody has a cell phone in his pocket! We have to carefully calibrate this and see to it that FDI in any particular sector leads to incrementality and does not displace Indian capital”.

In the presentation on the industrial scenario, it was indicated that industrial growth was 8.1% and manufacturing growth 8.7% during the period April-February 2004-05, as against 7% and 7.3% growth respectively in 2003-04. Cumulative FDI inflows (equity component only) from August 1991 to February 2005 were US $ 33.41 billion. As per international practice, FDI data should comprise (i) equity capital; (ii) Reinvested earnings and (iii) other capital component. FDI data is being revised jointly with RBI to align with the international practice and as per the international definition, FDI inflows into India in 2004-05 (up to February 2005) are valued at US $ 4.47 billion, it was stated.

Members raised several issues relating to export of some agro products especially perishables such as fruits & vegetables and also suggested measures to promote exports of leather & leather manufactures, meat products and handicrafts. There was a suggestion to have a separate board for chillies (presently under the Spices Board) as also to create a special purpose vehicle to support tobacco farmers in the event of fall in prices. The Minister informed that he had personally taken up the issue of tobacco exports with the authorities in Russia and China and agreed to a suggestion to send a trade delegation for tobacco to tap these two markets. Responding to a query about the quality of tea, Shri Kamal Nath mentioned that the government had recently issued a new Tea (Distribution and Export) Control Order 2005 replacing the earlier Order in order to maintain quality and the brand equity of Indian teas. All teas, whether imported or exported, would be required to conform to the specifications of the new order, he said.

The Directorate General of Foreign Trade (DGFT) has issued Public Notice No.05 dated 27/04/2005 notifying additional standard input-output norms for 27 new export items and amendments/ corrections/deletions in the standard input-output norms for 66 existing export items. Out of the 27 new norms, 25 norms relate to the chemicals & allied products, one relates to the engineering products and one relates to the plastic products. Fixation of standard input-output norms will facilitate issue of advance licences for above additional items to the exporters.

The proposed Inter-State Trade Council will be headed by the Commerce & Industry Minister, Shri Kamal Nath. The Inter State Trade Council will engage the State Governments in providing an enabling environment for boosting international trade.

ii) To evolve uniform practices across different states in respect of trade facilitation;

iii) To identify issues relating to State Governments with regard to capacity building under the World Trade Organisation (WTO),
infrastructure development and creating an overall supportive policy and fiscal environment for international trade; and

iv) To create a framework by making states a partner in India’s export effort.

The need for such Council was felt for long as coherence and consistency among trade and other economic policies of both the Union and State Governments is important for maximising the contribution of such policies to development. State Governments are increasingly required to partner with the Union Government in this process.

This was stated by Shri EVKS Elangovan, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.

The MMTC Limited will establish six Free Trade and Warehousing Zones in accordance with the Foreign Trade Policy of 2004-09.

Six locations tentatively identified for Free Trade & Warehousing Zones (FTWZs) are Kandla, Noida, Mumbai, Haldia, Kochi and Ennore, to be set up in phases. The estimated investment for each warehouse would be Rs.100 crore approximately. It envisages creation of world-class infrastructure for trading and warehousing of various products.

Rs.6359 CRORE SEZ AT NAVI MUMBAI

The Special Economic Zones (SEZs) promoted by the City and Industrial Development Corporation of Maharashtra Limited (CIDCO) is to be set up over a total area of 4377 hectares at an estimated cost of Rs.6359 crore. Approval was given on 15/2/2002 to the Government of Maharashtra for setting up an SEZ at Dronagiri at Navi Mumbai on the basis of the proposal received from them.

CIDCO has since finalized a preferred bidder for the project and the financial closure is now expected to be achieved by June 2005. This was stated by Shri EVKS Elangovan, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.

KAMAL NATH RELEASES BOOK IN HINDI ON INTERNATIONAL BUSINESS

Shri Kamal Nath, Union Minister of Commerce & Industry, today released a book in Hindi on International Business, focusing on the Indian perspective titled International Business: A Perspective on Policies & Procedures (“Antarashtriya Vyapar: Avdharna, Nitiyaan Aur Prakriya”), brought out by the Indian Institute of Foreign Trade (IIFT). Speaking at the release function here in the presence of the Director and other faculty of the IIFT as also the senior officers of the Department of Commerce, Ministry of Commerce & Industry, Shri Kamal Nath commended the pioneering effort of IIFT and expressed the hope that the standardized compilation would meet the long felt needs of entrepreneurs, especially the small and medium enterprises (SMEs).

The book contains 25 articles covering various facets of international business, all written by the experienced faculty of IIFT. The book has been compiled to cater to the pressing need of the SME sector for understanding the basics of international business. The experience of the workshops conducted by IIFT in this regard has been fully taken into account while compiling the book with its wide coverage of the subjects as also the competent treatment of complex trade issues in a Hindi compilation. An interactive CD is also made available with the book, which would help entrepreneurs to understand the intricacies of export procedures and documents.

Major areas of International Business are covered in a comprehensive manner in the book which is divided into four major parts. The first part deals with International Business Environment and Policies and the second part deals with Marketing & Strategy, while the third section of the book relates to financial aspects of International Business. The final section of the book is on Export Procedures & Documentation.

Rapid changes are being witnessed in the context of increasing globalisation and multilateralisation of trade. An understanding of these developments and capacity to respond to the changing scenario are factored into the various programmes that the IIFT, which has been in the forefront of management education with a global focus for 40 years, conducts such as the two-year full-time and three-year part-time MBA degree programmes in International Business; the 18-month Executive Masters Programme in International Business including an online programme; a number of short-term Executive Development Programmes and a 4-month Certificate Course on Export Management, specifically for SME sector. Besides, IIFT has also been conducting 10 to 12 workshops of one-week duration every year in Hindi in different parts of the country.

INDIA PROACTIVE IN WTO – MAJOR RTA INITIATIVES FOR REGIONAL ECONOMIC COOPERATION

The growing competitiveness of Indian exports and the high growth rate registered by India’s manufacturing sector reflecting productivity changes, coupled with recovery of the global economy and world trade helped maintain buoyancy in India’s export growth over and above the targetted levels during 2004-05. India’s export performance during 2004-05 was also influenced by continued trade promotion and trade facilitation efforts of the Government and a focussed approach announced in the new comprehensive Foreign Trade Policy (2004-09) announced in August 2004 to double exports during the next four years, according to the Annual Report 2004-2005 of the Ministry of Commerce & Industry (Department of Commerce). With the high growth achieved despite strengthening of the rupee vis-à-vis the US dollar and the overall impact of rise in fuel prices on competitiveness, the country is expected to double its percentage share of world merchandise trade by increasing its exports to US $ 150 billion by 2009, the Report adds.

Subsequent to the Report, India’s merchandise exports have touched almost 80 billion dollars, as announced recently by Shri Kamal Nath, Union Minister of Commerce & Industry, against a target of US $ 74 billion. In view of this record performance, India’s export target for the year 2005-06 has been revised upwards to US $ 92 billion from the US $ 88 billion target set earlier.

Referring to Special Economic Zones (SEZs), the Report says that 36 SEZs have been approved and all the 8 Export Processing Zones (EPZs) have been converted into SEZs. Private investment by entrepreneurs for establishing units SEZs is about Rs.2000 crore of which foreign/NRI investment is about Rs.500 crore, accounting for nearly 25% of total investment. In order to give stability to the policy regime, Government intends to enact a legislation for SEZs as early as possible, the Report says.

On the multilateral trade front, India took an active part in the revival of the Doha process by interacting with both the developing and the developed countries in the World Trade Organisation (WTO). As a result of these efforts, the Framework Agreement was adopted by WTO member countries in the General Council meeting in Geneva of the WTO on 1^st August, 2004 ensuring that the negotiations were back on track. India was able to achieve all her major objectives in this Framework Agreement, including in the crucial area of agriculture. With a view to safeguarding the interests of farming sector, India made concerted efforts with like-minded alliance on agriculture and the G-33 alliance on Special Products. This ensured that the elements and principles incorporated in the agreed framework on agriculture would lead to substantial reductions in trade-distorting domestic subsidies provided to their farm sector largely by the developed countries, a credible and date for elimination of their export subsidies and substantial market access improvements for products of export interest to developing countries. Similarly, India negotiated successfully in the area of non-agricultural market access (NAMA), Services, and ensured that the Framework Agreement includes a firm commitment to addressing Implementation Issues and operationalisation of Special and Differential Treatment (S&DT) for developing countries on a time-bound basis. One of the significant achievements in the Framework Agreement was the removal of 3 of the 4 Singapore issues on which India had raised objections – namely, Investment, Government Procurement and Competition.

The year also saw the launch of fresh initiatives for regional free trade agreements (RTAs) or comprehensive economic cooperation agreements (CECA). India continued to engage in transforming the Preferential Trade Arrangement (PTA) with SAARC countries into a SAARC Free Trade Area (SAFTA), which would come into existence from 1^st January, 2006. Besides, an Early Harvest Programme in BIMSTEC which covers countries on the rim of the Bay of Bengal, negotiations with ASEAN countries collectively and with countries with Singapore individually are nearing completion. At present, India has a full-fledged FTA with Sri Lanka. An Early Harvest Programme has been signed identifying common list of items for exchange of tariff concessions as a first step towards establishing a Free Trade Area between India and Thailand. India is also currently negotiating FTAs or CECA’s agreements with Singapore and the ASEAN as well as with the MERCOSUR countries (Brazil, Argentina, Uruguay and Paraguay) and a grouping of 5 South African countries led by South Africa known as the South Africa Customs Union (SACU).

In order to avoid concurrence of Sudan dye contamination in the export of chilli and chilli products from India, Spices Board has started conducting compulsory sampling of all chilli/chilli products export consignments from India and testing it for Sudan I, II, III and IV and aflatoxin. With effect from 10^th March, 2005, no consignment of chilli, chilli products or other food products containing chilli in whatsoever form shall be exported unless a certificate is issued by the Spices Board certifying that the consignment does not contain Sudan I to IV and aflatoxin beyond acceptable levels and, therefore, is fit for export to the identified destination.

Major chilli producing States had also been advised to initiate and sustain action with the specific objectives of preventing use of Sudan I by the food industry.

This was informed by Shri EVKS Elangovan, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.

A committee to examine the regulatory structure of the Gold Industry to make India a gold trading hub has been constituted by the Ministry of Commerce.

i) Improving the scope of measures to be undertaken to facilitate banks to hedge in Future Markets on Gold.

iii) Recommend measures to improve the ability of the banks to implement Gold-Linked Saving Scheme.

iv) Recommend appropriate customs and foreign trade measures that are required to be undertaken to facilitate manufacturing and trading in gold.

v) Any other recommendation required to be trading in gold and also on measures required to ensure quality of the goods being traded.

The findings of the Committee are expected to improve the prospects of Gold Trade in the country.

This was informed by Shri EVKS Elangovan, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.

Though no market study has been done exclusively for chillies, a study was conducted to explore the possibility of marketing branded Indian spices in the US market, which inter alia, covered capsicum (chilli/paprika). The study recommended the inclusion of red pepper (covering chilli) in the product introduction phase both under the mainstream segment and the gourmet segment.

The varieties of chillies, having foreign demand include Sannam-4, Indian wrinkled chillies, Wonder hot, Bird’s eye chilli, Kashmiri chilli, Byadagi chilli and Warangal Chappatta. Spices Board, being an export promotion body, facilitates export of spices including chillies and does not directly execute export orders. Spices Board provides support to exporters who procure material for executing export orders from all chilli producing centres including Andhra Pradesh.

Some major promotional activities undertaken by the Spices Board for export of chilli from Andhra Pradesh are:

1. Introduction of Integrated Pest Management (IPM) in chillies to reduce incidence of pesticides in chillies.

2. Introduction of a pilot project for solar drying of chillies for reducing aflatoxin.

3. Encouraging exporters to source chillies produced under IPM by paying a premium to the growers.

Other promotional activities of the Spices Board which are available to all spice exporters, including those from Andhra Pradesh include: support for package development, reimbursement of courier charges for sending business samples as part of export promotion; support for participation of exporters in international fairs; assistance for business promotion tours abroad; and assistance to produce promotional brochures.

This was informed by Shri EVKS Elangovan, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.

The Government has put in place a liberal policy on Foreign Direct Investment (FDI) wherein FDI up to 100 % is allowed under the automatic route in most sectors and activities.

Under the liberalized the economic environment, investment decisions are taken by the entrepreneurs based on their commercial judgement and various other factors both external and internal. Besides the macro-economic environment in the host economy, global economic environment, corporate strategy of the transnational corporations, and the economic situations in other FDI destinations play a major role. Policy initiatives of the Government, including the policy on FDI are aimed at promoting modernization and technological upgradation, productivity and efficiency with a view to increasing industrial production and enhancing export competitiveness.

Statement showing the State-wise break-up of FDI inflows from January2002 to December 2004 is enclosed in Statement I. Sector wise break up of FDI inflows from January 2002 to December 2004 is enclosed in Statement II.

This was informed by Shri EVKS Elangovan, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.

The Government is considering replacement of the existing Duty Entitlement Pass Book (DEPB) scheme by a scheme which would be more compatible to the WTO and exporter friendly.

A three member committee comprising Shri Saumitra Chaudhari (Member of Economic Advisory Council to the Prime Minister) as Chairman, Shri S.B. Mohapatra, Secretary,(Retd), and Shri. T.R. Rustagi, Chief Commissioner of Customs and Central Excise, (Retd) as members has been constituted to work out the methodology for calculation of All Industry Rates of Duty Drawback, 2005-06, and suggest rates on the basis of changes made in the Union Budget, 2005-06. The Committee is expected to submit its report to the Government in the week beginning 18.04.05.

This was informed by Shri EVKS Elangovan, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.

URGES SUPPORTIVE SIGNALS TO BOOST FDI TO INDIA – PROPOSES LIMITED AGREEMENT ON AGRICULTURE TO STEP UP
AGRO EXPORTS TO JAPAN
TIME RIGHT TO PUSH INDO-JAPAN TRADE - INDIA: A COUNTRY OF VAST POSSIBILITIES, SAYS KOIZUMI

Shri Kamal Nath, Minister of Commerce and Industry, called on the Prime Minister of Japan, Mr. Junichiro Koizumi, at his residence in Tokyo yesterday morning and had a very cordial meeting with the Japanese Prime Minister which lasted about 40 minutes. During the discussions, Mr. Koizumi indicated Japan’s support for India on the United Nations Security Council (UNSC) and said that both Japan and India should become permanent members of the UNSC, while underlining the need for reform of the UN.

Shri Kamal Nath said the purpose of his visit to Japan at the head of a large Indian business delegation was to apprise Japanese business community of the tremendous economic progress made by India in the last decade and a half. In this context, Shri Nath urged the Japanese government for supportive signals to promote inflows of Japanese investment into India. He also proposed a limited agreement on agriculture between the two countries covering products of export interest as means of reversing the continuing stagnating trend in India’s trade with Japan and boosting two-way trade on a mutually beneficial basis, especially India’s agro exports to Japan. He said India and Japan could be the major drivers of economic development in the Asian region. The two countries should also work together in the World Trade Organisation (WTO), he said.

Mr. Koizumi said the time was now right to push Indo-Japan bilateral trade. Describing India as a country of immense possibilities, Mr. Koizumi said he was looking forward to his forthcoming visit to Japan later this month. As two major economic powers Japan and India could contribute significantly to the trade and economic development of Asia, he added.

Shri EVKS Elangovan, Minister of State for Commerce & Industry and Shri S. N. Menon, Commerce Secretary, along with their accompanying delegation, met the US Deputy Secretary of Commerce Mr. Theodore Kassinger and Acting US Trade Representative Mr. Peter F. Allgeier. They also met the Co-chair of the India Caucus in the House of representatives, Congresswoman Ileanar Ross Lehtinen and Congressman Gary Ackerman. In all these meetings, Shri Elangovan and Shri Menon conveyed to the US authorities the heavy damage inflicted by the tsunami to the Indian shrimp industry and the losses suffered by the Indian fishing community. While conveying appreciation to the United States International Trade Commission (USITC) for suo moto seeking comments about the Changed Circumstances Review, they urged that the Changed Circumstances Review of anti-dumping action against Indian shrimps be launched expeditiously. They also expressed the hope that considering the damages suffered due to Tsunami, the anti-dumping duties currently applicable to Indian export of shrimps to the US would be revoked. The US side gave a patient and sympathetic hearing and took note of India’s concerns.

Shri Elangovan and Shri Menon also participated in the India Connect-USA road show that was organized by Confederation of Indian Industry (CII) in collaboration with US-India Business Council at Washington D.C. This event was inaugurated by Ambassador Shri Ronen Sen. Shri Elangovan gave the luncheon key note address along with Deputy Secretary Ted Kassinger on 'Moving forward the US-India Economic Relationship'. Shri Menon gave a presentation at the first plenary session on 'India Now'.

India and Japan have decided to strengthen bilateral economic relationship as two of the major constituents of an Asia wide economic network which is now underway with the conclusion and negotiation of various Free Trade Agreements (FTAs) and Economic Partnership Agreements (EPAs) with ASEAN and its member countries. According to a joint press release – “Towards Strengthening the Japan-India Economic Relationship” – issued in Tokyo last evening at the conclusion of the official visit of Shri Kamal Nath, Union Minister of Commerce & Industry, to Japan, “India is coming under the spotlight as a centre of global economic growth (while) the Japanese economy is recovering steadily and hence, the situation is ready for strengthening of Japan-India Economic relationship”.

Japan is keen to establish a close partnership with India in the manufacturing sector, the statement says. “The Indian government is actively addressing the development of the manufacturing industry, which has a huge effect on job creation, for example, by establishing the National Manufacturing Competitiveness Council (NMCC) to respond to the need to provide job opportunities to a growing number of people and the need to improve the standard of living of ordinary people. Meanwhile, a growing number of Japanese companies are beginning to recognize India as a promising market, with its expanding middle class and stable supply of superior labor forces. They are beginning to place India as one of the important bases in their strategy for production, logistics and sales particularly in the situation that countries in the Asian region are engaging in FTAs/EPAs positively more than ever”, he said.

Further, Shri Kamal Nath and Mr. Shoichi Nakagawa, Minister of Economy, Trade and Industry of Japan, have agreed on an action plan to reinforce the economic relationship between the two countries. The action plan aims to: a) improve the investment environment in the manufacturing industry through closer interaction among governments and private sector both the economies including the effective use of Special Economic Zones (SEZs); (b) make further efforts by Japan to support manufacturing industry in India including through technical experts and training; (c) encourage agencies like Japan External Trade Organisation (JETRO) and India Trade Promotion Organisation (ITPO) to enhance investment related activities; and (d) enhance supply and investment cooperation relating to natural resources.

The two Ministers had earlier announced the establishment of a Policy Dialogue in January 2005 to explore the possibility of a Japan-India Economic Partnership Agreement and its first meeting was held in New Delhi last week. The fourth India-Japan Investment dialogue to promote investment between the two countries was held in Tokyo yesterday.

Shri Kamal Nath and Mr. Nakagawa also exchanged views on the current status of the Doha Development Agenda (DDA) negotiations in the World Trade Organisation (WTO) and their respective positions. They agreed that “it is critically important to deepen the dialogue between the two Ministers and strengthen the partnership between the two countries toward the sixth WTO Ministerial to be held in Hong Kong this December”.

Shri Kamal Nath, Minister of Commerce and Industry, called on the Prime Minister of Japan, Mr. Junichiro Koizumi, at his residence in Tokyo this morning and had a very cordial meeting with the Japanese Prime Minister which lasted about 40 minutes.

Shri Nath said the purpose of his visit to Japan at the head of a large Indian business delegation was to apprise Japanese business community of the tremendous economic progress made by India in the last decade and a half. In this context, he urged the Japanese government for supportive signals to promote inflows of Japanese investment into India. He also proposed a limited agreement on agriculture between the two countries covering products of export interest as means of reversing the continuing stagnating trend in India's trade with Japan and boosting two-way trade on a mutually beneficial basis, especially India's agro exports to Japan He said India and Japan could be the major drivers of economic development in the Asian region. The two countries should also work together in the World Trade Organisation (WTO), he said.

Mr. Koizumi said the time was now right to push Indo-Japan bilateral trade. Describing India as a country of immense possibilities, the Japanese Prime Minister said he was looking forward to his forthcoming visit to Japan later this month. He observed that as two major economic powers Japan and India could contribute significantly to the trade and economic development of Asia. Mr. Koizumi also referred to the issue of the United Nations Security Council, saying that both Japan and India should be permanent members of the UNSC.

KAMAL NATH UNDERLINES SCOPE FOR MORE JAPANESE INVESTMENT IN INDIA
INVESTING IN INDIA A PROFITABLE PROPOSITION – DESTINATION INDIA SEMINAR HELD IN TOKYO

Shri Kamal Nath, Union Minister of Commerce & Industry, has said that there is a vast potential for higher levels of Japanese investment in India in a variety of sectors like Infrastructure, Telecom, Power and Construction where Japanese businessmen can make use of the growing opportunities in India. Inaugurating the “Destination India Seminar”, organised jointly by the Federation of Indian Chambers of Commerce & Industry (FICCI) and the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry and the Japan Chamber of Commerce & Industry (JCCI), in Tokyo today, Shri Kamal Nath pointed out that the FDI policy in India in general was very liberal, transparent and investor-friendly with 100% foreign direct investment (FDI) allowed under the automatic route for almost all major sectors, including in the construction sector, opening huge opportunities for Japanese business. “I am aware of the fact that India is one of the largest ODA* recipients from Japan. However, in the changed context of our desire for seeking a new economic partnership, it is important that we shift the emphasis of India-Japan relationship from an ODA-based relationship to an FDI-based partnership. It is no long aid that India seeks, but trade. India’s exports were 80 billion dollars last year, and our imports 105 billion dollars. But only a fraction of this 185 billion dollar international engagement is with Japan”, the Minister observed.

Expressing disappointment over the fact that India’s trade with Japan had remained stagnant for long, Shri Kamal Nath invited Japan to invest in India’s Special Economic Zones (SEZs), which could spur an increase in trade between the two countries.

Reiterating India’s commitments to economic reforms to stimulate growth, investment and employment, Shri Kamal Nath noted that the actual inflow of investment of Japan into India had not even touched US $ 2 billion and 62% of it was concentrated in the automobile sector. A number of successful Japanese investments are already there such as Suzuki-Maruti, Hero-Hondo and Toyoto-Kirloskar joint ventures in the area of automobiles and Mitsubishi in the chemicals sector. These success stories could be replicated manifold to push up India’s investment and trade ties with Japan, Shri Kamal Nath said. “As those who have already invested in India have experienced, investing in my country has been a profitable preposition. A survey of foreign companies conducted by the Federation of Indian Chambers of Commerce & Industry in 2004 showed that 77% of foreign companies in India were making profits, while another 9% were breaking even. The findings in respect of Japanese companies in the sample were even better, with 80% making profits”, he added.

SB/MRS

Shri Kamal Nath, Union Minister of Commerce & Industry, is leaving for Tokyo tonight on an official visit that is aimed at boosting trade and investment ties with Japan. During his visit, Shri Kamal Nath is scheduled to call on the Prime Minister of Japan, Mr. Junichiro Koizumi on Thursday, 14^th April, 2005. He will also have bilateral meetings on the same day with Mr. Shoichi Nakagawa, Minister of Economy, Trade and Industry (METI); Mr. Yoshinobu Shimamura, Minister of Agriculture, Forestry and Fisheries and Mr. Sadakazu Tanigaki, Finance Minister.

Shri Ashok Jha, Secretary, Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry, is accompanying the Minister along with a high-powered business delegation of the Federation of Indian Chambers of Commerce & Industry (FICCI) CEOs led by Shri Onkar S. Kanwar, President, FICCI, to participate in the Destination India Seminar at Tokyo, being jointly organised by FICCI and DIPP from the Indian side and Japan Chamber of Commerce & Industry from 13^th to 14^th April, 2005. The Seminar, to be inaugurated by Shri Kamal Nath on Wednesday, 13^th April, 2005 will also be attended by Mr. Kazumasa Kusaka, Vice Minister for International Affairs (METI) of Japan along with over 250 Japanese companies. The Indian business delegation will participate with representation from key sectors of the knowledge-based industries including drugs & pharmaceuticals, information technology and related services, R&D, etc. Other sectors include textiles, power & energy, environment, food processing, consumer products, electrical equipment, metallurgy and transport.

With a strong representation from the Indian industry, Shri Kamal Nath’s visit would help in promoting investment flows from Japan to India and give a renewed thrust to bilateral trade and economic cooperation.

India’s overall trade with Japan in 2003-04 was of the order of US $ 4356 million ($ 4.3 billion). Of this, India’s exports to Japan amounted to US $ 1714 million ($ 1.7 billion) and India’s imports from Japan amounted to US $ 2642 million ($ 2.6 billion). Japanese FDI inflows into India are US $ 1.9 billion, representing a share of 7.3% in the total FDI inflows into India.

Shri Kamal Nath, Minister of Commerce and Industry, has today said that China is poised to become India’s largest trading partner in two or three years if the rapid growth in bilateral trade seen lately is maintained. In his address at the India-China Business Cooperation Conference jointly organised here this afternoon by the apex Indian business chambers and their Chinese counterparts, Shri Kamal Nath welcomed the Chinese Premier Mr Wen Jiabao and Commerce Minister Mr. Bo Xilai and underlined that Premier Wen’s presence at the business meeting “ signals the tremendous importance attached by the Chinese government to promoting trade and business between our two countries”.

While trade between the two countries had increased rapidly, crossing the 12 billion dollar mark this year – up from less than 1 billion dollars a decade ago - , Shri Kamal Nath made two suggestions for further augmenting the bilateral flow of trade and investment. One, the composition of the export basket needs to change to make it more broad-based in favour of higher value-added items, especially for India’s exports in sectors like drugs and pharmaceuticals and chemicals as well as in service sectors like information technology, tourism, banking etc. And secondly, there should be greater focus on investment flows between India and China, the Minister said . Indian total contracted investment in China amounting to US $ 235 million is mainly in pharma, auto components, software and machine tools. Investment flows from China into India have not picked up as well, though companies like Haier group have achieved significant access in the Indian market.

On the multilateral trading front, it was indicated during discussions between Shri Kamal Nath and Mr. Bo Xilai here last night that India and China would strongly oppose attempts to divide developing countries by categorizing them as advanced developing countries, along with South Africa and Brazil.

“Barely two decades ago, the world perceived China and India as large but poor developing countries. There has been a sea change in this perspective. And this change of mind-set has been driven by emerging economic realities. If we are to build upon this, then the scope of our economic engagement has to be enlarged and diversified. Prime Minister, your visit gives us the platform to raise our economic partnership to a new high”, Shri Kamal Nath said.

ADDRESS BY
SHRI KAMAL NATH
MINISTER OF COMMERCE AND INDUSTRY
GOVERNMENT OF INDIA

On August 31 last year the Government spelt out a bold vision to double India’s share in world trade within five years, and to focus on the generation of additional employment in the process. The current trade figures indicate that India is not only on the right path but approaching the goal at an accelerated pace.

Against a target of 74 billion dollars worth of exports and an envisaged growth rate of 16%, quick initial estimates show that the actual growth of merchandise trade in the very first year of the Policy period has been of the order of almost 80 billion dollars, corresponding to a growth rate of nearly 24% over last year’s exports. This growth is unprecedented in India’s economic history! If we can maintain the momentum, I am confident that India will cross the 150 billion dollars milestone substantially earlier than the end date of the Policy period.

You may recall that in a departure from earlier practice when export targets were announced almost mid-way during the year, I had specified our targets for the next four years as far back as in December last year. This was done, so that we could plan systematically and strategically, sector-wise. In this scheme of things, I had indicated an export target of 88 billion dollars for 2005-06, on the expectation that we would touch 75 billion dollars last year. But in view of our unprecedented achievement, I have no option but to revise this year’s target upwards to 92 billion dollars. It will be a challenge, but I am confident that we will meet it.

Since trade is not just about exports, but also about imports, I am sure that you are eager to know the value of our imports last year. It was 105 billion dollars, representing a growth of 34% over last year. It is significant that oil imports accounted for 29 billion dollars, whereas the negative balance of trade is 25 billion dollars, indicating that if oil imports were not to be counted, then our exports exceeded our imports by almost 4 billion dollars. Though we have a trade deficit in terms of merchandise goods, this is more than made up for by our services exports, which are estimated at about 30 billion dollars.

The second objective of the FTP was providing a thrust to employment generation, particularly in semi-urban and rural areas. The FTP announced special focus initiatives in the employment intensive sectors. The employment generation has been encouraging not only in these sectors, but in other sectors across the board.

A study commissioned by the Ministry (and done by Research & Information Systems for Developing Countries, i.e. RIS) reveals that exports generated an incremental direct employment of 10 lakh jobs in the year 2004-05, over the previous year. The total employment generated during the year corresponding to export activity valued at 75 billion dollars was 1 crore jobs – 86 lakhs of direct employment, and 14 lakhs of indirect employment in the logistics, transport and related sectors. Since our exports were actually 80 billion dollars, these figures would improve proportionately. The study further reveals that if we achieve our target of 150 billion dollars over the next four years, we shall be adding an additional 1 crore jobs: 85% of it direct employment, and 15% indirectly associated jobs.

The dynamics of global trade and the opportunities provided by the multilateral trading platform necessitate a continuous realignment of our international trade strategies and priorities. While India’s international trade will continue to function under the overall framework of the Foreign Trade Policy announced last August (and which has proved so hugely successful), some fine-tuning needed to be done to take into account the changing international trade dynamics. In fact, as periodic reviews are done, even in the future, some strategic realignment and reassessment would always be necessitated. This is the genesis of the Annual Supplement. It is not a ‘new policy’ that I am announcing today, but just something to supplement the existing policy. This Annual Supplement endeavors to incorporate additional policy initiatives and simplify procedures, thereby facilitating and enhancing India’s international trade.

I have been taking a consistent stand from a policy perspective that taxes and duties should not be exported. The various cesses levied under the different Commodity Board Acts is a tax on exports, which is a handicap and a major irritant to our exporters, since it erodes the competitiveness of our agricultural exports. We therefore propose to abolish cess on export of all agricultural and plantation commodities levied under these Acts. We shall also engage in consultations with other Ministries which may, under Acts administered by them, be levying cesses on exports, so as to eliminate these. We cannot subsidise our exports, but let us at least not tax them!

The Export Promotion Capital Goods Scheme is an important building block for sustained export growth and so we have worked out several elements in the form of an attractive ‘EPCG package’.

(a) With a view to accelerating exports under the Scheme and to incentivise fast track companies, firms fulfilling 75% or more of their export obligation in half the original obligation period, shall be freed from the balance export obligation.

(b) To create modern infrastructure in the retail sector, concessional duty benefits under EPCG scheme shall be extended for import of capital goods required by retailers, who shall be required to fulfill their export obligation from payments received against ‘counter sales’ in foreign exchange through banking channels.

(c) For providing a thrust to the agricultural sector as well as to promote capacity expansion and quality upgradation in the SSI sector, import of capital goods shall be allowed at concessional rates and there shall be a reduced export obligation. We hope this will provide an impetus for modernization of plant and machinery, which will enhance overall competition in the medium term.

(d) In order to augment facilities available at secondary ports with modern equipment and thereby reduce cargo handling turnaround time and related transaction costs, Minor Ports, Integrated Container Depots and Freight Stations would be allowed to count payment received in rupees for port handling services against discharge of export obligation.

(e) The facility of clubbing of EPCG licences has been further liberalized, and restrictive conditions relating to same licensing year and same products and services have been deleted. Henceforth, all EPCG licences issued under the same Customs Notification can be clubbed. This will considerably reduce paperwork, both for the exporter and the licensing authorities and lead to easier monitoring.

Marine products constitute an important element in our export basket. The tsunami tragedy has wrought havoc on our eastern coastline. Fishermen and their families have suffered greatly, and the long term benefits on coastal marine productivity are yet to be realised. We have therefore prepared a special package for marine sector.

(a) It is proposed to allow import of mono-filament long line system for tuna fishing at concessional duty.

(b) In order to enter new export markets and achieve a higher value addition, certain special flavourings and ingredients for seafood processing are required. These inputs will be allowed to be imported free of duty to the extent of 1% of the FOB value of exports.

(c) The present system of allowing disposal of waste of perishable commodities like seafood only after inspection by a customs official is cumbersome and leads to unhygienic conditions. To overcome this, a self removal procedure for clearance of waste shall be put in place.

In order to give a boost to rural areas, benefits under the ‘Vishesh Krishi Upaj Yojana’ shall be extended to exports of poultry and dairy products in addition to export of flowers, fruits, vegetables, minor forest produce and their value added products.

To promote export of ‘Minor Forest Produce’ products Shellac Export Promotion Council has been designated as a nodal EPC for minor forest produce.

Tea - In order to maintain quality and retain the brand equity of Indian teas, all teas, whether imported or exported, would be required to conform to specific quality norms.

The new Order also prescribes a minimum value addition norm of 50% on export of all imported tea and stipulates a time period of 6 months from the date of import for the export of imported tea.

Handlooms – Government has decided to develop a trademark for Handloom on lines similar to ‘Woolmark’ and ‘Silkmark’. This will enable handloom products to develop a niche market with a distinct identity.

All Export Promotion Councils shall open a separate Cell to involve and encourage youth and women entrepreneurs in the export effort.

In fact, I would like to invite your suggestions on a proposal to change the names of Export Promotion Councils to ‘Trade’ Promotion Councils!

(a) To enable Service providers to upgrade infrastructure in their associate companies, goods imported under the ‘Served from India’ Scheme shall be transferable within the Group companies.

(b) At present, Hotels & Restaurants are required to submit a Chartered Accountant certificate that the entire duty benefits availed under the ‘Served from India’ Scheme have been passed on to the consumer. From now on, only a declaration will suffice.

We have also brought in a number of rationalizations into the Advance Licensing Scheme. Some of the important changes are:

(a) (a) Different categories of Advance licences i.e. advance licence for physical export, advance licence for intermediate supplies and advance licence for deemed exports have been merged into a single category for procedural facilitation and easier monitoring.

(b) (b) The scope of Advance Licence for Annual Requirement has been extended to all categories of exporters having past export performance. Earlier, the option was limited to Status Holders only. Also, the earlier limit has been enhanced from 200% of FOB value of exports to 300%.

(c) (c) Clubbing of advance licences for export regularization purpose has been allowed even for licences pertaining to 1992-97 period.

(d) Transfer of Duty Free material imported under Advance Licence from one unit of a company to another unit is simplified.

Duty Free Replenishment Certificate:

The list of Sensitive Items restricted for import under the DFRC has been pruned down to just nine items.

DEPB benefits shall be available for supply of goods from DTA to SEZs for the period 1.04.2003 to 11.05.2004.

The Target Plus Scheme aimed at rewarding incremental exports would continue in the year 2005-06 with such modifications as will be notified, separately for preventing misuse, if any.

Export Oriented Units:

EOUs account for 10% of our exports. They provide the nation the same service as do SEZ units, in spite of the fact that the environments in which they function are not always conducive. It is our intention to facilitate their functioning, and remove procedural irritants. The supplement contains the details of such initiatives.

Last year I had promised to initiate action to bring about procedural simplification and reduction of transaction costs to exporters. With this in mind, a broad-based Committee was set up under the Chairmanship of the DGFT. The Committee has submitted its report and has made several useful and relevant recommendations. I have accepted the recommendations, and we shall be implementing them. Broad details are given in the Supplement.

As a first step towards this exercise, the DGFT has devised a single set of common forms called ‘Aayaat Niryaat’ Forms. This is a 50 page set of forms, as against the 120 page set currently in use.

The DGFT shall strive to move towards an automated electronic environment for filing, retrieval and authentication of documents.

To enable the users to make commercial decisions in a more professional manner, trade data shall be made available with minimum time lag in a query-based structured format.

All DGFT offices shall continue to provide facilitation to exporters in regard to developments in international trade, for example, WTO agreements, Rules of Origin, SPS requirements and Anti Dumping issues to help exporters strategise their business decisions in an internationally dynamic environment.

As I mentioned at the start of my speech, India’s total trade engagement (imports plus exports) with the world is 185 billion dollars – up 30% from last year’s total of 142 billion dollars. With this kind of involvement, India is inching towards becoming a significant player in international trade. This rapid growth signals a more pronounced integration with the global economy. Our tariffs are coming down to ASEAN levels, our FDI regime is increasingly liberal, our domestic laws are TRIPS-compliant.

The paradox, however, is that while India is opening up more and more, certain developed economies seem to be shutting up. This ‘shutting up’ in obviously not in terms of tariffs and quotas; these are on their way out. But the barriers now are more subtle – they are NTBs and SPS regulations: the non-tariff barriers to trade, often in the guise of health or environmental or social concerns. It is these new instruments of discrimination which we have to fight against.

Inter State Trade Council:

In order to achieve our Foreign Trade Policy objective of becoming a major player in world trade, coherence and consistency among trade and other economic policies of both the Union and the State Governments is vital. State Governments are increasingly required to partner with the Union Government. Some States have formulated export policies. But a lot needs to be done to coordinate these efforts.

It is therefore proposed to engage the State Governments in providing an enabling environment for boosting international trade, by setting up an Inter State Trade Council. It is hoped that the Council would provide an appropriate institutionalized dialogue mechanism on the subject.

The FTP provided a road map that could help Indian companies become globally competitive and simultaneously aimed at giving Indian consumers world class products and services. I believe that it is the new equation of partnership and co-operation engendered by the FTP last year that has paid the rich dividends we are now encountering. Business and industry have responded remarkably.

Government is committed to resolving all outstanding problems and disputes pertaining to the past policy periods through the Grievance Redressal Committee set up last year, for condoning delays, regularizing breaches by exporters in bonafide cases, resolving disputes over entitlements, granting extensions for utilization of licences etc. The atmosphere of partnership between Government and Business will be enhanced and taken forward.

GLOSSARY OF TERMS – FOREIGN TRADE POLICY

FTP Refers to Foreign Trade Policy, announced by the Commerce & Industry Minister on 31^st August, 2004. It is a 5-year Policy (2004-2009), which provides a stable policy framework. The Annual Supplement 2005 to the Foreign Trade Policy (2004-09) was announced by the Commerce & Industry Minister on 8^th April, 2005, and is effective from 1^st April, 2005.

Exim Policy Refers to Export and Import (Exim) Policy. Exim Policy got incorporated into the comprehensive Foreign Trade Policy, which was announced by the Commerce & Industry Minister on 31^st August, 2004.

DGFT Directorate General of Foreign Trade, which is headed by the Director General of Foreign Trade. The office of the DGFT is responsible for formulating and execution of Foreign Trade Policy, including licensing. Formerly (till 1991), was known as the Chief Controller of Imports & Exports (CCI&E).

EPZs/EOUs EPZ means Export Processing Zones which are special enclaves, separated from the Domestic Tariff Area (DTA), to provide an internationally competitive duty-free environment for export production. EOU means Export Oriented Units. The EOU scheme is complementary to the EPZ scheme, except that it is widely dispersed in location, unlike EPZs, which are set up at specific locations.

SEZs SEZs means Special Economic Zones. So far, 36 new SEZs have been approved for establishment. They are: Manikanchan at Salt Lake, Kolkata (West Bengal); Moradabad (UP); Indore (MP); Sitapur (Rajasthan); Jodhpur (Rajasthan); Mundra (Gujarat); Mahindra City for IT hardware, Chennai (Tamil Nadu); Mahindra City for apparel & fashion accessories, Chennai (Tamil Nadu); Mahindra city for auto ancillaries, Chennai (Tamil Nadu); Positra (Gujarat); Navi Mumbai (Maharashtra) Kopta (Maharashtra); Village Sachin, Surat (Gujarat); Hassan (Karnataka); Vallarpadam (Kerala); Salt Lake Electronic City (Kolkata); Nangunerry (Tamil Nadu); Kalinga-Duburi (Orissa); Gopalpur (Orissa); Kulpi (West Bengal); Bhadohi (UP); Kanpur (UP); Greater Noida (UP); Visakhapatnam (Andhra Pradesh); Dahej (Gujarat); Baikampady (Karnataka); Ranchi (Jharkhand); Greater Noida (UP); Kolkata (West Bengal); Ennore near Chennai (Tamil Nadu); Noida, Gautam Budh Nagar (UP); Icchapur, Surat (Gujarat); Hajira (Gujarat); Kakinada (AP); Sedarapet, Karasur (Pondicherry) for automobiles & auto parts and Sedarapet (Pondicherry) for IT and bio-informatics.

FTWZ Free Trade and Warehousing Zone, a new scheme announced in the Foreign Trade Policy.

AEZs Refers to a scheme of Agricultural Export Zones. So far, 48 AEZs have been approved in 19 States by the Department of Commerce.

BTP BTP means Biotechnology Park as notified by Director General of Foreign Trade on the recommendation of the Department of Biotechnology

E-Commerce Refers to electronic commerce. In the context of Foreign Trade Policy, e-commerce relates to electronic filing and processing of applications etc.

EPCG EPCG refers to the Export Promotion Capital Goods (EPCG) Scheme, which gives the manufacturer facility for import of capital goods for export production at concessional rate of duty (5 per cent) against certain level of export obligation over a period of time.

Exemption Scheme/Duty Free Import of Inputs Duty Entitlement Pass Book (DEPB) and Duty Free Replenishment Certificate (DFRC) Scheme.

Advance Licence Advance Licence is granted for import of inputs without payment of customs duties. It is issued in accordance with the Policy and procedures in force and subject to fulfilment of time-bound export obligation. Such licences can be issued for import of inputs for use in the export production as well as for replenishment of the inputs already used in the export product.

DEPB Refers to the Duty Entitlement Pass Book to neutralise the incidence of basic customs duty on the import content of export product. This is provided by way of grant of duty credit against the export product at specified rates. The DEPB Scheme which was notified on 1/4/1997 consisted of (a) Post-export DEPB and (b) Pre-export DEPB. The pre-export DEPB scheme was abolished w.e.f. 1/4/2000. Under the post-export DEPB, which is issued after exports, the exporter is given a duty entitlement Pass Book at a pre-determined credit on the FOB value. The DEPB allows import of any items except the items which are otherwise restricted for imports.

Input-Output Norms The norms which define the amount of input/inputs required to manufacture a unit of output.

DFRC Refers to the Duty Free Replenishment Certificate Scheme which was introduced from 1/4/2000 replacing Transferable Advance Licensing Scheme. The scheme is available to merchant exporters as well as to manufacturer exporters. However, it covers only items which are covered under standard input-output norms notified by DGFT.

Deemed Exports Refers to those transactions in which the goods supplied do not leave the country and the payment for the goods is received by the supplier in India.

FoB FoB means Free on Board -- i.e., when an exporter delivers goods "free on board", he pays all charges involved in getting them actually onto the ship.

NFE Refers to Net Foreign Exchange. Net Foreign Exchange earning is calculated as a percentage of exports (NFEP).

ISO-9000 Refers to international standards, laid down by the International Standards Organisation.

Manufacturer Exporter - Manufacturer-exporter means a person who exports goods manufactured by him or intends to export such goods.

Merchant Exporter Merchant- Exporter means a person engaged in trading activities and exporting or intending to export goods.

One to Five Star Export House With a view to building marketing infrastructure and expertise required for export promotion, exporters with certain level of export performance are conferred the status of One to Five Star Export House.

Status Holders An exporter recognised as One to Five Star Export House by DGFT/ Development Commissioner for the purpose of benefits and facilitation.

Registration cum Membership Certificate - Registration-cum-Membership Certificate (RCMC) means a certification of registration and membership granted to an exporter by an Export Promotion Council (EPC) or other competent authority.

Value addition Value addition refers to the increment added in the process of manufacture of a particular item, which also becomes part of its price.

QRs QRs mean Quantitative Restrictions. QRs refer to specific limits imposed by countries on the quantity or value of goods that can be imported or exported. QRs are non-tariff measures which are taken to regulate or prohibit international trade. QRs specifically refer to measures such as licensing requirements for exports/imports; quotas, ceilings etc.

ITC (HS) Refers to Indian Trade Classification (Harmonised System). It is a system of classification of products for the purposes of export and import.

VKUJ Vishesh Krishi Upaj Yojana, a new scheme introduced in the Foreign Trade Policy (2004-2009) as part of the package for agriculture.

SEPC An exclusive Services Export Promotion Council announced in the Foreign Trade Policy to map opportunities for key services in key markets.

SB/MRS

1. Formulation of Inter-State trade Council to engage State Governments in providing an enabling environment for promotion of international trade.

2. Proposed removal of export cess on export of all agricultural and plantation commodities levied under various Commodity Board Acts.

3. Realizing that great potential and opportunities exist in the manufacturing sector, Annual supplement introduces a number of measures to enhance the competitiveness of manufacturing sector.

(i) No safeguard and antidumping duty to be levied on inputs under advance licence for deemed export supplies made to ICB (International Competitive Bidding) projects.

(ii) To promote accelerated export performance, balance export obligation will be waived for the exporters completing 75% of their export obligation in half the prescribed export obligation period.

(iii)Reduced export obligation and enhanced time available for exports under the EPCG Scheme for the imports made by the agriculture sector.

(iv) Reduced obligation at six times the duty saved amount as against the normal eight times for imports made by the SSI sectors under the EPCG Scheme.

(v) EPCG Scheme will facilitate the modernization of retail sector by allowing concessional duty imports. For this the retailer should have a minimum covered shopping area of 1000 square meters.

4. Export of poultry and dairy products and their value added products facilitated by granting them duty credit @ 5% of the FOB value of the exports under the Vishesh Krishi Upaj Yojna.

5. Package has been developed for modernizing the marine sector. Package allows duty free import of inputs based on the past export performance, import of mono filament long line system for tuna fishing at concessional duty and establishes a self removal procedure for clearance of waste of perishable commodities

(ii)Supply of gold of 0.995 and above purity allowed for release for export purposes.

7. Package for EOU sector: For units debonding from EOUs, a simplified procedure is being worked out. Similarly, capital goods can be transferred to other units by simply intimating Central Excise & Development Commissioner. EOUs can claim IT exemption within a period of 12 months from the date of exports.

8. Reducing congestion at the major ports. The facility for export obligation discharge in rupee payment under the EPCG has been extended to the minor ports, ICDs and CFS also.

(i) Single common application form called Aayaat Niryaat Form introduced reducing the size of the form by more than 60%.

(iii)Annual advance licence, which was available only to status holders, will now be available to all the exporters with some export performance.

(iv) Export obligation extension for five years under advance licence based on BIFR rehabilitation package.

(v) Bank guarantee threshold reduced for units in Agri export zones and established service providers and a category of manufacturer exporters.

(vi) Simplified clubbing norms under the advance licence and EPCG Scheme will help exporters in regularizing their cases.

(vii) Chartered Engineer Certificate in lieu of Central Excise Certificate for non-excisable units and those importing spares will be accepted as installation certificate. This will reduce the transaction time.

(viii) Imports made under Served from India Scheme can be transferable within the group companies and managed hotels. The provision will allow bulk sourcing and better utilization of the entitlement.

Shri Kamal Nath, Union Minister of Commerce & Industry, today unveiled a series of new trade initiatives to put the country’s exports on a higher growth trajectory and to generate more employment through the foreign trade sector, even as India’s exports in the very first year of the comprehensive Foreign Trade Policy announced by him last year touched a record high of US $ 80 billion showing the highest ever export growth rate of 24% (in US dollar terms) surpassing the target set for the year. Announcing the Annual Supplement 2005 to the five-year Foreign Trade Policy at a press conference here, Shri Kamal Nath said that the growth rate achieved in 2004-05 had been unprecedented and if this momentum was maintained, India would cross the milestone $ 150 billion of merchandise exports substantially and thereby, double her share of world merchandise trade earlier than the target date of 2009.

The Annual Supplement, while carrying forward the agenda set out in the Foreign Trade Policy announced last year – of doubling India’s percentage share of global merchandise trade within five years and providing thrust to employment generation – focuses on making manufacturing sector more competitive through concrete policy measures so as to help Indian companies become globally competitive and simultaneously, give Indian consumers world-class products and services; provides packages for several sectors including agriculture, marine products, export oriented units and service sectors; contains major procedural simplification initiatives to reduce transaction costs; and proposes setting up of an Inter State Trade Council to engage state governments more actively in export effort. “While India’s international trade will continue to function under the overall framework of the Foreign Trade Policy announced last August (and which has proved so hugely successful), some fine-tuning needed to be done to take into account the changing international trade dynamics. This is the genesis of the Annual Supplement. It is not a ‘new policy’ that I am announcing today, but something to supplement the existing policy” by incorporating additional policy initiatives to facilitate and enhance India’s external trade, the Minister said.

Taking a consistent stand that taxes and duties should not be exported as they erode the competitiveness of India’s agricultural exports, Shri Kamal Nath has proposed to abolish cess on export of all agricultural and plantation commodities levied under the various Commodity Board Act.

In a further boost to agri exports, the Minister announced that benefits under the ‘Vishesh Krishi Upaj Yojana’ would also be extended to poultry and dairy products in addition to export of flowers, fruits, vegetables, minor forest produce and their value added products.

Shri Kamal Nath announced a number of concrete measures to enhance competitiveness of the manufacturing sector in India. Salient amongst these are: (i) No safeguard and antidumping duty to be levied on inputs under advance licence for deemed export supplies made to International Competitive Bidding (ICB) projects. (ii) To promote accelerated export performance, balance export obligation will be waived for the exporters completing 75% of their export obligation in half the prescribed export obligation period under the EPCG scheme. (iii) Reduced export obligation and enhanced time available for exports under the Export Promotion Capital Goods (EPCG) Scheme for the imports made by the agriculture sector. (iv) Reduced obligation at six times the duty saved amount as against the normal eight times for imports made by the SSI sectors under the EPCG Scheme.

Further, to facilitate modernisation of the retail sector in India, Shri Kamal Nath announced that concessional duty benefits under the EPCG Scheme would be extended for import of capital goods required by retailers having a minimum covered shopping area of 1000 square meters.

Addressing the problem of port congestion that had frequently hampered exports, Shri Kamal Nath announced a new initiative aimed at reducing congestion at the major ports. Thus, the facility for export obligation discharged in rupee payment under the EPCG has been extended to the minor ports, ICDs (Inland Container Depots) and CFS (Container Freight Stations) also.

“Marine products constitute an important element in our export basket. The tsunami tragedy has wrought havoc on our eastern coastline. Fishermen and their families have suffered greatly, and the long term benefits on coastal marine productivity are yet to be realised. We have therefore prepared a special package for the marine sector”, Shri Kamal Nath said. The package allows duty free import of specified inputs based on the past export performance, import of mono filament long line system for tuna fishing at concessional duty and establishes a self removal procedure for clearance of perishable waste.

Gems & Jewellery sector has not been left behind and the enhanced entitlement of Rs.3 lakh of duty free imports of samples is being allowed. It also allows the nominated agencies release of gold of 0.995 and above purity for export purposes.

Under a Special Package for the Export Oriented Units (EOU) sector, a simplified procedure is being put in place for units debonding from EOUs. Similarly, capital goods can now be transferred to other units by simply intimating Central Excise & Development Commissioner. EOUs can also claim IT exemption within a period of 12 months from the date of exports.

In a major leap towards paperless trading, Shri Kamal Nath has announced a series of initiatives in the direction of moving towards reduced paper transactions through procedural simplifications. A single common application form called “Aayaat Niryat Form” is being introduced, reducing the documentation requirements by more than 60%. Further, three categories of advance licences are being merged into a single category and annual advance licence, which was available only to status holders, will now be available to all exporters with some export performance.

In the area of service exports, to enable service providers to upgrade infrastructure in their associate companies, goods imported under the “Served from India” Scheme will be transferable within the group companies and managed hotels. This provision would allow bulk sourcing and better utilization of the entitlement.

In order to develop niche market with distinct identity for quality products, Shri Kamal Nath said that the Government would develop a trademark for Handloom also on lines similar to ‘Woolmark’ and ‘Silkmark’.

To promote export of ‘Minor Forest Produce’ products Shellac Export Promotion Council has been designated as a nodal EPC for minor forest produce.

All Export Promotion Council (EPCs) shall open a separate Cell to involve and encourage youth and women entrepreneurs in the export effort.

The Duty Entitlement Pass Book (DEPB) Scheme will continue till the replacement scheme is put in place. The replacement Scheme is currently under finalisation and inter-ministerial consultations are currently on towards finalisation of the new scheme. Meanwhile, Department of Revenue, Ministry of Finance, have already notified rollover of DEPB for the next six months, i.e., till September, 2005.

The Target Plus Scheme aimed at rewarding incremental exports would continue in the year 2005-06 with such modifications as will be notified, separately for preventing misuse, if any.

In order to engage the States in providing an enabling environment for boosting India’s exports, Shri Kamal Nath has also proposed the setting up of an Inter State Trade Council. “Coherence and consistency among trade and economic policies of both the union and state governments is important for maximising the contribution of such policies to development…. It is hoped that the Council would provide an appropriate institutional dialogue mechanism on this important subject”, he said.

Shri Kamal Nath, Union Minister of Commerce & Industry, has said that exports have generated an incremental direct employment of one million jobs in the year 2004-05, over the previous year. He said this while releasing this year’s Annual Supplement to the Foreign Trade Policy 2004-09.

Quoting a study commissioned by the Commerce Ministry, the Minister said that the total employment in the country during the year corresponding to export activity of 78 billion dollars was 1 crore jobs which included 86 lakh of direct employment, and 14 lakh of indirect employment in the logistics, transport and related sectors. “The study further reveals that we shall be adding a further 1 crore jobs if we achieve the target of 150 billion dollars over the next four years”, he said.

Shri Kamal Nath said that apart from doubling India’s percentage share of global merchandise trade in five years, the major objective of the FTP was generation of employment in rural and semi-urban areas. “With this in view, the FTP announced special focus initiatives in the employment intensive areas of agriculture, handicrafts, handlooms, gems & jewellery and leather & footwear sectors. The employment generation has been encouraging not only in these sectors, but in other sectors across the board”, he said.

In order to maintain quality and retain the brand equity of Indian Tea, the Government has issued a new Tea (Distribution and Export) Control Order, 2005 which prescribes strict norms for tea. All teas, whether imported or exported would be required to conform to the specifications cited in the new Order. Tea has been classified for the purpose of issue of non-preferential Certificate of Origin into three categories:

(i) Tea wholly produced or obtained in India will only be classified as “India tea.”

(ii) Where the Indian tea content in the export is not less than 90% by weight, it will be classified as “India tea (not less than 90% by
weight of tea)”.

(iii) In case of tea not wholly produced or obtained in India and where the content of Indian tea is less than 90% by weight, it will be classified as “Blended tea of different origin and packed in India”.

The new Order also prescribes a minimum value addition norm of 50% on export of all imported tea and stipulates a time period of 6 months from the date of import for the export of imported tea.

This is stated in the Annual Supplement to the Foreign Trade Policy announced here today by Shri Kamal Nath, Union Minister of Commerce & Industry.

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The Target Plus and the Duty-Free Credit Entitlement Certificate Schemes have been operationalised, with the respective notifications having been issued tonight.

The Exim Policy 2002-07, as amended up to 31/3/2003, provided for a scheme to accelerate growth in exports by rewarding status holders through duty-free credit entitlement. Due to various reasons, the scheme could not be operationalised. The respective notification and the application form (Appendix 17D) have now been announced on the 7^th of April, 2005 whereby exporters entitled to the benefits can start availing the same.

Similarly, the Target Plus Scheme announced in the Foreign Trade Policy 2004-09 on the 1st September, 2004 with the objective of accelerating growth in exports by rewarding Star Export Houses who have achieved a quantum growth in exports, has also been operationalised through notification of the required application form (Appendix 17D).

Department of Commerce, Government of India, launched the Price Stabilisation Fund Scheme in April 2003 for the benefit of growers of Tea, Coffee, Natural Rubber and Tobacco. The objective of the Price Stabilisation Fund Scheme is to provide financial relief to the growers when the prices of these commodities fall below a specified level.

The scheme is based on the principle of contribution from the growers and from the Government depending upon boom / normal / distress years, with a provision for withdrawal by the growers during the distress year. The contribution of the participant growers as well as that of the Government is credited to the savings bank account of the participant growers opened for the purpose with any nationalized bank. The contribution of the participant grower / Government in the growers’ account and withdrawal there from is decided with reference to the price spectrum band which is fixed and announced every year.

The Price Stabilisation Fund (PSF) Trust, Department of Commerce, Government of India, has announced the Price Spectrum Band for the year 2004 for Rubber, Coffee and Tea. As no tobacco grower was enrolled under the scheme during the year 2004-05, Price Spectrum Band for tobacco has not been fixed. The Price Spectrum Band for each commodity has been calculated on the basis of Seven Years’ Moving average of International price for the commodity. The annual average domestic price during 2004 was Rs.62.42/kg for Tea, Rs.34.93/kg for Coffee-Robusta, Rs.72.16/kg for Coffee-Arabica and Rs.55.71/kg for Natural Rubber. Year 2004 has been categorized as Boom/ Normal/ Distress year for each commodity on the basis of the relationship of average annual Domestic Price to the Price Spectrum Band. Based on the above methodology, the year 2004 has been categorized as Boom year for Rubber and Normal year for Coffee Robusta, Coffee Arabica and Tea.

On the basis of Price Spectrum Band 2004, 9521 Coffee growers and 2777 Tea growers would receive financial assistance of Rs.47.61 lakh and Rs.13.89 lakh respectively from the PSF Trust during the current year.

During 2004 -2005, 8226 Coffee growers and 1861 tea growers received financial assistance of Rs.82.26 lakh and Rs.9.31 lakh respectively, under the Scheme.

Price Stabilisation Fund Trust, Ministry of Commerce & industry
New Delhi, dated 7^th April, 2005

KAMAL NATH CONSTITUTES TECHNICAL EXPERT GROUP ON PATENT LAW ISSUES

Shri Kamal Nath, Union Minister for Commerce& Industry, has constituted a Technical Expert Group to study certain patent law issues.

The five-member committee headed by Dr. R.A. Mashelkar, Director General, Council of Scientific and Industrial Research (CSIR), New Delhi (Chairman), will comprise the following as members: Prof. Goverdhan Mehta, Director Indian Institute of Science, Bangalore; Prof. Asis Datta, Director, National Centre for Plant Genome Research, New Delhi; Prof. Madhav Menon, National Judicial Academy, Bhopal; and Prof. Moolchand Sharma, Director, National Law Institute University, Bhopal.

(a) whether it would be TRIPs (Trade-Related Intellectual Property Rights) compatible to limit the grant of patents for pharmaceutical substance to new chemical entity or to new medical entity involving one or more inventive steps; and

(b) whether it would be TRIPs compatible to exclude micro-organisms from patenting.

The setting up of the Committee is a direct follow-up of the assurance given by Shri Kamal Nath while moving the official amendments to the Patents (Amendment) Bill 2005 in the Lok Sabha on March 22 that the issue of patent availability of new chemical entities and micro-organisms would be referred to an Expert Committee and if as a result any amendments were suggested to safeguard the interests of these products, they would be incorporated in the new legislation later.

According to the Order dated 5^th April, 2005 constituting the Technical Expert Group issued by the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, the Group will submit its report to the DIPP and would be serviced by the Department of Industrial Policy & Promotion.

20% GROWTH IN INDIA’S TRADE WITH GERMANY THIS FISCAL, BUT SCOPE FOR MORE
GERMAN INVESTMENT IN INDIA, SAYS KAMAL NATH
INTERACTIVE SESSION WITH INDO-GERMAN BUSINESS AND INDUSTRY

India’s bilateral trade with Germany has shown a growth rate of 20% in the first nine months of the current financial year and within the European Union (EU), Germany is India’s largest trading partner along with the UK and Belgium, Shri Kamal Nath, Union Minister of Commerce & Industry, indicated here today while participating in the Interactive Session with the Indo-German Business and Industry, led by Mr. Wolfgang Clement, Federal Minister of Economics & Technology of Germany, organised by the Federation of Indian Chambers of Commerce & Industry (FICCI). However, Shri Kamal Nath pointed out that on the investment front, the picture was not so encouraging, as the total German investment in India had been barely US $ 1.26 billion. Even though the actual figures of foreign direct investment (FDI) did not reflect the synergies of the two economies evident from the fact that more than 600 German companies were operating in India and a growing number of Indian companies were investing in Germany, Shri Kamal Nath emphasised the need to do more on both sides to realise the true potential of bilateral trade and investment.

An exclusive German window, the Minister informed, was functioning in the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, for focussed enhancement of industrial cooperation with Germany, stressing that all such instruments needed to be utilised effectively.

Expressing concern over the increasing use of non-tariff barriers (NTBs) that hindered trade, Shri Kamal Nath said: “use of standards as non-tariff barrier militates against the spirit of the multilateral trading order that we both are so staunchly committed to. We have to ensure that the applicable regulations are in conformity with the international best practices and aid, trade not obstruct it. We seek German understanding and cooperation in settling the issues of various Non-Tariff Barriers supposedly imposed on grounds of health and SPS requirements that Indian exporters have been facing in the European Union. India looks towards Germany as the channel for articulation of our views and concerns in EU. We will appreciate immediate steps to implement the much needed mutually beneficial changes”.

Underlining the new investment opportunities in the wake of India’s liberal FDI policy, Shri Kamal Nath pointed to the possibilities in the areas of IT, bio-tech and infotainment, besides other areas like telecom, engineering, environmental technology, chemicals, pharmaceutical and food processing. Similarly, India could benefit from German expertise in the field of renewable source of energy, which would boost bilateral economic ties, he said.

NEW TEA ORDER TO ENFORCE QUALITY NORMS

In an effort to maintain quality and retain the brand equity of Indian teas, the Government has issued a new Tea (Distribution and Export) Control Order, 2005 under the provisions of the Tea Act, 1953 in supersession of the Tea (Distribution and Export) Control Order, 1957. The new Order contains a number of important provisions. It stipulates that all tea consignments meant either for imports or exports would have to undergo a certification procedure whereby the quality of tea and the country of its origin would be determined and displayed. All teas, whether imported or exported, would be required to conform to the specifications cited in the new Order.

The Tea Board would be the nodal agency of the certification exercise. The non-preferential Certificate of Origin in respect of each consignment of tea exports would be issued by the Tea Board or any of its designated agencies.

The new Order also prescribes a minimum value addition norm of 50% on export of imported tea and stipulates a time period of 6 months from the date of import for the export of imported tea.

Consequential changes have been made in the Handbook of Procedures under the Foreign Trade Policy and these have been notified by the Director General of Foreign Trade (DGFT) separately.

Government of India has been considering various measures for enforcing suitable quality norms on tea imports and exports. The new Tea Order has consequently been issued coming into effect from 1^st April, 2005 and the DGFT notification with effect from 2^nd April, 2005.

ENOUGH SAFEGUARDS IN PATENTS ACT TO PREVENT PRICE RISE – DOMESTIC PHARMA INDUSTRY INTERESTS
FULLY PROTECTED: KAMAL NATH
DIPP-UNCTAD SEMINAR ON PRODUCT PATENTS HELD

Shri Kamal Nath, Union Minister of Commerce & Industry, has said that the government has built in enough safeguards to prevent price rise in the Patents (Third Amendment) Act 2005 passed by Parliament recently in order to protect the interests of consumers by ensuring availability of medicines at affordable prices. In a message delivered on the occasion of a Meeting on “Product Patents: Implications for Pharmaceutical Industry and Consumers”, jointly organised by the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Government of India and the United Nations Conference on Trade & Development (UNCTAD) here this morning, Shri Kamal Nath said: “The price of medicines will not shoot up due to patents, because of these strong safeguards, checks and balances. There are comprehensive provisions in the amended Act to deal with issues concerning the price and availability of medicines. These include provisions for compulsory licensing to ensure availability of products at reasonable price; parallel import of products; acquisition of patent rights by the government; revocation of patents in the public interest; and provisions to deal with emergency situations. I must also repeat the point often cited that 97% drugs in the market, and 100% of all essential drugs are not covered by patents”.

Further, the Minister said the interests of the domestic pharmaceutical industry were fully protected and listed out the specific provisions in the amended Patent Act which would safeguard the pharma and chemical industry. (a) Domestic companies can continue to manufacture patented products even after a patent is granted, in respect of mailbox applications, on payment of a reasonable royalty to the patent holder, if they had been producing and marketing the concerned product since prior to 1/1/2005. This provides a level playing field for domestic players who have already made substantial investments and have been manufacturing the products for which applications for patents have been received in the mailbox. (b) The system provides for both pre-grant and post-grant opposition avenues, and reduces the timeframe for grant of patents in a cost-effective manner, while taking care of public interest. In fact, pre-grant opposition to patents has been strengthened and all the 11 grounds for pre-grant opposition to patents have been specifically listed in the Act, in the same way as before the Ordinance of December 2004. (c) In order to prevent “evergreening” of patents for pharmaceutical substances, provisions listing out exceptions to patentability (or what cannot be patented) have been suitably amended so as to remove all ambiguity as to the scope of patentability. (d) Conditions for obtaining compulsory licence have been clarified in order to facilitate export of patented pharmaceutical products by Indian companies to countries that do not have adequate production capacities such as least developed countries. (d) ‘Reasonable period’ for negotiations between the patent holder and companies seeking compulsory licence has been fixed at six months; and (f) Exemption of research and development from the ambit of patents, including experimental and educational purposes.

The Minister reiterated that though the impetus for amending the Act might have been India’s obligation under the WTO Agreement on the Trade Related Intellectual Property Rights (TRIPs), the contents of the Patents Amendment Act of 2005 is “not an externally driven, it is nationally driven. It suits us to have a modern patent regime in line with what most countries in the world have already adopted, including China and Brazil”. Pointing out that the pharmaceutical industry was amongst India’s most globally competitive industries today, with over one-third of its output being exported, Shri Kamal Nath said that with the expertise and knowledge-base of the domestic pharma industry and her scientists, India could change the paradigm of research and development by investment in technology and protecting her own intellectual properties through patents. Referring to the various concerns expressed over the years about the impact of the patents amendment, Shri Kamal Nath underlined that it was a measure of the government’s responsiveness to such concerns that extensive consultations were held with all stakeholders prior to formulating the Bill in its various stages, both, before and after the promulgation of the Ordinance. “I can say with confidence that all these concerns have been fully taken on board in the final form of the Amendment”, he added.

The Minister said that today’s meeting was a timely initiative in bringing together experts, policy makers and other stakeholders to discuss the important issues and challenges in the field of pharmaceuticals, especially in the context of the introduction of the full product patent regime in India with effect from 1^st January, 2005. The Meeting was also addressed by Shri Ashok Jha, Secretary, Department of Industrial Policy & Promotion, and Shri G.K. Pillai, Additional Secretary, Ministry of Commerce & Industry, who chaired the meeting.

The findings of the UNCTAD Study on “Product Patents: Implications for Pharmaceutical Industry and Consumers” by Dr. Veena Jha, India Programme Coordinator, UNCTAD were presented at the meeting by Shri James Nedumpara of UNCTAD India.

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KAMAL NATH RECONSTITUTES BOARD OF TRADE

Shri Kamal Nath, Union Minister of Commerce & Industry, has reconstituted the Board of Trade with effect from April 1, 2005, in order to ensure a continuous dialogue with trade and industry. The Board of Trade would inter-alia advise the government on policy measures connected with the Foreign Trade Policy in order to achieve the desired objective of boosting India’s exports.

In a departure from the past practice when the Board of Trade used to be headed by the Minister himself, Shri Kamal Nath has instead designated an eminent representative of trade and industry, Shri Kumaramangalam Birla, to be chairman of the Board.

The composition of 38-Member Board, headed by Shri Birla would be as follows: (Non-Official Members): (1) Mr. Ishaat Hussain, Tata Sons (2) Mr. Baba Kalyani, Bharat Forge (3) Mr. Malvinder Singh, Ranbaxy (4) Mr. Erfan Allana, Chairman, Allana Sons (5) Mr. Jagdish Khattar, MD, Maruti Udyog (6) Mr. Ravi Raheja, President, Shoppers Stop Ltd. (7) Mr. Prashant Ruia, ESSAR Group (8) Mr. A.C. Muthiah, SPIC (9) Mr. Harsh Neotia, Gujarat Ambuja (10) Mr. Rana Kapoor, YES Bank (11) Mr. Swaminathan S. Anklesaria Aiyar, Economist (12) President, CII (13) President, FICCI (14) President, FIEO (15) President, ASSOCHAM (16) Chairman, NASSCOM (17) Chairman, Gems & Jewellery EPC (18) Chairman, Apparel Export Promotion Council (19) Chairman, Texprocil (20) Chairman, SRTEPC (21) Chairman, HHEC (22) President, The Seafood Exporters Association of India (23) Chairman, Council of Leather Exports (24) Chairman, Chemexcil (25) Chairman, Pharmexcil (26) Chairman, CAPEXIL (27) Chairman, Electronics & Software Council and (28) President, EPC for EOUs; (Official Members): (1) Secretary, Department of Commerce (2) Secretary, Department of Revenue (3) Secretary (ER), Ministry of External Affairs (4) Secretary, Ministry of Textiles (5) Chairman, India Trade Promotion Organisation (6) Chairman & Managing Director, Export Credit Guarantee Corporation (7) Managing Director, EXIM Bank (8) Deputy Governor, Reserve Bank of India, Central Office, Mumbai (9) Secretary, Shipping, Government of India and (10) Director General of Foreign Trade (DGFT) as Member Secretary

The terms of reference of the Board of Trade would be: (1) To advise the Government on Policy measures for preparation and implementation of both short and long term plans for increasing exports in the light of emerging national and international economic scenario; (2) To review export performance of various sectors, identify constraints and suggest industry specific measures to optimise export earnings; (3) To examine the existing institutional framework for imports and exports and suggest practical measures for further streamlining to achieve the desired objectives; (4) To review the policy instruments and procedures for imports and exports and suggest steps to rationalise and channelise such schemes for optimum use; (5) To examine issues which are considered relevant for promotion of India’s foreign trade and to strengthen the international competitiveness of Indian goods and services; and (6) To commission studies for furtherance of the above objectives;

The Board will meet at least once every quarter and make recommendations to Government on issues pertaining to its terms of reference.

The Board of Trade will have the power to set up sub-committees and to co-opt experts to these, to make recommendations on specific sectors and objectives.

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KAMAL NATH TO ANNOUNCE ANNUAL SUPPLEMENT TO FOREIGN TRADE POLICY ON 8^thAPRIL, 2005

Shri Kamal Nath, Union Minister of Commerce and Industry, is scheduled to announce the Annual Supplement to the Foreign Trade Policy here on 8^th April, 2005.

Extensive consultations have been held with the trade and industry, including export promotion councils, chambers of commerce, trade associations and all other stakeholders and their inputs taken into account in fine-tuning the Foreign Trade Policy, especially with regard to simplification of procedures, reduction of transaction costs and liberalisation of the regulatory framework for foreign trade.

The first-ever comprehensive Foreign Trade Policy (FTP) was announced by Shri Kamal Nath on 31^st August, 2004 with a five year framework (2004-09). As the Minister had pointed out, the FTP takes an integrated view of the overall development of India’s foreign trade and has a two-fold objective. One, to double India’s percentage share of global merchandise trade by 2009. And, secondly, to act as an effective instrument of economic growth by giving a thrust to employment generation, especially in semi-urban and rural areas.

India’s merchandise exports in the eleven months (April 2004-February 2005) of the current financial year were valued at around US $ 70 billion with a record growth of over 27%. Commenting on the export growth registered this year so far, Shri Kamal Nath had said that “more than exchange rate variations, the significant increase in exports during the current financial year has been on account of the growing competitiveness of the Indian manufacturing sector and the vigorous export-led growth strategy followed by the government for doubling India’s share in global merchandise trade in the next five years”.

The Annual Supplement to the Foreign Trade Policy to be announced by the Minister will be available on the Internet and can be accessed at the following website addresses: http://commerce.nic.in and http://dgft.delhi.nic.in immediately after its release. In addition, the Foreign Trade Policy Annual Supplement etc., will also be available on the website of the Press Information Bureau (PIB) at: http://pib.nic.in

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MMTC TO SET UP SIX FREE TRADE AND WAREHOUSING ZONES

MMTC, the country’s premier trading company is proposing to set up six Free Trade & Warehousing Zones (FTWZs) in Kandla, NOIDA, Haldia, Ennore, Mumbai and Kochi. The minimum investment at each site would be Rs.100 crore with a size of 500,000 sq. mt. built up area. It is expected that some of the warehousing zones would be in place during the year 2006.

Keeping in view importance of enabling infrastructure for growth of the economy and foreign trade, Government had introduced concept of Free Trade Warehousing Zones in the Foreign Trade Policy 2004-2009. The scheme was started with a view to providing global standard warehousing zones in India. Such free trade zones are a well-established concept in global trade. This model has been widely accepted and has exhibited a history of providing substantial encouragement to foreign trade and warehousing activity.

What differentiates the FTWZ from standard warehouses is the integrated platform through which physical, regulatory, and other tangible and intangible services / benefits will be made available to individual users, thus helping them optimise their efficiencies and reduce operational costs. Such FTWZs score over traditional warehouse models since they integrate the benefits of a free zone with professionally handled, high quality physical infrastructure, thereby providing significant benefits to the individual users and the economy as a whole. These benefits include common facilities like cost effective skilled labour, transportation facilities, customised warehouses, sophisticated equipments etc.

This facility would provide to importers a chance to procure goods at competitive rates including small and medium industries which do not have capability/capacity to import large quantities by themselves, while exporters would be able to utilize these warehouses to store goods for export. Moreover, the FTWZ Scheme envisages duty free imports of all goods (except prohibited items) for warehousing. The FTW zones would also be exempted from Indian income tax and service tax. In these zones, it would be possible to undertake transactions in free foreign currency. Companies would have the freedom to pay duty at the time of taking the goods out of the zone, thereby decreasing costs and making Indian industry more competitive besides providing facility of maintaining minimum stock levels. Another major advantage accruing out of the FTWZ would be the possibility of Indian / foreign companies utilizing the superior infrastructure and operational dynamics available to hub their operations (i.e. service other countries’ needs from this base).

The warehouse zones would also provide allied support services like banking, Customs clearance, state of the art communication, insurance etc. within the zone for easy use by companies. Other than advantages to actual users of the FTWZ facility, there would be spin-off benefits to the economy also by way of backward and forward linkages by companies to the warehousing industry since trade volumes would in any case increase. An FTWZ development would generate employment opportunities both for operations and maintenance of the zone, as also within companies operating in the zone. Also, employment opportunities would be generated in industries having linkages to the trading and warehousing industry. Further, due to provision of shared infrastructure, the capital cost would be apportioned over a larger base which would reduce logistics costs per capita. Finally, with the provision of efficient infrastructure, superior operational dynamics and reduced logistics costs, the FTWZ would make companies located in India more competitive on a global scale and would help to make India an attractive destination for investments, trading and transshipment.

The government (in the Department of Ocean Development) have constituted an Expert Committee, consisting of the following members to study and review the long-term impact of Tsunami on the Ocean Eco-system and its resources in the Indian maritime zones.

The Committee would study and review the impact of Tsunami on the Ocean Eco-System including the changes that have taken place to the ocean floor and the impact on the flora and fauna and fishery resources.

II. The Committee may co-opt members as and when required for getting the requisite inputs for preparation of the report.

III. The Committee may hold sittings to discuss the issues relating to impact of Tsunami on ocean and its resources, at a convenient venue to be fixed by the Chairman;

IV. The TA/DA in respect of the members of the expert group be met from the respective Department/Institutes.

Shri EVKS Elangovan, Minister of State for Commerce and Industry said that the new Value Added Tax (VAT) system of taxation would provide a simplified system of taxation for exporters. Exporters will be eligible for input credit on all purchases and it will result in better pricing and enhanced competitiveness for Indian exporters in the global market place. He was speaking at the Tally Mela, organized by the Tally Solutions and the New Indian Express Group here today.

Terming the implementation of VAT as an important reform in indirect taxation, the Minister said that introduction of VAT would transform the way business was done in India and would give Indian business the much needed cutting edge in the global market. He said that VAT would herald uniform tax rates across the country, simplify procedures, eliminate the cascading effects of taxation and thereby lower the prices, reduce total tax outlay and improve cash flows of companies.

Complimenting the efforts of companies like Tally Solutions and the New Indian Express Group for spreading awareness about the advantages of the VAT system, Shri Elangovan urged the business community to adapt to newer methods to increase efficiency and welcome the implementation of VAT as that would benefit the people at large.

KAMAL NATH TO ANNOUNCE ANNUAL SUPPLEMENT TO FOREIGN TRADE POLICY ON 8^thAPRIL, 2005

Shri Kamal Nath, Union Minister of Commerce and Industry, is scheduled to announce the Annual Supplement to the Foreign Trade Policy here on 8^th April, 2005.

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INDIA-JAPAN TRADE CAN REACH $ 10 BILLION IN THREE YEARS – KAMAL NATH ADDRESSES BUSINESS INTERACTION WITH JAPANESE PRIME MINISTER

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Rs.6359 CRORE SEZ AT NAVI MUMBAI

KAMAL NATH RELEASES BOOK IN HINDI ON INTERNATIONAL BUSINESS

KAMAL NATH UNDERLINES SCOPE FOR MORE JAPANESE INVESTMENT IN INDIA
INVESTING IN INDIA A PROFITABLE PROPOSITION – DESTINATION INDIA SEMINAR HELD IN TOKYO

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Duty Free Replenishment Certificate:

The Target Plus Scheme aimed at rewarding incremental exports would continue in the year 2005-06 with such modifications as will be notified, separately for preventing misuse, if any.

Export Oriented Units:

Inter State Trade Council:

GLOSSARY OF TERMS – FOREIGN TRADE POLICY

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KAMAL NATH CONSTITUTES TECHNICAL EXPERT GROUP ON PATENT LAW ISSUES

20% GROWTH IN INDIA’S TRADE WITH GERMANY THIS FISCAL, BUT SCOPE FOR MORE
GERMAN INVESTMENT IN INDIA, SAYS KAMAL NATH
INTERACTIVE SESSION WITH INDO-GERMAN BUSINESS AND INDUSTRY

NEW TEA ORDER TO ENFORCE QUALITY NORMS

ENOUGH SAFEGUARDS IN PATENTS ACT TO PREVENT PRICE RISE – DOMESTIC PHARMA INDUSTRY INTERESTS
FULLY PROTECTED: KAMAL NATH
DIPP-UNCTAD SEMINAR ON PRODUCT PATENTS HELD

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KAMAL NATH RECONSTITUTES BOARD OF TRADE

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KAMAL NATH TO ANNOUNCE ANNUAL SUPPLEMENT TO FOREIGN TRADE POLICY ON 8^thAPRIL, 2005

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MMTC TO SET UP SIX FREE TRADE AND WAREHOUSING ZONES

KAMAL NATH TO ANNOUNCE ANNUAL SUPPLEMENT TO FOREIGN TRADE POLICY ON 8^thAPRIL, 2005

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