Jan 2005 Press Release

Shri Kamal Nath, Union Minister of Commerce & Industry, has said that India will host the meeting of the G-20 (a group of WTO member countries on agriculture) in New Delhi on 18^th March, 2005 following a consensus to this effect among members at the G-20 meeting held in Davos on Saturday, 29^th January, 2005. It has also been agreed that back to back with this, there will be a meeting of the G-33 (a group of WTO member countries who are pushing for special products, special safeguard mechanism and market access) in New Delhi on 19^th March, 2005, Shri Kamal Nath said. The Minister suggested that besides focussing on agriculture, the G-20 discussions could also cover other areas of interest such as NAMA and services. Several G-20 countries like Pakistan, Chile, South Africa and others strongly supported the proposal.

The Minister participated in the informal meeting (mini-ministerial) of Trade Ministers from 26 member countries of the World Trade Organisation (WTO) including Europe, North America and the G-20 developing countries in Davos on 29^th January, 2005. The Trade Ministers agreed on the need for taking urgent action for a successful conclusion of the negotiations on modalities for agriculture and non-agricultural market access (NAMA) by the next Ministerial Conference of the WTO scheduled in Hong Kong in December 2005. They also stressed that there should be overall balance in the different areas of negotiations such as agriculture, NAMA, services, rules and trade facilitation, so as to ensure equitable results for all, particularly developing countries.

Shri Kamal Nath sought greater market access for services and indicated that India would submit its revised offers by May 2005. During the discussions, he questioned the concept of advanced developing countries mooted by some members and said that introducing new concepts such as these which were not there in the Framework Agreement would delay the Hong Kong decision process. Shri Kamal Nath also made the point that the process of selection of the new Director General of WTO should not be allowed to impede the progress of negotiations.

The Trade Ministers set out a roadmap for talks from now till the Hong Kong Ministerial which would include frequent meetings at the Ministerial level with a view to bridging differences on issues like agriculture, NAMA and services. The Ministers agreed to meet again in another mini-ministerial in Kenya from 3^rd to 5^th March, 2005.

Shri Kamal Nath, Union Minister of Commerce & Industry, today made a strong pitch for India as an investment destination to a large international audience at the World Economic Forum (WEF) Session on "India – Bigger, Better Business Horizons" in Davos. He said the question for CEOs the world over was no longer "should my company go to India"?, but rather "can my company afford not to be in India?". On the tourism front, it is Incredible India, but on the economic front, it is clearly Opportunity India, Shri Kamal Nath said.

He emphasised in particular the policy measures taken by India to attract FDI in the Special Economic Zones (SEZs), which included 100% FDI in manufacturing sector through automatic route barring a few sectors for establishment of units in Zones; 100% foreign investment to develop townships within the SEZs; setting up off-shore banking units in SEZs; external commercial borrowings by SEZ units up to US $ 500 million in a year without any maturity restriction through recognised banking channels; flexibility to keep 100% of export proceeds in EEFC account etc. He said that the legislation on SEZs to be brought up before Parliament shortly was aimed at attracting private investment for the development of Zones so that units set up there could avail themselves of world-class infrastructure, communication and banking facilities coupled with an attractive and stable fiscal regime, with minimum regulatory restrictions.

Shri Kamal Nath, Union Minister of Commerce & Industry, began a series of bilateral meetings on the sidelines of the World Economic Forum annual meet in Davos, starting with a bilateral with Mr. James Peterson, the Canadian Minister for International Trade last evening. They decided on the setting up of a Joint Study Group (JSG) at the official level to look into the possibility of a comprehensive economic partnership between Canada and India. In a significant move, the Canadian Minister indicated that Canada was keen on looking at India as a stepping stone to the SAARC and ASEAN regions and in turn invited India to use Canada as a base for entering the North American Free Trade Area (NAFTA). Shri Kamal Nath invited the Canadian Minister to visit India. In response, Mr. Peterson agreed to come to India with a delegation of 300 Canadian business representatives in April 2005. Shri Kamal Nath also had a meeting yesterday with Mr. Peter Mandelson, Trade Commissioner of the European Union (EU).

Shri Kamal Nath is scheduled to have separate meetings today with Mr. Robert Zoellick, the United States Trade Representative (USTR) and with Mr. Pascal Lamy, former EU Trade Commissioner and one of the candidates for the post of Director General/World Trade Organisation (WTO). He will also hold bilaterals during the day with the Trade Ministers of Korea, the Netherlands, Germany and Chile.

Shri Kamal Nath, Union Minister of Commerce & Industry, has said that export of drugs from India will not in any way be affected by the amendment to the Indian Patents Act. "The global market for generic drugs is currently estimated at US $ 40 billion and the impending expiry of patents on drugs worth US $ 60 billion during the next five years offers huge opportunity to India", the Minister said while participating in the World Economic Forum (WEF) Session in Davos (Switzerland) on "India Meets Doha" which discussed the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPs) in the context of the healthcare industry and its implications for India’s research & development (R&D) and intellectual property rights. Shri Kamal Nath reiterated that the new patents regime would not affect domestic prices as 97% of the drugs in the Indian market were already off-patent, including 350 live-saving essential drugs. "The 12 ARVs (anti retro-viral drugs) most used for AIDS and manufactured in India, cannot be patented, as they are pre-1995 inventions. India will continue to manufacture, use and export them without hindrance", Shri Kamal Nath stated.

Underlining the possibility of India taking centre stage in drug development in the near future, Shri Kamal Nath stressed that India had a 10 billion dollar pharmaceutical industry, which was the 4^th largest in terms of volume and the 13^th largest in terms of value. There were 300 pharma companies in India of large and moderate size and 5500 small pharma companies, while the largest number of units approved by the US-FDA outside America were in India. Although at present less than 0.25% global spending in Pharma R&D was being done in India, Shri Kamal Nath said that "with higher patent protection, it is expected that more medical research would take place in India, given the cost advantage and large pool of technical and scientific talents in India".

Stressing the emergence of India as a low cost centre for medical research, Shri Kamal Nath said: "India will – in fact, is already emerging – as a low cost centre for medical research. Many multinational companies from Europe and America have tied-up with local ‘Indian Multinationals’ (such as Nicolas Piramal, CIPLA, Dr. Reddy, Ranbaxy, Wockhardt) to carry out research for new molecules. India has world-class talent with requisite training. Our manufacturing and R&D Labs are well equipped. There is synergy between fields of IT, biotechnology and medicine. The cost of Basic Research and Drug Discovery in India is much lower as compared to the Western counterparts. For a new drug to come in to the market, the average cost is 810 million dollars and takes 10-15 years in the Western countries. The global Pharma industry, therefore, desperately needs strategies to bring down the cost. Therefore, outsourcing in India has become an option. While outsourcing in India provides cost-benefit to the giant pharma companies, it is also a huge opportunity for smaller international companies which do not have well developed drug discovery programmes, to get a toehold, making it a win-win strategy. The first steps into Drug Discovery have already been taken by many pharma companies in India through in-house research as well as partnership with global players. The Patent Law in India, complying as it does with international norms for intellectual property, establishes India’s credibility and enormous strength in basic research and drug discovery is not a far-fetched dream".

Describing India and China as the "twin engines of growth" of Asia, Shri Kamal Nath, Union Minister of Commerce & Industry, has emphasised that there are several complementarities in the economies of India and China which can be capitalised on to achieve rapid and further expansion of trade and economic ties between the two countries on a mutually beneficial basis. Addressing the Session on "Beijing and Delhi – Navigating New Territories" at the meeting of the World Economic Forum (WEF) at Davos today, the Minister said the complementarities were reflected in the fact that India had a comparative advantage in IT software and China in IT hardware. Similarly, India’s strength in auto-components, pharmaceuticals & chemicals and machine tools were complemented by China’s strengths in electronics, toys and machinery. Therefore, "I do not see this as an ‘India Vs China’ debate, but rather in a ‘India with China’ context", Shri Kamal Nath said.

The tremendous untapped potential of trade between India and China was borne out by the fact that "the India-China two-way trade is now 1 billion dollars a month, compared to 1 billion dollars a year, a decade ago. This twelve-fold increase in the last decade only goes to prove that though we are competitors in many respects (as is only natural for two large and rapidly growing economies), we are also complementary and supplementary to each other", the Minister said, adding that for the last 15 years the Indian and Chinese economies had been growing twice as fast as the rest of the world.

In a broader context, Shri Kamal Nath referred to the new dimension and content in India’s "Look East Policy" and pointed out that whereas a decade ago trade with Europe constituted 30% of India’s total trade and with US 15% and with all of Asia only 20%, the roles had now reversed as India’s trade with Asia today accounted for 30% of her total trade. "If you take ASEAN, China, Japan, Korea and India together, you can visualise an integrated market whose size is that of the European Union (EU) in terms of income, and bigger than NAFTA in terms of trade. They account for half the world’s population and foreign exchange reserves exceeding those for the EU and NAFTA put together. The Prime Minister of India has proposed the establishment of an Asian Economic Community which would constitute an ‘arc of advantage’ across which there would be movement of people, capital, ideas and creativity", Shri Nath said.

While emphasising the complementarities between India and China, Shri Kamal Nath also mentioned the similarities, emanating from their characteristic political and social structures. Having reached a considerable degree of integration with a global economy, "India is now wanting to focus on targeting greater foreign direct investment (FDI) and engaging more aggressively in international trade", Shri Kamal Nath stated.

India and Chile have signed a Framework Agreement on Economic Cooperation. Shri Kamal Nath, Union Minister of Commerce & Industry, has described the signing here today as a historic moment, which would open new avenues to boost bilateral trade. The agreement is meant to promote expansion of trade by providing limited preferential access to each other initially. The Minister has said that the signing of the Framework Agreement is part of the strategy to boost India’s exports and improve its share of world trade, which at present is less than 1%. India, of late, has been engaging itself with various regions/countries for preferential trading arrangements (PTA). Besides countries in her immediate neighbourhood, India has entered into a Preferential Trade Agreement (PTA) with MERCOSUR (Brazil, Argentina, Paraguay and Uruguay) which is likely to be operational in April, 2005 and Chile is a major economy in the South American region. Negotiations for PTA with Chile will commence subsequent to the signing as per mutual consultations and would conclude by 2005.

It has also been agreed to set up a Joint Study Group to study the present status of the commercial and economic exchanges between India and Chile and to identify the potential for cooperation between the growing economies of the two countries as well as the bottlenecks both in goods, services and investment and to make recommendations for moving towards a Free Trade Agreement (FTA) or a Comprehensive Economic Cooperation Agreement (CECA) if such, an arrangement is found to be feasible. The Framework Agreement was signed by Shri Kamal Nath on behalf of Government of India and the Chilean Minister of Foreign Affairs, Mr. Ignacio Walker, in the presence of Prime Minister Dr. Man Mohan Singh and the Chilean President, Mr. Ricardo Lagos.

Chile has FTAs with USA, Canada, Mexico, EU and South Korea. It is also an associate member of MERCOSUR and has bilateral trade agreements with the Andean nations and Central America. It is an active member of the Asia Pacific Economic Cooperation (APEC). It is also currently negotiating comprehensive FTAs with New Zealand and Singapore and negotiations are at preliminary stage for FTAs with China and Japan. India’s exports to Chile were US $ 80 million during 2003-04 and imports from Chile were US $ 157 million in the same period. The total global imports of Chile were US $ 17.94 billion during 2003. The region still has a huge potential for Indian exporters as India’s share was just 0.45% of the global imports of Chile during 2003-04.

Later, addressing Business Session in honour of Dr. Ricardo Lagos, Shri Kamal Nath said that considering the potential of the Latin American Region, the government had launched a programme called "Focus: Latin America" to sensitise the Indian industry about the possibility of this region. "This has delivered welcome results and our bilateral trade with Latin America has grown by over 130% since the launch of this programme. The Framework Agreement with MERCOSUR was a step in this direction, and now the Framework Agreement with Chile is testimony to the genuine desire of ours to improve our commercial and economic ties with this region", he said.

Kazakhstan has invited India to set up joint ventures in Kazakhstan in the oil and natural gas sector, besides other sectors such as information technology, chemicals & pharmaceuticals, engineering and textiles. Apart from Uzbekistan and Kazakhstan, which were already priority countries under the Focus: CIS programme of the Department of Commerce, Ministry of Commerce & Industry, Turkmenistan has also been identified as a high-priority country for trade and economic cooperation in view of the discovery of oil there. Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry, recently led a large business and official delegation to Uzbekistan and Kazakhstan (from 8^th to 14^th January 2005) and held bilateral meetings to discuss cooperation in various sectors. Shri Elangovan was accompanied by Shri S. Ramasundaram, Joint Secretary, Ministry of commerce & Industry, along with business delegation.

In Uzbekistan, Shri Elangovan attended the first Conference of Heads of Six Indian Missions in the Central Asian Region, as well as the 5^th Meeting of the India-Uzbekistan Joint Commission on Trade, Economic, Scientific and Technological Cooperation, besides bilaterals in Kazakhstan. The general view at the meeting of the Heads of Indian Missions was that, despite the logistic barriers, the Central Asian Region needed consistent attention from both government and business from India. The Indian Ambassadors of the region welcomed the initiative of the Department of Commerce in organising such a conference where senior government officials and nearly 70 Indian businessmen from various sectors were able to interact and formulate plans for accelerating India’s trade with the region. In the bilateral meetings, both sides recognized the growing interest in two-way trade and economic cooperation.

There was also enormous interest and response for the buyer-seller meets both in Uzbekistan and at Almaty in Kazakhstan. Businessmen from both sides agreed that such interactions at regular interval would go a long way in boosting bilateral trade. It has been agreed after the successful visit of Shri Elangovan such official cum business delegation to priority countries namely Uzbekistan, Kazakhstan and Turkmenistan need to be held on a regular basis alternately, in India and in the Central Asian countries.

Other highlights of the business meetings were the commencement of trade in a joint venture between State Trade Corporation (STC) of India and M/s. Eke Pharma, a Kazakh Pharma company and the annual trade volume is about US $ 40 million. Two new joint ventures in the engineering sector were also signed between M/s. Rakesh & Associates and M/s. Sharp Power & Communication of India and M/s. Kainar and M/s. AVYL of Kazakhstan (industrial batteries and concrete). More such Indo-Kazakh joint ventures are in the pipeline and would materialize over the next few months.

India’s exports from the Export Oriented Units (EOUs) and Special Economic Zones (SEZs) are growing by about 25% and are expected to cross Rs.50,000 crore during the current financial year 2004-05. "However this 25% growth rate is not adequate. The country’s total exports are growing at more than 20%. Since EOUs and SEZ units have a special preferential regime and since their number is increasing, the growth rate of exports from these units should be in the region of 30%. This should be our target", Shri Kamal Nath, Union Minister of Commerce & Industry, said while addressing the Open House with EOUs & SEZ units, in Mumbai today.

The Minister announced that Domestic Tariff Area (DTA) units making supplies to SEZs would now be eligible for Duty-Free Replenishment Certificate (DFRC) and a notification to this effect had been issued yesterday. With this, one major demand of SEZ units has been taken care of. Supplies made by DTA units to SEZs were so far eligible for drawback, Duty-Entitlement Pass Book (DEPB) and advance licence but were not entitled to DFRC.

Shri Kamal Nath also gave an assurance that the long-awaited SEZ bill would be brought before Parliament in the coming Budget session. "The government is committed to have the SEZ legislation enacted as early as possible to give stability to our SEZ units and to enhance the confidence of investors in both establishment of SEZs, as well as manufacturing and service units within them", he said, responding to the concerns expressed by SEZ units about whether at all or not the SEZ Act would be passed.

All supplies made to Special Economic Zones (SEZs) are to be treated as physical exports with effect from 1^st September, 2004 and will be entitled for benefits of DFRC (Duty-Free Replenishment Certificate) under the Foreign Trade Policy. The Directorate General of Foreign Trade (DGFT) has issued Public Notice No.47 dated 18^th January, 2005 and Notification No.18 dated 18^th January, 2005 to this effect relating to provision off DFRC for supplies made to SEZs. This was also announced by Shri Kamal Nath, Union Minister of Commerce & Industry, at his Open House with EOU/SEZ units in Mumbai today. The facility of Drawback/Advance Licence/DEPB (Duty Entitlement Pass Book) was already available for supplies made to SEZs.

A Policy Circular No.16 dated 18^th January, 2005 has also been issued wherein it has been clarified that all supplies to SEZ from 1^st September, 2004 will be eligible for the benefit of DFRC in terms of Chapter 4 of the Foreign Trade Policy.

A Notification No.19 dated 19^th January, 2005 has been issued for the Gems & Jewellery sector allowing import of gold of 8 k and above under Replenishment Scheme subject to proper verification by way of an Assay Certificate. Now onwards the holder of Diamond Imprest Licences will also be entitled to procure the inputs from the indigenous sources in lieu of import against Advance Release Order (ARO). Earlier, the facility was available to the holder of Advance Licence and holder of DFRC only.

Shri Kamal Nath, Union Minister of Commerce & Industry, is scheduled to hold an Open House Meeting with Special Economic Zones (SEZs) and Export Oriented Units (EOUs) in Mumbai to elicit feedback from EOU & SEZ units on the operation of these schemes and to get their suggestions for the forthcoming Budget and the Foreign Trade Policy. The interactive meeting is being organised by the Export Promotion Council for EOUs & SEZs. Earlier, Shri Kamal Nath has said that he would be introducing a bill on SEZ in the next session of the Parliament. The bill would include Bio-Technology Parks and Free Trade & Warehousing Zones. In all these, FDI up to 100% would be permitted, including in real-estate development and establishment of the zones.

This year in the first six months, EOU/SEZ sector has exceeded the target of 20%. SEZs have shown a growth of 31% and EOUs have shown a growth of 28% in rupee terms. Exports from EOUs and SEZ sector are likely to touch Rs.50,000 crore this year i.e. 2004-05. The Council has said that SEZ Act must be enacted at the earliest to provide quantum jump to exports and to attract investments.

Government have disallowed two firms from exports of iron ore, pursuant to issue of show cause notices and the receipt of replies to quasi judicial proceedings against the firms are in progress and till such time final orders are passed.

On receipt of certain complaint of unauthorized export of high-grade iron ore from the country, inspections were carried out at four major ports by teams of officers of DGFT (Directorate General of Foreign Trade) and EIC (Export Inspection Council). The samples were sent for analysis. The analysis report revealed that some of the firms had exported high-grade iron ore, i.e., with Fe content + 64% without obtaining export licences from DGFT.

Under Foreign Trade Policy, high-grade iron ore can be exported under export licences only. In view of the show cause notices under the Foreign Trade (Development & Regulation) Act, 1992 issued to some of the exporting firms, two of them were earlier placed under Denied Entities List (DEL). This will deny them export-import benefits available under the Foreign Trade Policy, until further orders.

Shri Kamal Nath, Union Minister of Commerce & Industry, has announced that India and Malaysia will target a two-way trade of US $ 10 billion to be achieved within three years from the current level of US $ 3.5 billion. Addressing the Malaysia-India Economic Conference 2005 organised by National Small & Medium Industry Consultative Centre (NASMIC) in Kuala Lumpur, Malaysia, today, he observed that with the rapid expansion of bilateral trade flows, Malaysia had already become India’s largest trading partner in the ASEAN and said that the present environment offered an excellent window of opportunity for India and Malaysia to expand their trade and economic cooperation.

Shri Kamal Nath also invited foreign direct investment (FDI) from Malaysia, saying that there were no restrictions in FDI now in most sectors. And, there were no restriction on repatriation of either the investment or profits. "We have only last week substantially modified the provisions of Press Note 18 so as make crystal clear our intentions to encourage investment", he said. He reiterated that India’s investment policy, including policies on FDI, were amongst the most liberal in the developing world, adding that India looked especially to FDI in manufacturing sectors and in the greenfield projects.

Shri Kamal Nath further said that he would be introducing a bill on Special Economic Zones (SEZs) in the next session of Parliament and that these would include Bio Technology Parks and Free Trade and Warehousing Zones. "In all these, FDI up to 100% would be permitted, including in the real-estate development and establishment of the zones. We see Special Economic Zones as hubs of manufacturing, and Free Trade & Warehousing Zones as trading hubs. These zones will be specially designated areas, for all economic purposes foreign territory, and therefore units located in them will enjoy a number of tax preferences. These, and the state-of-the-art infrastructure, should make them particularly attractive places to invest and set up business in", he said.

About 1800 business delegates from Malaysia and 150 businessmen of Indian origin are participating in the Conference, mainly from the small and medium enterprises. Stressing that SMEs hold the key to the future, Shri Kamal Nath said both India and Malaysia must look towards greater interaction between their SMEs in order to boost bilateral trade ties.

The Directorate General of Foreign Trade (DGFT) has issued Public Notice No.44 dated 14/01/2005 clarifying eligibility for deemed export benefits in terms of Para 8.3 of the Foreign Trade Policy.

In terms of the Public Notice, supplies of goods will be eligible for refund of Terminal Excise Duty in cases where the recipient of the goods does not avail CENVAT credit/rebate on such goods. Similarly, supplies will be eligible for deemed export drawback provided CENVAT credit has not been availed of by the applicant. However, such supplies will be eligible for deemed export drawback on the customs duty paid on the inputs/components.

The rationale behind this condition is that dual benefits should not accrue on the deemed exports. This Public Notice seeks to clarify and to elaborate the intention behind the amendment so that the trade and industry is not put to a disadvantage.

India and the European union (EU) have agreed to find areas of common interest in the ongoing negotiations in the World Trade Organisation (WTO) and to work for the progress of the Doha Round so as to have a positive outcome at the next Ministerial Conference of the WTO scheduled for December 2005 in Hong Kong. This was indicated during the bilateral discussions that Mr. Peter Mandelson, Trade Commission, European Commission, had with Shri Kamal Nath, Union Minister of Commerce & Industry, here this morning. Later, in his address on "India-EU Strategic Partnership: Steps Ahead", organised by the Federation of Indian Chambers of Commerce & Industry (FICCI) here, Shri Kamal Nath said: "We look forward to the leadership of Mr. Mandelson to see that the development dimension should remain at the heart of the WTO negotiations and that the EU should take a leadership role in resolving the implementation related concerns of the developing countries, in operationalising the S&DT clauses and in ensuring that principle of ‘less than full reciprocity’ is applied without fail while according concessions to the developing countries". Shri Kamal Nath expressed the hope that the Doha Work Programme would now get the necessary impetus and reach early fruition, leading to substantial market access for developing countries in agriculture, non-agricultural products as well as the key areas of services.

Earlier, during his bilateral meeting with Peter Mandelson which lasted more than two hours and was attended, among others, by Shri S.N. Menon, Commerce Secretary, Shri Ashok Jha, Secretary, Department of Industrial Policy & Promotion (IPP), Shri Abhijit Sengupta, Additional Secretary (Europe), Shri G.K. Pillai, Additional Secretary (Trade Policy Division), Ministry of Commerce & Industry and members of Mr. Mandelson‘s delegation, Shri Kamal Nath raised the issue of serious non-trade barriers faced by Indian exporters in the EU arising out of cumbersome rules, regulations and procedures, ever increasing stringency of standards and frequent use of trade defence instruments.

"India seems to have borne the brunt of the EU’s Trade Defence Actions which affect 3-1/2% of Indian exports to the EU, as against the average global incidence in the EU of only �%. It is rather odd that a developing country like India should be facing 9 out of the 20 Anti-Subsidy actions in force in EU. We would earnestly request Mr. Mandelson to see that the Article 15 of the WTO’s Anti-Dumping Agreement and Article 27 of the WTO’s Anti-Subsidy and Countervailing Duties Agreement are fully operationalised and not left as mere ‘best endeavour’ clauses, with least endeavour to implement them", Shri Kamal Nath said. Mr. Mandelson informed that the EC would soon announce its decision not to destroy contaminated consignments but to return them to the exporting country, thereby resolving a long standing issue which India had been raising with the EU.

Shri Kamal Nath also urged Mr. Mandelson to ensure that India’s textile exports were not adversely affected due to arbitrary fixation of graduation criterion in the EU’s new GSP (generalized system of preferences) scheme, adding that the textile sector supported over 80 million people in India through direct and indirect employment and contributed over 27% of India’s total exports to the EU. He further pointed out that India suffered in the last 2 to 3 years due to arbitrary administration of the GSP scheme, wherein zero duty concession on 2500 tariff lines was extended to India’s competitors.

During Shri Kamal Nath’s one-to-one meeting with Mr. Mandelson, it was also agreed that India and the EU would have a bilateral investment agreement. Mr. Mandelson underscored the need to institute early warning system to identify and solve the irritants between India and the EU. "There should be a mechanism to know each other and to foster trade partnership", he said.

"The EU is today India’s largest trading partner, and with over 30 billion dollars worth of trade, it accounts for 20% of India’s global trade. By contrast, India’s share in the EU’s global trade is a meager 1%. It is evident that there is considerable untapped potential in our business relationship", Shri Kamal Nath said at the FICCI meet.

Government have clarified that an undertaking set up in the Domestic Tariff Area (DTA) which is subsequently converted as a 100 percent Export Oriented Unit (EOU) will qualify for availing benefits under section 10 B of the Income Tax Act. This was one of the items of the Foreign Trade Policy announced by the Commerce and Industry Minister Shri Kamal Nath in August last year. The circular issued by the Central Board of Direct taxes (CBDT) is in pursuance of the matter being taken up with the Finance Minister.

For getting benefits under section 10 B of the IT Act, the unit should be deriving profit from export of the articles or things or computer software, manufactured or produced by it. However, the deduction will be available only from the year in which it has got the approval as 100 per cent EOU and shall be available only for the remaining period of 10 consecutive assessment years beginning from the assessment year relevant to the revious year in which the undertaking begins to manufacture or produce articles as a DTA unit. Further, in the year of approval, the deduction shall be restricted to the profits derived from exports from and after the date of approval of DTA unit as a 100 % EOU. The benefits under section 10 B will not be available after the assessment year 2009-10, which is the sunset clause for such benefits to sink in.

India and UK have identified the key areas which offer particular potential for increased trade and investment such as agriculture, infrastructure (including energy), services and knowledge-based industries, including research & development (R&D). This is indicated in the joint statement issued here this evening following the first meeting of the India-UK Joint Economic and Trade Committee (JETCO), which was launched earlier in the day by Shri Kamal Nath, Union Minister of Commerce & Industry and Ms. Patricia Hewitt, Secretary of State for Trade & Industry, UK.

India and UK have agreed to convene an annual UK-India Investment Summit to support increased mutual investment. It has also been agreed to examine intellectual property rights (IPR) issues under government leadership, with regard to the concerns of businesses from both the countries relating to IPR protection in the UK and India and adopt practical measures to address these.

JETCO also welcomed the 2004 UK-India Air Services Agreement and expressed support for further increases in the frequency of bilateral trade services.

The two Ministers noted the positive state of trade and investment but agreed that there was considerable potential to increase this and JETCO would play an important role in this process. They also stressed the importance of working constructively in order to make progress at the WTO Ministerial Meeting in Hong Kong in December this year to achieve a successful outcome for the Doha Development round.

Shri Kamal Nath, Union Minister of Commerce & Industry and Ms. Patricia Hewitt, UK Secretary of State for Trade & Industry, launched the India-UK Joint Economic and Trade Committee (JETCO), here today.

JETCO was announced in the Joint Declaration signed on 20^th September, 2004 by the Prime Minister, Dr. Manmohan Singh and the UK Prime Minister, Mr. Tony Blair, to strengthen and deepen the bilateral relationship between the two countries.

"I am delighted that we have today signed this Agreement which gives concrete shape to the India-UK Joint Economic Trade Committee. This is, indeed, a historic occasion. India and UK, in our own ways will have a major role to play in writing the global history of this new century. Let us hope that the signing of this Agreement will go a long way towards increasing and substantiating that role", Shri Kamal Nath said.

Ms. Hewitt said: "JETCO will be a vital new link between the British and Indian economies. It will build on our substantial trade relationship and provide the framework for improving the strong business-to-business links between India and the UK. The UK attaches great importance to this new initiative".

Ms. Hewitt was accompanied by a 15-member high-level business delegation from the UK.

JETCO aims to help the UK and India identify obstacles and opportunities for increased bilateral trade and investment. The creation of JETCO symbolises the strength and depth of the UK-India relationship.

JETCO will help both India and the UK to build on existing relationship by identifying opportunities and barriers to increase bilateral trade and investment. JETCO will also provide a forum in which to proactively develop ways to address any trade and investment issues that may arise.

JETCO will be co-chaired by the Minister of Commerce & Industry, Government of India and the Secretary of State for Trade & Industry, Government of the United Kingdom.

Shri Kamal Nath, Minister of Commerce and Industry, has indicated that the Special Economic Zones (SEZ) bill, which has been referred to the Group of Ministers by the Cabinet, will come up before the budget session of Parliament next month. Speaking to a television channel on the sidelines of the first meeting of the India-UK Joint Economic and Trade Committee (JETCO) here today, he expressed the hope that the bill would be passed in the next session so as to provide a stable policy framework for SEZs, which was vital for attracting investment in the SEZs including foreign direct investment (FDI) on a scale that was required to make the scheme a success.

The government’s proposal to enact a legislation for SEZs is intended to give stability to the SEZ policy regime and covers all aspects of establishment, operation and fiscal regime.

Meanwhile, the number of SEZs approved so far for establishment come to 36 including the 3 proposals cleared recently for the establishment of SEZ by WIPRO Ltd., for software development and IT enabled services at Salt Lake Electronic City, Kolkata and two other sector-specific SEZs for Information Technology and Automobiles and Auto Parts respectively at Sedarpet – Karasur (Pondicherry) by the Government of Pondicherry. One SEZ for information technology, including bio-informatics, has also recently been approved for establishment at Mahindra City near Chennai on the basis of proposal received from M/s. Mahindra Industrial Park Limited.

The 8 SEZs at Kandla and Surat (Gujarat), Santa Cruz (Maharashtra), Cochin (Kerala), Chennai (Tamil Nadu), Vishakapatnam (Andhra Pradesh), Falta (West Bengal) and Noida (UP) converted from Export Processing Zones (EPZs) are fully operational.

The Directorate General of Foreign Trade (DGFT) has issued Public Notice No.43 dated 12/01/2005 notifying additional standard input-output norms for 12 new export items and amendments/corrections/deletions in the standard input-output norms for 16 existing export items. Out of the 12 new norms, 6 norms relate to the chemicals & allied products, 3 relate to the engineering products, 2 relate to the plastic products and 1 norm relate to the textile products. Fixation of standard input-output norms will facilitate issue of advance licences for above additional items to the exporters.

Directorate General of Foreign Trade (DGFT), Ministry of Commerce & Industry, New Delhi, January 13, 2005

Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
Secretariat for Industrial Assistance

The Government has reviewed the guidelines notified vide Press Note 18 (1998 series) which stipulated approval of the Government for new proposals for foreign investment/ technical collaboration where the foreign investor has or had any previous joint venture or technology transfer/ trademark agreement in the same or allied field in India.

2. New proposals for foreign investment/technical collaboration would henceforth be allowed under the automatic route, subject to sectoral policies, as per the following guidelines:

It says that the Government has reviewed the guidelines notified vide Press Note 18 (1998 series) which stipulated approval of the Government for new proposals for foreign investment/ technical collaboration where the foreign investor has or had any previous joint venture or technology transfer/ trademark agreement in the same or allied field in India.

Shri Kamal Nath, Union Minister for Commerce & Industry, has said that India will strongly resist any overt or clandestine attempt to differentiate between and thus, divide, developing countries. Addressing the CII Partnership Summit session on "WTO Talks: Getting Back on Course" in Kolkata today, Shri Kamal Nath said that in view of the date of the Hong Kong WTO Ministerial Conference having been fixed for December 2005, things had now begun to develop a sense of urgency and gather momentum. "The Framework Agreement adopted last July indicates the contours of the way forward. It provides the principles and criteria, and points the direction in which we should proceed in order to give concrete shape to what we envisioned as a ‘development agenda’. A multitude of issues remain to be defined and refined, and numbers and dates have to be specified. Wide-ranging consultations with all stakeholders, including producers, consumers, academics, researchers and NGOs is essential. In this context, the exchange of views on this platform provided by the CII Partnership Summit promises to be both, illuminating and useful", he said.

How to achieve balance in the negotiations on the road to Hong Kong, taking into account the concerns of all members, both developed and developing would be of prime importance, Shri Kamal Nath said, adding that one of India’s principal concerns related to Agriculture.

Referring to services, Shri Kamal Nath said given its importance to the economy, India had strong stakes in the services trade and was committed to a successful conclusion of WTO negotiations in this area. "In Mode 4, we want that the categories of personnel be delinked from the insistence on commercial presence and inter-corporate transfer conditions. In order to make Mode 4 effective, the issue of mutual recognition of qualifications is also pertinent. Bilateral arrangements in this context would have to keep pace with multilateral commitments. In the case of cross border supplies (essentially, Modes 1 & 2) we need to ‘lock in’ current regimes in order to establish a measure of predictability in commitments. We acknowledge that the EC has made some improvement in the light of the Framework Agreement", Shri Kamal Nath said.

Shri Kamal Nath, Union Minister of Commerce & Industry, has announced withdrawal of Press Note 18 on future joint ventures (JVs) as well as substantial modifications in its applicability to current joint ventures. Outlining details of the changes after the Prime Minister Dr. Manmohan Singh had gave an indication of the government’s intention to withdraw Press Note 18 on future JVs at the Partnership Summit of the Confederation of Indian Industries (CII) in Kolkata today, Shri Kamal Nath said that the Press Note 18 would not apply to any joint ventures entered into after today and future joint ventures were advised to include a conflict of interest clause in their agreements in order to protect interests of the parties concerned. Shri Kamal Nath said that the decision had been taken after wide consultations with industry associations and all sections of the domestic industry.

A perception has grown that Press Note 18 is standing in the way of foreign direct investment (FDI). I do not entirely agree with this view. However, since the government wishes to make crystal clear its intention of facilitating FDI, particularly to increase economic activities and generate more employment opportunities, we wish to remove even the perceived obstacles and therefore, it has been decided to substantially modify the applicability of Press Note 18", Shri Kamal Nath said.

Even among the old or existing joint ventures, the following three categories are excluded from the purview of Press Note 18:

Even among the existing joint ventures which do not come under these categories, and, therefore, Press Note 18 applies, it will apply in modified form. Firstly, it will apply only for the same field and not similar or allied fields. And secondly, the onus of proof to prove whether the new joint ventures would or would not adversely effect the existing joint ventures would be equally with the foreign and domestic partners. (Uptil now, it was only on the foreign partner).

According to Press Note 18 of 1998, foreign financial/technical collaborators with previous/existing joint ventures/technology transfer/trade-mark agreements in India were required to obtain prior government approval before setting up new ventures in the same or allied field, justifying that the new venture would not in any manner jeopardise the interest of the existing joint venture partner. Press Note 18, therefore, prohibited access to automatic route and such cases required prior approval of the government.

India’s exports during April-December, 2004-2005 are valued at US $ 53498.68 million which is 23.42% higher than the level of US $ 43346.72 million during April-December 2003-2004. This is substantially higher than the 12.72% export growth in April-December, 2003-04 over April-December, 2002-03. In rupee terms, the exports were Rs.242434.63 crore, during April-December, 2004-2005 which is 21.25% higher than the value of exports during April-December, 2003-2004.

Exports during December, 2004 are valued at US $ 6806.26 million which is 14.59% higher than the level of US $ 5939.79 million during December, 2003. This is over and above the 49.06% export growth in December, 2004 over December, 2003. In rupee terms, the exports were Rs.29933.64 crore, which is 10.54% higher than the value of exports during December, 2003.

India’s imports during April-December, 2004-2005 are valued at US $ 73651.66 million representing an increase of 33.64% over the level of imports valued at US $ 55111.40 million in April-December, 2003-2004.

Oil imports during April-December, 2004-05 are valued at US $ 21516.36 million which is 46.17% higher than oil imports valued at US $ 14719.67 million in the corresponding period last year. Non-oil imports during April-December, 2004-05 are estimated at US $ 52135.30 million which is 29.07% higher than the level of such imports valued at US $ 40391.73 million in April-December, 2003-04.

Imports during December, 2004 are valued at US $ 9424.59 million representing an increase of 28.74% over the level of imports valued at US $ 7320.65 million in December, 2003. In Rupee terms the imports increased by 24.20%.

The trade deficit for April-December, 2004-05 is estimated at US $ 20152.98 million which is higher than the deficit at US $ 11764.68 million during April-December, 2003-04.

Tables showing data on exports, imports and trade deficit, according to the Directorate General of Commercial Intelligence & Statistics (DGCI&S) are attached.

DEPARTMENT OF COMMERCE ECONOMIC DIVISION IMPORTS & EXPORTS : (PROVISIONAL)
(Unadjusted for late returns) (US $ Million)
	December	April-December
EXPORTS
2003-2004*	5939.79	43346.72
2004-2005	6806.26	53498.68
%Growth 2004-2005/2003-2004	14.59	23.42

IMPORTS
2003-2004*	7320.65	55111.40
2004-2005	9424.59	73651.66
%Growth 2004-2005/2003-2004	28.74	33.64

TRADE BALANCE
2003-2004*	-1380.86	-11764.68
2004-2005	-2618.33	-20152.98
*Final figures as given by DGCI&S

DEPARTMENT OF COMMERCE ECONOMIC DIVISION IMPORTS & EXPORTS : (PROVISIONAL)
(Unadjusted for late returns) (Rs Crores)
	December	April-December
EXPORTS
2003-2004*	27078.33	199940.00
2004-2005	29933.64	242434.63
%Growth 2004-2005/2003-2004	10.54	21.25

IMPORTS
2003-2004*	33373.40	254297.04
2004-2005	41448.96	333907.25
%Growth 2004-2005/2003-2004	24.20	31.31

TRADE BALANCE
2003-2004*	-6295.07	-54357.04
2004-2005	-11515.32	-91472.62
*Final figures as given by DGCI&S

The India-UK Joint Economic & Trade Committee (JETCO) will be launched here tomorrow with the signing of the Agreement on JETCO by Shri Kamal Nath, Union Minister of Commerce & Industry, on behalf of Government of India and Ms. Patricia Hewitt, UK Secretary of State for Trade & Industry.

The signing will be followed by the First Meeting of the JETCO which will be co-chaired by Shri Kamal Nath from the Indian side along with Ms. Patricia Hewitt and their respective official and business delegations.

The agenda will include an overview of recent developments in Indo-UK trade and economic relations covering significant trends and developments in bilateral trade and investments including also prospects of the Doha Development Agenda. Ms. Hewitt is also scheduled to have separate bilateral discussions with Shri Kamal Nath on 13^th January.

JETCO was announced in the Joint Declaration signed on 20^th September, 2004 by the Prime Minister Dr. Manmohan Singh and the UK Prime Minister Mr. Tony Blair to strengthen and deepen bilateral relationship between the two countries.

Mr. Peter Mandelson, Commissioner for Trade, European Commission, who is on an official visit to India this week, will have an interactive meeting with Shri Kamal Nath, Union Minister of Commerce & Industry, organised jointly by Federation of Indian Chambers of Commerce & Industry (FICCI), Ministry of Commerce & Industry and the European Commission, here on 14^th January, 2005.

There will be special addresses by Shri Kamal Nath and Mr. Mandelson on "Indo-EU Strategic Partnership: Steps Ahead". With the new European Commission in place, it is expected that there will be further deepening of commercial and business relations between India and the EU.

Mr. Mandelson is also scheduled to have a separate bilateral with Shri Kamal Nath on 14^th January to discuss issues of interest and concern to India and the EU, including the issues relating to the World Trade Organisation (WTO), and the current state of play in the post-July Framework phase.

India’s exports are estimated to have crossed US $ 53 billion during nine months of current financial year 2004-05 and the export growth rate in April-December is estimated to be over 23%. Thus, the surge in India’s exports is continuing despite appreciation of the rupee and the double-digit growth of over 20% is being sustained. Detailed trade data based on Directorate General of Commercial Intelligence & Statistics (DGCI&S) provisional figures would be available tomorrow.

Meanwhile, Shri Kamal Nath has announced an export target of US $ 88 billion for the next financial year 2005-06. In pursuance of this, the Ministry of Commerce & Industry is interacting with the concerned Export Promotion Councils and Commodity Boards to finalise the targets sector-wise and commodity-wise for each of the next four years to enhance India’s exports to the level of US $ 88 billion in 2005-06, $ 104 billion in 2006-07, $ 125 billion in 2007-08 and $ 150 billion in 2008-09. Strategies to unlock the potential of agricultural exports from India would also be worked out.

According to disaggregated data for April-August 2004-05, the sectors showing high growth in exports are gems & jewellery, engineering goods, ores & minerals excluding coal and mica, petroleum products, chemicals & related products, project goods, cereals except rice, plantations including tea, textiles excluding jute manufactures, cashew including cashew nut shell, oil meals, leather & manufactures, meat and preparations.

Shri Kamal Nath, Minister of Commerce and Industry, will participate in the 11^th Partnership Summit of the Confederation of Indian Industries (CII) in Kolkata on Wednesday 12 January, 2005, which is scheduled to be attended by trade ministers from several countries, including Mr. Peter Mandelson, Trade Commissioner of the European Union (EU) and Ms. Patricia Hewitt, Secretary of State of the United Kingdom (UK).

While in Kolkata, Shri Kamal Nath will inaugurate the new office of the Engineering Export Promotion Council (EEPC) there and give away the annual EEPC export awards to exporters of engineering goods for the years 2001-2002 and 2002-2003.

Shri Kamal Nath, who is leaving for Kolkata this evening, is also scheduled to have a meeting with the Chief Minister of West Bengal Shri Buddhadeb Bhattacharjee tonight.

Addressing a joint trade delegation from Pakistan comprising Lahore, Karachi and Rawalpindi Chambers of Commerce and Industry along with the PHD Chamber of Commerce & Industry (PHDCCI), who called on him here, Shri Kamal Nath, Minister of Commerce & Industry, said that the key to solving Indo-Pak issues lay in increasing trade between the two countries. The biggest challenge for both countries was to generate employment opportunities for which economic activity needed to be given a boost, he said. Shri Kamal Nath indicated that the meeting of the Indo-Pak Joint Study Group was slated for January 25, 2005 and urged members of trade and industry from both sides to come forward to put forth their views during the deliberations.

Responding to the request by PHDCCI for opening land route for trade between the two countries, the Minister said that whereas India was committed to improving trade relations with its neighbours, the Pakistan business community should also force its government to open land route. "We are willing to do so but Pakistan should also equally respond", Shri Kamal Nath said, adding that there was a lot of potential for increasing trade between India and Pakistan and the business community had to push for greater cooperation. Stressing the importance of regional cooperation, he said that both India and Pakistan would lose tremendously if they did not participate in such blocs and even in the WTO, the two countries should join hands in the context of their concerns.

Presenting a copy of the Joint Declaration signed between PHDCCI and the three Pakistan Chambers for identifying factors impeding growth of trade and economic cooperation, Mr. Sohail Lashari, Senior Vice President, Lahore Chamber of Commerce and Industry, said that business had decided to form pressure groups to force governments on both sides to give clear cut policy decisions for increasing trade. Mr. Ravi Wig, Immediate Past President, PHDCCI, said that there was huge market that remained unexplored due to the border tensions. With borders thrown open and SAFTA in place, India and Pakistan would benefit the most. There was also a need to invest in people by improving education and health services in the region, he said.

Shri Kamal Nath, Union Minister of Commerce & Industry, presented a cheque for Rs.1.05 crore to the Prime Minister Dr. Manmohan Singh, towards the Prime Minister’s National Relief Fund for the relief and rehabilitation of Tsunami victims on behalf of the Public Sector Undertakings (PSUs) under the Ministry of Commerce & industry, here today.

The PSUs under the Department of Commerce viz., the State Trading Corporation of India (STC) Ltd., MMTC Ltd., and Project & Equipment Corporation (PEC) Limited have contributed Rs.25 lakh each and the Exports Credit Guarantee Corporation (ECGC) Ltd. Rs.30 lakh towards the Prime Minister’s National Relief Fund for the relief of the victims of the Tsunami tidal wave.

The Gem & Jewellery Export Promotion Council (GJEPC) has also contributed Rs.51 lakh to the Prime Minister’s National Relief Fund for this purpose, the cheque for which was also presented by Shri Kamal Nath to the Prime Minister today.

India and Italy have agreed to improve bilateral trade flows as a common goal for mutual benefit and mutual reinforcement of political links. This is indicated in the agreed minutes of the 16^th Session of the India-Italy Joint Commission for Economic Cooperation which was signed here by Shri Kamal Nath, Minister of Commerce & Industry, on behalf of Government of India and Mr. Antonio Marzano, Minister for Production Activities, on behalf of the Government of Italy. Although the two-way trade between India and Italy increased to US $ 2.77 billion during 2003-04, both sides have noted that the level of trade is far below its true potential. Indo-Italian trade could be doubled to US $ 5 billion within the next 2 to 3 years, Shri Kamal Nath had said at the inaugural meeting of the Joint Commission and the interactive business session held on 7^th January.

In another significant move in the context of the phase-out of the multi-fibre arrangement (MFA), India and Italy have agreed to explore enhanced cooperation in textile clusters and in the field of textile design through the National institute of Fashion Technology (NIFT). Both sides expressed the hope that the transition from quota to the non-quota regime in textiles "will be smooth and would not cause disruptions so as to affect current flows, without any negative repercussions especially on developing and the least developed countries". Both sides will also explore possibilities for cooperation in leather, gems & jewellery, food processing industry, tourism, energy, financial services and information technology and scientific research.

In response to Shri Kamal Nath’s raising the issue of problems faced by Indian marine products exporters in Italy in the recent past, both sides have agreed to expedite signing of the Memorandum of Understanding in the sector of aquaculture and fishing products during the state visit to India of the President of Italy, Mr. Carlo Azeglio Ciampi so as to facilitate cooperation in the marine sector. Further, a bilateral Task Force will be set up for the development of industrial clusters and to foster cooperation between the small & medium enterprises (SMEs) of both the countries.

India has invited Italy to participate in infrastructure projects in roads, ports and Special Economic Zones (SEZs). Both sides have also agreed to continue consultations to improve facilities for business entry visas to Italy.

The two sides expressed the hope that the visit of the Italian President to India in February 2005 would represent a milestone in bilateral relations.

The next meeting of the India-Italy Joint Commission would be held in Italy sometime next year.

The 5^th Joint Commission Meeting (JCM) between India and Uzbekistan will be inaugurated by the Minister of State for Commerce and Industry, Shri EVKS Elangovan in Tashkent on Monday. The JCM is expected to give a boost to the trade and economic cooperation in the areas of apparels, engineering goods, basic chemicals and pharmaceuticals.

The Minister is leading a 73 member trade delegation to Uzbekistan and Kazakhstan as part of the Focus: CIS (Commonwealth of Independent States) programme of the Ministry of Commerce and Industry to enhance the areas of economic cooperation between India and the CIS countries.12 countries like Armenia, Azerbaijan, Russia,Tajikistan,Kazakhstan Uzbekistan etc. are members of the CIS group. Under the Focus:CIS programme, the government gives assistance to exporter, Export Promotion Councils(EPCs), Business Chambers etc. to visit these countries, organize trade fairs and to undertake various market promotional activities. Members from various Export Promotion Councils like Basic Chemicals and Pharmaceuticals EPC, Engineering EPC, Chemicals and allied products EPC are part of the delegation. The thrust areas for cooperation are textiles, engineering goods, chemicals and pharmaceuticals.

Among other things, the delegation will also deliberate on the possibility of building an International Transport Corridor between India and CIS countries to facilitate movement of goods and services. It is expected to sign joint ventures in the fields of tourism, higher education and apparels. India is at present importing cotton and silk from Uzbekistan and it is felt that they can reap greater benefits in the post MFA regime in textiles through greater cooperation.

The Union Minister of Commerce and Industry Shri Kamal Nath said that both the countries should aim at a bilateral trade of 5 billion dollars per annum in 2 years. Italy is the largest trading partner of India in the European Union and is the gateway for Indian goods to reach European Union. Mr. Kamal Nath expressed concern at the developed countries imposing non tariff barriers in the name of health and consumer preferences. The barriers include enforcing whether a fabric imported from India is having a particular chemical or pesticides or not; the buyer industry wanting to examine the pension laws of the supplying company etc. Such barriers negate the very spirit of WTO. He sought the support of Italy in fighting this. Mr. Kamal Nath said this while addressing the Indo-Italian Joint Commission for Economic Co-operation here today.

A full fledged Italian Business Delegation from Italy will be soon visiting India to strengthen the bilateral trade between the two countries and to diversify the areas of economic cooperation. This was announced by the Italian Minister for Production Activities Mr. Antonio Marzano while addressing the Joint Commission.

The Italian Minister said that about 95 Percent of Italian companies are in the small and medium sectors and they face market access problems in India due to lack of resources. The business delegation from Italy will organize meetings on sector specific issues to identify the problems. An Italian trade fair will soon be opened in Pragati Maidan in New Delhi and the delegation will help India to establish trade fairs in Italy. Italy evinced keen interest in the development of port facilities sea-port management and for greater cooperation in the field of scientific research like biotechnology, nuclear technology etc.

India may sign a Comprehensive Economic Partnership Agreement (CEPA) with Korea to boost bilateral trade. A Joint Study Group has been constituted for this purpose. This was informed by Shri Kamal nath, Union Minister of Commerce and Industry when the Korean Vice Minister for Commerce and Industry Mr. Hwuan–Eik–Cho called on him recently. Mr. Hwuan–Cho expressed the intention of his country to participate in the infrastructure development in India especially in the urban transport and construction sectors.

Shri Kamal Nath said that all the economic indicators of India were good. Exports had registered a growth rate of 24 per cent despite higher oil prices and strengthening of the rupee. He added that Korean companies like LG, Samsung etc had become a house hold name in India.

India’s trade with Italy has registered a significant and balanced growth. The volume of bilateral trade during the year 2003-04 hit a new high of US $ 2.77 billion registering a growth of 28% over the previous year. During the first six months of 2004-05 (April-September), bilateral trade has registered a growth of 21%. While noting this during an interactive business meeting with Mr. Antonio Marzano, Italian Minister for Production Activities, organised by Federation of Indian Chambers of Commerce & Industry (FICCI) here today, Shri Kamal Nath, Union Minister of Commerce & Industry, also raised the issues of market access arising out of various health/SPS (sanitary & phyto-sanitary) standards that Indian exporters are facing in Europe in general and in particular, the market access problems that Indian exporters of marine products were facing in the Italian market. Given Italy’s role as a major player in Europe and also one of India’s largest trading partners in the European Union (EU), Shri Kamal Nath sought their cooperation in overcoming such barriers. The Export Inspection Council of India has disputed many of the rejections of consignments on grounds of the absence of clear-cut norms from the European Commission. Shri Kamal Nath suggested that an agreement between the Export Inspection Council of India and its counterpart agency of the Italian government, which had been under consideration since 2002, be expedited so as to address this issue.

Earlier, at the inaugural session of the 16^th Indo-Italian Joint Commission for Economic Cooperation, the two ministers underlined the importance of the Joint Commission as providing another opportunity to find ways and means of further expanding and diversifying bilateral economic cooperation. Shri S.N. Menon, Commerce Secretary, attended the inaugural session, which was followed by official level discussions in the Joint Commission, co-chaired by Shri Abhijit Sengupta, Additional Secretary, Department of Commerce, Ministry of Commerce & Industry and Mr. Amedeo Teti, Director General, Italian Ministry of Production Activities.

The thrust areas of India’s exports to Italy are textiles, including cotton and synthetic yarns and fabrics, knitwear items, readymade garments, leather & leather goods, granite & similar stones, organic & inorganic chemicals, bulk drugs, gems & jewellery, marine products, agricultural and related products, auto-components etc. There is tremendous unexploited potential in these areas. For example, in the field of textiles, there is an inherent ability to collaborate in area of lifestyle, fashion and apparel, both sides noted, as also the scope for Italian investment especially in the field of infrastructure.

FICCI representatives mentioned that the Italian model of cluster development was being replicated in India in the food processing sector by multilateral agencies and that FICCI was taking active part in promoting greater interaction with Italian counterparts.

Presently, Italy is 4^th in the list of India’s trading partners among the EU countries and 12^th in the list of countries from which foreign direct investment (FDI) has been approved in India since 1991. Total FDI approved from Italy during the period 1991-2004 (September) is of the order of US $ 1.31 billion, that is about 1.95% of the total FDI approved from all countries. The actual inflow of FDI from Italy is of the order of US $ 448 million, that is about 1.83% of the total FDI inflow from all countries. About 1011 foreign collaboration cases have been approved with Italian companies. The top sectors attracting FDI and technology transfer from Italy have been transportation, food processing, metallurgy, textiles, electrical equipments, chemicals, drugs & pharmaceuticals and industrial machinery.

Shri Kamal Nath, Union Minister of Commerce & Industry, has constituted a Free Trade Area (FTA) Cell in the Ministry of Commerce & Industry (Department of Commerce) to deal with representations of domestic industry regarding adverse impact, if any, of FTAs on specific sectors and also, suggestions for amendments to agreements on Free Trade Areas in terms of either inclusion or exclusion of items of concern to domestic industry. Representations are generally received from industry in the event of a surge in imports which may impact on segments of domestic industry. The Cell is headed by Shri G.K. Pillai, Additional Secretary, Department of Commerce.

At present, India has a full-fledged FTA with Sri Lanka. There is a Preferential Trade Agreement (PTA) amongst the 7 SAARC countries which is in the process of being transformed into an FTA called SAFTA to be fully effective from 1^st January, 2006. 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 comprehensive economic cooperation agreements with Singapore and the ASEAN as well as with the MERCOSUR countries (Brazil, Argentina, Uruguay and Paraguay) and SACU – a grouping of 5 South African countries lead by South Africa known as the South Africa Customs Union.

The National Manufacturing Competitiveness Council (NMCC) will prepare a long-term strategy to promote rapid growth of the manufacturing sector in India, which has been stagnant for the past decade or so. This is among the major decisions taken by the NMCC at its first meeting which was inaugurated here yesterday by Shri Kamal Nath, Union Minister of Commerce & Industry and chaired by Dr. V. Krishnamurthy. Besides the long-term strategy, the Council also decided to take up issues that required to be addressed immediately relating to sectors like textiles in the wake of the phase-out of the textile quotas under the multi-fibre arrangement (MFA) as well leather and other sectors which have tremendous potential. The Council’s message for the forthcoming Budget was: "Reward innovation and R&D" as a spur to manufacturing sector growth.

The share of manufacturing sector accounts for only 17% in our GDP which is very low compared to China, Malaysia and Thailand where manufacturing contributes to 1/3^rd or more in their GDP. The growth of manufacturing sector at an average of 6.3% during 1991 to 2003 is much below India’s potential. Manufacturing needs to grow at 12% annually or more for GDP to grow at 8% and provide jobs to the masses. Though the National Common Minimum Programme targets 8% plus GDP growth over a decade, the Indian manufacturing industry is capable of taking Indian GDP growth to double digits, as was pointed out by Shri Kamal Nath.

Among the members who attended the first meeting of NMCC were S/Shri Ratan Tata, Y.C. Deveshwar, Jamshed Godrej, Venu Srinivasan, Habil Khorakiwala of Wokhardt Limited, Dr. Surinder Kapur of Sona Steerings, Mukul Kasliwal of S Kumars, Ms. Uma Reddy, woman entrepreneur; economists Dr. Bibek Debroy and Dr. Isher Judge Ahluwalia, eminent educationists Dr. M. S. Anant of IIT Chennai and Prof. Sekhar Choudhry of IIM Kolkata, besides representatives of industry associations, FICCI, CII and ASSOCHAM along with Shri Govindarajan, Member Secretary of the Council.

Economic liberalisation has provided tremendous opportunities for Indian manufacturers to make products for domestic and global markets, cost advantages of manufacturing in India is evident to the global community, who have started using the Indian manufacturing base in sectors like auto-components, R&D, drugs & pharmaceuticals etc. Shri Kamal Nath said that NMCC would be an hands-on Council which would provide continuous policy inputs to help the Indian manufacturing sector to reach its potential.

Shri Kamal Nath, Union Minister of Commerce & Industry and Japanese Minister for Economy, Trade and Industry, Mr. Shoichi Nakagawa announced the formal establishment of the Policy Dialogue between India and Japan here today. It was also announced that the Minister level talks between Commerce and Industry Minister and Japan’s Minister for Economy, Trade and Industry would be held regularly on an annual basis.

The issue relating to establishing the Policy Dialogue emanated during the visit of Mr. Shoichi Nakagawa in August last year. The Policy Dialogue would be at the official level and would be co-chaired by Shri S.N. Menon, Commerce Secretary on the Indian side and Mr. Kazumasa Kusaka, Vice Minister, Minister of Economy, Trade and Industry, Japan on the Japanese side. The terms of reference for the Policy Dialogue would soon be finalized very shortly after which, the first meeting of the two sides would be held.

The government has notified various export items eligible for duty credit scrip equivalent to 5% of fob value of exports under Vishesh Krishi Upaj Yojana, a new scheme which was announced by Shri Kamal Nath, Union Minister of Commerce & Industry, to be effective from 1^st April, 2005, as part of the Special focus Initiative for agriculture in the Foreign Trade Policy announced by him in August, 2004. The export items eligible for these benefits include Plants, Bulbs, Roots, Cut Flowers, Edible Vegetables, Edible Fruits & Nuts, Spices and Minor Forest Product. The export of Tea & Coffee has however excluded for the purposes of these benefits.

The items under the scheme have been notified by the Directorate General of Foreign Trade (DGFT) vide notification Nos. 15 & 16/2004-09 and Public Notice No.41/2004-09 dated 4/1/05.

The duty credit can be used for import of inputs or goods including Capital Goods provided the same are freely importable under ITC (HS) Classifications of Export and Import items. However, Vegetables with duty of more than 30%, Coconut, Areca Nut, Oranges, Lemon, Fresh Grapes, Apple, Pears, Spices, Pepper, Tea, Coffee, Oil Seeds cannot be imported against these Scrips. Natural Rubber has also been excluded from the import list against these Scrips.

Shri Kamal Nath, Union Minister of Commerce & Industry, has called for a major boost to improving the competitiveness of India’s manufacturing sector in order to generate demand, investment and employment in the country. Inaugurating the first meeting of the National Manufacturing Competitiveness Council (NMCC), which is headed by Dr. V. Krishnamurthy, Shri Kamal Nath said that the common minimum programme recognized this and the government had accordingly created a forum of all stakeholders in the form of the NMCC to give the much required fillip to India’s manufacturing sector.

"The share of manufacturing sector accounts for only 17% in our GDP which is very low compared to China, Malaysia and Thailand where manufacturing contributes to 1/3^rd or more in their GDP. The growth of manufacturing sector at an average of 6.3% during 1991 to 2003 is much below our potential. Manufacturing needs to grow at 12% annually or more for GDP to grow at 8% and provide jobs to the masses. Though the National Common Minimum Programme targets 8% plus GDP growth over a decade, the Indian manufacturing industry is capable of taking Indian GDP growth to double digits", he said. Dr. Krishnamurthy delivered the welcome address.

Shri Kamal Nath emphasized that the compositionof the Council had been carefully chosen to represent not only the best industrialiasts in the country but also the key sectors in manufacturing. The Council includes S/Shri Ratan Tata, Y.C. Deveshwar, Jamshed Godrej, Venu Srinivasan, Habil Khorakiwala of Wokhardt Limited, Dr. Surinder Kapur of Sona Steerings, Mukul Kasliwal of S Kumars, Ms. Uma Reddy, woman entrepreneur; economists Dr. Bibek Debroy and Dr. Isher Judge Ahluwalia, eminent educationists Dr. M. S. Anant of IIT Chennai and Prof. Sekhar Choudhry of IIM Kolkata, besides representatives of industry associations, FICCI, CII and ASSOCHAM. Shri Govindarajan, Member Secretary of the Council, also addressed the meeting.

Underlining that economic liberalisation had provided tremendous opportunities for Indian manufacturers to make products for domestic and global markets, Shri Kamal Nath said that cost advantages of manufacturing in India was evident to the global community, who had started using the Indian manufacturing base in sectors like auto-components, R&D, drugs & pharmaceuticals etc. "However, investment climate in India and our manufacturing competitiveness is yet to reach its potential and this must be addressed on priority", he added.

Shri Kamal Nath, Union Minister of Commerce & Industry, will address the inaugural meeting of the National Manufacturing Competitiveness Council (NMCC) being held here tomorrow, 6/1/2005. Dr. Krishnamurthy, Chairman, NMCC, will deliver the welcome address. The agenda would include the role, functions and structure of NMCC, and analysis of some of the important sectors like textiles, leather & leather goods, food processing, gems & jewellery, handicraft, chemicals & pharmaceuticals and IT hardware sectors with a view to suggesting future plan of action.

The NMCC was constituted for the purposes of implementation of the National Common Minimum Programme which lays emphasis on providing a continuing forum for policy dialogue to energise and sustain the growth of the manufacturing industry as also increase its share of contribution to the GDP. The National Common Minimum Programme had identified among others food processing, pharmaceuticals, capital goods, leather and IT hardware as priority sectors.

The Chairman of the Council is Dr. V Krishnamurthy who has a distinguished record of management and was instrumental in the turnaround of several major industries such as the Maruti Udyog Ltd., BHEL, SAIL respectively besides his tenure as Secretary (Heavy Industries) and Member, Planning Commission. The other members of the Council include the captains of the industry, Mr. Ratan Tata, Mr. Y.C. Deveshwar, Mr. Jamshed Godrej, Mr. Venu Srinivasan etc. Representatives of sunrise industries like Mr. Habil Khorakiwala of Wokhardt Limited, Dr. Surinder Kapur of Sona Steerings, Mr. Mukul Kasliwal of S Kumars and Ms. Uma Reddy, woman entrepreneur. The Council also is represented by the three industry associations, FICCI, CII and ASSOCHAM, economists Dr. Bibek Debroy and Dr. Isher Judge Ahluwalia and eminent educationists Dr. M. S. Anant of IIT Chennai and Prof. Sekhar Choudhry of IIM Kolkata. Secretaries of Department of Industrial Policy and Promotion (DIPP), Heavy Industry and Public Enterprises, Small Scale Industries, Member (Industry), Planning Commission and DG, CSIR are also members of the Council.

The government has notified various export items eligible for duty credit scrip equivalent to 5% of fob value of exports under Vishesh Krishi Upaj Yojana, a new scheme which was announced by Shri Kamal Nath, Union Minister of Commerce & Industry, as part of the Special focus Initiative for agriculture in the Foreign Trade Policy announced by him on 31^st August, 2004. The export items eligible for these benefits include Plants, Bulbs, Roots, Cut Flowers, Edible Vegetables, Edible Fruits & Nuts, Spices and Minor Forest Product. The export of Tea & Coffee has however excluded for the purposes of these benefits.

The items under the scheme have been notified by the Directorate General of Foreign Trade (DGFT) vide notification Nos. 15 & 16/2004-09 and Public Notice No.41/2004-09 dated 4/1/05.