Sep 2004 Press Release

Approval has been given to Cochin Port Trust for setting up a port-based Special Economic Zone at Vallarpadam/ Puthuvypeen near Cochin over an area of about 448 hectares on the basis of proposal received from the Port Trust. The estimated cost of the project is about Rs. 800 crore. The project is expected to be developed by Cochin Port Trust in association with the private sector. This was indicated by Shri Kamal Nath, Union Minister of Commerce & Industry, on the sidelines of the Stakeholders Conference on Tea here today.

Shri Kamal Nath, Union Minister of Commerce & Industry, today called for a comprehensive package for the revival of the tea industry. "The tea industry is too important and too complex to be dealt with piece-meal. In order to be truly effective, the revival package has to be a comprehensive one. It is for this reason, we have decided that everybody who has a stake in the industry… should be represented at this Conference", Shri Kamal Nath said while inaugurating the two-day Stakeholders Conference on Challenges before the Tea Industry, organised here jointly by the Tea Board of India and the Ministry of Commerce & Industry (Department of Commerce). He said that the objective of the Conference was to take stock of the current situation and to evolve a long-term policy as well as a suitable package to enable the tea industry to overcome the current crisis and meet the challenges of the future. Shri Kamal Nath indicated that he would also soon be meeting Members of Parliament of tea growing areas, besides participating in the wrap-up session tomorrow, so as to evolve a useful and effective package for the industry. Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry; Shri Dipak Chatterjee, Commerce Secretary; Shri Abhijit Sengupta, Additional Secretary; Shri N.K. Das, Chairman, Tea Board were present at the inaugural ceremony along with state government officials, representatives of Tea Associations and planters community.

Stating that he was fully aware that the tea industry was beset with a number of problems, the Minister said: "Due to a steep fall in prices over the past few years, the level of returns is rather low. The decline in profitability has given rise to a vicious circle, in which adequate investment in tea gardens is not taking place. This has resulted in lower productivity, which in turn further worsens the profitability. A number of plantations have been closing down and thousands of workers have been rendered jobless. Our government is deeply concerned with this grave situation, and we are determined to rectify it".

The package should be designed to raise productivity levels and increasing the cost-effectiveness of production processes in India, as the root cause for the closure of tea gardens in several parts of the country is low productivity and lack of investment in the plantations, the Minister said. Quality aspects must receive due attention and the key strategy should be to augment India’s competitive strength. Meeting future challenges would depend also on putting R & D on a sound footing, Shri Kamal Nath said. Livelihood of the plantation workers is directly linked to the prosperity of the tea industry which provides direct employment to more than a million people and indirectly to twice that number, with most of them coming from the weaker sections and the majority being women, he added.

In his address, Shri Elangovan stated that the tea industry occupies major importance in the country’s economy and provides largest employment. Referring to the problems being faced by the tea industry, the Minister said that the government is seized of the matter and has taken a number of policy measures recently to tackle these problems. Shri Elangovan hoped that the deliberations during this 2-day Conference would throw up a number of solutions which could be considered in the formulation of package for the tea industry.

Shri Chatterjee emphasised the need to promote the Indian tea in overseas markets to change the perception about Indian tea which has taken a beating in recent times. He urged the representatives of the tea industry as well as the stakeholders to provide inputs so as to find construction solution to the problems being faced by the tea industry.

The total import of 300 sensitive tariff lines for the period April-July 2004 has been Rs 4,606 crore as compared to Rs 5,913 crore during the corresponding period of last year thereby showing a negative growth of 22%. The gross import of all commodities during same period of the current year was Rs 1,37,720 crore as compared to Rs 1,06,907 crore during the same period of last year. Thus import of 300 sensitive items constitute only 3.3% and 5.5% of the gross imports during current year and last year respectively. The major item that has contributed significantly to the decline in imports is crude palm oil and its fractions.

Imports of edible oil and cotton & silk have shown a decline at broad group level during the period. Imports of fruits & vegetables, tea & coffee, spices, rubber, marble & granite, automobiles, and products of SSI have shown an increase during the period under reference.

In the edible oil section, the imports has gone down from Rs 4,143 crore last year to Rs 2,857 crore this year. A significant feature of edible oil import is that import of crude oil has gone down by 47%, and that of refined palm oil & palmolein gone up by 87%. The drastic reduction in edible oil import is mainly due to a huge reduction in import of crude palm oil, which has gone down by 58%. Import of Soya bean crude oil has also gone down significantly.

Imports of sensitive items from Benin, China P RP, Cote D’ Ivoire, Egypt A RP, Guinea Bissau, Germany, Ghana, Japan, Korea RP, Romania, Russia, Sri Lanka, United Kingdom, Ukraine etc. have gone up while those from Argentina, Brazil, Indonesia, Malaysia, Thailand and United States of America etc. have shown a decrease.

IMPORT OF SENSITIVE ITEMS-PROVISIONAL ESTIMATES
(Value in Rs Crore)
Sr. No.	Commodity Group	No. of Tariff Lines	Weights w.r.t. total sensitive items		Value of Import (Rs Crore)		Difference (Rs Crore) (Col. 7 -Col. 6)	Growth
			Upto July 2003	Upto July 2004	Upto July 2003	Upto July 2004
1	2	3	4	5	6	7	8	9
1	Milk & Milk Products	16	0.25%	0.56%	15.04	25.59	10.55	70.2%
	Significant growth is observed in Butter Oil and its Contribution is				13.31	23.38	10.07	75.6%
	( and its %age share to this group)				88.5%	91.4%
2	Fruits & Vegetables	43	9.18%	15.58%	542.59	717.57	174.98	32.2%
	Significant growth in Cashew nuts in shell IS				363.23	565.28	202.05	55.6%
	( and its %age share to this group)				66.9%	78.8%
3	Poultry	10	0.00%	0.00%	0.00	0.00	0.00
4	Tea & Coffee	31	0.28%	1.01%	16.81	46.51	29.71	176.8%
	Significant growth in black tea (in packet, leaf and dust in bulk)				10.59	22.57	11.98	113.1%
	( and their %age share to this group)				63.0%	48.5%
5	Spices	34	1.45%	2.11%	85.71	97.19	11.48	13.4%
	(Significant shortfall in Black pepper ungarbled and its contribution is)				9.17	5.95	-3.23	-35.2%
	( and their %age share to this group)				10.7%	6.1%
	(Significant growth in Pepper long, Cassia, Cloves not extracted and their contribution is)				31.57	47.89	16.32	51.7%
	( and their %age share to this group)				36.8%	49.3%
6	Food Grains	11	0.00%	0.00%	0.22	0.19	-0.03	Less weigtage
7	Edible Oils	22	70.07%	62.02%	4143.21	2856.66	-1286.55	-31.1%
	(a) Crude				3645.69	1926.23	-1719.46	-47.2%
	( Ratio of crude to total Edible )				88.0%	67.4%
	(b) Refined				497.52	930.43	432.91	87.0%
	( Ratio of Refined to total edible import)				12.0%	32.6%
8	Alcoholic Beverages	11	0.20%	0.52%	11.90	24.12	12.22	102.7%
9	Rubber	11	1.37%	3.45%	81.30	159.01	77.71	95.6%
	Significant growth in natural rubber in smoked sheet & non-latex				63.25	141.34	78.09	123.5%
	( and their %age share to this group)				77.8%	88.9%
10	Cotton & Silk	20	14.88%	8.38%	879.68	386.01	-493.67	-56.1%
	Significant Shortfall in :cotton(other than Indian of all staple length)				657.86	135.22	-522.64	-79.4%
	( and their %age share to this group)				74.8%	35.0%
11	Marble & Granite	9	0.30%	1.02%	17.47	46.89	29.42	168.4%
	Marble blocks/tiles, polished and others (Simply cut/Sawnmarble trauertine & alabaster with a flat or even surface				15.75	46.08	30.33	192.6%
	( and their %age share to this group)				90.1%	98.3%
12	Automobiles	33	0.72%	2.39%	42.42	110.12	67.69	159.6%
13	Product of SSI	37	1.20%	2.22%	70.85	102.42	31.57	44.6%
	(Umbrella, locks, toys, writing instruments, tiles, glassware, etc.)
	Significant growth in drinking glasses other than lead crystal and other glassware used for table excluding glasses				12.49	21.69	9.19	73.6%
	( and their %age share to this group)				17.6%	21.2%
14	Others (Wheat floor, sugar, cigarette & salt)	12	0.09%	0.73%	5.42	33.80	28.39	524.0%
	Total of Sensitive items		100.0%	100.0%	5912.61	4606.08	-1306.54	-22.1%
	%age share of Import of sensitive items to Total Import (All Commodities)				5.5%	3.3%
	Total of All commodities ( including sensitive items) as per quick estimate				106907.5	137720.1	30812.6	28.8%

The Language Related Market Access Facilitation Initiative in the German IT Market (LRMAFI-G) was officially launched by Shri S. N. Menon, Special Secretary, Department of Commerce, Ministry of Commerce & Industry here today. The broad objective of the scheme, approved by the Department of Commerce, is to enable Indian IT software and services including IT enabled services firms to overcome the language related market barrier which they face in development of mutually beneficial Indo-German IT business cooperation and business alliances. Mr. Julius Georg Luv, Minister, Embassy of the Federal Republic of Germany, Shri M. V. P. C. Shastry, Joint Secretary, Department of Commerce, Shri P. K. Sandell, Chairman, Electronic & Computer Software Export Promotion Council (ESC) and Shri D. K. Sareen, Executive Director, ESC were present at the occasion along with several software exporters and students.

In his speech, Shri Menon said that IT exports from India have shown a momentum and this scheme would help in removing some of the existing barriers to enhance IT trade between the two countries. Presently India’s IT exports are about US $ 12.5 billion and are expected to reach US $ 50 billion by 2010. Shri Menon said that the language as an instrument of trade promotion has assumed a great significance, particularly in the IT knowledge society space. Germany for India is the second largest IT destination after the UK, in Europe. He informed that the Ministry had launched this scheme in the Japanese IT market two years ago and said that the next initiative would be to start the similar programme for the Spanish language. Mr. Luv said that this programme was an important step in Indo-German relations and hoped that it would give a new impetus to prospective Indian IT experts in German language.

Under this scheme, financial support will be available to Indian IT students who have learnt the German language and obtained the certificate of German from Goethe Institut Inter Nationes/Max Mueller Bhavans in India; and Indian IT software member exporters of the ESC who have incurred an expenditure on training their IT professionals/personnel in the German language and enabled them to obtain the Certificate of German from Goethe Institut Inter Nationes/Max Mueller Bhavans in India.

In order to enhance trade with CIS (Commonwealth of Independent States) region, the government has undertaken many trade facilitation steps and trade promotion measures. These include government Lines of Credit (LOC), Inter-Banking relations, Double Taxation Avoidance Agreement (DTAA), Bilateral Investment Protection Agreement (BIPA) and strengthening of institutional mechanisms like Joint Commission Meetings, Joint Business Councils and Trade Missions/Delegations. Considering the potential that this region offers, the government had launched Focus: CIS Programme in 2003 to enhance India’s trade with this region. The Programme covers all the 12 CIS countries w.e.f. April 2004. India’s exports to the CIS region, including Russia, have grown from US $ 919 million in the year 2002-03 to US $ 1.020 billion in the year 2003-04, registering a growth of 11%.

International North South Transport Corridor Agreement was signed between India, Iran and Russian Federation to facilitate movement of goods via Caspian Sea and Astrakhab to Russia and adjoining countries of the CIS region. The Agreement provides a faster and cheaper transit route for trade to Iran, Russian Federation and beyond, which will make country’s exports competitive.

Under the India Development Initiative, the Ministry of Finance, Department of Economic Affairs has issued new guidelines for Government Lines of Credit (LOC). Recipient countries have been put under four different classifications. In the revised policy guidelines the State Bank of India, Bank of Baroda and Indian Overseas Bank are also being used in addition to EXIM Bank for channelling the LOCs to other governments.

To promote and facilitate trade, DTAA has already been signed with Russian Federation, Ukraine, Kyrgyzstan, Turkmenistan, Kazakhstan, Uzbekistan, Armenia and Belarus. Negotiations are on for signing the same with Azerbaijan. Steps will be taken for initiating negotiations with rest of the CIS countries i.e. Moldova, Georgia and Tajikistan.

The government has signed BIPA with Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan, Tajikistan, Russian Federation, Ukraine, Armenia and Belarus. Steps will be taken for signing BIPA with rest of the CIS countries i.e. Azerbaijan, Moldova and Georgia.

The government has allowed exports of Indian goods on consignment basis under the debt repayment route to the Russian Federation. ECGC has upgraded credit ratings of a number of countries in the CIS region as well as liberalised its under writing policy to these countries which will help in promoting exports to this region.

Shri Kamal Nath, Union Minister of Commerce & Industry, will inaugurate the Stakeholders Conference on Challenges before the Tea Industry here on Thursday, 16^th September, 2004.

The two-day Conference (16-17 September) is being jointly organised by the Tea Board of India and the Ministry of Commerce & Industry (Department of Commerce).

The Conference will deliberate on important issues of current relevance to the Indian tea industry. These would include: Existing policy & legislation/ regulations pertaining to tea industry and the changes required for facilitating sustainable growth of the tea industry; Re-engineering of the tea industry for achieving sustainable global competitiveness; Long-term steps required for achieving increased productivity and reducing cost of production through (a) replanting and rejuvenation (b) product mix optimisation (orthodox, green tea etc.); Steps required for enhancing productivity and quality in small holdings and improving manufacturing of tea in bought leaf factories with focus on export; improving the Working Condition and Capacity Building of the tea garden workers; WTO/IPR issues and their impact on plantation sector; Future directions of research for sustainable growth of tea industry; Demand creation through (i) marketing mechanism (ii) possible product innovations and (iii) generic & brand promotion; and finally, Role of finance institutions in financing of tea industry.

The Conference will see high-level participation by the Indian tea industry including the United Planters Association of Southern India (UPASI), Indian Tea Association (ITA); Tea Association of India (TAI); NABARD; National Productivity Council (NPC); Tea Research Association (TRA) and others.

Tea exports from India amounted to 173 million kgs. valued at Rs. 1,550.92 crore in the calendar year 2003 as against 201 million kgs. valued at Rs. 1,753.39 crore respectively in the year 2002.

India’s exports to the CIS region, including Russia, have grown from US $ 919 million in the year 2002-03 to US $ 1.020 billion in the year 2003-04, registering a growth of 11%. It is expected that with the increasing interest in the region among Indian exporters and the higher level of funding under the Focus-CIS programme, the export growth rate will further accelerate in the coming years.

The Focus-CIS programme was launched with effect from 1.4.2003 focussing on seven countries namely, Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan, Tajikistan, Azerbaijan and Ukraine. In view of the interest generated during the first year of the programme, the remaining five countries namely, the Russian Federation, Armenia, Belarus, Georgia and Moldova were also added with effect from 1st April 2004. Hence, the programme now covers all the twelve CIS countries. During the first year of the programme (2003-04), various Export Promotion Councils, ITPO and FIEO implemented trade promotion programmes at a cost of Rs. 41 lakhs under the Market Development Assistance programme. They outlay for export promotion activities under the Focus-CIS programme during the current year 2004-05 has been sharply increased to Rs. 3.07 crore.

Meanwhile, India’s exports to Africa grew from US $ 3.028 billion in 2002-03 to US $ 3.803 billion during 2003-04 registering a sharp growth rate of 25.57 %. This growth rate compares very favourably with the overall export growth rate of 20.36 % for India during the same period.

The Focus: Africa was launched with effect from 01.04.2002, focusing on seven African countries being the largest trading partners of India. These were Ghana, Nigeria South Africa, Tanzania, Kenya, Ethiopia and Mauritius. In view of the enthusiasm generated by this programme in its first year, the Government expanded the programme to cover the entire continent of Africa including six North African countries during the year 2003-04. A number of export promotion activities were conducted by various Export Promotion Councils and Apex Chambers at a total cost of about Rs 1.3 Crore. The Focus Africa programme is continuing for the third year during 2004-05. A much higher allocation of Rs 4.24 Crore has been provided during 2004-05 for export promotion activities in the African continent to be implemented by the various Export Promotion Councils, FIEO and Apex Chambers.

Updated booklets on Focus: CIS and Focus: Africa have recently been released by the Ministry of Commmerce & Industry, (Department of Commerce).

The government is in the process of formulating a comprehensive relief package for the Coffee and Tea Industry so as to extend all possible help to address the problems faced by the plantation sector. Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry, indicated this while inaugurating the 111^th Annual Conference of United Planters Association of Southern India (UPASI) at Coonoor today. Shri Elangovan informed that the government had initiated action in consultation with various sections of the tea industry, to prepare a special package with particular emphasis on replantation and rejuvenation of tea bushes. Shri Oscar Fernades, Minister of State for Statistics & Programme Implementation (Independent Charge), Shri R. Prabhu, Member of Parliament, Shri Abhijeet Sengupta, Additional Secretary, Ministry of Commerce & Industry, Shri B.B. Medaiah, President, UPASI and Shri Ullas Menon, Secretary General, UPASI were present at the occasion along with members of the plantation industry.

Shri Elangovan informed that the Department of Commerce and the Tea Board would organise a two-day conference of the various stakeholders in the tea industry in New Delhi on 16-17September 2004, in which the whole gamut of issues relating to production, productivity, research, reforms, marketing and also government policies on taxes and legislation covering land and labour laws would be discussed. The impact on the plantation industry vis-à-vis negotiations being conducted at the WTO would also come up for discussions at this Conference.

The Minister assured the members of the plantation industry that the government was seized of the problems affecting the plantation sector and announced that the Tea Board would commence the disbursement of the price subsidy scheme for small tea growers very soon, since the Demands for Grants have been passed by the Parliament. The Scheme provides for a maximum subsidy of Rs. 8 per kg for made tea, which would amount to approximately Rs. 2 per kg for green tea leaf for small tea growers having holdings up to 10-12 hectares for a four-month period from February to May 2004.

Regarding Coffee industry, the Minister said that the government had extended an interest subsidy of 5 % on working capital loans on a limited scale of finance in the year 2001-02, 2002-03 and 2003-04. "Likewise, 3% interest subsidy on working capital loans availed by large growers from Banks in 2002-03 was also extended. The proposal of Coffee Board to extend this scheme for the entire 10^th Plan period is under consideration of the Government", he said.

Responding to the plea made by the representatives of Rubber industry for continuation of export support measures and reintroduction of port restrictions for imports, Shri Elangovan mentioned that the prices of Natural Rubber are still higher presently than the corresponding prices of last year and continued to be reasonable comfortable at about Rs. 54 per kg. "Now that the prices of Natural Rubber have recovered and also taking into account the problems being faced by the consumer industries on account of port restrictions, the government has removed the port restrictions. However, the mandatory compliance with BIS specifications on imported rubber is still continuing. The government will continue to monitor the prices of Natural Rubber and in case of any crash in prices, the government will intervene and take appropriate action to deal with the situation", the Minister said.

Regarding reports about the increase in the annual import of Pepper from Sri Lanka in the past few years, Shri Elangovan said that the government was seized of the matter and appropriate steps would be taken to protect the interests of Indian growers. Shri Fernades in his address emphasised the importance of widening the marketing network to promote Indian tea and coffee in overseas markets. He also urged the members of the plantation sector to enhance the production capacity as well as productivity in order to be globally competitive.

Shri Medaiah stressed the need of plantation sector to be treated as a separate industry. He also urged the government to continue with export supportive measures regarding rubber and said that the port restrictions for imports should be re-introduced.

The government has approved a scheme for infrastructure support to Leather Goods Park at Kolkata with the Central Government’s assistance of Rs. 5 crore under the Integrated Leather Development Programme (ILDP). The Park would be equipped with design and fashion studio, common facility centre including training institute and display-cum-warehousing facility and would be aimed at attracting investment in the leather goods sector. The park would be developed in collaboration with the State Government and Indian Leather Products Association (ILPA).

In order to enable the country’s exports achieving the target of 1.5% of the global trade by the year 2009, Shri Kamal Nath, Union Minister of Commerce & Industry, has indicated that he would write to all Chief Ministers regarding the exemption of exports from different State levies. While speaking at the Interactive Session on Foreign Trade Policy organised by the Associated Chamber of Commerce & Industry (ASSOCHAM), here today, Shri Kamal Nath said that the exemption by States would lead to incremental economic activity that would increase the growth momentum. Shri M.K. Sanghi, President, ASSOCHAM; Shri G.H. Singhania, Chairman, ASSOCHAM International Trade Committee and Mr. Anil Agarwal, Alternate President, ASSOCHAM were present at the meeting along with foreign diplomats from various countries, senior officials and representatives of trade and industry.

Shri Kamal Nath said that for India to achieve the target of 1.5% of global trade, there has to be a partnership between the government and private sector. The trading pattern has changed over the last few years and we have to leverage our trade so as to marry our strength with other countries, he said. It is also important to harmonise the country’s regional trade agreements within the multilateral trading system. The trade and industry must have a level-playing-field for which the inverted duty structure must be corrected, he added.

Shri Sanghi welcomed the sector-specific initiatives announced in the Foreign Trade Policy (FTP) and highlighted the importance of greater participation of States in the cause of exports. Shri Singhania said that there has to be close monitoring of implementation of the policies for the success of FTP.

The Directorate General of Foreign Trade (DGFT) has issued Public Notice No. 77 dated 26/08/2004 notifying additional standard input-output norms for 21 new export items and amendments/corrections/deletions in the standard input-output norms for 26 existing export items. Of the 21 new norms, 10 norms relate to chemicals & allied products, 10 norms relate to engineering products and one norm relates to textile products. Fixation of Standard Input-Output Norms will facilitate issue of advance Licence for above additional items to the exporters of the items without any need for referring the same to the Headquarter office of DGFT on repeat basis.

Directorate General of Foreign Trade (DGFT), Ministry of Commerce & Industry, New Delhi, dated 1^st September, 2004

DEPARTMENT OF COMMERCE ECONOMIC DIVISION IMPORTS & EXPORTS : (PROVISIONAL)
(Unadjusted for late returns)
(US $ Million)
	August	April-August
EXPORTS
2003-2004*	4386.68	21852.48
2004-2005	5620.53	27551.63
%Grw 2004-2005/2003-2004	28.13	26.08
IMPORTS
2003-2004*	5656.41	28474.44
2004-2005	7102.04	37137.75
%Grw 2004-2005/2003-2004	25.56	30.42
TRADE BALANCE
2003-2004*	-1269.73	-6621.96
2004-2005	-1481.51	-9586.12
*Final figures as given by DGCI&S

DEPARTMENT OF COMMERCE ECONOMIC DIVISION IMPORTS & EXPORTS : (PROVISIONAL)
(Unadjusted for late returns)
(Rs Crores)
	August	April-August
EXPORTS
2003-2004*	20148.04	101956.20
2004-2005	26046.08	125199.79
%Grw 2003-2004/2002-2003	29.27	22.80
IMPORTS
2003-2004*	25979.87	132887.41
2004-2005	32911.57	168690.71
%Grw 2003-2004/2002-2003	26.68	26.94
TRADE BALANCE
2003-2004*	-5831.83	-30931.21
2004-2005	-6865.49	-43490.92
Final figures as given by DGCI&S SB/PM/MRS*