TRADE UPDATE #23

Crunch-time for councils

03/05/2019

Not even the country’s top export promotion councils are above accountability. That was the message sent out this week by the Prime Minister’s Office (PMO) as it revealed it would soon begin a performance-based review of over two dozen export promotion councils (EPCs) across the country. The EPCs that are found to have failed to meet export targets could face closure or undergo restructuring. It remains unclear how the election result will affect this policy decision, but the government is definitely serious about boosting India’s exports -- whatever it takes.

On a hopeful note, the reviews will take place against the backdrop of improving international relations between India and its trade partners. For starters, India has once again postponed imposing retaliatory tariffs on US goods after the US has further delayed its decision on GSP withdrawal. The prospect of improving trade relations between the two, as well as talks of a possible free trade agreement with Peru and a preferential trade agreement with Iran, should bring some stability and hope to India’s exports in the coming months.

Unfortunately, the steel sector faces a crisis closer to home, as the closure of the Sterlite plant in Tamil Nadu is possibly going to reduce India’s steel exports by as much as $3 billion. There is also a danger of hazardous imports making their way into the Indian market to fill the gap in demand. With the government’s performance review looming on the horizon, export promotion councils in steel and other sectors have their work cut out for them.


EXPORTS

Performance review of export promotion councils to start soon

The government will soon begin a performance-based evaluation of over two dozen export promotion councils in the country as a follow-up to the Prime Minister’s Office’s direction that it should ascertain ways to boost exports, according to a senior official. The export promotion councils (EPCs) found falling short of export targets could face closure or undergo restructuring. The official cited earlier told ET that the Prime Minister’s Office (PMO) had some time ago suggested a check to see if any of the EPCs need support in order to boost exports.


INTERNATIONAL RELATIONS

As US delays withdrawing GSP benefits, India postpones retaliatory tariffs

India, on 2nd April, further extended its June 2018 order to impose retaliatory tariffs on 29 US products by another 14 days till 16th May as it awaits a final word from the US on its decision to withdraw duty-free benefits to Indian exporters. On 20th June last year, India notified that it will hike tariffs on 29 US products, including almonds, apples and phosphoric acid worth $10.6 billion in imports, in retaliation to the steel and aluminum tariff hikes by the US in March 2018.


INTERNATIONAL RELATIONS

India, Peru to hold next round of free-trade agreement talks in August

India and Peru will hold their next round of negotiations for a proposed free-trade agreement (FTA), aimed at boosting two-way commerce and investments, in August, an official said. “Chief negotiators from both the countries will hold the fifth round of negotiations for the agreement in August,” the official said. In an FTA, two trading partners significantly reduce or eliminate duties on most of the goods traded between them besides relaxing norms and rules to promote trade in services and increase bilateral investments.


INTERNATIONAL RELATIONS

India, Iran may hold next round of negotiations for trade agreement in May

Senior officials of India and Iran are likely to hold a fifth round of negotiations for a bilateral preferential trade agreement (PTA) in May, an official said. Till now, four rounds of negotiations have been completed and the last one was held in March in Tehran where both countries discussed the draft text of the pact. “Both sides have tentatively agreed to hold the fifth round of talks here this month,” the official added. Unlike in a free trade pact, where two trading partners significantly reduce or eliminate duties on the maximum number of goods traded between them, a PTA involves removal of duties on certain identified products.


TRADE

Sterlite Plant’s Closure Might Bring Down Indian Exports By $3 Billion, Increase Hazardous Imports: EEPC Chief

According to India’s premier exports body, closure of the Sterlite plant in Tamil Nadu might bring down India’s exports by as much as $3 billion in the current financial year (FY20), reports The Hindu BusinessLine (BL). “The loss could be to the tune of $3 billion this fiscal. And there is also a fear of rising imports of inferior or hazardous quality of copper scrap,” said Ravi Sehgal, Chief of Engineering Export Promotion Council (EEPC).


OTHER NEWS

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