Focus of Indian Embassies and High Commissions in foreign countries


From the agreements signed during the visits of foreign dignitaries to India and Indian dignitaries to foreign countries it appears that Indian Embassies and High Commissions should focus among others on the following, which apart from establishing Indian visibility, would help generate foreign exchange for the country and enhance the image of the country.

i, opportunities for Indian Banks to set up branches in foreign countries
ii. opportunities for Indian insurance companies to set up branches
iii. opportunities for setting up educational institutes, including IT, Medical
iv. opportunities for Indian hospitals to set up branches
v. opportunities for Indian companies for management of sick companies.
vi. opportunities for Indian companies to invest
vii. opportunities for India to buy/lease agricultural land
viii. opportunities for Indian establishments to set up hotels, Indian Restuarants

The above are not new items of work for the Embassies/High Commissions. Such opportunities have in the past been explored in countries like Vietnam, Guyana, Suriname, Trinidad & Tobago, Malaysia etc.

Number of outbound Indian tourists is nearly twice that of number of inbound tourists to India. Considering the vast potential for increasing tourist flow to India, the Embassies should put the foreign outbound tour operators in touch with Indian inbound tour operators. Embassies themselves should increase their interaction with local outbound tour operators. India’s tourist offices abroad should be part of the embassies

Similarly, considering the fact that India’s imports are much higher than exports, Embassies should concentrate on generating local enquiries for Indian exports by regularly writing to local importers of various products they could import from India as well as by organizing catalogue exhibitions, buyer-seller meets.

Performance of India and Vietnam in foreign trade sector


The exports of Vietnam increased from US$ 15 billion 2001 to $132 billion in 2013 i.e. by about 9 times during the 12 years and to $150 billion in 2014 i.e. by  10 times in 13 years. On the other hand  exports from India increased from $44 billion in 2001-2002 to $ 313 billion in 2013-14 i.e only by about 7 times. While in 2001, India’s exports were about 3 times that of Vietnam, in 2013, it is only about 2.5 times.

As regards imports, Vietnam’s imports increased from $16.2 billion in 2001 to $131 billion in 2013 i.e by about 7 times and in 2014 to $148 billion i.e. by about 9 times in 13 years. Imports have grown at a lower rate than those of exports. But imports into India increased from $51 billion in 2001-02 to  $450 billion in 2013-14 i.e by about  9 times.Imports have grown at a higher rate than exports.

While trade balance in Vietnam became surplus of $0.9 in 2013 from deficit of $1.2 billion in 2001, In India trade balance grew from a deficit of $7.6 billion in2001-02 to trade deficit of $137 billion in 2013-14.

The above figures show that on the foreign trade front, India’s performance is poor compared to that of Vietnam.

Guyana-India Economic Co-operation


Gold is the main item of export for Guyana contributing over 40% to total exports. India is a very large importer of gold. India should explore possibilities of import of gold directly from Guyana , if necessary by undertaking of refining etc.

The second major item of export of Guyana is Rice. Guyana has large uncultivated but cultivable land. Indian companies can lease land for cultivation of Paddy, set up rice mills and increase exports of rice from Guyana. Guyana’s trade deficit can be wiped out.Indian companies can earn good profits as Guyana has fertile land and abundant rainfall.

Sugar is the fourth largest item of Guyana’s exports. Here also Indian companies can set up sugar mills and also lease land for cultivating sugarcane for feeding the mills. With increased sugar production, there will be increase in the production of molasses which can feed Rum factories. Guyana’s Rum is famous and Indian companies can produce and export Rum from Guyana.

Guyana also produces and exports rough diamonds and India is a large importer of this item. India can directly import diamond from Guyana .India can also explore possibilities of diamond exploration.

Some of the items which Guyana can import from India are: motor vehicles , including cars, sugar machinery, agricultural machinery like tractors, harvesters etc.Guyana consumes wheat but does not produce the same. Guyana can import wheat/wheat flour from India. The quantity will not be huge as the total population of Guyana is less than one million.

There are also possibilities for cooperation between the two countries in laying railway lines in Guyana and construction of bridges across rivers

Rates of Exchange and Exports


It is generally believed that when a currency is upvalued(revalued) it would affect exports as the export items would become costlier. This is not really true. When the currency is revalued, imports become cheaper and cost of living comes down. The local currency gets strengthened. In 2005, Chinese Yuan RENMINBI(CNY) was USD 1 = CNY 8.09. Since then the CNY has appreciated and now USD 1 = CNY 6.09. With the appreciation of CNY exports did not decrease. On the contrary, exports from China when up from USD 939 billion in 2006 to USD 2,057 billion in 2012. Indian exports also went up from USD 122 billion in 2006 to USD 298 billion in 2012. The Indian Rupee also depreciated from USD 1 = Rs. 45 to USD 1 = Rs. 60. Here the depreciation is not the main reason for the increase in exports. Even without the deprecation the exports went up to USD 198 billion in 2008. So while fixing the rate of exchange the purchasing power of the respective currencies should be taken into account. The main contributing factor for increase in exports is surplus production, lower cost of production and the quality of products. A currency should not be allowed to depreciate thinking that this would contribute to increase in exports. The rate of exchange between Indian Rupee and US Dollar should be USD 1 = Rs. 20 or Rs. 25.  


Author: Singharan Govindan

India: countries to focus for increasing exports


France is the 5th largest importing country with a share of around 3.8% of world imports. However, France accounts for only 1.7% of exports from India, occupying a low 17th position among countries importing from India. Of course France ranks only 29th among countries exporting to India, with a share of only about 0.8% of India’s total imports. As crude oil is a major import item for India accounting for about 30% of its imports and as already India’s trade deficit is very wide, India may not be able to increase imports from France. However, India can with some more effort, increase exports to France.

Similar is the position regarding exports to Italy and South Korea which are also leading importing countries

India should as a first step set up Consulates in France and South Korea and additional Consulate in Italy. Embassies and Consulates should organize CATALOGUE exhibitions at least twice a year.. After 3-4 catalogue exhibitions, products exhibitions and buyer-seller meets can be organized.

Declining position of India in Cashew production and exports.


Till late 1990s, India was the largest producer of raw cashew nuts(cashew nuts with shell) and largest exporter of processed cashew nuts in the world. Roasted Cashew nuts also used to be an important item of export from India.However India is now not so prominent in the world as an exporter.While India’s production of raw cashew went up only by about 50% from 420,000 MT in 1996 to 675,000 MT in 2011,Vietnam’s production increased by about 500% from 237000 MT to 12,72,000 MT during this period making Vietnam the largest producer in the world. Nigeria’s production went up by about 700% from 110,000 MT to 813000 MT, making Nigeria, the second largest producer behind Vietnam and ahead of India.India thus is only the third largest producer in the world.

The low increase in production in India is due to low yield. During the 15 year period from 1996 to 2011, in India the yield increased only marginally from 0.66MT per hectare, while in Nigeria it went up by about 400% from 0.63MT to 2.46 MT.The yield in Vietnam increased from 2.23MT to 3.84MT.

In India as much as 0.95 million hectare of land is under cashew while Vietnam and Nigeria each have only about 0.33 million ha under cashew.

In 2001, India was the largest exporter of roasted cashew nuts with exporters of about 90,000 MT when Vietnam’s exports were only 44000 MT. But in 2011, India’s exports were almost at the same level at 93,000 MT while Vietnam’s exports went up by 4 times to 195,000 MT.

Cashew tree starts yielding from about 3rd year and its life is about 35-40 years.
India should consider measures to increase yield by encouraging farmers to grow high yielding dwarf varieties, consider giving grants and subsidies and/or procuring raw cashew nuts at a much higher price which would offset effect of increased wages of workers as also services like transport etc.

India should also coordinate with other large producing/exporting countries like Vietnam and Nigeria to promote consumption of cashew nuts in the world particularly in developed importing countries, to evolve high-yielding varieties,exchange of information, exchange of agricultural and industrial experts etc.

Currency War-US, Europe are unjust in their demand for Yuan appreciation


The rate of exchange between US$ and Chinese Yuan is around $1= Yuan 6.7. US(and other developed countries in Europe etc) thinks that Yuan is undervalued to the extent of about 25% i.e. their view is that the rate should be around $1= Yuan 5 or 5.5. The arguments of US is that since the Yuan is undervalued, products imported from China into US are cheap compared to local products, and this is detrimental to the US industry, and leads to job cuts estimated at around 0.5 million. Further, US products exported to China are expensive in China and hence US exports suffer. China’s foreign exchange reserves are very large (around $2650 billion) and this should normally make China’s local currency appreciate against other currencies but it is not happening. . According to US, China manipulates the exchange rate

US argument is not fully justified because,

i).it does not take into account, the fact the China exports to around 200 countries and the number of countries affected by current rate of exchange are only a few. Most of the developing countries benefit when prices of imported products are low.

ii) Many countries do not have the concerned industry and the question of the local industry suffering or workers losing jobs do not arise at all.

iii) Where local industry exists, Chinese equipments and products fill the gap between supply and demand, at comparatively low prices thus meeting requirements of importing country and helping industrialization of that country.

iv) Even in US, the general public will only be happy to get their requirements from China at a lower rate. The large number of consumers is not bothered about the job loss for a few hundred thousand people or manufacturers suffering loss.

v)To protect the local industry and save the jobs, US could think of means like imposing/increasing import duties on Chinese products, assisting the exporters with incentives like low interest rate for exporters, exemption from tax for profits from exports etc.

vi) US could think of means of making its industry competitive in relations to Chinese industry, by asking workers to increase their productivity, upgrading technology, minimizing overhead expenses etc..

vi) US(also European) industry being affected by Chinese exports or its inability to export to China is a bilateral issue and should not be made a multilateral issue as the US gain from appreciation of Yuan will harm many, particularly developing countries importing from China.



      The Government of India has extended the ban on exports of cotton, as the consumer industry,  namely textile industry has complained about increase in the prices of its raw materials which would make its exports uncompetitive. Often, the government bans the exports of onions to bring down the prices domestically to benefit the consumers.  It also allows imports of  products/commodities when their prices in India go up. This means that:

    The Government wants cotton growers to subsidise exports; it wants onion growers to suffer losses or forgo profits for the benefit of the consumers. When the prices of cotton goes down, does the textile industry comes forward to pay higher prices? When the price of onion goes down, do the consumers volunteer to pay higher prices? Of course, the government sometimes procures certain products at  particular prices. The prices should be allowed to be determined by the market forces. In the process,  for examples, if the textile exports suffer , the government should extend cash or other assitance to the exporters, considering the need for foreign exchange. In the case of domestic sales, the industry should pass on the increase in prices to the consumers.

    However, a question arises as to the incentives that the government extends to, for example cotton growers by way of restricting/ banning imports to ensure  remunerative prices for the growers. Restricting the imports is not just to help the growers, but also to conserve the foreign exchange for use by the industry.  However, the ultimate solution should be to allow freely, both imports and exports of raw materials and finished products except where the non-renewable raw materials  like ores, need to be conserved for future use.