Focus of Indian Embassies and High Commissions in foreign countries

13/08/2016

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

24/01/2015

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.


Indian Projects- no need for foreign loans

03/01/2014

There is news that India will get a loan of $160 million from World Bank for modernizing roads in Rajasthan. When the money is received by India, the equivalent amount of Rs.996 crores will be brought into circulation in India. It may come from the reserves and /or from printing currency notes. Roads can be modernized without importing any material from abroad or in other words there is no need for foreign exchange for the project. Only Indian Rupees is needed and this is available in India or can be printed. Inflation will be there whether loan is taken from World Bank or the Indian currency is released into circulation without taking loan in foreign currency from abroad. So in cases where imports are not required for projects loans should not be taken from abroad and the required amount should be loaned by Reserve Bank of India.


India: countries to focus for increasing exports

12/07/2013

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.


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

15/10/2010

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.


CONFLICTING INTERESTS OF PRODUCERS AND CONSUMERS

30/09/2010

      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.


India – Land Acquisition by the Government

12/12/2009

The Land Acquisition Act provides for acquisition of privately owned land by the Central and State Governments for public purposes. However, Governments acquire land for private companies, calling it public purpose. They acquire more than required area of land for current use and also for future use. The compensation being paid is much less than current market value. In order to induce landowners to come forward to sell land the price has to be what it would be 5 or 10 years later in the market. In Malaysia, the government used to pay large compensation and people used to compete to sell their land and become “instant millionaires”. In fact, the Malaysian government asks companies to procure land themselves.

Government has recently acquired/ is acquiring land for widening national highways. They are acquiring land not only for the present use for 4 lanes but for future use of  6-8 lanes which may be after 20 or 25 years later. Till then surplus land will remain fallow.

Even for welfare measures like free or subsidized housing for low income people, some governments are using as much as 10 acres of land for 100 small houses whereas 3-4 acres will be sufficient. Government can do with about 2 acres if double storey houses are built in stead of single story houses

The land acquisition has shrunk agricultural land considerably and the country would have to depend on imports for consumption. Not only this. The farmers are agitating against land acquisitions even for genuine purposes for government’s direct use. In order to avoid problems for acquisition in future, it would be better, if governments acquire land only for government’s current use at an estimated value 10 years later.