India Business & Trade September 2019 by Trade Promotion Council of India

India

business & trade Indian enterprise. Global opportunities

SEPT 2019

“LOCALISATION REQUIRES A LONG TERM STRATEGY” - Sohinder Gill, Director General, SMEV

STREAMLINING FOOD TRADE THROUGH TECHNOLOGY - Dr ARPITA MUKHERJEE Professor, ICRIER

` 150

INDIA-KENYA:

A PROMISING

PARTNERSHIP

Relations between the two countries are blossoming with regular high-level engagement and deepening cooperation. Can this translate into gains in trade?

Department of Commerce Ministry of Commerce and Industry

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India

From the Chairman’s desk Dear Readers The Ministry of Finance has commenced a comprehensive review of India’s past FTAs, given the general consensus that they have been bad for India’s manufacturing sector. Also, the FTA-led import surge is putting pressure on the government not to sign mega-FTAs like the Regional Comprehensive Economic Partnership (RCEP). India has signed 18 regional trade agreements (RTAs) according to RTAIS database of the WTO. The list includes the Global System of Trade Preferences among Developing Countries (GSTP) and two accessions – to China in APTA and Afghanistan in SAFTA. Besides this, India has signed major trade agreements with ASEAN, Japan, Korea, Malaysia, Singapore & Bhutan, and partial scope agreements with Chile, MERCOSUR, Thailand, Nepal and Afghanistan. India’s exports with partner countries have not been very impressive. In fact, only four of India’s top ten manufactured export sectors, namely, organic chemicals, pharmaceuticals, vehicles and parts and non-electrical machinery have seen some increase in global export shares. India’s trade with major RTA partners for the past 12 years shows an aggregate trade deficit, which has increased post-2013. These 24 trade partners account for nearly 20% of India’s exports and 17% of India’s imports. In 2018, India’s total exports to these countries were at US$ 75.76 billion, while imports were at US$ 98.16 billion. The ASEAN FTA had the greatest impact on trade, where India has provided the highest reduction in import tariffs. India’s trade balance to total trade ratio deteriorated from -17.5% to -22.6% and with respect to ASEAN, from -43% to -56.2%. A report by NITI Aayog cites higher margin of preference (MFN-preferential duty) offered by India as a major reason for the relatively higher increase in imports. Furthermore, utilisation rate of FTAs by Indian exporters is between 5% to 25%, among the lowest in Asia. Re-routing of imports through RTAs is a common practice, which leads to revenue loss for the government and competition for the industry. A recent instance is the influx of pepper from Vietnam via Sri Lanka, Bangladesh and Nepal, falsely claiming benefits under SAFTA and ISFTA. Besides this, violation of value addition norms to claim unfair benefits is also an issue of concern. There also appears a mismatch in terms of what trade agreements offer and what India’s industry actually needs. While most nations are looking to create economies of scale and have generated surplus capacity that makes their industry amenable to FTAs, India has a huge dominance of the MSME sector, which does not have similar scale. Considering these aspects, the ongoing review of FTAs by the government is a step in the right direction. With the benefit of experience, India should carefully address various aspects like rules of origin norms, utilisation of FTAs, trade complementarities, possible exemptions to the services sector, potential to connect with global value chains, etc before it ratifies mega trade agreements like the RCEP.

MOHIT SINGLA Chairman, TPCI

business & trade Indian enterprise. Global opportunities

Vol 1 | Issue 3

Sept 2019

TPCI CHAIRMAN: Mohit Singla DIRECTOR: Sameer Pushp

EDITORIAL EDITOR: Virat Bahri WRITERS: Abhishek Jha, Nikhaar Gogna, Rithika Bansal, Sneha Varma

DESIGN SR. ART DIRECTOR: Prakash Shetty DESIGNER: Ajay Kumar Singh India Business & Trade is a monthly magazine published by Trade Promotion Council of India, 9, Scindia House, Connaught Circus, New Delhi- 110001, India . Material in this publication may not be reproduced in any form without the written permission of TPCI. Editorial opinions expressed in this magazine are not necessarily those of TPCI, and TPCI does not take responsibility for the advertising content, content obtained from third parties and views expressed by any independent author/contributor. For any editorial queries/ feedback, please contact: editorial@tpci.in For advertising queries, please contact: advertise@tpci.in

TPCI.IN

TABLE OF

CONTENTS

4 TPCI News Buzz Stay tuned to the latest trade and business news and updates from across the world.

CATR DATA MINING 10 Statistics: India’s sugar exports Find out all that you need to know about India’s sugar exports, top exporters and importers for sugar, key competitors, price fluctuations over time and more.

STREAMLINING FOOD TRADE WITH TECH Dr Arpita Mukherjee, Professor, ICRIER

PERSPECTIVES 12 Tea should be put in negative list of RCEP Sujit Patra, Secretary, Indian Tea Association talks about the detrimental impact of RCEP. 14 Will China succumb to its own maneuver? Yuan was devalued by 0.36% in the first week of

August. Is this approach by China sustainable? 16 Global Value Chains: Remedy for slowdown blues India needs to drive its presence in global value chains to usher in export-led growth. 18 Missing pieces in a promising story Despite many firsts, India’s innovation story remains a saga of unmet promise 20 Chasm between ‘Incredible’ & ‘Credible’ India Despite a larger number of tourist attractions, India fares poorly in terms of foreign tourist arrivals. 22 Indo-Pak trade: Pakistan scores another self-goal

FARMING WITH A DIFFERENCE! Sahyadri Farms aims to make farming lucrative for farmers

Suspension of bilateral trade with India is likely to do more harm than good to Pakistan. 24 Streamlining food trade through technology Professor Arpita Mukherjee & Divya Satija talk about improving ease of doing business.

2 | India Business & Trade • September 2019

COVER STORY

26 India-Kenya: A PROSPERING PARTNERSHIP India and Kenya have enjoyed cordial and friendly relations over a long period of time. Can these translate into gains in trade?

IMPORT FOCUS: PALM OIL 32 Palm oil: Why India is on slippery ground Palm oil represents a major policy conundrum, as consumption increased by over 230% since 2001.

PRODUCT PROFILE: PEPPER 34 Black Pepper India needs to boost its competitiveness in the face of the challenge from Vietnam, Indonesia and Brazil.

EXPORTER PROFILE: SAHYADRI FARMS

“HUGE POTENTIAL FOR IP IN EVS” Ravneet Phokela, Chief Business Officer, Ather Energy

36 Farming with a difference! Sahyadri Farms is focussed on making agriculture lucrative for India’s farmers.

SECTOR FOCUS: ELECTRIC VEHICLES 38 Can India break the ‘ICE’? An EV revolution is quietly simmering in Indian automobile industry. But is India ready for it? 42 “We need to believe in ourselves” Sohinder Gill, Director General, SMEV, believes India can learn from China, Japan & Taiwan. 43 “Huge potential to build IP in EVs” Ravneet Phokela, Chief Business Officer, Ather Energy feels India can develop an indigenous EV ecosystem.

FOCUS MARKET

A PARADISE FOR BUSINESS Making Kashmir a hub for investment post-370

44 South Africa: Common struggles, shared vision Complementarities between the two economies provide tremendous scope for enhanced trade relations.

FOOD TRENDS 50 East meets West: The story of Indian ‘curry’ Curries have travelled across the globe through the history of various rulers. 52 UAE remains our biggest export market Mansoor Ali, Chief Sales & Marketing Officer, Hamdard Laboratories, talks about plans to transform the company into a 21st century brand.

FOOD & BEVERAGE BSMS, US & CANADA

54 WHAT’S THE LATEST @ TPCI

TPCI organised Food & Beverage BSMs in New York and Toronto for promotion of India’s food exports.

September 2019 • India Business & Trade | 3

News buzz

International

Is the world heading towards a recession?

he economists at top organizations like Goldman Sachs Group Inc and Morgan Stanley are anxious that escalating tensions caused by US-China trade conflict might result in a global recession. The recent advancements in the spiraling trade spat include the imposition of 10% tariff on a final US$ 300 billion worth of Chinese imports by US from September 1. According to Morgan Stanley, the threat of recession hangs over UK’s economy as it heads towards Brexit as well as other European economies. Analysts are of the opinion that the rising input costs from supply chain disruption could lead companies in US to reduce domestic activity,

and consequently, lower their capex spending. Goldman Sachs has asserted that it no longer expects a resolution of the impasse before the 2020 US

Presidential election. It expects a 20 basis points reduction in US GDP growth to 1.8% in the Q4, especially due to the larger than expected impact of trade tensions.

US calls China a ‘currency manipulator’

or the first time since 2008, China’s central bank allowed the yuan to slip below the sensitive seven-to-one dollar level, reaching a six-month low. Julian Evans Pritchard of Capital Economics opined, “The fact that they have now stopped defending 7.00 against the dollar suggests that they have all but abandoned hopes for a trade deal with the

US.” However, there are some economists who believe that China doesn’t want to infuriate US further. Moreover, the fact that Hong Kong is undergoing political turmoil amid civil disobedience and economic disruption has led to increased uncertainty in the region. A further weakening of China’s currency to the point where it can dilute the impact of high American

tariffs is also possible, according to some experts. This propelled US to label China as a manipulator of its currency. The US Treasury department defines “currency manipulation” as a situation when a country deliberately influences the exchange rate between their currency and the US dollar to gain unfair competitive advantage in international trade.

China has allowed the vaue of yuan to drop below the mark of 7 to the US dollar after over a decade

4 | India Business & Trade • September 2019

Singapore’s exports plunge

NUMBER GAME

ingapore, an economy that is highly trade-reliant and viewed as a barometer of the health of global trade, saw its exports dropping way more than anticipated in June, in the face of the rising trade tension between US & China and waning technology boom. Its non-oil domestic exports shrunk 17.3% YoY, after witnessing a 16.3% fall in May’19. Electronics exports tumbled 31.9% in June’19. The ongoing squabble between South Korea and Japan has further dealt a severe blow to Singapore’s electronics exports. This is the fourth straight month in which Singapore’s exports fell by double digits and the biggest year-on-year drop since shipments sank 33.2% in February 2013.

China’s economic growth is moderating and is projected to be

The biggest contractions were in shipments to Hong Kong (-38.2%), Japan (-23.2%) and South Korea (-22.7%). Given the dismal state of affairs, economists sense a strong possibility of monetary easing.

UK’s new PM firm on Brexit

6.2% in 2019 (IMF)

US expected to lose

10% of its GDP to climate change

UK PM Boris Johnson is trying to renegotiate the Irish backstop

oris Johnson, the newly appointed PM of Britain has vowed to get Brexit done by October 31, 2019. With his convincing victory, the UK is headed towards a showdown with the EU. A constitutional crisis is also simmering at home, as British lawmakers have vowed to bring down any government that tries to leave EU without finalising a divorce. Signs of turmoil in UK have already begun to appear as PM Johnson intends to suspend

parliament to force through a no-deal Brexit. A legal challenge seeking to prevent this will be heard before the October 31 Brexit deadline by the Court of Session in Edinburgh. Johnson, the face of the 2016 Brexit referendum, won the approval of 92,153 members of the Conservative Party, defeating his rival, foreign secretary Jeremy Hunt, who garnered 46,656 votes. He is currently looking to renegotiate the Irish backstop with EU.

World trade and GDP both have grown by

26%

since 2008 (WTO)

September 2019 • India Business & Trade | 5

IN QUOTES

Russia curbs use of US$

A Donald Trump President of the United States

China has always used currency manipulation to steal our businesses & factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices. Not anymore!

s tensions between US & Russia sour, the use of dollar by Russia in international trade is coming down, as vowed by Russian President Vladimir Putin. This move is part of a carefully planned strategy to “de-dollarize” the Russian economy in order to lower Russia’s vulnerability to the ongoing threat of US sanctions. Russia’s trade with a lot of its trade partners such as the EU, India & China is now being done in rubles. “There’s been a strong incentive to change, not just for Russia but for its trading partners too,” observed Dmitry Dolgin, an economist at ING Bank in Moscow. There has also been an increase in the use of euros in Russia’s US$ 108 billion annual trade with China.

Russia’s Minister of Industry and Trade, Denis Manturov

However, it must be noted that while the central bank was able to quickly dump half of its dollar holdings last year, progress in trade has been slow due to ingrained use of the greenback. Moreover, over half of its US$ 687.5 billion annual trade is still conducted in dollars.

UK and S. Korea sign deal

Boris Johnson British PM

I think people are yearning . . . for this great Incubus (Brexit) to be pitchforked off the back of British politics. They want us to get on with some fantastic things for this country.

South Korean Minister of Trade Yoo Myung-hee with British counterpart Elizabeth Truss

ritain and South Korea have signed a trade deal, which is a continuation of the existing trade agreement between the two countries. The agreement will allow both countries to trade freely after Brexit, which is scheduled for October 31 this year. It is Britain’s first post-Brexit trade deal with an Asian country and third-largest deal post-Brexit. UK has already signed 12 such deals in order to replicate the preferential access it has currently as a member of the EU. South Korea, the world leader

6 | India Business & Trade • September 2019

in electronics, mainly exports cars and ships and imports crude oil, cars, ceramics and whisky from UK. The deal reduces the uncertainty for South Korea about its trade equation with Britain. As per the UK government, the deal will protect annual bilateral trade flows between South Korea and Britain worth £ 14.6 billion, which is equivalent to around 1% of Britain’s and 2% of EU’s total trade with S. Korea . The UK is expected to close similar deals with countries like Chile, Iceland, Norway and Switzerland & US.

News buzz

National

Finance Ministry commences review of FTAs

ith inputs from across industry that free trade agreements (FTAs) have been detrimental to India’s manufacturing sector, the Ministry of Finance has begun a comprehensive review of India’s past FTAs. The review will try to ascertain the impact of these agreements on the overall economy with the view being that they have mostly been helpful to the partner country. Also, the Department of Revenue has flagged the blatant violation of rules of origin and value addition norms to increase exports to India. The authorities note that there are instances when the imports from non-FTA partners are routed via the FTAs so that they avail lower tariffs and benefits applicable under the FTAs as compared to the domestic

Smt Nirmala Sitharaman, Minister of Finance, Government of India

tariff route when the government raises customs duty. Such instances work against the purpose of imposing tariffs of discouraging imports to protect the domestic industry. Also, these adversely impact the government’s

revenue. This review comes at a crucial time when India is engaged in talks on the proposed RCEP agreement and there are concerns all across the industrial sector about the possible negative implications of the agreement.

Adjudicatory panel over India’s sugar subsidies

fter failing to reach a mutually agreeable position in India’s discussions with Australia, Brazil and Guatemala on its sugar subsidies at the WTO, it has been decided to set up dispute settlement panels to look into the

matter. However, India has rejected requests from the three countries for a single panel to oversee their complaints jointly on grounds that each case was distinct. The three countries have argued that India’s sugar subsidies (like

Australia, Gautemala & Brazil have filed a case against India on sugar subsidies

soft loans and subsidies to maintain stocks of sugar, and tax rebates) are causing a global glut, depressing prices and are in breach of trade rules. They have also charged that India provides subsidies contingent on export through “Minimum Indicative Export Quotas” (MIEQ) or other sugar export incentives. As per the complainants, India is in violation of its obligations under WTO as the resulting sugar support exceeds India’s “de minimis” level of 10% of value of production, while export subsidies are prohibited under the Agreement on Subsidies and Countervailing Measures (ASCM). However, India has countered that the accusations stating that its policies have increased the domestic price of sugar, thereby making imports of sugar into India more lucrative and exports from India uneconomical.

September 2019 • India Business & Trade | 7

NUMBER GAME

India, Russia target $30 bn

India’s shrimp exports to US rose by

14%

in H1, 2019 in volume terms Moody’s revises India’s GDP growth forecast to

6.2% from 6.8% for 2019 India exported US$

1.07 Bn

Russian President Vladimir Putin with Indian PM Narendra Modi

n an interaction between Russia’s Deputy Prime Minister Yuri Trutnev and India’s Commerce and Industry Minister, Shri Piyush Goyal during August 11-13 in Vladivostok, it was decided to diversify and deepen cooperation in priority sectors to meet the bilateral trade target of US$ 30 billion by 2025. Several MoUs were signed between regions of the Russian Far

East and 5 Indian states on trade, economy, investment, scientific and technical cooperation. Collaboration with Indian states in the fields of energy, gold and diamond mining, agriculture and food-processing. Total bilateral trade between India & Russia stood at US$ 8.2 billion in 2018-19 where India’s exports were US$ 2.4 billion and imports amounted to US$ 5.8 billion.

Govt plans ‘made in’ tag

n order to help customs curtail imported goods that don’t meet quality standards or infringe on trade norms, India plans to make it mandatory for all imports to carry ‘made in (country)’ tag. This measure will also enable the government to curtail large scale dumping of goods and give a fillip to local manufacturing. Presently India has rules of origin and value addition norms under FTAs and PTAs but none for products entering

worth of mobile phones in 2018 8 | India Business & Trade • September 2019

on the MFN basis. The move is part of a wider plan pertaining to ‘non-preferential rules of origin’ that would apply to imports from those countries that do not have a trade agreement with India. This includes countries like US, EU, China, New Zealand and Australia. The WTO is yet to conclude harmonised non-preferential rules of origin. However, 40 countries have implemented such rules for nonpreferential imports of products.

Diamond industry sees red

ndia’s diamond and polishing hub in Gujarat, which spreads across Surat and smaller centres like Amreli and Bhavnagar, is suffering on account of a slowdown in demand from China and West Asia.

This has led to job losses of around 10-15% for the industry and prices of polished diamonds have declined by 6-10% in the past four months. Additionally, the working capital crunch due shortage of bank finance has also made it difficult for exporters to access credit from international agencies for buying rough diamonds. Delayed GST refunds are also blamed for blocking the working capital. The industry is not optimistic of a quick recovery in demand in these regions, which is led by a slowdown in demand and the liquidity crisis. Demand in China, for instance, has dropped by 15-20%. Exports of cut and polished diamonds from India dropped by 15.11% during AprilJuly, 2019. Around 8 lakh people are engaged in the cutting and polishing of diamonds in Gujarat. India is recognised as the world’s largest cutting and polishing center of rough diamonds, processing as many as 14 out of every 15 rough diamonds in the world.

TRADE TERMINOLOGY TARIFF ESCALATION The terminology refers to higher import duties on semi-processed products as compared to raw materials, and higher still on finished products. It protects domestic processing industries and discourages development of processing activity in those countries where raw materials originate. It is a major sore point between developed & developing nations as the former have a history of adopting such policies in several sectors.

IN QUOTES

Piyush Goyal Minister of Commerce & Industry

Nitin Gadkari Union Minister for MSMEs

(If) protectionist measures continue, there will be recession in the world and no country will escape it.

We want to give a boost to the MSME sector which is currently contributing nearly 29% to the manufacturing segment and 40% to exports.

September 2019 • India Business & Trade | 9

CATR Data Mining 1

India’s sugar exports

Sugar exports by India reached a value of US$ 1.35 billion in 201819, registering a growth of 67.9% YoY. Trend over the past few years shows significant fluctuations in the export figures.

1,800.00

600.00

1,484.90

1,350.05 803.9

800.00

1,285.04

1,000.00

866.12

1,200.00

1,172.62

1,400.00

1,571.97

1,600.00

400.00 200.00 0

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Source: Department of Commerce, figures in US$ million

18%

21%

3% 3%

12%

3% 4% 5%

10% 7%

Sudan Somalia Sri Lanka Myanmar Djibouti Bangladesh UAE Jordan Iran Saudi Arabia Malaysia Cote D’ Ivoire Others

Source: Department of Commerce; figures show import share in %

10 | India Business & Trade • September 2019

Top sugar importers

Indonesia was the largest importer of sugar in 2018, followed by USA & China Indonesia USA 7% 4% 7% China % Malaysia 3 3% Italy 3% 2% Algeria 2% Korea 2% Myanmar 2% India 2% 2% Bangladesh 2% 52% 2% Spain Egypt UAE Saudi Arabia Source: ITC Trade Map, import shares in Sudan percentage for 2018 Others 3%

Sugar imports from India

Sudan was the top sugar importer from India in 2018-19 with a share of 21%

Centre for Advanced Trade Research (CATR) is a premier research institution of economists and researchers in TPCI. The institution facilitates its diversified stakeholders including Government and industry with inputs on trade and economic development matters.

Top exporters of sugar

Brazil was the world’s top exporter in 2018 followed by Thailand and France

12%

6% 4% 4% 3% 3% 2%

29%

2% 2% 2% 2% 2% 1% 26%

Gautemala, Australia and Brazil have alleged that India’s sugar subsidies are in contravention of its WTO obligations. They feel that India’s subsidies towards sugar exports are behind the ongoing glut in global sugar supplies and the consequent drop in prices. India has countered that it is providing production subsidies that do not flout WTO norms.

Brazil Thailand France India Germany Myanmar Mexico Belgium Guatemala Netherlands Pakistan South Africa UAE Poland Others

Closing stocks in India’s sugar mills

India is facing a severe glut of sugar production, due to which it has offered subsidies for sugar mills and farmers, which have been challenged at the WTO.

120

Sugar price trends Global sugar prices have seen a largely downward trend this year, as oversupply persists. However, this could end in 2019-20 with expected shortfall of 2-4 million tonnes.

15.1 13

100

12.9

12.8

12.6

12.7 12.5

12.4 12.3

20 0

India’s sugar policies too sweet?

12.2 2013-14

2014-15

2015-16

2016-17

2017-18 (P)

Source: Department of Food & Public Distribution, figures in lakh tonnes

12.1

5-Feb19

5-Mar19

5-Apr19

6-May19

5-Jun19

5-Jul19

5-Aug19

Source: International Sugar Organisation, 15-day average prices in cents/lb

September 2019 • India Business & Trade | 11

SUJIT PATRA

Tea should be I put in negative list of RCEP

Granting access to the tea market under RCEP will be disastrous for the Indian tea industry, especially due to the yearly surplus of indigenous tea and an insignificant market size and growth potential in RCEP countries. On the other hand, countries like China will have an unprecedented opportunity to flood India with cheap imports.

12 | India Business & Trade • September 2019

ndia produces around 1,350 million kg of tea, out of that 1,220 million kg is CTC and 130 million kg is Orthodox & Green tea. India consumes mainly CTC tea. It imports 20 million kg, consumes 1,000 million kg and exports 250 million kg. Thus absorption level (consumption plus export) has not kept pace with production level, resulting in oversupply year after year. Growth in production in the last few years is attributed to the emergence of the small grower/ bought leaf sector that contributes to 50% of the total production and is growing steadily. Due to oversupply of 70-80 million kg every year, the industry has been suffering from depressed prices over the past 6-7 years. India makes all types of tea, which all other producing countries together produce. There are some vulnerable areas like Cachar (production of 55 million kg), Dooars (235 million kg) & Terai (160 million kg), which cater exclusively to the domestic market and would suffer in the event of an influx of imports. The government’s imposition of 100% import duty has kept the Indian tea industry protected so far. But the industry sees a potential threat with the possible opening of its market to RCEP countries, if tea is brought under the ambit of the FTA, leading to dilution of Rules of Origin through change in the Tariff Classification & PSR and zero/lower import duty. In the RCEP, there are 16 countries, which want a free trade agreement for free imports & exports of goods within the block. Now, if you go through the trade within that block in individual countries, you’ll find that that trade is not in India’s favour – import contents exceed that of exports. There are countries like China, Japan, Vietnam and Indonesia in the block, which also make tea apart from India. Exports of Indian tea to this block is limited to 18-20 million kg. On the other hand, India has a market of over 1,000 million kg, which is growing @2.3% annually.

On signing the FTA, RCEP countries will get this big ready market that will be disastrous for the Indian tea industry. When we look at the import and export content of tea in RCEP bloc, we find that our exports to China are 10 million kg and to other countries in the block are around 8-10 million kg. Thus, there is very limited opportunity to increase tea exports because China, Japan, etc are mainly green tea consuming countries. China, apart from making green tea, also makes sizeable quantity of black tea, which is not sought after in its own market. China will then target India’s black tea market and flood it. It is difficult for China to expand exports to US, Western countries or Middle East, which are mainly black tea markets and almost saturated. Every country maintains high tariffs on certain products to protect its farmers and labour intensive industries or to promote manufacturing. India should be no different. Developing countries need to protect their indigenous industries and millions of workers, traders, etc associated with them. India’s tea production cost is the highest in the world as it bears lot of social welfare costs apart from high transportation costs. In fact, no

THERE IS LIMITED OPPORTUNITY TO INCREASE TEA EXPORTS TO CHINA, JAPAN, ETC AS THEY ARE MAINLY GREEN TEA CONSUMING COUNTRIES other industry in India or tea industry in any other country bears those costs. In the last 6 years, production cost has increased at a CAGR of 10%, while price has not kept pace (CAGR of 1%). The financial condition of the Indian tea industry is critical due to supressed prices and rising costs. In the midst of this, if the government allows imports of tea, it will be disastrous for the Indian tea industry. We have requested the government to pragmatically look into the issues and put tea into the negative list of RCEP, where there would be no negotiation on either export or import of tea and no dilution of import duty from 100% on the following grounds: • Indian tea industry provides employment to over 1.2 million

workers directly and another 6 million associated with the industry. Around 50% of the workforce is women. • Indian tea suffers from oversupply, stagnant prices and significant mismatch in demand & supply. • Low CoP in many RCEP nations will enable export of tea at much lower price. Teas from those countries would be cheaper even after payment of 100% import duty. • While there is a limited scope of exports of Indian teas within the RCEP bloc, there is a huge scope for other countries to enter into the big Indian tea market. The tea industry strongly suggests that instead of going into the hurdles of negotiations on tea under RCEP, it should be put in the Negative List of FTA in order to protect interests of the industry and the millions of people associated with it. There should be no dilution of PSR and Rules of Origin or reduction of import duty for the Indian tea sector.

BY: SUJIT PATRA The author is Secretary, Indian Tea Association (ITA)

September 2019 • India Business & Trade | 13

PERSPECTIVES

Yuan devaluation: Will China fall victim to its own manoeuvre? China’s currency devaluation will help increase exports in the short term but increase hardships for its industry and consumers. BY CATR

ecently the Chinese yuan breached the seven-toone level against the dollar for the first time since the global financial crisis of 2008. The People’s Bank of China, which had maintained this level consistently till now, deliberately devalued the Chinese currency after the latest tariff threats issued from the USA side as a retaliation move. This was followed by the US labelling China as a ‘currency manipulator’. Commentators argue that the People’s Bank of China has actually been reluctant to take this step, but was forced by the threat of tariff increase by the US. The act marks a possible shift of focus in the current trade tensions between the US and China away from what was seen as a “tariff war” to a potential “currency war”. And this spells greater uncertainties not

14 | India Business & Trade • September 2019

only for those trading in Chinese and US currencies or their stocks (which essentially means over 60% of global financial investors), but also for capital flows between emerging markets that tend to peg the value of their own currencies to the dollar. Economic theory says that a lower exchange rate tends to benefit exporters at the expense of importers, and vice versa, which is known as the J-Curve concept. Thus, when an economy deliberately keeps its currency exchange rate below the level that it would be if its exchange rate were floating, it faces the risk of being accused of manipulating its currency to fetch an unfair trade advantage. Since countries are obliged to respond to unfair competition by imposing barriers to trade, currency alteration is discouraged by international bodies such as the IMF.

The move has possibly negative implications on other fronts for China. With inflation on food already reaching at 7%, more import restrictions or tariffs will add to hardships on households and consumers. Devaluing the yuan may further add to the risk and make China’s financial system volatile and uncertain. China’s whopping domestic debt has already compelled the central bank to augment its money supply at a rate of 8% to 10% a year, a relatively high pace that typically enervates the exchange rate. To guard against the expectation of a weakening currency, the central bank of China has strategized and spent years establishing the reputation of the yuan, which has been built on the tacit assumption that it would not fall below 7 yuan to the dollar. This impression is crucial for the yuan because the currency does not have a significant and liquid market, where participants can hedge against various risks at a relatively low price. Since, China remains a major exporter, the yuan’s devaluation may well tempt and incentivise other countries either to devalue their currencies by expanding money supplies or by cutting interest rates to be competitive. Such a response may provide impetus to financial uncertainties at the global level. It seems unlikely, therefore, that China is about to declare an all out currency war. The yuan was already close to the symbolic level of 7 yuan per US dollar. By setting their daily benchmark rate for the currency at a smidgen below 7 yuan to the dollar, the Chinese authorities have created room for currency traders to push the market rate temporarily above that mark, which is an effective devaluation. Since devaluation would also carry significant risks for China, the country’s policymakers and leaders will be hesitant to continue this manoeuvre for a longer tenure. Many of China’s biggest corporates have borrowed heavily in dollars, and a weaker yuan would greatly

VALUE OF YUAN VS US DOLLAR 0.146 0.145 0.144 0.143 0.142 0.141 0.14 0.139 8

18 19 July

6 7 August

Source: YCurrency, Figures denote rate of 1 Yuan vis-a-vis the US$

MANY OF CHINA’S BIGGEST CORPORATES HAVE BORROWED HEAVILY IN DOLLARS, AND A WEAKER YUAN WOULD INCREASE THE COST OF SERVICING THIS EXTERNAL DEBT increase the cost of servicing this external debt and increasing the opportunity cost of paying back. Worse, the prospect of devaluation could spark massive capital flight from China as anxious companies and individuals seek to shield the value of their assets. The Chinese consumer is certainly losing out. A weaker currency drives up import prices and constrains living standards. Commodity imports in particular will be hit the most in terms of paying the bills. Since they are priced in dollars, surged commodity prices will pressure input costs, weaken corporate margins and slow government spending. A feebler yuan also poses a risk to Chinese corporate non-financial debt issued in US dollars, which is close to US$ 850 billion and has tripled since 2014. Meanwhile, banks have also issued around US$ 670 billion of dollar debt. Together, this debt load is over 11% of GDP. Defaults are rising and are expected to top the record stress levels that

were set in 2018. Regardless of the immediate winners or losers, in the long run, currency wars are zero sum games. US trade friction with China is the greatest risk to global growth and continued provocations could prematurely deliver a recession. Other economies are already witnessing the impact of the trade war. South Korea’s exports declined by 11% YoY in July 2019. Thailand has announced the weakest growth since 2014 in its second quarter this year. Singapore, often believed to be a marker of the health of global trade, revised its growth projections from 1.5-2.5% to 0-1%. It’s a high stakes game for both countries: China wants continued access to US markets and technology. Trump wants to get re-elected next year, and evidence of competent economic stewardship is critical to his appeal. Despite US stocks witnessing a battering in August, Trump boasted, “The longer the trade war goes on, the weaker China gets and the stronger we get.” China has affirmed that it will be bringing countrmeasures against the US in September. Any waiting game or procrastination gets catastrophic as economic and market confidence can swiftly erode and plummet, leaving little scope for catch-up political action to shift the momentum. One would hope that a market scare or a pickup in Chinese defaults force some sort of an agreement that in turn dials back the geopolitical risks.

September 2019 • India Business & Trade | 15

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` `` `` `` `` `

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Global Value Chains: A remedy for India’s slowdown blues Participation in global value chains to drive exports is critical for India to emerge out of the current slowdown and achieve its long term ambitions. BY CATR

ndia’s economy is firmly in the grips of a slowdown, a fact that even the most optimistic commentators would now grudgingly admit. The trend has been evident ever since the fourth quarter of 2018-19, when India clocked a below-par GDP growth rate of 5.8%. At this juncture, when the government admits that India needs to push investment and exportdriven growth, participation in global value chains (GVCs) could be one way to combat the challenge. Enervated consumer demand, slowdown in trade, liquidity crunch and slower growth in investments have been blamed for the current slowdown in India’s economy. Consumption constituted about 60%

of GDP (at current prices) during 2017-18 and 2018-19. A decline in consumption indicates that demand has dried up and needs to be revived immediately. Another parameter which needs to be given attention is investment, which is another major driver of economic growth, and has witnessed a jerky ride. Private investment grew 7.2% in the March quarter, down from 8.4% in the previous quarter, while investment growth slowed to 3.6% from 10.6%. The slowdown would put pressure on for fiscal stimulus, including tax cuts on fuel products to boost consumption The growth forecast of Indian GDP has plummeted below 7% and the Indian economy slipped

16 | India Business & Trade • September 2019

down to 7th position at nominal price levels. There has been a lot of activity going around over the past few weeks including a cut in repo rate to revive demand & tackle this deepening economic slowdown. Industry sops and tax cuts are being considered by the government to revive growth. Also, Indian markers have been volatile for the past few weeks, caused by a high outflow of foreign and domestic investments. While external factors such as US-China trade tussle and negative US Fed Rate commentary have affected sentiments, weakness in demand and growth have also dampened investor sentiment. There are continuous layoffs in the automobile sector due to decline

in demand, which is impacting the balance sheets of these firms. The malaise is now spreading to the services space, as indicated by slowdown in credit to sectors like shipping, tourism, hotels & restaurants, computer services and commercial real estate. In this scenario, India needs to take urgent measures to mitigate the impact of the global slowdown on its exports, which can be a catalyst for economic revival. Considering that the current slowdown is also seen to be structural in some sense, a shift to export-led growth would be necessary. Due to increased integration of world markets, transmission of economic slowdown from one country to the rest of the world has become quite seamless. The larger the country where the crisis originates, the greater is the impact on other countries. India’s exports will be challenged by the global slowdown in demand and trade. We need to have a clear thought process and plan of action to revive our exports outlook. It is a major challenge for India to implement strategies, which not only mitigate the adverse impact of the global slowdown on its exports but also build the resilience of the economy to such future shocks. However, for designing such strategies, there is a need to assess the extent to which the global slowdown may impact India’s total exports and, more importantly, identify the sectors which are likely

to be more adversely affected by this slowdown. REVIVAL THROUGH GVCS Global value chains (GVCs) have become all the more necessary because selling products that are labour intensive is becoming difficult for many developing countries. They are facing declining returns unless the producers are able to upgrade the quality of products through higher value addition. This problem is particularly relevant to SMEs of developing countries, which generally have limited pricing power and capabilities and options for upgrading their products. They can link up with international production networks, but then they have to meet a wide range of increasingly stringent global standards with respect to quality, price, timely delivery and flexibility. Only some countries have been successful in integrating themselves into global value chains and China is at the forefront. Almost all big

INDIA HAS A WEAK GLOBAL EXPORT SHARE IN PRODUCTS LIKE MOBILE PHONES, INTEGRATED CIRCUITS, COMPUTERS, SOLARPOWERED DIODES, TRANSISTORS & LCDS

INDIA’S GDP AND GVA GROWTH, IN % AT 2011-12 PRICES 9 8 7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

GDP

GVA

Source: http://statisticstimes.com/economy/gdp-growth-of-india.php, 2019

retail chains of the world get their products made in China, even though shifts to other locations have been seen in recent times. Ironically, 70% of India’s export earnings come from the small basket products. India has a high share of world exports in products like small diamonds (19.8%), jewellery (12.7%), rice (39.1%), buffalo meat (19.1%) and shrimps (17.7%). Other major products are petroleum, cotton, yarn, ladies’ suits, medicines and auto components. The small size of the global basket limits the potential for future growth. Also, most products face intense competition from low-cost countries such as Bangladesh and Vietnam. On the other hand India has a weak global export share in commodities such as mobile phones (0.19%), integrated circuits (0.01%), computers (0.04%), solar-powered diodes, transistors (0.14%) and LCDs (0.04%). Compare these shares with India’s 1.7% share of global merchandise exports. India has an insignificant presence in products that have become important in world trade. Most large basket products are infra critical products, whose parts are manufactured in several countries. According to the OECD TiVA database, the foreign value added content in India’s exports declined from 25.1% in 2012 to 16.1% in 2016, which is a sign of concern and further highlights India’s weak GVC participation. India’s foreign value added content of gross exports is lowest for primary agriculture (3%), processed food (6%) and is highest for petroleum products (47%) and basic metals (39%). The country has ended up importing more from the rest of the world rather than exporting to it. It is not the only economy, which is facing such problems. Unless India undertakes pragmatic reforms which equip its manufacturing sector to fully exploit the advantages of integration into the global economy, it is unlikely to realize the dreams of the becoming the next global factory, which is critical to achieving its economic goals.

September 2019 • India Business & Trade | 17

Innovation in India: Just the tip of the iceberg India’s innovation culture goes far beyond a few visible successes. But the country needs to facilitate more industry-academia interface to truly leverage its potential. BY Nikhaar Gogna

he history of innovation in India relates quite well to a popular English proverb, “Necessity is the mother of invention.” From designing wellorganised drainage systems in the cities of Indus Valley Civilization to engineering a fridge that can run without electricity & the world’s lowest priced tablet PC, India has been a pivot of life changing ideas. Yet, India doesn’t feature anywhere in the top 20 ranks in terms of global innovation. As the Global Innovation Index suggests, India secured 52nd position among 129 countries ranked on the basis of more than 80 indicators such as political environment, education, infrastructure and business sophistication. However, other Asian economies including Singapore (8), China (14), Japan (15), Malaysia (35), Vietnam (42) & Thailand (43) are well ahead of India in this area. While the jump from 81st rank in 2015 is reason to celebrate, there’s a lot of work still left for India to take its rightful place as the innovation hub of the world. INSPIRING SUCCESS STORIES The Mangalyaan launch by ISRO a few years back was a success story of many firsts, and brought India’s latent innovation potential to global centre-stage. While these

18 | India Business & Trade • September 2019

THE MISSING LAST MILE India’s record in patents is quite poor, so a lot of innovation doesn’t see the ‘light of day’. On comparison of patents in force by filing office for 2017, India had 60,777 patents and was ranked 24, according to World Intellectual Property Organisation

PATENTS IN FORCE BY FILING OFFICE

500000 USA

Korea

Italy

Russian Switzerland

60,777

208,022

France

244,217

Germany

297,672

563,695

Japan

1000000

657,749

China

1500000

970,889

2000000

1,243,678

2500000

2,013,685

3000000

2,085,367

3500000

2,984,825

may come across as isolated instances of success, the ecosystem for innovation in India certainly has much more to offer. A few years ago, professors Vijay Govindarajan and Chris Trimble and GE’s Jeffrey R. Immelt popularized the concept of “reverse innovation” - an innovation used first in the developing world, before being applied to the industrialized world. India is seen as the epitome of jugaad, and often as a testbed for such innovation due to its consumer market as well as addressable issues in a host of areas. A case in point is GE, which started shipping low cost products developed for emerging markets to the markets of Europe and the US, making affordable health care accessible for a large number of people. The US$ 1,000 electrocardiogram (ECG) device Mac 400 was developed at GE’s John H Welch Technology Center (JHWTC) in Bangalore. The Indian ecosystem has fuelled several such innovative ideas. Researchers of IISc developed a low-cost solar water purifier, which can transform water from any source – including that contaminated with arsenic, fluoride or sewage – into potable water. Karnataka has started using selfrepairing roads modeled on the one devised by Professor Nemkumar Bhantia with hydrophilic nanocoating and made with fly-ash (60%) and cement (40%). Hyderabad’s Jawwad Patel is the first Asian to develop a 3D-printed apparatus, which can ‘create’ drinking water from air. IITians are coming with very futuristic innovations like passive solar water walls to replace ACs, smart canes for visually impaired, solar powered cold storage and intelligent street lights.

India

Source: WIPO; Data is for 2017

AROUND (17%) OF PATENTS FILED IN INDIA ARE BY RESIDENTS, WHILE AN OVERWHELMING 83% OF THE PATENTS ARE FILED BY NONRESIDENTS. (WIPO). This is way below the leaders – US (2,984,825), China (2,085,367), Japan (2,013,685), UK (1,243,678) and South Korea (970,889). Moreover, just 10,343 (17%) of these patents are by residents in India with the remaining 83% filed by non-residents. In 201718, Qualcomm filed 960 patents in India, more than all the IITs with 540 applications. At the launch of Niti Aayog’s Atal Community Innovation Centre, Shri Dharmendra Pradhan, Petroleum Minister noted, “India will not become US$ 5 trillion economy without innovation.” While India has the basic conditions that stimulate innovation – democracy, demography, diversity and unconventionality – it has not been able to efficiently harness these conditions to become a global innovation hub. One key issue is that there is very little synergy between academia and industry in India, which leads to lower inclination

and incentive for filing patents. Part of the problem is cultural, as corporates in India tend to rely on their own research due to existing stereotypes of academia and general lack of awareness. India would also do well to learn from its other counterparts who have fared better such as US (3) & Israel (10). The US has fast-tracked innovation through tax regulations that encourage venture capital, and laws (like the Bayh-Dole Act) that facilitate the adoption of academic research in the commercial world. This act enabled universities, nonprofits, and other small businesses to earn patents to inventions. In Israel, the government has played a more direct role, particularly through the office of the chief scientist, which provides high-tech start-ups with seed funding. This has given Israel a dominant position in vital high-tech fields like security software. Greenshoots of change are emerging like the Advanced Manufacturing Technology Development Centre (AMTDC), Chennai, an industry-academia collaboration set up at IIT Research Park and supported by Department of Heavy Industries. Indian companies are using this facility to indigenize their manufacturing facilities by designing machines that are at par or even better than global standards. More such initiatives need to be facilitated to help Indian technology & manufacturing firms to be able to compete more effectively in the global market.

September 2019 • India Business & Trade | 19

Tourism: Chasm between ‘Incredible’ and ‘Credible’ India A lot of work needs to be done in terms of infrastructure, safety & security and health & hygiene to boost India’s tourism sector. BY CATR

rimming with magnificent visual spectacles and nonpareil cultural experiences, India is a land of marvels. From attracting the famous Moroccan scholar, Ibn Battuta in the 14th century, to drawing the popular wildlife enthusiast, Bear Grylls on an expedition in the rocky forests of Jim Corbett with PM Shri Narendra Modi, India has enticed foreign travelers throughout history. However, India’s actual tourism numbers have been well below the potential. Dr Pralok Gupta, Associate Professor (Services and Investment), Centre for WTO

Studies, IIFT New Delhi notes, “We have nature tourism, eco-tourism and cruise tourism in our country. But we receive lesser foreign tourists than say Singapore & Thailand.” Indeed as numbers for 2017 suggest, destinations like Mexico (39.3 million), Thailand (35.4 million)

20 | India Business & Trade • September 2019

and Turkey (37.6 million) cater to over twice the number of foreign tourist arrivals (FTAs) compared to India (15.5 million including NRIs) on an annual basis. If one looks at the top 10 destinations in 2017 of tourist arrivals in the world, India features nowhere in the list. On the other hand, Asian counterparts like China

& Thailand have carved a niche for themselves on travelers’ itinerary. According to World Travel & Tourism Council, in 2018, there has been a growth of 7.5% in the tourism sector’s contribution to India’s total GDP and 3.1% growth in terms of jobs generated. The agency predicts that in 2028, out of 185 countries, India will rank third in terms of the growth in direct contribution of tourism to GDP of the country (7.1%). But for this estimate to come true, India’s tourism numbers need to be pumped up to sustainably higher levels. Recent reports suggest that the performance has been quite lackluster this year so far. There was a mere 1.9% yoy growth in FTAs YoY until April 2019, rising to 3.93 million. This is quite disappointing as compared to 2018 when FTAs rose by 5.2% to 10.5 million, and 2017 when there was a 14% growth. Weather vagaries have dealt a blow to India’s FTAs last year, particularly the floods in Kerala The world is headed for another global recession due to the tensions created by the US-China trade war. While there is little that the government can do to safeguard itself from the harsh effects of global factors like economic slowdown & climate change, timely policy intervention can be a game changer. Issuing of visa on arrivals, e-visas, launching of schemes like Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD) & Heritage City

Development and Augmentation Yojana (HRIDAY) are steps in the right direction. However, if India looks at its rankings in terms of vital parameters such as safety and security, health and hygiene and tourism infrastructure, it does not fare well on a global scale. This is evident in the 2017 assessment by World Economic Forum – Travel & Tourism Competitiveness Index. Out of 136

DESTINATIONS LIKE MEXICO, THAILAND AND TURKEY CATER TO OVER TWICE THE NUMBER OF FTAS THAT INDIA DOES ON AN ANNUAL BASIS

INDIA VS TOP 10 TOURIST DESTINATIONS OF THE WORLD 100 90

86.9

81.8

76.9

60.7

58.3

39.3

37.7

37.6

37.5

37.4

30 20

15.5

10 0 France

Spain

USA

China

Italy

Mexico

Turkey

Germany Thailand

India

Source: UNWTO, Ministry of Tourism, figures pertain to foreign tourist arrivals in 2017 in million

economies, India was ranked 114 in safety and security, 104 in health and hygiene, and 110 on tourist service infrastructure. A larger push to catapult India to the ranks of the world’s top tourist destinations entails addressing structural issues like paucity of proper infrastructural facilities, absence of last mile connectivity and provision of a safe & healthy environment for travelers. India should be depicted as a destination for varying needs of travelers – business, leisure, sightseeing, spiritual, adventure, medical etc. Prime Minister Shri Narendra Modi made a pertinent point during his Independence Day Speech from Red Fort this year, “Why shouldn’t our country develop 100 great tourist destinations? Why shouldn’t every state prepare two, five or seven world class tourist destinations?” Both onground action and branding initiatives will be needed to achieve this objective. Ten important tourism sites including Ajanta Caves, Taj Mahal and Fatehpur Sikri will now be converted to world-class destinations by the government. The PM also urged Indians to travel more domestically to boost tourist destinations in the country. Around 50 million Indians are estimated to travel overseas this year, a huge jump compared to 23 million in 2017. Therefore, in the drive to take Indian tourism ahead, the potential role of this audience certainly cannot be ignored.

September 2019 • India Business & Trade | 21

Indo-Pak trade: Pakistan scores another self-goal Pakistan suspended trade relations with India in response to the latter’s decision to abrogate Article 370 in Jammu & Kashmir. However, this is likely to impact Pakistan much more than India, considering that the former accounts for a very small percentage of India’s trade. Given that Pakistan’s own economy is in dire states, it should adopt a more pragmatic approach and work to establish peace and prosperity in the region. BY CATR

hocked and stunned by India’s decision to scrap article 370 in Jammu & Kashmir, Pakistan has been looking desperately at ways to express its displeasure and gain popular support. Some of the measures announced as a mark of protest included spending Pakistan’s Independence Day August 14 ‘in solidarity with Kashmiris’ and recognizing August 15 as Black Day. Furthermore, it has decided to downgrade bilateral relations and suspend India-Pakistan trade ties. The decision is yet another example of Pakistan’s short-

sightedness and poor economic prudence. Pakistan has repeatedly tried to push its Kashmir agenda into talks with India and exported terror in its bid to keep the cauldron boiling. But the fact is that any such decision on Jammu & Kashmir is purely India’s internal matter, and not a reason for Pakistan to cry foul. Moreover, India had already removed Pakistan’s MFN status in February after the dastardly Pulwama attack and increased import duties by 200%. So any such announcement of trade tensions carries little meaning. Moreover on the question of

22 | India Business & Trade • September 2019

trade, the decision by Pakistan impacts its own economy more than India. From India’s perspective, Pakistan ranks 48th on its list of trading partners with total trade of US$ 2.56 billion in 2018-19, around 0.3% of India’s total trade (Department of Commerce). Pakistan’s imports from India in 2018 on the other hand take a relatively much higher share of 3.9% of its imports from the world. India has a significant trade surplus of US$ 1.57 billion vis-à-vis the trade equation, with top exports being cotton, organic chemicals, plastics, tanning or dyeing extracts,

machinery, pharma, iron & steel and coffee, tea, mate and spices. Top items imported from Pakistan are mineral fuels, fruits & nuts, salt, sulphur, etc, ores, raw hides and skins, and oilseeds. India-Pakistan trade has remained erratic over the past few years, due to the political issues. Mohit Singla, Chairman, TPCI comments, “We will not be losing much as Pakistan had not even granted us MFN status. Pakistan is an important export destination for India but not vice-a-versa. This is despite the fact that Pakistan imposes a large number of NTMs (143) on Indian exports, the major ones being export-related measures (25.2%); technical barriers to trade (24.5%); and sanitary and phytosanitary measures (22.4%). These are ‘concentrated on agriculture, plants, and food-related products.” On the other hand, India had granted Pakistan MFN status way back in 1996. The two countries had made substantial progress towards liberalization of trade in 2012, when Pakistan moved from the positive list approach (allowing a small number of items to be imported) to a negative list approach (restricting trade in a small number of items) for the first time. India also made attempts to address non-tariff barriers. However, this has hardly brought any significant gains, with trade fluctuating from US$ 1.94 billion to US$ 2.61 billion from 2011-12 to 2018-19. A study by ICRIER finds that besides the size of the trade pie, the post-liberalisation phase has also seen a moderate increase in the composition of India-Pakistan trade through rise in exports of products like organic chemicals, oilseeds, nuclear reactors and coffee, tea, mate and spices. Tea itself is an example of unmet trade potential. Pakistan is the second largest tea importer in the world, and largely imports Kenyan tea despite neighbourly relations with India. Sujit Patra, Secretary, India Tea Association (ITA), comments, “From less than

TRENDS IN INDIA-PAKISTAN BILATERAL TRADE 3

2.7

2.61

2.5

2.35

2.61

2.56 2.27

2.41

1.94

1.5 1 0.5 0 2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

Source: Department of Commerce, figures in US$ billion

1 million kg in the 90s, tea exports reached a peak of 25 million kg at one point due to consistent efforts by ITA, exchange of delegations and education of Pakistani importers/ blenders on the quality and varieties of Indian tea.” However, in the last few years delegations have stopped due to various reasons, and exports have fallen. In 2018, tea exports to Pakistan from India reached 15.83 million kg. India exported 5 million kg in January-June, 2019, a significant decline compared to 7.4 million kg in January-June, 2018. On the other hand, informal trade between the two countries continues to garner a much larger share. According to a study, the informal India-Pakistan trade was estimated at US$ 4.71 billion in 2012-13, much higher than the formal trade. This included items like jewellery (24%), textiles (20%), machinery and machine parts (8%), electronic appliances (6%) and chemicals (5%). India’s informal exports to Pakistan were estimated

LIBERALISATION BROUGHT SOME GAINS IN FORMAL INDO-PAK TRADE, BUT POSTSUSPENSION OF TIES, INFORMAL TRADE COULD SURGE ONCE AGAIN

at US$ 3.9 billion in 2012-13, while imports stood at US$ 721 million. Some shift from informal to formal trade was taking place, but after the suspension of ties, informal trade is expected to grow again. The study by ICRIER makes a few policy recommendations like improving information sharing, having exhibitions and fairs for each other’s exporters, addressing impediments impacting exports by rail, and having an institutional framework to address issues. From a pragmatic perspective, Pakistan would have done itself a world of good if it discussed the ways to improve its trade and business relations with India. It is no secret that the Pakistani economy is in dire straits and there are other ‘downgrades’ to worry about. Pakistan’s long-term credit rating was downgraded to ‘B-Negative’ from ‘B’ by Standard & Poor’s (S&P) in February this year amid structural weaknesses and heavy external borrowing, particularly from China. S&P admitted that Pakistan’s economic outlook and external position had “deteriorated beyond expectations”. It is clear that Pakistan needs a positive political and economic relationship with India to a much greater degree than the other way around. Rather than persistently crying itself hoarse over the Kashmir bogey and trying to escalate tensions, Pakistan would be better off working to enhance ties with India and facilitating efforts for the prosperity of the region.

September 2019 • India Business & Trade | 23

ARPITA MUKHERJEE & DIVYA SATIJA

Streamlining food trade through use of technology & data analytics To improve ease of doing business and India’s ranking in logistics performance, there is an urgent need for backend process and IT integration across export and import clearance agencies. Data generated through digitisation on cross-border trade can help in evidence-based policy making

he report of the Logistics Development Committee, Economic Advisory Council to the Prime Minister (EAC-PM), October 2018, pointed out that despite various measures taken in the recent years by the Central governmentto improve ease of doing business, there are delays and bottlenecks at the ports due to lack of predictability and certainty,

resulting from manual interventions. The report recommended a shift towards a fully-facilitated trust-based clearance process through stateof-the-art risk management system. More recently, the Economic Survey 2018-19 brought forth the need for technology and data analytics in the food sector. In this context, a survey-based study by the authors covering 150 respondents titled,

24 | India Business & Trade • September 2019

“Streamlining Food Imports for Trade Facilitation and Ease of Doing Business in India”, published by Academic Foundation, found that while agencies such as the Food Safety and Standards Authority of India (FSSAI) have taken several initiatives to implement technology and automation, there are gaps in processes, technology adaptations and inter-agency co-ordination. These are resulting in delays and higher compliance costs. For example, even though pre-shipment filing of application has been made mandatory in the Customs’ ICEGATE portal, the FSSAI’s facility of pre-shipment filing in the Food Import Clearance System (FICS) is not mandatory and according to survey participants, it is not being used by the importers. This is leading to delays. To improve ease of doing business and India’s ranking in logistics performance indicators, there is an urgent need for backend process and IT integration across different export and import clearance agencies and all agencies should make pre-shipment filing mandatory. Unless import clearance portals of other agencies are fully integrated with ICEGATE, importers have to upload the same set of documents on multiple portals, which adversely impacts ease of doing business. Integration of systems for real time exchange of data and information electronically between the Customs, FSSAI, and other government agencies would be necessary for a robust risk management system. The study found that opening up of the Indian economy to trade in food and feed products has led to the associated “trade” of hazards and risks, which can enter the country through imports. The FSSAI systems generate and operate on large volumes of data from various touch points with respect to importers, logistics companies, courier and express delivery bodies, food business operators, and other participating agencies. This data can be used to identify high-risk and low-risk products,

importers and countries. The highrisk products can then go through more examination while low-risk products can be cleared on a fast track route. Integration and sharing of information across agencies and across different ports of entry will not only ensure uniformity of processes but will also ensure that unsafe food products do not entry the country. The survey found that since multiple clearance agencies are not putting down their requirements by a common product classification or HS codes, importers and exporters are often unaware of the documentation requirements. They often submit incomplete documents and in some cases no-objection is required from multiple agencies causing delays. Ideally, the requirements of different agencies such as the FSSAI, APEDA, Plant and Animal Quarantines should be consolidated by product categories at HS 8-digit level on a technologybased platform so that Customs and other stakeholders involved in the export and import processes are aware of the requirements and are able to verify if these are met. Unless this

REQUIREMENTS OF DIFFERENT AGENCIES SHOULD BE CONSOLIDATED BY PRODUCT CATEGORIES AT HS 8-DIGIT LEVEL ON A TECHNOLOGYBASED PLATFORM is done, a product cleared by an export control agency in India can be rejected or even banned in the importing country market, leading to huge losses for the exporters. To conclude, the growth in agriculture trade has posed a challenge to agencies in ensuring that food adheres to safety requirements such as the maximum permitted level of pesticide and other chemical residues and are free of animal and plant borne diseases. Products can be classified under high-risk and low-risk products and can even be banned. However, such classifications should be based on scientific evidence and

the rationale for such classification has to be made public and shared with importers, exporters and other stakeholders. Risk can be under various categories â&#x20AC;&#x201C; importer/ exporter related risk, productrelated risk, country-related risk and so forth. These risks have to be identified by sharing information across agencies and even across countries, to understand how other countries are identifying, examining and analysing such risk and what measures have been taken to communicate and mitigate the risks. In this context, there is need to have greater collaborations with regional groups such as the EU and countries such as the US, Australia and Japan to understand how these countries are collating and collecting data and analysing them. With widespread digitisation, data generated through cross-border trade can help in evidence based policymaking and can be used as proof in case of any legal dispute faced by India in international forums such as the World Trade Organization (WTO). Indian government agencies engaged in trade have to build frameworks for not only collecting data but also for archival and purging of historical data. There is need to segregate the data based on usage patterns and this, in turn, will define the way data needs to be stored. Such a stance can help India leapfrog to utilise the benefits of technological advances for ensuring food safety and standards and ease of doing business.

ARPITA MUKHERJEE Professor, Indian Council for Research on International Economic Relations (ICRIER)

DIVYA SATIJA Consultant, Indian Council for Research on International Economic Relations (ICRIER)

September 2019 â&#x20AC;˘ India Business & Trade | 25

COVER STORY

INDIA-KENYA:

A PROMISING R

elations between India and Kenya date well back into history, with evidence of trade contacts well before European exploration began to take shape. Indians have supported and even participated in Kenya’s struggle for independence. Regular high-level visits, rising trade relations and extensive people-to-people contacts have transformed this relationship to the level of a robust partnership. In 2016, PM Narendra Modi embarked on a state visit to Kenya and deliberated on a number of issues with Kenyan President Uhuru Kenyatta. The two sides signed a number of agreements to enhance defence, trade and development assistance. In turn, Kenyatta visited India in 2017, when he held

meetings with the President and Vice President. During this visit, discussions were held on a number of sectors - maritime security and surveillance, counter-terrorism, counter-narcotics and human trafficking, agriculture, health, supporting Kenya through Lines of Credit, digital and cash-less economy, renewable energy and blue economy. India and Kenya have set up a joint trade committee (JTC) to deliberate on frameworks for trade and economic expansion. The 9th Session of the India-Kenya Joint Trade Committee (JTC) was organised during August 19-20, 2019 in New Delhi. The Indian delegation was led by Union Minister of Commerce & Industry

26 | India Business & Trade • September 2019

and Railways Piyush Goyal. Peter Munya, Minister of Industry, Trade and Cooperatives, Government of the Republic of Kenya, led the Kenyan delegation. Piyush Goyal highlighted the friendship, solidarity, strategic partnership and multifaceted-cooperation between the two countries. Total trade between India and Kenya reached US$ 2.21 billion in 2018-19, growing by 7.9% YoY. However, this is considerably less than the peak of US$ 4.23 billion achieved in 2014-15. In 2018-19, India’s top items of exports were petroleum products, drug formulations, biological and industrial machinery for dairy, paper, paper board and products, plastic raw materials, two and three-

Relations between the two countries are blossoming with regular highlevel engagement and deepening cooperation. Can this translate into gains in trade?

PARTNERSHIP wheelers, iron and steel, manmade yarn, fabrics made-ups, books, publications and printing, electric machinery and equipment.

On the import side, it was inorganic chemicals, pulses, coffee, drug formulations, biologicals, copper and products made of

INDIA-KENYA BILATERAL TRADE

4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00 1,500.00 1,000.00 500.00 0

2014-15 2015-16 2016-17 2017-18 India’s exports to Kenya India’s imports from Kenya Source: Export-Import Data Bank, figures in US$ million

2018-19

copper, wood products, aluminium, products of aluminium, tea and finished leather. Both sides have expressed their willingness to explore trade opportunities in sectors like manufacturing, agriculture, agroprocessing, floriculture, aquaculture, Information, Communication and Technology (ICT) and products such as base metals & articles thereof, textiles & textiles articles, vegetables and horticultural products, plastics & rubber, chemical products and machinery & mechanical appliances. India is the second largest source of imports for Kenya after China, accounting for 10.5% of the country’s total imports in 2017. However, the drop in exports over the past few years is a cause for worry. While China’s exports to

September 2019 • India Business & Trade | 27

Kenya grew at a CAGR of 7% during 2014-18, India’s exports have suffered a de-growth by 13% during the same period. The most drastic declines have been seen in mineral fuels (CAGR of -50.8%), iron & steel (CAGR of -11.1%), electrical machinery and equipment (CAGR of -6.8%), man-made staple fibres (CAGR of -11.4%) and furniture (CAGR of -14.6%). This has been attributed to the huge investments by China in Kenyan infrastructure, steel and chemicals sectors, leading to India losing its first mover advantage. China’s bilateral trade with Kenya stood at US$ 3.9 billion in 2018. There is also a need to have more reciprocity in the bilateral trade, which is overwhelmingly tilted in India’s favour. While India exports to Kenya were at US$ 2.07 billion during 2018-19, imports were just at US$ 137.12 million. PROMOTING INVESTMENT Kenya is a source of investment opportunities in a range of sectors including energy, financial services, tourism, agriculture, real estate, infrastructure and manufacturing. India is currently the second largest investor in Kenya after US, with investments estimated at US$ 3.5 billion. On the other hand, Kenya has invested around US$ 22.96 million in India between April 2000 and March 2019. Some of the major Indian companies that have invested in

Kenya include Tata Chemicals, Bharti Airtel, Reliance Industries Ltd; Tata. A number of Indian firms like Kalpataru Power Transmission Ltd., Kirloskar Brothers Ltd., Mahindra & Mahindra, Thermax, WIPRO, Punj Lloyd, Emcure, Cipla, TVS, Mahindra Satyam, Bank of India and the Bank of Baroda have a presence in Kenya.

INDIA HAS PROPOSED TO SIGN AN MOU WITH KENYA ON THE LINES OF SIMILAR MOUS WITH JAPAN, CANADA, SOUTH KOREA & SAUDI ARABIA

TOP PRODUCTS OF EXPORT FROM INDIA TO KENYA

700 600

583.6

500 400 300

233

200

227.6 133.4

100 0

Mineral fuels, oils

Machinery, Pharmamechanical ceutical appliances products

116.3

Vehicles Plastics & other than articles… tramway.

Source: ITC Trade Map, figures in US$ million for 2018

28 | India Business & Trade • September 2019

77.3

Paper & paperboard…

In order to boost investments, India has proposed to sign an MoU with Kenyan Investment Authority on the lines of MoUs with other similar authorities including Japan, South Korea, Canada and Saudi Arabia. The proposed scope for this collaboration will include: 1. Exchange of information on investment opportunities, investment-related laws and regulations 2. Encourage the exchange of business missions 3. Assist existing and potential investors who seek opportunities but face impediments to investment and to also provide further information on current laws and regulations to the potential investors. 4. International cooperation for building capacities While welcoming this proposal, Kenya has also informed India about potential investment opportunities in its special economic zones (SEZs). Export-Import Bank (EXIM) of India, has provided 4 Lines of Credit (LoCs) aggregating US$ 206.55 million to Kenya. So far, contracts of around US$ 93.73 million have been included for projects. National Small Industries Corporation (NSIC) has also offered to share its experience and expertise to Kenyan MSMEs through fee-based consultancy services and training in capacity building, policy & institutional framework, entrepreneurship

KENYA’S GOVERNMENT HAS INITATED MEASURES FOR GROWTH INCLUDING SEZS, INDUSTRIAL PARKS & CLUSTERS & NICHE PRODUCTS

development, business development services along with skill upgradation programmes. In the power sector, NTPC is looking to set up utility-scale solar photovoltaic (PV) power project(s), liquefied natural gas (LNG)-based power projects and possible joint venture/joint development of power projects. India has proposed greater cooperation on renewable energy through an MoU and requested Kenya to be a part of the International Solar Alliance (ISA) agreement. ONGC Videsh Ltd has expressed interest in offering its expertise for joint studies in exploration, production and development. Besides, this, Indian PSUs are interested in collaboration with Kenya for LPG marketing, distribution and lube business and engineering consultancy services. Kenya is regarded as one of the major business and leisure tourism destinations in the world, and offers opportunities in areas like building resort cities, branding premium parks, branded hotels, MICE tourism facilities, etc. On the civil aviation front, Air India is looking to operate to Mombassa on code-sharing with Ethiopian Airlines. Kenya Airways is interested in code-sharing arrangements to Cochin, Chennai, Bangalore & Kolkata. Manufacturing is a major priority for Kenya’s government due to its potential role in raising national output, exports & job creation. Some key targets and specific goals have been set by the government to drive growth, which include development

Africa’s healthcare challenge Africa is India’s second largest destination for pharma exports, and there is much greater potential in store

ndia’s pharmaceutical industry has played a major role in Africa’s healthcare sector. Exports of pharmaceutical products from India to Africa constitute around 20% of India’s total pharma exports, and growth has remained robust in this sector. Regionally, Africa is the second largest region in terms of share of pharma exports after North America (30%). Furthermore, the Indian pharma industry has helped promote indigenous manufacturing capabilities in African countries. Recognition of Indian Pharmacopoeia (IP) is a key step to bolster India’s exports and domestic manufacturing in Africa. Kenya is equally keen on Indian investments in its pharma sector, and asked India to consider a government-to-government purchase for critical medicines for haemophilia, post-transplant medicine, cancer, etc. A report by Goldstein Research projects the African pharma market opportunity at US$ 160.7 billion by 2024. Major driving factors are growing healthcare capacity, fast-paced urbanisation, growing healthcare spending and the rise in incidence of lifestyle diseases. Moreover, Africa is considered the largest reservoir of infectious diseases like malaria, TB and AIDS due to its tropical climate. Unfortunately, around half of Africans still do not have access to essential medicines, and a child is killed every 30 seconds due to malaria. Amidst this conventional scenario, increasing alignment with Western lifestyles has also led to a rise in non-communicable diseases (NCDs) like diabetes, cardiovascular diseases and cancer. Share of NCDs in Africa’s healthcare challenge is expected to rise to 21% by 2030.

of SEZs, industrial parks & clusters, and niche products. GATEWAY TO AFRICA Amidst uncertainty in the global economic environment, Africa is emerging as a vital investment destination for business growth. The continent has defied the global slump, as FDI into Africa grew by 11% YoY in 2018.

Africa’s attractiveness has got even better with the launch of African Continental Free Trade Area or AfCFTA. Kenya and Ghana were the first to ratify this agreement, which was signed by 54 member countries as of July 2019. It is expected to increase intraAfrican trade by 52.3% by 2022. African countries have agreed to progressively reduce intra-regional

September 2019 • India Business & Trade | 29

Minister of Commerce & Industry Piyush Goyal with Peter Munya, Minister of Industry, Trade & Cooperatives, Kenya

TOP 10 PRODUCTS OF HIGH UNTAPPED TRADE POTENTIAL INDIA’S EXPORTS TO KENYA Kenya's India's imports exports to world from world

Estimation of untapped potential trade

245.59

6,878.4

259.70

0.00

321.54

825.6

92.14

Cement clinkers

0.00

94.54

178.6

44.91

871120

Motorcycles, incl. mopeds, with reciprocating internal combustion piston engine of a cylinder...

65.52

105.60

1,931.9

18.17

720711

Semi-finished products of iron or non-alloy steel containing, by weight, < 0,25% of carbon,...

10.47

130.62

219.67

16.73

100590

Maize (excluding seed for sowing)

0.00

32.42

193.66

15.90

720719

Semi-finished products of iron or non-alloy steel containing, by weight, < 0,25% of carbon,...

30.21

39.52

976.24

15.45

170199

15.18 Cane or beet sugar and chemically pure sucrose, in solid form (excluding cane and beet sugar...

88.39

856.03

14.51

300410

5.92 Medicaments containing penicillins or derivatives thereof with a penicillanic acid structure,...

11.61

494.38

12.05

390210

Polypropylene, in primary forms

101.57

864.44

10.91

Product Code

Product Label

India's exports to Kenya

100630

Semi-milled or wholly 19.17 milled rice, whether or not polished or glazed

720839

Flat-rolled products of iron or non-alloy steel, of a width of >= 600 mm, in coils, simply...

252310

12.83

Source: ITC Trade Map, figures in US$ million

30 | India Business & Trade • September 2019

KENYA HAS AFRICA’S HIGHEST INTERNET PENETRATION RATE, AND INVESTOR INTEREST IS HIGH IN ITS TECHNOLOGY SECTOR tariff and non-tariff barriers. This will improve the flow of goods and services across borders and providing greater certainty for businesses beyond Africa as well. Some sectors expected to benefit are apparel, leather, wood, vehicles, and transportation equipment. Kenya is a vital gateway to Africa in India’s context due to its geographic location. It also has the highest internet penetration rate in Africa, and Nairobi has been recognised as the most ‘intelligent city’ in the continent according to Intelligent Community Forum. India can leverage the Kenyan market to further make inroads into East Africa, which has an addressable market of 172 million and other prominent investment destinations like Tanzania and Uganda. The region has emerged as the leading destination for FDI in Africa according to EY Global’s 2018 Africa Attractiveness Report. It attracted 30% of the region’s FDI in 2017 with 197 projects, growing by 82% over 2016. FDI projects in Kenya grew by 44% over 2016 with significant interest in its technology, media and telecommunications (TMT), where FDI increased 44% YoY. Called Silicon Savannah, Kenya’s technology ecosystem has emerged as a prominent feature of its business landscape. It is an opportune time for India to diversify its trade with Kenya to more primary and manufactured goods as well as deeper partnership in services, especially information technology. Indian companies must also strengthen their physical presence in the region for strategic gains in the larger African market, especially in the AfCFTA era.

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FOCUS IMPORT

Palm oil: Why India is on a slippery ground India’s palm oil imports have grown by 20 times over the past 25 years. Given that consumption of the product is not expected to abate in the coming years, what can India do to reduce this alarming import dependence? BY VIRAT BAHRI

alm oil is among the most commonly used vegetable oils in the world. It is deemed as the most efficient and economical source of vegetable oil till date, around 20% cheaper than its peers. Even if it is not a part of your kitchen shelves, an average consumer will be surprised to know that palm oil is a key ingredient in a number of packaged products on the supermarket shelves – be it pizza

dough, instant noodles, shampoos, cosmetics, detergents, margarine, chocolates and ice cream. India’s palm oil imports have increased at a brisk pace from Indonesia and Malaysia, especially since the conclusion of the IndiaASEAN agreement in 2009. In fact, India is the largest importer of this product globally. The country’s imports of palm oil and its derivatives (HS Code 1511) rose by

32 | India Business & Trade • September 2019

a sharp 58.03% YoY in 2009-10 to reach US$ 4.04 billion. Indonesia took the lead with exports of US$ 3.2 billion followed by Malaysia with imports of US$ 750.4 million. Imports reached a peak of US$ 7.2 billion in 2011-12, after which growth has been erratic. In 2018-19, imports were recorded at US$ 5.23 billion, a decline by 22.73% YoY, with Indonesia still in the lead at US$ 3.36 billion and Malaysia at US$ 1.44 billion. Palm oil continues to heavily dominate India’s edible oil imports as well. Imports of palm oil (crude + refined) accounted for 60% of India’s total edible oil imports in 2018-19 (April-Jan). Out of the 73.21 lakh tonnes of palm oil imported during this period, 73.7% was crude, while the rest was refined. The government reduced duties on crude palm oil (from 44% to 40%) and refined palm oil (from 54% to 45% for Malaysia and 50% for other ASEAN countries) effective from January 1 this year. The special reduction for Malaysia was done under the provisions of the IndiaMalaysia CECA Agreement signed in 2010-11. The Solvent Extractors Association has noted a sharp increase in the imports of refined palm oil since the reduction of duty. They have requested the government to hike the duty on refined, bleached and de-odorised (RBD) palmolein or refined palm oil. According to the association, imports of refined palm oil increased from 1.3 lakh tonnes in December 2018 to 3.71 lakh tonnes in May

2019, the highest monthly figure since May 2013. During November 2018 to July 2019, imports of RBD palmolein have increased to 20.9 lakh tonnes, growing by 40% YoY. As a consequence of the duty advantage, Malaysia’s share in India’s palm oil imports has increased to 52% in the first half of 2019 compared to 30% last year. While Indonesia is also asking for a similar favour, SEA has complained that due to the rise in imports of RBD palmolein, operations of domestic refiners have been impacted and their capacity utilisation has come down. In consideration of the demand, the government has imposed a 5% safeguard duty on imported palm oil from Malaysia on August 26. Consumption of edible oil in India is estimated to be rising at a rate of 3.5% per annum, but production is not rising at the same rate. The government is making efforts to boost oilseed cultivation. Add to this the problem of excess supply of edible oils in the overseas market, due to which prices have dropped by 8-20% over the past year. Palm oil represents a major policy conundrum for India. Consumption of this product has increased by over 230% in the country since 2001. The government had anticipated this demand surge way back in the 1980s and set up a committee to identify potential regions for cultivation. By 2012, 2 million hectares were identified,

for which the government provided training to farmers apart from inputs and subsidised plant materials. Even private companies were encouraged to set up factories for processing in oil palm cultivation areas. Twelve states were covered under the National Mission on Oilseeds and Oil Palm (NMOOP) in the 12th Five Year Plan (2012-17) to expand the area under oil palm cultivation. However, the project has not progressed as anticipated and the expansion has consistently fallen short of the target. As a consequence, imports of palm oil have increased by over 20 times in the past 25 years. One major cause for this shortfall is that palm oil is not as lucrative for farmers with small landholdings. They require high maintenance and a long gestation period of at least 5-6 years before giving commercial returns. Moreover, the palm oil market is vulnerable to sharp price fluctuations that can be

PALM OIL REPRESENTS A MAJOR POLICY CONUNDRUM FOR INDIA, AS CONSUMPTION OF THIS PRODUCT HAS INCREASED BY OVER 230% SINCE 2001.

PALM OIL IMPORTS BY INDIA

8 7 6 5 4 3 2 1 0

6.51

2013-14

6.37

2014-15

5.79

2015-16

6.13

6.77 5.23

2016-17

2017-18

Source: Export Import Data Bank, figures in US$ billion

2018-19

IMPORT SHARE OF MAJOR EDIBLE OILS BY QUANTITY

17%

22%

61%

Soybean oil

Palm oil

Sunflower oil Source: Department of Agriculture, Cooperation & Farmers Welfare

devastating for these farmers. While the NMOOP proposes and provides subsidy benefits for intercropping, farmers have also argued that it could result in lower yields. In 2017, the government took further measures for boosting cultivation. The land ceiling limit on assistance for oil palm cultivation has been relaxed to over 25 hectares to attract more corporate interest as well as leverage maximum benefit from 100% FDI. Considering the limitations of promoting the programme in individual farmers’ fields, the government is counting on participation of private entrepreneurs, cooperative bodies and joint ventures to promote large scale plantations. In the current fiscal year, the government plans to add 25,000 ha under oil palm plantations to the existing 325,000 hectares. While this will provide some results in the coming five to six years, they will not address the demand-supply gap in the immediate future, considering that domestic production of palm oil is just around 200,000 tonnes compared to imports of around 8-9 million tonnes. The government has addressed the issue of duty diffference between basic and refined palm oil for the benefit of processors, but addressing this humongous and fast growing import dependence for palm oil will require much more.

September 2019 • India Business & Trade | 33

PRODUCT FOCUS

Black Pepper India should focus on enhancing its capabilities in organic and processed pepper segments BY CATR

lack pepper, commonly called the King of spices or even Black gold, is the most germane and commonly used spice, which occupies an exclusive and unique position in the world. In India, Kerala is the native place of black pepper, contributing most of the country’s area under cultivation and production for the crop. India ranked at the topmost position in global pepper production until the late 19th century, but lost its position to other nations like Vietnam, Indonesia and Brazil. Major exporting destinations of India include US, UK, Sweden, Italy, Germany, France and Netherlands. The current supply is not able to meet the global demand, which has made exports more profitable. Conversely, this has led some of the countries to focus on black pepper exports by increasing the area, output and yield. Increasing demand from Far East countries, which have started using more pepper in cooking, has been quite vital in influencing the global black pepper market. Growth in the cosmetics industry is also directly influencing the pepper market. Due to the antioxidant and antibacterial properties of black pepper, it is often used as an ingredient in skin care products. Also, black pepper is one of the healthiest spices relative to other seasonings. The currently surging usage of black pepper in bakery and confectionery products such as cakes, chocolates and snacks is proliferating global demand. Manufacturers are also focusing on new product innovations such as pepper sprays, essential oils and fragrances apart from innovative packaging of black pepper powder. Unfortunately, the demandsupply mismatch has proved to be a major constraint in this market. This is majorly due to intensive crop

PRODUCT DETAILS HS CODE (INCL BLACK PEPPER) 090411 MARKET (GLOBAL) US$ 5.7 billion by 2024 TOP EXPORTER Vietnam (US$ 502 mn in 2018) INDIA’S EXPORTS (2018-19): US$ 46.6 million MAJOR EXPORT DESTINATIONS FOR INDIA US, UK, Sweden, Italy, Germany, France and Netherlands

34 | India Business & Trade • September 2019

losses in various parts of the world, especially in India & Brazil. Sudden climatic changes and untimely rainfall have significantly led to the fall in the yield of black pepper. In 2018, pepper exports from India plummeted by approximately 35% compared to 2016 to 16,840 tonnes, the lowest in recent times. According to the Department of Commerce, exports of pepper declined by 26.5% to reach US$ 46.6 million. Majority of the shipments from India are value added exports of imported varieties, mostly from Vietnam. This is because Vietnam is selling the commodity at US$ 2,800 per tonne, way less than the price of US$ 6,000 per tonne commanded by the Indian variety. Demand for principal usage is increasing as manufacturers are speedily producing new varieties in seasonings and blends to increase their product portfolio. The demand for whole black pepper is more in the Asian region because of Vietnam, Indonesia and India having their own production and manufacturing centres, which are working towards the production of high-quality black pepper and essential oil. The segment is expected to create absolute business opportunity of more than US$ 900 million between 2019 and 2024. Also, organic production is the one efficient method to save the environment and preserve the ecology. It is a commercially lifesaving option for farmers because organic products will fetch a premium price at lesser production cost, which is being promoted through the agri-export policy as well. Exporting of processed goods from the country has an optimistic prospect, as it is expected to lead to greater foreign exchange earnings for the sector.

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EXPORTER PROFILE

Farming with a difference! As the largest farmer producer organisation in India, Sahyadri Farms is focussed on making agriculture lucrative for farmers, while providing safe and high quality food to customers. BY CATR

estled over 150 km away from the cacophony of Mumbai in Nashik lies one of India’s leading farmer producer companies, Sahyadri Farms. Encompassing an agglomeration of over 8,000 marginal farmers of the country, this is a cooperative of the farmers, by the farmers and for the farmers. While the idea to do something in order to make farming a profitable venture for small farmers (who account for about 63% of the total farmer population) germinated in 2003-04, it was only in 2011 that the brand ‘Sahyadri Farms’ was born. With this, the endeavour graduated from being a group of 10 ‘farmerentrepreneurs’ to a full-fledged ‘farmer producer company’ (FPO). Farming with a difference, what really innervated this zeal was the distressing milieu in which the farming community found itself: mounting loans, crop failures owing to factors like weather vagaries and lack of proper irrigation system and farmer suicides. As Mr. Azhar Tambuwala, Director (Marketing) opines, “It wasn’t a business idea; it was the need of the hour. It is about the duty that we have towards our society.” Associated with the company since inception, Azhar has watched it grow from a brick & mortar structure to the success story it is today. What makes this cooperative stand apart is the number of initiatives undertaken to impart knowledge to the farmers in order to make this economic activity more commercially viable for them. From setting up stations to helping farmers become better equipped to deal with adverse weather conditions, to bringing in agro-economists to interact with

“BRINGING IN HIGH YIELDING VARIETIES THAT ARE MORE RESISTANT TO PESTS AND DISEASES, WILL ATTRACT BETTER MARKETS”

36 | India Business & Trade • September 2019

them in their academy, setting up retail chains and taking farmers overseas to help them learn from their international peers – Sahyadri Farms is playing a key role in the upliftment of India’s farming community. On the other end of the spectrum, the cooperative also aims to provide safe and high quality food to the customers. Its retail stores have been instrumental in ensuring the elimination of middlemen so that the farmers can get direct access to the markets where they can sell their produce at fair prices. In the process, farmers also get invaluable exposure to the entire agricultural value chain from farm to fork – be it finances, technology and processing or marketing & branding. The idea received a thumbs down from banks initially as they were not convinced about the viability of this business concept. In fact, even the members of small farming groups were sceptical about this experiment. In addition, the company faced several other challenges including the lack

of infrastructure & right agroadvisory, absence of quality inputs, fragmented supply chain, postharvest losses & exploitation by intermediaries. Determined to rise against all odds, Sahyadri Farms has grown to establish retail chains and food processing factories not just in the domestic arena but also across the globe in markets like Europe & Dubai. Its processing infrastructure includes cold storages for fast moving and frozen food products, pre-cooling and ripening chambers, aseptic, frozen and IQF processing facilities and a vacuum pre-cooling facility for leafy vegetables. The company’s first trade activity was to export grapes to Europe. Among its major wins, the company has also bagged a Hindustan Unilever Limited contract to manufacture jams & ketchups in its factories for Kissan. Internationally, the exports of agri-products are known to face issues of traceability, compliance, harmonisation of standards & quality control. To address this, Sahyadri Farms ensures continuous monitoring of the product & service quality. It also invests in technology labs so that high quality products can be delivered to the consumers. When quizzed on the measures that can be adopted to tackle trade barriers, Azhar insists, “Trade-

FACTS ON INDIAN FOOD PROCESSING INDUSTRY The food processing industry of India contributes around

11%

of agricultural valueadded and

of manufacturing value-added. It employs

12.8%

of organised sector (factories registered under Factories Act, 1948), and 1

3.7%

of the unorganised sector workforce, according to the annual report of Ministry of Food Processing Industries. In 2018, India was the

largest producer of milk, bananas, spices, shrimps & pulses in the world. Source: MOFPI & Media reports.

related issues have to be dealt with by the government or trade promotion bodies. APEDA, Spice Board, etc are created for the facilitation of the industry. Therefore, it’s important that these boards promote trade.” Though well ahead in their mission to empower Indian farmers, the founders of Sahyadri Farms believe that they still have a long way to go in this journey: “We’re looking for new markets and new products. We’ve got a strong R&D department. Our aim is to have at least 200 retail outlets in India in the coming years. These will be fruit and vegetable shops where our growers can sell their produce. We can reach out to the consumer with the concept of safe food.” Azhar also asserts that exporters should learn from the success stories of rice and grapes. He adds, “Achieving certification standards, product value addition, investments in pre & post harvest management standards, infrastructure & cold storages will bring in greater reliability for importers in other countries.” In his view, bringing in new high yielding varieties that are more resistant to pests and diseases, will attract better markets and increase value and competitiveness of the industry as a whole in the international market.

September 2019 • India Business & Trade | 37

FOCUS SECTOR

Electric vehicles:

Can India break the ‘ICE’?

As the world prepares to make a paradigm shift to replace internal combustion engine (ICE) based vehicles with EVs, is India prepared to take the lead? BY CATR

hree years ago in Paris, a resolve was made by the leaders of the world in Paris to limit the global temperature rise to 1.5ºC above pre-industrial levels. Keeping in line with the Paris commitments on climate change and also perhaps the promise of an emerging and lucrative industry, countries around the world are putting long term strategies in place for EV adoption. According to the International Energy Agency, the global electric car fleet stood at 5.1 million in 2018, a growth by 2 million over the previous year. China currently has the largest share of this market

followed by Europe and US. However in terms of share of the electric cars within a market, the global leader is Norway with a share of 46%. But in comparison, India’s EV sales were at around 759,000 in 2018-19 according to SMEV. Around 630,000 were three-wheelers, with electric passenger vehicle (PV) sales at just 3,600 units. Countries are adopting a range of policies to escalate adoption of EVs. These include fuel economy standards, financial incentives and proliferation of charging infrastructure. Developments in battery technology, increase in production capacities, redesigning of

38 | India Business & Trade • September 2019

vehicle manufacturing platforms and use of big data are all playing a role in reducing costs. Under the New Policies Scenario by IEA based on announced policy ambitions, global electric car sales are expected to reach 23 million by 2030 while the stock is expected to cross 130 million vehicles. In the process, they are estimated to offset around 220 million tonnes of carbondioxide equivalent (Mt CO2-eq) emissions. The Indian government has also taken some steps over the years. Battery rickshaws were introduced sometime around 2012 in India. It also revamped the Faster Adoption

and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme. With an outlay of Rs 10,000 crore till 2022, FAME 2 intends to augment the number of EVs in the commercial fleet. The Union Budget introduced an additional IT rebate of Rs 1.5 lakh on interest for loans on EVs. The GST Council has cut the tax on EVs to 5%. Further, the government has set a 2-phased strategy to switch to EVs. In the first phase (from 2025), it wants two- and three-wheelers with internal combustion engines (ICE) to be replaced with electric two- and three-wheelers having engine capacity of up to 150cc; while in the second phase (from 2030), it suggests that only electric PVs be sold in the country. NITI Aayog estimates that India can save about 64% of anticipated passenger road-based mobilityrelated energy demand and 37% of carbon emissions in 2030 by pursuing a shared, electric, and connected mobility future. This would result in a reduction of 156 Mtoe in diesel and petrol consumption in 2030 and net savings of roughly Rs 3.9 lakh crore (US$ 60 billion). Moreover, with a well established automotive ecosystem in place, India has a huge opportunity to be at the forefront of the revolution and emerge as a leading player in the global EV market. The vision is clearly ambitious, but India hasnâ&#x20AC;&#x2122;t made significant progress yet, barring 3-wheelers. The road ahead is riddled with potholes, and we will now proceed to discuss some of them.

EV SALES POTENTIAL

25 20 15 10 5 0

CY 2018

CY 2020

China

Europe

USA

CY 2025 Japan

India

CY 2030 Other

Source: IEA; figures in million under New policies scenario

FUTURE PROJECTIONS FOR EVS IN INDIA 2026* 2016-17 revised classification as per 2016-17 Niti Aayog domestic sales (only EVs) Passenger vehicles - personal

2000

Passenger vehicles - commercial / f eet

1,254,000 3,078,000

Commercial vehicles - goods Commercial vehicles - passenger

265,500

Three wheelers

675,000

Two wheelers

22000

10,620,000

Overall vehicles

24,070

15,892,500

Source: Innovation Norway report, *Transformative based on NITI Aayog's roadmap on transformative mobility

WITH A WELL ESTABLISHED AUTO MANUFACTURING ECOSYSTEM IN PLACE, INDIA HAS A HUGE OPPORTUNITY TO BE AT THE FOREFRONT OF THE EV REVOLUTION

September 2019 â&#x20AC;˘ India Business & Trade | 39

Is India ready to be an EV nation? 01 It’s all about the money!

One major roadblock in the adoption of EVs is the high cost of manufacturing them. As Dr. Ashok Jhunjhunwala, Professor of IIT Madras, notes, “I see technical challenges pertaining to battery development, development of motor, development of cells, procurement of raw materials for EV production. Also, there’s the question of making these automobiles affordable and reliable. We have to come up with new ways to manufacture Rs 50,000 two-wheeler and a Rs 4 lakh electric car.” The battery makes up around 50% of the vehicle’s cost. Until a few years ago (2012), the Li-Ion batteries cost around US$ 600 per unit, which has now come down to US$ 250. Income tax rebate of Rs 2.5 lakh will not be enough to make EVs competitive, especially since India is a highly price sensitive market.

02 Import dependence

Another major hurdle is the lack of availability of raw materials – lithium, cobalt, manganese, nickel – to produce EVs. Each metal is imperative to the production of lithium-ion batteries. For example, lithium is used to generate a flow of electrons and helps to charge the battery; while cobalt prevents the battery from overheating. India’s lithium requirement is expected to be roughly 350,000 tonnes per year according to auto industry estimates. Around 65% of lithium reserves are located in Bolivia and Chile, while 60% of cobalt reserves are located in the Congo. While India has recently leveraged its way into the Bolivian lithium reserves through a MoU, this imported metal will drive up the cost of the vehicle. In the case of electric scooters, India has resorted to importing 90% of components from China. It is said that EVs will in fact increase India’s import dependence to 70% or more.

03 Performance pressure

There are also apprehensions about the performance of the vehicle. While the mileage of electric vehicles is said to be relatively better when compared to conventional cars, it may not fare well in terms of other parameters. For instance, all the EVs that currently exist in the Indian market have a top speed of around 85 km/hr. Moreover, when fully charged, the cars would go around 120 km. That does not suffice if one intends to drive faster or go farther than 120 km. These issues severely limit the utility of an EV to consumers and add to considerable inconvenience. Moreover, these new age modes of transport will require the technicians & engineers to acquire new skills.

04 Infrastructural bottlenecks

This situation is further complicated by several infrastructural bottlenecks like lack of sufficient public e-charging ports. Secondly, while it is said that EVs can be charged overnight conveniently at home, these statements miss the fact that quite a few parts of the country still don’t have access to electricity. Even those regions which have access to electricity, grapple with the problems of frequent power cuts, fluctuation of voltage & low voltage. An Assocham-EY study estimates that India would require 69.6 terawatt hours (TwH) by 2030 to meet additional demand from EVs. For those highlighting their green credentials, it is worth considering that India’s power grid still remains coal heavy.

05 Are the consumers ready?

Leapfrogging to EVs entails a shift in behavior patterns. It was observed that just 9 months after the launch of Ola’s ambitious electric vehicle project in Nagpur, many drivers wanted to return their electric cars and switch back to conventional variants due to high operating expenses and long queues at charging stations. Removing customer inertia will take a lot of effort.

06 Failure to rise to ‘FAME’?

Driven by the zeal to move towards e-mobility, the government launched the FAME scheme in 2015. The first phase of the scheme (2015 to March’19), received a lukewarm response despite offering incentives as high as Rs 140,000 on some cars. As of May 2019, India has just about 0.28 million e-vehicles, falling significantly short of the target of 15-16 million (by 2020). On the other hand, China is adding 800,000 EVs a year. While FAME 2 is definitely a significant improvement over its predecessor, it too, has its shortcomings. For instance, it should not have kept private vehicles (except two-wheelers) out of its ambit. The policy also ignores the possibility of battery swap. Also, while the policy aims to give a boost to local production, the industry feels that it does not have many supply-side incentives to realize this goal. Around 50% of an electric vehicle comprises controllers, battery cells and permanent magnet motors, and these are not yet being manufactured within India.

In order to facilitate the switch to EVs, government must first and foremost create reliable sources for the procurement of raw materials. While one solution is to sign trade agreements like the one that India has signed with Bolivia, this would also increase India’s import bills. In this kind of a scenario, the government should consider the other option to look for alternatives to lithium and cobalt like sodium & sulphur. Although the government is aggressively pushing localisation, the industry has different ideas. Mr Sohinder Gill, Global CEO, Hero Electric and Director General, SMEV, comments, “Localisation is something which requires a long-term strategy. The government tried to solve this problem in a day and created a mess. Therefore, because of this mess, only 1700 vehicles were sold in Q1, while 30,000 EVs were sold in last year’s Q1. So, there’s been a 90% drop in sales of EVs. Industry is not comfortable with these norms. Localisation has increased the cost of the vehicle by 20%.” Another point that needs to be noted is that most of the global research focuses on premium four wheelers. However, in India, premium four wheelers (cars) account for only 2% of total sales. Therefore, the industry should focus on the economy segment of the market. India needs to develop its own solutions rather than following developed countries. If India cracks the code on low cost quality EVs like it did for the automotive sector, it can look forward to replicating the latter’s success in global markets. The government also needs to ensure more incentives on the supply side & the demand side. For the producers, this could mean tax holidays initially, easier availability of land, easier FDI rules and low import duties. For consumers, it could mean things like offering incentives to scrap diesel/petrol vehicles, raising tax on CO2 emissions and development of adequate charging infrastructure.

September 2019 • India Business & Trade | 41

SOHINDER GILL

financers due to technical issues. The government should come up with some mandates, like it has done for tractors. Priority lending for EVs must be encouraged.

We need to believe in ourselves Sohinder Gill, Director General, Society for Manufacturers of Electric Vehicles (SMEV) feels that India needs to take lessons from countries like China, Japan and Taiwan to boost the EV industry

IBT: What is your view on the Government of India’s vision of making the country a 100% EV nation by 2030? What can we realistically expect? Sohinder Gill (SG): 2030 is 11 years ahead from the current date and the kind of changes in terms of technology so far have been really good. Worldwide sales are clocking around 100% growth rate. As far as vehicle registration in India is concerned, there is a different mindset. Although I don’t think that 100% transition to EVs will happen by then, a very good percentage of people will shift to EVs. IBT: What challenges exist in the adoption of EVs as a popular mode of commuting in India? How can these be addressed? SG: the biggest challenge is price parity. For instance, an Activa may

cost around Rs 60,000 while an EV scooter may cost almost double, although the battery price is going down, thanks to the steps taken by the government. Also, even though the government has given subsidies in FAME 2 to the industry, these are not enough; we believe that at least 50% increase is needed in the current subsidy slab. Secondly, there are supply side problems. There are hardly any incentives for them. Earlier there was about 25% incentives for the batter/charger producers under MSIPS scheme. This has been discontinued. We hope Government of India will soon come up with a supply side incentive program. The third major challenge is financing. Out of the 25 million vehicles sold last year, 9 million of them were financed. For EVs, however, it is difficult to find

42 | India Business & Trade • September 2019

IBT: What lessons can the Indian automotive industry take from its international counterparts to bolster EVs? SG: We have to believe in ourselves & learn from the world. From China, we can learn about the policies, from Taiwan we can learn R&D and from Japan, we can learn the manufacturing bit. Hardly 15% lithium is used in making EV batteries. Lithium is 100% recyclable. So, paucity of lithium is not an issue. Efforts should be taken to undertake mining and find the reserves of lithium & cobalt. Moreover, we could learn lessons from Japan. It is the largest producer of steel, despite not having significant iron ore reserves. Government has given the responsibility to KABIL, a PSU, to buy lithium mines outside India & bring it here. We have a target of 54 GW lithium production in the next 3 years. Moreover, alternatives like hydrogen and fuel are very expensive. IBT: Do you think government’s FAME 2 scheme is apt for the industry? SG: FAME 2 has its pros & cons. Having Rs 10,000 crore outlay for 3 years is a really good thing for an industry having Rs 500 crore business in India. The target of 9 lakh vehicles is achievable too. The planning is good, but implementation is not. Localisation is something which requires a long-term strategy. The government tried to solve this problem in a day and created a mess. Therefore, because of this mess, only 1,700 vehicles were sold in Q1, while 30,000 EVs were sold in last year’s Q1. So, there’s been a 90% drop in sales of EVs. The industry should decide the next phase, not the government. Industry is not comfortable with these norms. Sudden localisation has increased the cost of the vehicle by 20%.

RAVNEET PHOKELA

counterparts, especially from Norway. Policy measures (e.g. tax exemptions, toll exemptions and other incentives) adopted by Norway have been effective in promoting electric cars. The country imposes hefty vehicle import duties and car registration taxes, but the same are waived off for electric vehicles. Thus Norway is effectively subsidising EV purchases.

Huge potential to build IP in EVs Ravneet Phokela, Chief Business Officer, Ather Energy feels that India can develop an indigenous EV ecosystem as more players enter the industry and the supplier ecosystem builds up.

IBT: Indian consumers are experiencing the benefits of enhanced public mobility infrastructure and shared transportation. Will they be willing to switch to EVs? Ravneet Phokela: We believe that the growth of public transportation will not have a big impact on sales of two-wheelers as evident in the estimate about the scooters segment to alone grow to 16 million by 2025. In the cities we operate, we have observed high consumer traction especially from petrol scooter owners seeking to replace their existing vehicles. Though shared mobility is introducing new ownership patterns, we believe it will be a game-changer for the four wheeler industry rather than two wheelers because cost saving in two-wheelers shared mobility isnâ&#x20AC;&#x2122;t as dramatic as in car ride sharing.

IBT: What challenges exist in the development of EVs as a popular mode of commuting in India? How can these be addressed? Ravneet Phokela: The biggest challenges to adoption are the initial high cost of electric vehicles and lack of choice of nearequal performance products. As government interventions, financial instruments and a wide variety of high performing products step in, India will see two wheeler EV adoption accelerating. The EV ecosystem in India is at a nascent stage. The hindrance for customers in the adoption of EVs lies in the lack of information about the sector. Educating consumers about how EVs are a great alternative to the ICE counterparts is thus a huge challenge. The Indian automotive industry can learn a lot from its international

IBT: How can India ensure selfreliance in EV manufacturing? RP: We believe that India has the potential to develop an indigenous EV ecosystem. As the EV industry scales up, our supplier ecosystem will build up. As more indigenous players enter the market, we will witness greater diversity and healthy competition in the industry, which will eventually reduce our dependence on other countries for imports. We believe: a) Designing products for Indian consumers will limit dependence on imports. b) Since it is a new industry, there is huge potential to build IP and value which will allow Indian manufacturers to define standards. India already has the technology to manufacture battery packs, with new players being added everyday. However the cell manufacturing industry still needs to be developed and for that, cell design needs to take Indian conditions into consideration. This requires a lot of investment and long term policy support from the government. The move to reduce GST on electric vehicles from 12% to 5% and an allocation of Rs 1,000 crores for charging infrastructure shows the seriousness on the governmentâ&#x20AC;&#x2122;s side to drive the electric shift, though the industry will need greater clarity on the criteria and process to avail these benefits. Standardisation of charging protocols and connectors for similar vehicles will add to the convenience of the EV vehicle owners. Common standards lead to interoperability and better utilization of the infrastructure, eventually leading to a faster path to profitability.

September 2019 â&#x20AC;˘ India Business & Trade | 43

FOCUS MARKET

Common struggles, shared vision India and South Africa share a similar past of struggle against colonialism. Today, their partnership stands as an epitome of South-South collaboration. Complementarities between the two economies also provide tremendous scope for enhanced trade relations. BY ABHISHEKH JHA

ith a GDP of US$ 371.30 billion, the economy of South Africa is the second largest in the African continent after Nigeria. The World Bank categorises South Africa as an upper middleincome economy, one of only four such countries in Africa alongside Botswana Gabon and Mauritius as the other three. South Africa faced

a decade and a half of international sanctions, during which the GDP of the economy tripled. It is the only African economy to be a part of the G20 group of countries. It also became a part of the BRIC group (Brazil, Russia, India & China) in 2010, now known as the BRICS. South Africa is one of the worldâ&#x20AC;&#x2122;s leading mining and mineral-

SOUTH AFRICA

44 | India Business & Trade â&#x20AC;˘ September 2019

processing countries with around 60% of its exports represented by mining and mineral products. Apart from gold and diamonds, the country also contains reserves of chromium, copper, iron ore, platinum, manganese, uranium, silver, titanium and beryllium. In 2016, the top five challenges to doing business in the country

2015

296.27

2014

317.58

2013

2016

366.30

2012

349.43

2011

350.90

416.88

2010

366.82

2009

396.33

2008

375.30

297.22

450 400 350 300 250 200 150 100 50 0

287.10

ANNUAL GDP OF SOUTH AFRICA, IN US$ BILLION

2017

2018

Source: https://countryeconomy.com/gdp/south-africa

GROWTH RATE OF GDP AND GDP PER CAPITA OF SOUTH AFRICA (%) 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% -15.00%

2008

2009

2010

2011

GDP Growth

2012

2013

2014

2015

2016

Growth Rate of GDP Per Capita (%)

Source: https://countryeconomy.com/gdp/south-africa

2017

2018

were shortage of skilled workers, restrictive labour regulations, inefficient government bureaucracy, political instability, and corruption, whereas a strong banking sector was rated as a strongly positive feature of the economy. The South African economy was colonized by the Dutch, French, Germans and British in the span of approx. three centuries. In December 1866, the first authenticated diamond was discovered on the banks of the Orange River by Erasmus Jacobs. In May 1871, De Beers Mine was discovered on Vooruitzicht farm near Bultfontein. The country also entered into a phase of industrialization during this time, including the organization of the first South African trade unions. In 1902, the Cullinan Diamond Pipe was discovered near Pretoria and the Premier Mine was consequently established. Today, South Africa has made a perennial mark on the worldâ&#x20AC;&#x2122;s diamond industry, as one of the leading producers. IMPEDIMENTS TO GROWTH Income growth and labour productivity has remained sluggish in the last decade. This was juxtaposed by income inequality and poverty. Feeble labour utilisation and total factor productivity have both exacerbated the growth trajectory since the 2008 financial crisis. Removing barriers to competition and waiving off regulatory restrictions in many sectors is definitely going to boost growth. In particular, more competition across the value chain would bring down prices, increase the accessibility of services, stimulate the competitiveness of downstream firms and raise productivity growth. The reform of the wage bargaining system has been initiated, as the national minimum wage became effective in January 2019. Although ensuring robust labour market policies to tackle unemployment remains imperative, this has taken a backseat as investment in infrastructure and

September 2019 â&#x20AC;˘ India Business & Trade | 45

broadening access to markets are more deemed as more priority areas to support job creation and growth. Revamping the management and governance of state-owned enterprises and strengthening regulation is crucial to lift supply side

bottlenecks. Enhancing equity and quality of education would buttress human capital accumulation and reduce the current inequality. TRADE PERFORMANCE South Africa’s total trade slightly

TRADE BASKET AND TRADE DESTINATIONS OF SOUTH AFRICA IN 2018 Top exported products

Top Imported products

Top exporting Top importing destinations destinations

Bituminous coal

Crude petroleum oils

China

Gold

Motor cars including station wagons

Germany

Manganese ores

Distillate fuels

Ferro-chromium, containing by weight > 4% of carbon

Medicaments

Saudi Arabia

Heavy Commercial vehicles

Wireless telephones

Japan

India

Agglomerated iron ores and concentrates

Unused revenue stamps, postal stamps

India

Nigeria

Platinum, in semimanufactured forms

Switching and routing machines for transmission

Botswana

Big motor cars with diesel engines

Small cars like hatchback and sedans

Namibia

Thailand

Chromium ores and concentrates

SUVs

Mozambique

Japan

Palladium, unwrought or in powder form

Refined petrol

Netherlands

Italy

Source: ITC Trade Map, 2019

reduced in the past five years from US$ 192.38 billion in 2014 to US$ 187.85 billion in 2018. Exports registered a growth of 7% in 20172018 while imports grew by 13%. Current export and import figures of South Africa are US$ 94.42 billion and US$ 93.42 billion respectively. The effectively applied weighted average tariff (customs duty) for South Africa is 4.61% and the Most Favoured Nation (MFN) weighted average tariff is 6.65%. Total services trade of South Africa is US$ 31.9 billion, out of which US$ 16.1 billion is imports and US$ 15.8 billion is exports. When it comes to services exports, travel services tops the list with 55% of services exports followed by transport services (15%). In terms of services imports, transport services (38.5%) imports top the list followed by travel (21.1%), other business services (14.7%) and telecommunications (8%). According to Services Trade Restrictiveness Index provided By OECD STRI database, air transport services and courier services are the most restricted sectors, while road freight transport services and insurance services are the most liberal services to invest. Openness to trade can spur productivity growth via enhanced competition and access to new technology as well as a wide range of complementary intermediate inputs & scale economies. INDIA-SOUTH AFRICA TRADE Both India and South Africa share a deep historical bond due to their common struggle against colonial rule. In 2018, the two countries celebrated the completion of 25 years of re-establishing diplomatic relations. India is South Africa’s sixth largest export partner and fifth largest import partner as per 2018 trade figures. In 2018-19, India’s exports to South Africa remained at US$ 4.06 billion, registering a growth of 6.3% YoY. India’s imports from South Africa declined by 4.64% YoY to US$ 6.51 billion in 2018-19. India’s total trade with South

46 | India Business & Trade • September 2019

INDIA-SOUTH AFRICA BILATERAL TRADE FLOWS, IN US$ BILLION 14 12 10

TOP PRODUCTS OF EXPORT POTENTIAL FOR INDIA IN THE SOUTH AFRICAN MARKET Rice, pharma, vehicles, plastics & apparels are among the key focus products for exports

8 6 4 2 0 -2 -4

2014-15

2015-16

2016-17

India’s exports to South Africa India’s trade balance

2017-18

2018-19

Rice

Pharmaceutical products

Motor vehicles

Plastic and rubber products

Apparels

Chemical products

Processed food and beverages

Agro processing machineries

India’s imports from South Africa India’s total trade figures with South Africa

Source: Export Import Databank of India, MOCI, Government of India

INDIA-SOUTH AFRICA BILATERAL TRADE FLOWS, IN US$ BILLION 120 100 80 60 40 20 00 -20 2014

2015

Exports of South Africa

2016 Imports of South Africa

2017

2018

Trade Balance of South Africa

Source: ITC Trade Map, 2019

Africa decreased from US$ 11.79 billion in 2014-15 to US$ 10.57 billion in 2018-19. The trade deficit increased from US$ 1.19 billion to US$ 2.45 billion for the same period. Top products of export potential for India are rice, pharmaceuticals, motor vehicles, agro processing machineries, plastic & rubber products, processed food & beverages, chemical products & apparels. In 2016, the two countries set a target of doubling bilateral trade and investment to $20-billion by 2021. So far, more than 150 Indian companies have invested in South Africa, employing more than 20,000 South Africans. These investors include Tata, UB Group, Mahindra and a number of pharmaceutical companies, including Ranbaxy and Cipla, as well as IT companies and some investments in the mining sector. Annually around 1.2 lakh Indian tourists visit South Africa while 60,000 South African

IN 2016, INDIA & SOUTH AFRICA SET AN AMBITIOUS TARGET OF DOUBLING THEIR BILATERAL TRADE AND INVESTMENT TO US$ 20 BILLION BY 2021. tourists visit India. South African investments in India’s economy are led by SAB Miller for breweries, ACSA for the modernisation of airports, SANLAM and Old Mutual for insurance, Adcock Ingram for pharmaceuticals and Rand Merchant Bank for banking. South Africa has evolved as a regional hub of industrial and commercial development in Africa and beyond. The technological complementarities between South Africa and India provide enormous

scope for potential collaboration in sectors that include food and agro processing, deep mining, defence, fin-tech, insurance healthcare and pharma, bio-tech, IT and IT enabled sectors, gems and jewellery and infrastructure. Another critical aspect that makes the relationship special is South-South cooperation. Together with political dialogue and financial cooperation, South-South cooperation has promoted a large number of knowledge and expertise exchanges through programs, projects and initiatives that have helped solve specific problems in the countries of the Global South. India and South Africa have often seconded each other’s view point on key issues at WTO including e-commerce, food security and NAMA. Both are prominent countries of South-South cooperation and their consensus is critical to furthering the agenda of developing nations at the WTO.

September 2019 • India Business & Trade | 47

JAMMU & KASHMIR

Post Article 370: J&K can now be a business paradise The Modi government has made a bold move to abrogate Article 370, which gives India Inc the impetus to drive welcome transformation in this long suffering state. BY SAMEER PUSHP

he recent decision by the government to abrogate Article 370 has led to a nationwide hope that novel initiatives would be taken to improve the situation of Jammu and Kashmir. People feel that the abrogation should be viewed through the prism of the unity and integrity of the nation. It is also seen as a major step towards an inclusive India. The change in administrative status, the government believes, will have a positive impact on ease of doing business as it

would give industry ownership of establishments and encourage hiring. These decisions will allow any individual or businesses that operate as per the laws of Union of India, to freely operate under the same rules in J&K and Ladakh. An average Kashmiri earned about Rs 5,000 a month in 201617, considerably more than other poor states of India like Bihar, Uttar Pradesh and Madhya Pradesh. While there is no visible poverty in Kashmir owing to strong community bonds, the state has been stuck in an economic rut. To kickstart Kashmir’s economy is the government’s next challenge. A special developmental plan is being worked out, which includes setting up of industries and building state-of-the-art educational institutes and heathcare facilities in all three regions of Jammu and Kashmir. Let’s discuss a few of the sectors which India Inc should focus upon: TRAVEL AND TOURISM Despite Jammu and Kashmir ticking all the right boxes as a travel,

48 | India Business & Trade • September 2019

hospitality & tourism magnet, the industry’s presence and business in the state is dismal. There is a rising hope that novel initiatives would be taken to elevate the current tourism graph to greater heights, leading to better employment opportunities. A comprehensive plan is the need of the hour to harness this enormous tourist potential and regulate the tourist flow and effective management of services provided. At the same time, we must be very scientific in the management and development of new heritage sites and ensure sustainably by an effective use of environmentalists, occupational safety experts and other well trained tourism management professionals. A spate of investments in film and cinema making must also be considered to provide the necessary thrust to the sector. WATER RESOURCES The Jhelum, Chenab, Indus and Tawi rivers are flowing through this beautiful state, hence ample water resources are present here in the

form of lakes, rivers, glaciers and groundwater reserves. These resources are potentially useful for hydroelectricity, agricultural, industrial, household, recreational and environmental activities. They will require huge investment from the government with private partnership to drive other sectors with adequate power generation and provide water to all areas for agriculture. HYDROELECTRICITY Renewable power generation can help countries meet their sustainable development goals through the provision of access to clean, secure, reliable and affordable energy. Tens of gigawatts of wind, hydropower and solar photovoltaic capacity are installed worldwide every year in a renewable energy market that is worth over US$ 100 billion annually. Other renewable energy markets are also emerging as in recent years and have seen dramatic reductions in technology costs. The average cost of electricity from a hydro station is much more. Therefore, the cost of hydroelectricity is relatively low, which makes it a competitive source of renewable electricity. AGRICULTURE J&K has agro-climatic conditions best suited for horticulture and floriculture. Horticulture is the mainstay of the rural economy, which is providing employment to large number of local inhabitants. The state’s share in the overall apple production has increased over the years. It is also a major exporter of walnut and its international market share is about 7%. Then there are other cash crops like saffron and apricot, which hold huge potential. Food processing and value added products must be key areas of focus for India Inc owing to plenty of fresh fruits & vegetables being cultivated. REAL ESTATE Earlier, the state government has retained an industrial policy that offers attractive incentives along with a single-window clearance mechanism. Land is allotted at

HORTICULTURE IS THE MAINSTAY OF THE RURAL ECONOMY IN J&K, WHICH IS PROVIDING EMPLOYMENT TO A NUMBER OF LOCALS concessional rates in industrial areas on lease for 90 years. The cost of setting up is comparatively lower than other states. Now, sectors such as metals, infrastructure, PSUs and FMCG will have the opportunity to trade better in J&K. Apart from its beauty, J&K is famous for its exquisite handicrafts, handloom products, tourism, horticultural and cottage industries. Thus, industries which trade in all these sectors can also grow in this beautiful state. As tourism increases, more services will be required in terms of hospitality, travel agents and other amenities. J&K Bank, which was earlier controlled by the state government, will now be regulated by the central

government, which will also help the state take advantage of welfare schemes of the central government such as Sukh Samriddhi Yojana, Pradhan Mantri Jan Dhan Yojana and Ayushman Bharat. HANDICRAFTS The sector makes a conspicuous contribution in sustaining the export trade of the state. Handicraft activities carried out in the Kashmir Valley have earned a unique place in the world of handicrafts. This sector provides great potential to generate gainful employment within and outside the state. The employment and exports of handicraft during the last decade have increased, despite inherent challenges. Keeping in view the above key indicators of financial autonomy, J&K has the potential to be one of the fastest growing states. This bold move by the Modi government has reinstated the faith of the public. Support at the global level has boosted the peoples’ confidence further and surely gives India Inc the impetus for driving welcome and lasting transformation in the long suffering economy of J&K.

September 2019 • India Business & Trade | 49

FARM TO FORK

East meets west: The story of Indian ‘curry’ Indian curry has travelled across the world through traders, slavers and labourers over the course of history. Though the name ‘curry’ itself is not Indian, the dish certainly holds pride of place as a product of India, even as it has acquired various regional avatars like the Bunny Chow in South Africa and Nakamuraya Indo-Karii in Japan. BY SNEHA VARMA

hen you land up in the vicinity of a smattering of Indian restaurants on an overseas trip, you probably might, involuntarily, get smitten by a pleasant aroma, which gushes into your nostrils. And soon your eyes may get fixated on a simmering pot, the source of that heady aroma, telling you that home is not as far away as you think. It’s the magic of Indian curry, and it is hard not to get mesmerised, no matter where you hail from. Sure enough, curries, which in their composition and making are generally attributed to be of Indian origin, seem to have travelled across the globe across the history of various

50 | India Business & Trade • September 2019

rulers and dynasties in India. And this is how this ancient Indian recipe evolved as a dish, which the world devours even today. Curry travelled by sea, following traders, slavers and laborers, following historical vectors of colony & conquest. However, you would be surprised to know that no word like “curry” ever existed in India. “Kari” comes very close and just means “sauce”. Then where did curry receive its moniker from? IN THE NOTES Indian curry travelled to Burma, Thailand and China through Buddhist monks, who further took it with them in their southern expeditions to countries like Indonesia and the Philippines. It was approximately in 1498 when Portuguese first knocked the doors of Indian sub-continent through the palm-toothed land of Southern India. With their advent in India in search of cardamom, cloves, and black pepper, each among the world’s most valuable commodities, the expedition of the then pious ‘Curry’ across the globe marked a grand commencement. Lacking a word to describe the spicy, coconutthickened stews they found there, they went ahead and made one up: carel, taken from the Tamil word kari. The British first encountered it in the 17th century, when the British East Indian Company began trading with Tamil merchants along the Coromandel Coast in South India.

By the mid-19th century, the world noticed an upsurge of numerous writers and food enthusiasts who were keenly interested in this Indian-native dish. You couldn’t find a British cookbook without a curry recipe, or a chemist shop that didn’t have curry powder. In her 1861 note in the Book of Household Management, Isabella Beeton included a recipe that called for onions, apples, stock, and curry powder stewed with meat, thickened with a roux, and finished with a mortifying splash of cream. Curry had officially become British. In 1941, Jane Holt, a writer for The New York Times, experienced the captivating taste and flavours of curry in one of the Indian restaurants of Manhattan. She wrote about how it was prepared in a variety of styles and described—quite controversially in her column, The News Of Food, that “the rare Oriental ragout called curry” is one of “the true foods of occult India.” But it was not just the US. By then, the moniker curry with various added flavours and versions had already popped up in Britain, Fiji and Japan; further embarking on its journey to South Africa, Jamaica and Guyana. It even knocked on the culinary cultures of nations like Germany, Singapore and Scandinavia. Even the Americans have been savouring the piquant dish since ages as the first American cookbook in 1824, The Virginia Housewife, featured a curry recipe. So, it seems that one of the only places in the world that didn’t have a dish that was called curry was, curiously enough, India! A curry can refer to any stew prepared with a mélange of spices indigenous to India, usually a mixture of turmeric, coriander, cumin, and fenugreek. Thus, the curry remains a dish that’s from India and eaten nearly everywhere in its many avatars. CURRY POWDER? NO WAY! Curry is an anglical version of the Tamil word “kari”, which primarily means “sauce” and was perceived

to be a mixture of vegetables with meat as an additional item, with varying piquancy. It was generally cooked in a medley of spices, with or without gravy. Similarly, the word “curry powder”, which is a unique blend of whole spices like peppercorns, cloves, cinnamon, black and green cardamom, that are commonly used to flavour curries, comes from the Tamil word “kari podi”. “What you don’t need is curry powder,” wrote Madhur Jaffrey, the doyen of Indian cooking in America, in 1974, in her book An Invitation to Indian Cookery. She added that “no Indian ever uses curry powder,” nor would they mix their own, since then every dish would taste the same! Foreign influences have also added their nuances to curry within India. The Mughal Empire brought in a strong Turkish and Persian influence to Indian cooking, along with certain Islamic food practices, like eating halal meat. Similarly, the Portuguese brought in chilly pepper, which is used very liberally in Goan and Andhra food. Even today, many Goan restaurants have curry in their menus as “Caril-de-Camereo”. A popular outcome of the curry’s exploits is South Africa’s Bunny Chow. Essentially a piping hot Indian-style curry housed inside a hollow loaf of bread, Durban’s bunny chow is a much-loved street snack

ONE OF THE ONLY COUNTRIES THAT DIDN’T HAVE A DISH CALLED CURRY WAS INDIA!

in South Africa. In fact, according to the Johannesburg Times, it is an “integral part of South Africa’s culinary heritage.” In Japan, Nakamuraya IndoKarii remains a crowd favourite. Famously christened as the ‘taste of love and revolution’ by Tokyo’s newspapers, this Indian style chicken curry was introduced to the land of the rising sun by freedom fighter Rash Behari Bose and became a huge success. With over 6 billion helpings being served annually, it is still made according to Bose’s original recipe and supplied as packaged ready-to-eat meals to supermarkets across the country! These culinary Kohinoors of India have been catering to masses across the globe, since eras. Whether it is curry powders, or curry pastes, curry gravies and even instant curry mixes of unending varieties, the curry now faces a vibrant export market. Brands like Saras, Fazlani Foods, and Vimal Agro Products, have been manufacturing & exporting curry & allied products like curry spice powders, meat curry gravy, chicken curry gravy, and frozen Kerala’s fish curry gravy to countries like USA, UK, UAE and Ireland.

September 2019 • India Business & Trade | 51

MANSOOR ALI

UAE remains our biggest export market In this interview with Sneha Verma of IBT, Mansoor Ali, Chief Sales and Marketing Officer, Hamdard Laboratories, talks about his plans to turnaround Hamdard Laboratories into a modern 21st century brand, the new products in the pipeline and his plans to tap the growing herbal export market.

IBT: Hamdard enjoys a long presence in the market. How has the journey been? Mansoor Ali: Hamdard Laboratories India is a 112-year old organization, which is the maker of iconic Unani brands and herbal FMCG products such as Rooh Afza sharbat, Safi blood purifier, Roghan Badam Shirin, Joshina, Sualin and Cinkara tonic. Established in 1906 by Hakeem Hafiz Abdul Majeed as a small Unani clinic, Hamdard grew into a recognised name under the noble vision of renowned Unani physician Hakeem Abdul Hameed, who was conferred with Padma Bhushan and Padma Shri by the Government of India for his service to society. Since then, Hamdard has evolved into a progressive, research-based health and wellness organization with a focus on developing innovative and natural solutions for the masses based on the Unani system of medicine. Today, Hamdard India has a wide portfolio of over 500 natural and herb-based products and is amongst the leading health & wellness companies in India. IBT: What are the core competitive strengths of Hamdard that have enabled it to sustain for so many years? MA: At Hamdard, we believe in producing brands that can be consumed by our wide demography of consumers and embody complete wellness on a daily basis. At present, we are among the leading health & wellness companies of India, with a presence across 450,000 outlets in the country and offering a wide portfolio of more than 600 products, of which nearly 580 are medicinal products and the remaining are FMCG. We also have an extensive portfolio of products in the consumer health segment like Safi blood purifier, Roghan Badam Shirin, Joshina, Sualin and Cinkara tonic, that have made Hamdard a household name amongst its consumers. We have also

established our stronghold in the beverage segment with Rooh Afza becoming one of the company’s largest and most nostalgic heritage brands. Today, the concentrated syrup market is around 70-80 million bottles a year and as per last year’s stats by Euromonitor, we enjoy around 50% of the market for concentrated beverages. Rooh Afza and the red colour are synonymous and are also a source of many millions of stories in each and every Indian household. IBT: How do you see the sustainability and competitiveness of Rooh Afza in the changing market? MA: Rooh Afza is a market leader, but there are few things that need to be addressed. It is an in-homeconsumption drink, and there is a process to making it. As we move along our journey of transformation, it is important to understand the environment and the dynamics of our ecosystem. The juices category is pegged at Rs 25,000 crore, moving in double digit growth. The ready-to-drink segment is aspirational, considered cool by millennials, and offers variety and convenience of ‘anywhere’ consumption. The strategy now is to move into the RTD category, with our new product in this space - Rooh Afza Fusion, which will be a blend of Rooh Afza and fruit juices. This will be the exciting, next generation product from the Hamdard portfolio. This new product would be a

ready to use tetra pack product. It would be a sweet blend of fruit juices and off course Rooh Afza. The pilot product has been launched and we call it as “Rooh Afza Fusion” with various flavours ranging from lemon, orange and mango. It would place us in the ready-to-drink tetra pack product space globally. We recently associated with Barista and launched two cold and two hot beverages that mix Rooh Afza with coffee. IBT: Have you participated in IndusFood earlier? Please share your experience. MA: Today when they say the world is getting smaller, it’s true! I have seen previous editions of IndusFood and I can see the vibrancy has

CURRENTLY, 1015% OF OUR TOPLINE COMPRISES OF EXPORTS. BUT I SEE MORE POTENTIAL & WE ARE TARGETING MORE MARKETS

gone up, altogether. To me, one USP of the show is obviously the networking. It’s a huge forum where you meet people. But for a company like us, it is more of a platform where we can represent ourselves to a wide range of clients. Secondly, IndusFood is a global phenomenon where we get to understand the trends and culture across the globe. I believe that in the next five years, IndusFood would probably be like Gulf Food. IndusFood is an event which gets noticed globally. IBT: How does Hamdard view its performance and potential on the export front? MA: We export our products to countries like US, Canada, Australia apart from countries in UAE, Africa and West Asia. UAE remains our biggest export market. Currently, 10-15 percent of our top-line comprises of export revenue. But I see lot more potential in exports and we are targeting more markets in future. That will be good for the country as well, to increase exports and decrease imports. Even if we concentrate only on North America, Europe and Russia and work on registration and exports, then in about five years, we can touch a top-line close to half of our domestic sales. These markets have double-digit growth numbers for herbal remedies. Another advantage is that herbal brands abroad are premium products, which means we can compete in price as well as quality.

September 2019 • India Business & Trade | 53

Whatâ&#x20AC;&#x2122;s the latest

@ TPCI

August 2019

India-USA Buyer-Seller Meet, New York

rade Promotion Council of India (TPCI) in collaboration with the Consulate General of India (CGI) New York organised the India-USA Buyer-Seller Meet (BSM) in New York (August 20,

2019). APEDA also joined hands with TPCI for this programme. The BSM was inaugurated by HE Shri Sandeep Chakravorty, Consul General of India, New York. Over 40 Indian exporters participated in the

1: Deepak Vohra, Sr. Deputy Director, TPCI, Sandeep Chakravorty, Consul General of India in New York, Dr Sudhanshu, Secretary, APEDA, and Mahendra Bhai Patel, Owner, Patel Brothers.

Event: India-US Buyer-Seller Meet Sector: Food & beverages Date: August 20, 2019 Venue: Ballroom, Consulate General of India, New York

2: Sandeep Chakravorty, Consul General of India in New York addressing the gathering. 3 & 4: Attendees engaged in interactions at the India-US Food & Beverage Buyer-Seller Meet, New York

54 | India Business & Trade â&#x20AC;˘ September 2019

event from various food & beverage sectors including foodgrains, pulses, spices, teas and ready to eat foods. Some of the prominent exporters participating included Capital Ventures, Indian Tea Association, Regal Kitchen, SRG Organic Food and Mother Nature Foods. Some of the exporters were visiting the US for the first time. The focus was on value added food products The India-USA Buyer-Seller Meet was attended by over 100 importers, buyers and distributors from across New York, New Jersey, Texas, Houston, Seattle and West Coast. Some of the prominent buyers attending the show included Singh & Singh Brothers, Best Foods, Viks Distributor, SLT Foods, Gurudev Imports and Patel Brothers. Around US$ 5 million of orders were booked during the B2B meetings.

Food & Beverage Buyer Seller Meet, Toronto

fter the success of the BSM in New York, TPCI took the business delegation from India to another Food & Beverages Buyers Sellers meet at Indo-Canada Chamber of Commerce (ICCC), Toronto, Canada on August 22, 2019. This BSM was organised by TPCI in collaboration with CGI, Toronto and ICCC. The programme was attended by 40 prominent Indian exporters of value-added and branded products. APEDA also joined this programme with their member exporters. The event was inaugurated by Shri Saifullah Khan, Acting Consul General, CGI Toronto. Around 100 top importers of Indian food products from across Canada were present on this occasion. This event saw spot order booking of around US$ 4 million. TPCI officials were welcomed by the trade department of Govt. of Ontario, Canada. The meeting was organized by Sandeep Keshari, Director, North American Brands Group Inc., and chaired by Deepak Anand, & Nina Tangri, Members of Provincial Parliament along with Deepak Vohra, Senior Deputy Director, TPCI. The Canadian team discussed ways of introducing the gastronomic marvels of Indian food industry to Canada and vice versa. TPCI officers expressed interest in knowing if Canadian advanced technology, especially in food tech, which can be introduced to upgrade Indiaâ&#x20AC;&#x2122;s food sector.

Event: India-Canada BuyerSeller Meet Sector: Food & beverages Date: August 22, 2019 Venue: Indo-Canada Chamber of Commerce (ICCC), Toronto 1: Delegates at the India-Canada Food & Agri BSM, Toronto 2: Deepak Vohra, Senior Deputy Director, TPCI with Kesh Gelda, Director, Gelda Foods 3: Manish Madan, MD, Regal Kitchen Foods at the BSM 4: Interactive session during the India-Canada Food & Beverage BSM, Toronto 5: Sandeep Keshari, Director, North American Brands Group Inc. with Deepak Anand & Nina Tangri, Members of Provincial Parliament, Government of Ontario and Deepak Vohra, Senior Deputy Director, TPCI

September 2019 â&#x20AC;˘ India Business & Trade | 55

TPCI meets European stakeholders for Indus Food-Tech

r. Mohit Singla, Chairman, TPCI, met a cross-section of stakeholders across countries during his tour to Europe, including Spain, Denmark, Poland, Belgium and Germany. The meetings were highly fruitful, involving detailed discussions on avenues for collaboration and mutual synergy for the upcoming Indus Food-Tech 2020. 01

1: With Adolfo Diaz-Ambrona Medrano, Secretary General, Spain Chamber of Commerce and Jaime Montalvo, International Director, Spain Chamber of Commerce. 2: With François De Hemptinne, Business Group Leader, Food & Beverage Technology Solutions, Agoria. 3: With Anna Westenberger, Senior Manager, Asia Pacific, Germany Trade & Invest. 4: With Fillipe De Potter, Deputy Director, Inward Investment, Asia, Africa, Middle East and Pacific, Flanders Investment & Trade. 5: With Barbara Bujny, Country Manager, Polish Investment & Trade Agency. 6: With Gregor Wolf, Member of the Executive Board, Federation of German Wholesale, Foreign Trade and Services.

Chairman meets Secretary, DPIIT

r. Mohit Singla, Chairman, TPCI met Secretary DPIIT, Dr. Guruprasad Mohapatra in the Ministry of Commerce and Industry at Udyog Bhawan, New Delhi, on 26th August 2019. Chairman greeted the new Secretary and wished him very best for his new role. Chairman also briefed him about the Council’s latest activities including the IndusFood, which is the Council’s flagship food & beverage trade show. During this interaction, the Chairman also exchanged ideas on how to boost internal trade, capital flows and promotion of new sectors to add to the manufacturing and export basket. The Chairman also expressed his willingness to partner with DPIIT for its initiatives in the future.

56 | India Business & Trade • September 2019

Department of Commerce Ministry of Commerce and Industry

FOOD CHEM

India’s Largest B2B Sourcing Trade Fair for Food & Health Ingredients 08 | 09 | 10 January, 2020 India Exposition Mart, Greater Noida

Key FeaTureS

Buyer SegmenT

500+

Global Hosted Buyers From 40 Countries

1000+

Top Food Processers & Distributors from India

Co-located Trade Shows

• • • • • • • • •

Dairy Bakery and Confectionary Sweets and Snacks Ready to Cook & Ready to Eat Spices Pulses, Grain, Rice, Sugar & Oil Tea & Coffee Beverages FMCG

Contact anKIT goeL mobile: +91-8287900311 email: exhibitor.ifc@tpci.in

VISHaL TaLIa mobile: +91-9205883435 email: info.ifc@tpci.in

www.indusfoodchem.co.in Trade PromoTIon CounCIL oF IndIa 9 Scindia House, 2nd Floor, Connaught Circus, New Delhi - 110001, India Phone: +91 (11) 40727272 | Email: tradefair@tpci.in

See you at IndusFood-2020

& 09 January, 2020

#IndusFood