Dr V S Seshadri Presentation

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Information about Dr V S Seshadri Presentation

Published on March 15, 2008

Author: Mercede

Source: authorstream.com

Emerging Perspectives on India’s External Trade and India – US Trade Relations:  Emerging Perspectives on India’s External Trade and India – US Trade Relations Dr.V.S.Seshadri Minister (Commerce) Embassy of India Washington D.C. Growth in India’s Foreign Trade (Merchandise):  Growth in India’s Foreign Trade (Merchandise) External Trade showing greater dynamism. Exports rising by 20% plus and imports by 30% plus in recent years. While exports took 10 years to double in the nineties, the doubling is now taking place in 3-4 years time. India is not an export led economy. But external trade as a percentage of GDP is steadily rising. (US $ billions) Factors contributing to trade dynamism:  Factors contributing to trade dynamism Progressive reduction in tariffs Reduction in transaction costs Expansion in port infrastructure De-reservation of certain sectors Stronger growth in exports to neighboring markets Diversification of export product basket New initiatives towards establishing SEZs Progress in conclusion of FTAs Slide4:  Reduction in peak rate and number of major basic customs duty rates * CVD of 4% on imports to compensate for State level taxes. Credit will however be allowed for manufacturers of excisable goods. Government is committed to bring down import duties to ASEAN levels. Peak rate for non-agri goods brought down from more than 300% in 1990-91 to 12.5% in 2005-06 and number of duties reduced to 3. India’s collection rate (duty collected divided by total value of imports) for basic customs duty has come down from 9.03% in 2002-03 to 6.67% in 2004-05. Trade facilitation measures :  Trade facilitation measures 1. Continual efforts being made to reduce paper transactions in relation to Customs and DGFT who process tax refund for exporters Present position: a) Export documents can be filed electronically to all DGFT offices – Simplification to one form. b) Shipping Bill and Bill of Entry can be filed electronically in 23 Custom Houses (through the ICEGATE) that handle over 75% of our trade. Reduce Dwell time in ports. Introduced from 24 November 2005 Introduction of Risk Management System that will make only limited checks. Introduction of an Accredited Clients Programme that will grant clearance on the basis of self assessment to importers who have demonstrated capacity and willingness to comply with Customs laws. (More details in www.cbec.gov.in and www.icegate.gov.in) Port handling of cargo.:  Port handling of cargo. Major ports (12) have recorded a 11% growth in throughput of cargo handled last year. Growth sharper in Container traffic handling. Jawarharlal Nehru Port (JNPT) near Mumbai which handles 60% of container traffic is identified to become a CSI port. Turnaround time for ships progressively reduced to 3.42 days. Evidence of rising export cargo also seen in some of US ports. For example, Charleston Port in South Carolina already ranks India as number 2 in respect of source of import cargo. Beginning in June a shipping line has started a new weekly service between Tuticorin, Mumbai and Mundra and some of the Eastern ports in US. Opening up of sectors earlier reserved for Small Scale sectors:  Opening up of sectors earlier reserved for Small Scale sectors (A small scale industry is defined as one in which the investments in fixed assets and machinery are less than Rs. 10 million or US $ 225,000) Several items progressively de-reserved. Leather shoes (June 2001) Readymade garments (1.1.2001) Auto parts like bulb horn, radiators and exhaust mufflers (May 2002) Leather and leather products (2003) Knitted cotton and woolen textile items (March 2005) TV antennas, heaters and stoves, hand tools (March 2005) Part of the effort to make India a manufacturing hub for textiles, automobiles, steel, metals, petroleum products etc. Slide8:  India’s major trading partners, 2000- 2006 Percentage share in total trade (exports+imports) Asia now accounts for 46.3% of our exports and 34.41% of imports Strong growth rates in trade with FTA partners China and UAE have assumed No.2 and No.3 rankings. Commodity composition of exports (Percentage shares):  Commodity composition of exports (Percentage shares) Main drivers of growth are Chemicals, Engineering items, Iron ore and Petroleum products. SPECIAL ECONOMIC ZONES IN INDIA :  SPECIAL ECONOMIC ZONES IN INDIA First EPZ in Asia set up at Kandla in 1965 followed by SEEPZ (Mumbai) in 1975. Six more zones were set up thereafter, all established by Central Government. New SEZ policy announced in 2000, and eight existing EPZs converted into SEZs. Goal of new policy to encourage private investors and joint ventures (with state governments) to establish SEZs. No more investment by Central Government to set up SEZs. During 2004-05: Exports – US $ 4 billion – Growth in exports 32%; Imports – US $ 2.5 billion; Net foreign exchange earning – (over $ 1.5 billion) 811 units in operation in SEZs providing direct employment to 100,000 persons (40% of whom are women). SALIENT FEATURES OF SEZ ACT AND PROPOSED RULES :  SALIENT FEATURES OF SEZ ACT AND PROPOSED RULES In order to impart stability to SEZ a Special Economic Zone Act has been enacted. Provisions of SEZ Act and the proposed SEZ Rules are: 1000 hectares minimum for multi-product, 100 hectares for one product, 10 hectares for IT, Biotech and Gems and Jewellery etc. (Minimum built up area 100,000 sq. meters for IT, 50,000 sq. meters for gems and jewellery and 40,000 sq. meters for bio-tech.) Concept of a co-developer for undertaking development of infrastructure within an SEZ. Concept of sea port or air port based SEZs. Fiscal Benefits in SEZs :  Fiscal Benefits in SEZs Exemption from taxes, duties and cess in respect of goods or services exported out of or imported into the Special Economic Zone or procured from the Domestic Tariff Area. Exemption from taxes, duties and cess in respect of goods or services imported or procured by the developer for development, operation and maintenance of the Special Economic Zone. 100% income tax exemption to SEZ developer for a period of 10 years in a block of 15 years. In respect of units the income tax exemption would be 100% for the first five years, 50% for the next 5 years and 50% of the ploughed back export profits for the next 5 years i.e. the benefits would last for 15 years. STORY OF SEZs IN INDIA – PROGRESS MADE:  STORY OF SEZs IN INDIA – PROGRESS MADE Enthusiastic response to new SEZ policy – 164 new SEZs approved. Of the 164 SEZs approved for establishment, 8 SEZs at Mahindra City (IT and textiles) near Chennai (Tamil Nadu); Indore (Madhya Pradesh); Jaipur and Jodhpur (Rajasthan); Manikanchan and Salt Lake Electronic City (West Bengal); and Nokia Sriperumbudur (Tamil Nadu) have become operational in 2004/2005/2006.   Further, 5 SEZs at Mahindra City for auto ancillary, Moradabad (UP), Village Vanj., District Surat (Gujarat), Hassan (Karnataka) and Chandigarh are now getting ready for operation.    Other Zones are at various stages of implementation.   India’s Free Trade Agreements :  India’s Free Trade Agreements Current Agreements India-Sri Lanka FTA Operational from March 2000. CEPA (Comprehensive Economic Partnership Agreement) negotiation in progress. Since the signing of the Agreement, Sri Lanka’s exports to India have gone up eight fold. India’s exports have gone up by 2 1/2 times. India- Singapore Economic Cooperation Agreement (CECA) Operational from June 2005. Phased tariff elimination by 2009 with negative list. Covers goods, Services, Investment, Air services etc. India’s exports with Singapore have also risen sharply by about 60% this year. Slide15:  Agreements Where Negotiations are ongoing India- Thailand FTA Operational from September 2004. Early harvest of 82 items under implementation. Negotiations continue on FTA in goods, services and investment. India-ASEAN CECA Tariff reduction and elimination between January 2007 and December 2011 vis-à-vis all ASEAN countries. Details being worked out. South Asian Free Trade Agreement (SAFTA)- (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka). Has come into force on 1, January 2006 and fully operational by 2016. Phased liberalisation programme for non-LDCs, LDCs and Sri Lanka. Other Economic Cooperation Initiatives:  Other Economic Cooperation Initiatives BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical & Economic Cooperation which includes Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand) India-MERCOSUR PTA India-Chile PTA Bangkok Agreement (China, India, Laos, Korea, Sri Lanka and Thailand) India-Brazil-South Africa Cooperation India – US Bilateral Trade:  India – US Bilateral Trade Growth and Composition of Merchandise Trade Growth in Services Trade Forums for Bilateral Consultations India-US Economic Dialogue and the India-US CEOs Forum India- US Bilateral Merchandise Trade (Percentage growth):  India- US Bilateral Merchandise Trade (Percentage growth) Source of data: U.S. Dept. of Commerce, Bureau of Census Bilateral trade expanding at strong growth rates - should Bilateral trade expanding at strong growth rates – should result in trade doubling every 3 to 4 years. Commodity composition of India – US Bilateral Merchandise Trade India’s Exports during the year 2005:  Commodity composition of India – US Bilateral Merchandise Trade India’s Exports during the year 2005 % increase over the year 2004 mentioned within parenthesis Source: US Department of Commerce (Top ten items) (11.41%) (32.75%) (18.22%) (37.91%) (48.05%) (49.16%) (178.23%) (44.09%) (23.02%) (6.51%) Commodity composition of India – US Bilateral Merchandise Trade India’s Imports during the year 2005:  Commodity composition of India – US Bilateral Merchandise Trade India’s Imports during the year 2005 % increase over the year 2004 mentioned within parenthesis Source: US Department of Commerce (Top ten items) (18.2%) (11.96%) (76.41%) (26.35%) (26.16%) (-1.28%) (256.99%) (136.92%) (16.67%) (40.5%) US - India Trade in Services (in US $ millions):  US - India Trade in Services (in US $ millions) Source: Bureau of Economic Analysis US – India Bilateral Trade in Services (Cross border):  US – India Bilateral Trade in Services (Cross border) India-US Trade Policy Forum:  India-US Trade Policy Forum Rejuvenated after the visit of Prime Minister Dr.Manmohan Singh’s visit to US in July 2005. USTR and the Indian Department of Commerce India are respective focal points. Already four meetings held at Cabinet and sub-cabinet levels. Five focus groups discussing various trade policy and access issues of mutual interest. - Tariff and Non-tariff barriers - Services - Agriculture - Investment - Creativity and Innovation Last meeting was held on 22 June 2006 when Minister for Commerce and Industry Hon’ble Kamal Nath visited Washington DC. Progress being made on several issues of interest. A key outcome was also to associate private sector in future meetings. India-US Commercial Dialogue:  India-US Commercial Dialogue Dialogue coordinated by US Department of Commerce and Indian Ministry of Commerce and Industry. Discussions have covered exchange of experiences and information on standards. In the process of revitalisation, following subjects are sought to be covered Trade defence measures – Exchange of experiences and best practices. SMEs. Intellectual Property Rights- capacity building, awareness programs. Round Table on Pharmaceuticals held in New York, with partnership of industry from both sides on 23 June, 2006 High Technology Cooperation Group (HTCG) - Objectives:  High Technology Cooperation Group (HTCG) - Objectives To facilitate and promote high-technology trade with focus on steps to create the appropriate economic, legal and structural environment for successful high-technology commerce. To build confidence for additional strategic trade with focus on discussing ways to enhance trade in controlled dual-use goods and technologies. Focus on four sectors: IT, Defense Technology, Biotechnology and Nano-technology. Last HTCG meeting held in New Delhi, from 30 November to 1 December 2005. Information & Communications Technologies (ICT) Working Group – Objectives To enhance understanding and share perspectives on developments in the information and telecommunications sectors. To address outstanding issues and opportunities that can benefit through a more regular and structured dialogue process. First meeting took place in Washington D.C. 7-8 December 2005. Next meeting to be held in New Delhi 14-15, December, 2006 Other Bilateral Forums:  Other Bilateral Forums India-US Economic Dialogue India-US CEO’s Forum India-US Economic and Financial Forum India-US Energy Dialogue India-US Knowledge Initiative on Agriculture Enhanced cooperation also underway in Science and Technology, Space, Health etc. Conclusion:  Conclusion India – US relations have gathered momentum in a range of sectors, as the Indian economy is achieving accelerated growth. India – US Bilateral trade which is gathering speed is also poised to double to US $ 60 billion in 3 years time. Slide28:  Thank you

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