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Contents

1

Monthly Newsletter Volume 4 No 2 • February 2009

EximNews

TRADE STRATEGIES

• Announcement of Trade

Facilitation Measures Hit the

Right Note ..............................................2

TRADE STATISTICS

• Exports Register Modest

Growth for the period

April-January, 2008-09 ...........................3

TRADE ISSUES

• Report on the Diamond Industry in

Gujarat Released .....................................3

FDI NEWS

• Rs. 616 crore FDI proposals

cleared ......................................................4

IN BRIEF

• Calls for low oil prices are

short-sighted, says OPEC .....................4

SOURCE: DIPP, GoI 

Share of Top Investing Countries, by FDI

SOURCE: RBI 

Tracking the Rupee: March ’07-Feb ’08

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TRADE STRATEGIES

Announcement of Trade FacilitationMeasures Hit the Right Note

The Union Minister of Commerce and Industry,

Mr. Kamal Nath, announced the ‘Trade Facilitation

Measures (Supplement to Foreign Trade Policy)’ on

26 February 2009, here in New Delhi. Theannouncement came in the backdrop of a global

economic crisis and some of the measures are

expected to cushion the adverse impact of declining 

exports.

Highlights of the Trade Facilitation Measures;

1) Duty credit scrips under DEPB scheme to be

issued without waiting for realization of export

proceeds

2) Special package of Rs. 325 crore for leather andtextiles sector

3) STCL Ltd., Diamond India, MSTC, Gem & 

Jewellery EPC and Star Trading Houses added

as nominated agencies for import of precious

metals

4) Gem and jewellery export: import restrictions

on worked corals removed

5) Bhilwara and Surat recognised as towns of export

excellence for textiles and diamonds

6) Threshold limit for recognition as Premier

Trading Houses reduced to Rs.7500 crore

7) Under EPCG scheme, export obligation extended

till 2009-10 for exports during 2008-09

8) DEPB/Duty Credit Scrip utilization extended for

payment of duty for import of restricted items

also

9) Procedure for claiming duty drawback refund & 

refund of Terminal Excise Duty further simplified

10) Re-credit of 4% SAD for VKGUY, FPS AND

FMS allowed

11) Electronic Message Transfer Facility for advance

authorisation and EPCG to be established

12) Advance licenses issued prior to 1.4.2002

requiring MODVAT/CENVAT certificate

dispensed with

13) Export obligation period against advance

authorisations extended up to 36 months

14) Reimbursement of additional duty of excise

levied on fuel to be admissible for EOUs

15) Early refund of service tax claims & further

simplification of refund procedures on the anvil

India is likely to miss its export target of US $ 200

billion this fiscal due to the global meltdown, stated

Mr. Kamal Nath, but he hoped this figure will be

achieved next year as he unveiled the new measures

to help the exporting community. The minister

hoped the country would log merchandise exports

of at least US $ 175 billion during the current fiscal,

as he reviewed the country’s long-term foreign trade

policy.

CII Welcomes the Announcements

According to Mr. Chandrajit Banerjee, Director

General, CII, the announcements by Mr. Kamal Nath

were timely and tries to address the concerns of 

Indian exporters.

Mr. Banerjee said, “Announcement of the supplement

to the foreign trade policy would go a long way in

boosting employment generation in India as the

export sector is the second largest employment

generator in the country”. He further added “textiles

and leather sectors in India have been under severe

pressure in last few months and the announcement

of a special package of Rs 325 crore for the two

sectors would help in their revival”.

Mr. Banerjee also said, that reduction in recognition

slab for Premier Trading Houses to Rs 7500 crore of 

the total exports turnover and reduction in export

obligation of exporters in proportion to the fall in

exports to avail the EPCG benefits, are all measures

that will help exporters to tide over the current

slowdown.

Complimenting the leadership of Mr. Kamal Nath,

Mr. Sanjay Budhia, Chairman, CII National

Committee on Trade, said, “The removal of import

restrictions on worked corals is welcome and

addresses the long standing demand of gems & 

jewellery exporters”, He further added that

recognition of Bhilwara in Rajasthan as the

town of excellence for textiles and of Surat in

Gujarat as the town of excellence for diamonds

would help in bringing the two regions on a global

map.

Mr. Budhia also said that allowing a re-credit of 4

percent SAD (Single Administrative Document), in

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case of payment of duty by incentive scheme scrips

such as Vishesh Krishi and Gram Udyog Yojna

(VKGUY), Focus Products Scheme (FPS) and Focus

Markets Scheme (FMS) would help in rejuvenating 

India’s rural economy and further boost rural exports.

TRADE STATISTICS

2008-2009 18455 243358%Growth 2008-09/2007-2008 -18.2 25.3

Trade Balance

2007-2008 -7849 -66830

2008-2009 -6075 -99093

SOURCE: MoCI, GoI 

Oil imports during January, 2008-09 were valued at

US $ 4.46 billion which was 47.5 percent lower than

oil imports valued at US $ 8.51 billion in the

corresponding period last year. Oil imports during 

April- January, 2008-09 were valued at US $ 83.29

billion which was 32.4 percent higher than the oil

imports of US $ 62.97 billion in the corresponding 

period last year.

Non-oil imports during January, 2008-09 were

estimated at US $ 13.99 billion which was 0.5 percent

lower than non-oil imports of US $ 14.06 billion in

January, 2007-08. Non-oil imports during April-

January, 2009 were valued at US $ 160 billion which

was 21.9 percent higher than the level of such imports

valued at US $ 131 billion in April- January, 2007-

08.

The trade deficit for April- January, 2008-09 was

estimated at US $ 99 billion which was higher than

the deficit at US $ 66.8 billion during April- January,

2007-08.

TRADE ISSUES

Report on the Diamond Industry inGujarat Released

A Task Force convened by the Reserve Bank of India

to look into the distressed diamond industry in

Gujarat, has recommended measures for expeditious

restructuring which include, fresh financing of 

existing borrowal accounts as per the Reserve Bank’s

guidelines, financing diamond sector units not

financed earlier, re-training/re-skilling/ rehabilitation

of displaced diamond workers and providing financial

relief to diamond workers. These measures were

recommended by the Task Force based on discussions

with various stakeholders and deliberations in themeetings.

The Task Force was convened after the deliberations

at a meeting held by the RBI Governor with the

Minister of Finance, the Minister of State for Finance,Government of Gujarat, and senior officials of 

government and banks early on February 2009, to

look into the problems being faced by the diamond

industry in Gujarat.

The diamond industry in Gujarat is one the largest

contributors to Indian exports with diamond exports

(HS-7102) of US $ 14.2 billion and a share of 8.72

percent in India’s total export basket, 2007-08.

However, following the economic crisis in 2008, the

diamond industry is likely to suffer due to a globaldemand slump.

Exports Register Modest Growth forthe period April-January, 2008-09

India’s cumulative value of exports for the period

April- January, 2008-09 was US $ 144 billion as

against US $ 127 billion registering a growth of 13.2

percent. Exports during January, 2008-09 were valued

at US $ 12.74 billion which was 15.9 percent lower

than the level of US $ 14.71 billion during January,

2008.

Cumulative value of imports for the period April-

January, 2008-09 was US $ 243 billion as against US

$ 194 billion registering a growth of 25.3 percent.

India’s imports during January, 2008-09 were valued

at US $ 18.45 billion representing a decrease of 18.2

percent over the level of imports valued at US $

22.57 billion in January, 2008.

Exports & Imports: (US $ Million)(Provisional)

Exports Jan Apr-Jan

(including re-exports)

2007-2008 14717 127454

2008-2009 12381 144266

%Growth 2008-09/2007-2008 -15.9 13.2

Imports

2007-2008 22566 194285

Mr. Budhia, however, added that currency derivatives

continue to worry Indian exporters. He said small

and medium sized exporters have alone lost over Rs

2000 crore in these currency derivatives and there is

a need to look into the matter on a priority basis.

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Published by Confederation of Indian Industry, The Mantosh Sondhi Centre, 23, Institutional Area, Lodi Road, New Delhi - 110 003

March 2009

www.cii.in

Kindly send in your queries & suggestions to 

Confederation of Indian Industry

International Trade Policy Division

The Mantosh Sondhi Centre, 23, Institutional Area, Lodi Road, New Delhi-110 003

Tel: +91-11-2462 9994-7 • Fax: +91-11-2463 3168 • Email: eximnews@cii.in

Latest DGFT notifications can be accessed at the following link 

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DGFT NOTIFICATIONS

DISCLAIMER: The data and news used here are from various published and electronically availablesources. We have taken care to verify and crosscheck the accuracy of these reports and data.However, despite due diligence, the source may contain occasional errors. In such instances, CIIis not responsible for such errors.

Rs. 616 crore FDI proposals cleared

Based on the recommendations of Foreign

Investment Promotion Board (FIPB) in its meeting 

held late in February 2009, Government has approved

29 Proposals of Foreign Direct Investment amounting 

to Rs. 616.08 Crore (US $ 120 millionapproximately)

Nearly 60 per cent of the proposed foreign exchange

inflow is accounted for by a Singapore-based

company for entering into the hotel business in India.

The Government has permitted AAPC Singapore

Pvt. Ltd. to invest Rs. 365.78 crore in an Indian

company for constructing, developing, owning and

managing low-budget hotels in the country.

Among the other major proposals was that of cargo-

handling company ABG Bulk Handling which has

been allowed to bring in Rs. 90 crore through FDI

for making downstream investments. Likewise,

Cinema Capital Ventures Fund — the country’s first

regulated venture fund in the media and entertainment

sector — has been permitted to fetch Rs. 50 crore in

foreign exchange for investment in the fund.

In the telecom sector, global leader Telcordia

Technologies of the U.S. has received consent to

bring in Rs. 45 crore to buy equity in Indian

companies for carrying out mobile number

portability solutions.

The Government, however, deferred decisions on

19 other FDI proposals which include ventures by 

Hiranandani Realtors, Yamaha Motor India, BNP

Paribas Securities Services and Quippo Telecom.

Meanwhile, a proposal by ICP Investments(Mauritius) Ltd. was rejected.

FDI NEWS

IN BRIEF

Calls for low oil prices are short-sighted, says OPEC

The Organisation of the Petroleum Exporting 

Countries (OPEC) rejected calls to keep oil prices

at present low levels, arguing this would lead to a

supply crunch.

Maintaining the current price would help stimulate

the economic recovery of oil-importing countries,

the executive director of the International Energy 

Agency (IEA), Nobuo Tanaka had stated. But OPEC

secretary general Abdalla Salem El-Badri complained

that the prices of US $ 40 per barrel and more oil

industry investments wanted by the IEA were not

viable.

The oil cartel is set to meet in Vienna March 15 to

discuss possible further production cuts.

OPEC’s basket price has been around US $ 40 per

barrel despite production cuts of 4.2 million barrels

per day since last September.

According to the IEA, oil-importing economies

would receive a stimulus of US $ 1 trillion if oil

prices stayed around US $ 40 per barrel this year.