India is proposing to transform its narrow export-focused special economic zones (SEZs) into comprehensive economic hubs through several concessions and the easing of restrictions to attract more investment in these areas.

 

Industrial units located in these hubs, which will be called Development of Enterprise and Service Hubs (DESH), may be allowed to sell in the domestic market, and contract manufacture for those outside these zones as well, according to a draft circulated for consultation.

 

Some fiscal incentives and measures to improve the ease of doing business are also likely to be part of the package to transform SEZs into comprehensive economic zones.

 

These hubs may be established by the Centre or a state or jointly by them, or any person for the manufacture of goods or rendering services or for both.

 

An ‘equalisation levy’ may be imposed on goods or services supplied to the domestic tariff area to bring taxes on them at par with those provided by units outside the zones. Currently, units in SEZs are export focussed and face certain restrictions on sales to domestic market.

 

Appropriate legislation is likely to be introduced in the upcoming monsoon session of parliament once the draft is finalised after stakeholder consultations, said people aware of the deliberations.

 

Finance minister Nirmala Sitharaman said in her February budget speech that the SEZ Act will be replaced with new legislation that would enable states to become partners in development.

 

States looking to set up such zones will be able to set up boards that will be responsible for oversight. It is also proposed to relax the mandatory foreign exchange payment for domestic tariff area supplies and permit subcontracting both for goods and services for DTA units.

 

'The plan is to make the new SEZ scheme compliant with the WTO rules and doing away with the Net Foreign Exchange clause is the first step in that direction,' said one official.

 

Many proposals in the draft are from the 2019 report of an expert committee headed by Bharat Forge chairman Baba Kalyani. The committee had suggested SEZs be converted into employment and economic enclaves (3Es) with the extension of tax sunset clauses, simplification of processes, tax benefits for the services sector, and extension of MSME schemes to these zones.

 

Experts said the draft proposes to change the focus from exports to economic activity, investment, and global value chain interlinkage among others, apart from the greater involvement of states.

 

'The proposal to move away from Net Foreign Exchange, services to be paid in INR, single window and subcontracting are some positives in line with the Baba Kalyani committee report,' said indirect taxes and SEZ expert Rahul Shukla.

 

Shukla said additional fiscal and non-fiscal benefits, including industrial estates being notified as hubs, will hopefully lead to greater benefits.

 

'However, the rules and clarity on the proposed equalisation levy is something trade will be looking at, including greater guidance on the hubs framework,' he said.

 

Industry has already raised its concerns about the proposed equalisation levy, saying that it will lead to instability and has suggested a single hub director for each DESH instead of multiple directors as proposed in the draft.

Tunisia's state grains agency has issued an international tender to purchase an estimated 75,000 tonnes of soft wheat and 50,000 tonnes of animal feed barley, European traders said on Tuesday.

 

The tender closes on June 22.

 

The grains can be sourced from optional origins, but excluding the Black Sea region where shipments from Ukraine and Russia have been disrupted by the conflict in Ukraine.

 

Shipment is in various periods between July 20 and Aug. 15 depending on origin supplied, they said.

India has become the only saffron-producing country to earn a Geographical Indication (GI) tag for its Kashmir saffron. Iran is the largest producer of saffron in the world while India is a close competitor.

 

However, an official spokesman said on Tuesday that the GI tag will result in more prominence for the Kashmir saffron in the export market, thereby boosting its exports. This will in turn help the farmers to get the best remunerative price for economic sustainability, said.

 

The GI certification would also cease the prevalent adulteration of saffron and will put an end to the marketing of saffron cultivated in other countries under the garb of being produced in Kashmir which otherwise was affecting the economic interests of the farmers associated with this crop.

 

To give a boost to saffron production in Kashmir, J&K Government has launched new initiatives including the introduction of GI Tagging. The GI sign is used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.

 

Saffron growers are hopeful that they will now get a better price for their produce after the introduction of the GI tag to the saffron grown here. Kashmiri Saffron is grown at an altitude of 1,600 m to 1,800 m above mean sea level, which adds to its uniqueness and differentiates it from other saffron varieties available across the world.

 

Saffron is cultivated and harvested in the Karewas (highlands) of Jammu and Kashmir and has been assigned GI tag by the Geographical Indications Registry. The spice is grown in Pulwama, Budgam, Kishtwar and Srinagar regions of Jammu & Kashmir.

 

Highlighting the importance of preserving the unique identity of Kashmiri Saffron, an official of the Agriculture Department said that Kashmir is having the distinction of producing one of the best saffron in the world, therefore it is our individual and collective moral responsibility to preserve this golden spice not only for a large number of families directly associated with the cultivation of saffron but for our generations to come.

 

Saffron, despite its price, is in high demand for its antioxidant properties. It carries a hefty price tag also because the process of converting crocus flowers into the thread-like spice is painstaking and labour-intensive as it takes around 160,000 flowers to yield a kilogram of saffron.

 

Kashmiri saffron is of superior quality because of the higher concentration of crocin, a carotenoid pigment that gives saffron its colour and medicinal value. Its crocin content is 8.72% compared to the Iranian variant’s 6.82%, giving it a darker colour and enhanced medicinal value.

 

Kashmiri Saffron is globally popular as a spice. It rejuvenates health and is used in cosmetics and for medicinal purposes. It has been associated with traditional Kashmiri cuisine and represents the rich cultural heritage of the region. The unique characteristics of Kashmir saffron are its longer and thicker stigmas, natural deep-red colour, high aroma, bitter flavour, chemical-free processing, and high quantity of crocin (colouring strength), safranal (flavour) and picrocrocin (bitterness).

 

Remarkably, a new saffron park has been set up just for the sole purpose of processing and promoting the sale of saffron from Kashmir Valley.  The samples brought by growers are tested here. The lab is recognised across the world.  There are 8 parameters that are tested, which are internationally recognized.  The 8 parameters include moisture, extraneous matter and foreign matter, and total ash and three main characteristics. They are graded and then e-auctioned. The farmers get the flowers and then the stigma separation and vacuum drying are done at the Dusoo Park.

 

Traditionally the farmers used to dry the saffron under shade at home but due to that, the saffron used to lose the main components. Now all the parameters are saved to get the best grade, an official of the Saffron Park said.

 

With the GI tag, saffron growers and traders are getting more benefits like legal protection to the products as well as prevention of unauthorized use of GI tag products by others.

To promote the exports of locally sourced agriculture products in Bihar, the National Bank for Agriculture and Rural Development (NABARD) has identified six potential products to be registered for a GI tag.

 

Dr Sunil Kumar, chief general manager of NABARD’s regional office in Bihar said 'In Bihar, we are helping in producers’ group formation and GI filing of six identified products and for post GI initiatives.

 

'This is in line with 'Vocal for Local' and is going to help the producers in brand building, better marketing and visibility, boost regional economy and provide employment opportunities to people', he added.

 

Once approved, this will benefit more than 2,000 producers involved with these six products.

 

Some of the agricultural and non-agricultural products of the state awaiting for the GI tagging include Nalanda Bawanbooti saree and fabrics, Gaya Pattharkatti stone craft, Hajipur Banana (Chiniya kela), Gaya Tilkut, Runni Saidpur Balushahi and Udwantnagar Khurma.

 

The Central government, with an aim to promote local products, has been striving to identify new products and new export destinations.

 

These identifications help local artisans to take another step in gaining global recognition for their product. 

The intellectual property rights (TRIPS) waiver for five years agreed during the 12th Ministerial Conference of the World Trade Organization will help developing countries manufacture patented covid-19 vaccines to deal with the pandemic, commerce and industry minister Piyush Goyal said on Monday.

 

The agreement on patent waiver on covid-19 vaccines will allow India and other eligible developing countries to manufacture and export vaccines without seeking permission from the original maker and also export to other needy countries for five years.

 

However, at a press conference, Goyal said India already has the technology to manufacture vaccines and that the waiver can help other developing countries to make vaccines.

 

'We have sufficient types of vaccines... So, for the current strains of covid-19, we do not need this TRIPS waiver. We have supported it more for the other developing countries to manufacture vaccines,' Goyal said.

 

To be sure, talks on including therapeutics and diagnostics, proposed by India and South Africa, will start after six months.

 

He further said that no questions would be raised on India’s public stock holdings, procurement through minimum support price and support given to farmers. Earlier, WTO members had said that several developing nations distort prices by giving excessive subsidies.

 

Notably, India has agreed to do away with export restrictions on procurement by the UN World Food Programme on the condition that it will have the flexibility to curb exports to ensure domestic requirements.

 

India’s other demand for allowing exports from its public stockholdings to countries in need on a government-to-government basis will be discussed along with other agriculture issues in the next ministerial conference.

Union minister Piyush Goyal has expressed hope that the free trade agreement between India and the United Kingdom will be concluded by Diwali.

 

The minister for commerce and industry and textiles said that the government is moving ahead on free trade pacts with Canada, European Union and the UK.

 

Moreover, Goyal informed that Australia, Israel and the Gulf Cooperation Countries have expressed interest to forge Free Trade Agreements (FTAs) with India, along with Eurasia and Brazil.

 

The Gulf Cooperation Council (GCC) is a political and economic union of Arab states bordering the Gulf. It was established in 1981 and its six members include the United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain.

 

Diwali in October was set as a timeline for a draft FTA after British Prime Minister Boris Johnson's talks with Prime Minister Narendra Modi during the former's visit to the country last month.

 

'All countries are eager to make friendship with India, as we offer huge opportunity and promise. We are moving ahead on FTA with Canada, EU, UK. Australia, Even GCC and Israel along with Eurasia and Brazil have shown their interest to forge FTA with India. I am hopeful that by Diwali, India-UK FTA will be concluded,' Goyal said.

 

He was addressing at the inauguration of the 67th India International Garment Fair at Greater Noida on Monday.

 

He observed that apparel, fashion jewellery and MICE (Meetings, Incentives, Conferences and Exhibitions) are three industries where India has to grow.

 

Total trade between India and the UK stood at USD 16 billion in FY22 (Apr-Feb). The UK was India's 17th largest trading partner during the period.

 

A free trade agreement is a trade pact according to international law to form a free trade area between the cooperating states.

India may allow exports of up to 500,000 mt wheat to Egypt and Jordan at a time when both the countries are finding it challenging to secure wheat supplies, officials with India's food ministry told S&P Global Commodity Insights.

 

India, the world's second-largest producer, emerged as a major supplier of wheat in the aftermath of the invasion.

 

However, it restricted wheat exports as severe heatwaves across north Indian states weighed on India's wheat output, creating price panic in domestic markets.

 

India's wheat output estimate for marketing year 2021-22 (April-March) was reduced to 106.4 million mt in May, down 5% from initial estimates in February when export prospects were strong. India's wheat output is now seen 3% lower on the year.

 

However, Egypt and Jordan have requested India to allow shipments to ensure domestic food security.

 

'We received a request from Egypt for wheat supplies. The commerce ministry will take a final call on the matter,' an official with the food ministry added.

 

If India approves the shipments, this will be the fourth time that India has allowed wheat exports since it imposed a ban on May 13.

 

'Since the exports from Black Sea disappeared Egypt has been struggling with wheat supplies to make up for its domestic consumption,' a trader based in Cairo said.

 

Egypt has been reeling under severe food inflation since the invasion began and global wheat prices shot up. Egypt's food inflation was up 25% year on year in May, compared with 26% higher on the year in April, according to data released by Central Agency for Public Mobilization and Statistics.

 

Egypt-India swap deal

To cope up with the depleting supply, Egypt is also in talks with India for a potential wheat-for-fertilizer swap deal.

 

'India and Egypt are in talks to chalk out a deal to exchange wheat for fertilizers and other goods,' an official with the India's trade ministry said.

 

Similar to the situation with Egypt, India has been facing shortages of fertilizers. India usually imports nitrogen-based fertilizers from the Black Sea region. However, the invasion led fertilizer prices to shoot up.

 

Through the deal, India will be able to procure cheaper wheat while Egypt may source cheaper wheat.

 

Prices of Indian wheat are sharply cheaper compared with traditional sources like Russia, Europe, from where Egypt sources its wheat.

 

Currently, Indian wheat costs Rupee 23,000-25,000/mt ($295-320/mt), including wholesale prices and inland freight costs.

 

Platts assessed Russia's 12.5% wheat FOB prices at $420/mt and Romania's 11.5% wheat FOB from Constanta at $418.25, according to S&P Global Commodity Insights data.

India and the European Union (EU) will resume negotiations next week for a proposed free trade agreement after a gap of nine years. The talks are expected to result in a pact that will catalyse investments from the 27 EU countries into India, commerce and industry minister Piyush Goyal said on Monday. The proposed agreement will also give boosts to exports of pharmaceuticals, textiles, agricultural, leather and handloom products, Goyal said. 'We will get access to high end technologies from 27 EU countries while our services sector will gain from this trade agreement,' Goyal said.

 

The resumption of the negotiations, from June 27, were finalised in Brussels last week after a meeting between Goyal and European Commission’s executive vice president Valdis Dombrovskis. Both the sides will launch a stand-alone Investment Protection Agreement (IPA) and the Geographical Indicators (GIs) Agreement.

 

IPA aims at providing a legal framework for cross-border investments to enhance the confidence of investors, while the GI pact is expected to provide a common regulatory environment in facilitating trade of GI tagged products, including agricultural, food and handicrafts.

 

In India, there are 417 registered GI products such as Darjeeling tea, Basmati rice, Kanchipuram silk etc, which possess qualities or a reputation due to their geographical origins.

 

Formal negotiations between the two sides for the FTA were stuck over stark differences after 16 rounds of talks between 2007 and 2013. The EU insisted that India scrap or slash hefty import duties on sensitive products such as automobiles, alcoholic beverages and dairy products, and open up legal services.

 

Similarly, India’s demand included greater access to the EU market for its skilled professionals, among others. However, both sides have now decided to take the negotiations to a logical conclusion.

 

The EU, even after Brexit, continued to be India’s largest export destination (as a bloc) in FY22, although it has lost some appeal. The country’s outbound shipments to the EU jumped 57% on-year in FY22 to $65 billion, albeit on a contracted base. Similarly, its imports from the EU jumped 29.4% last fiscal to $51.4 billion.

 

In April, India and the EU decided to set up a trade and technology council to boost bilateral ties, as the bloc’s president Ursula von der Leyen met Prime Minister Narendra Modi here.

 

This move underscored growing co-operation between New Delhi and Brussels, as the US is the only other country that has a technical agreement with the EU, along the lines of the one signed with India now. The council is aimed at providing political-level oversight of the entire spectrum of the India-EU ties and to ensure closer coordination.

 

India signed an FTA with the UAE in February, New Delhi’s first such pact with any economy in a decade, and sealed another trade deal with Australia in April. Currently, it is also negotiating FTAs with the UK and Canada. The Gulf Cooperation Council, too, has evinced to sign an FTA with India.

The proposed free trade agreement with the European Union, when implemented, will provide greater market access for several domestic sectors such as textiles, leather and sports goods in the EU market, commerce and industry minister Piyush Goyal said on Monday. After a gap of over eight years, India and the EU on June 17 formally resumed negotiations for agreements on trade, investments and Geographical Indications (GI).

 

The next round of negotiations will take place from June 27 till July 1 here.

 

India had started negotiations for a trade pact, dubbed the Bilateral Trade and Investment Agreement (BTIA), with the 27-country economic bloc in 2007, but the talks stalled in 2013 as both sides failed to reach an agreement on key issues, including customs duties on automobiles and spirits, and the movement of professionals.

 

Goyal said that the EU is a large market with 27 countries which are prosperous. It is one of the largest trading blocs, having a big share of the world's market.

 

EU, he said, has strength in modern technologies, high-end precision equipment and 'we will get the benefit of their modern technologies'.

 

In the services sector also, both sides would get an opportunity to support each other and expand trade.

 

'We will get a larger flow of investments from Europe. It will be a win-win for both the countries,' he added.

 

India's merchandise exports to EU member countries stood at about USD 65 billion in 2021-22, while imports aggregated to USD 51.4 billion.

 

A GI is primarily an agricultural, natural or a manufactured product (handicrafts and industrial goods) originating from a definite geographical territory.

The special India-ASEAN ministerial meeting to commemorate 30 years of the dialogue partnership was held on June 15-16. Nine of the 10 ASEAN countries participated. Myanmar was not invited due to ASEAN’s decision to exclude it over its reluctance to implement the association’s guidelines on its domestic matters.

 

Six countries were represented by foreign ministers. Notable was Vivian Balakrishnan, Foreign Minister of Singapore, who co-chaired the meeting as Singapore is the current country coordinator for India. The Foreign Minister of Cambodia, the current chair of ASEAN, was present. Retno Marsudi, Foreign Minister of G20 Chair Indonesia, was an active participant. Thailand, the Philippines and Laos participated at lower levels, but the participation was fulsome and meaningful.

 

Since the last India-ASEAN summit in 2021, the problems of Covid and economic recovery were aggravated by the Ukraine crisis. Thus, this meeting was significant in dealing with the current global crisis and how India and ASEAN together should act in their mutual interest.

 

The meeting was an important confidence-building mechanism for the region. The Cambodian minister told the Delhi Dialogue, the track 1.5 parallel event, that there was a crisis in the region due to increasing great power rivalry, which ASEAN alone could not manage. The Singapore minister pointed out the important role of India, particularly in dealing with Covid, economic recovery and CBMs. He said that whenever one thought of the pharmacy of the region or the impact of digital connectivity and the big provider of agricultural products, thoughts turned to India. Keeping India engaged was important for the region.

 

Indonesian minister Retno Marsudi made a plea that despite the problems and cleavages in the world, it was important that strategic trust should be increased. This meeting was a good occasion for vaccination to deter the lessening of such trust. India’s External Affairs Minister (EAM) S Jaishankar said the partnership had received the double dose of the vaccine, and now the meeting had given it a booster shot. This appeared to be the perception among the participating ministers, who showed comfort and confidence with India.

 

India’s engagement with ASEAN started after its economic liberalisation in 1991 and the launch of the Look East Policy. Thereafter, India became a sectoral partner of ASEAN in 1992. This was enhanced to a full dialogue partnership. In 2002, India and ASEAN established their annual summits. In 2012, at the 20th Commemorative Summit, the strategic partnership was created. At the 25th anniversary Commemorative Summit held in New Delhi in January 2018, all 10 ASEAN leaders participated, including as chief guests at the Republic Day parade.

 

Much of the India-ASEAN agenda is already on the anvil and agreements exist. What is now to be done is to take them forward with determination. Most ministers pointed in this direction: that we have a good framework and let us now move to fruition.

 

Among the significant mentions in the Co-chair’s statement are an increasing heft for strategic and political cooperation. In the past, this was the weakest link in the India-ASEAN relationship, but is now becoming more focused. The India-ASEAN joint statement on maritime security at the last summit and the agreement for aligning the ASEAN Outlook on the Indo-Pacific (AOIP) with the Indo-Pacific Oceans Initiative (IPOI) of India has been reiterated as a good framework which requires further movement. Singapore and Indonesia stepped forward to participate in the IPOI programmes; the EAM invited other ASEAN countries to also step forward to choose areas of cooperation

 

It was decided that India and ASEAN would hold a defence ministers’informal meeting, to be held alongside the ASEAN Defence Ministers Meeting (ADMM)-plus in November 2022. India’s participation in the ADMM-plus has become more regular and this sets an important tone to the almost 30 other mechanisms which already exist. The agreement to do a joint maritime exercise between India and ASEAN as a whole is also a welcome step. Uptil now, India has been doing coordinated patrols with six ASEAN member states.

 

On the economic side, there was satisfaction that there is finally a forward movement in the India-ASEAN trade, which has crossed $100 billion. This requires much more attention and the creation of new supply chains which should be resilient and not China-dependent. This can be supplemented by a review of the ASEAN-India Agreement on Trade (AITIGA), which is overdue. Despite repeated calls for its early implementation, ASEAN bureaucratic processes are slow. But now it appears that the basic work to present the proposal to the ASEAN economic ministers later this year is complete. The review could actually start after that and, perhaps, be concluded by 2024.

 

The India-ASEAN upgraded FTA could be a game-changer within the Indo-Pacific region. Seven ASEAN countries, besides India, are part of the new IPEF. The RCEP, from which India withdrew, has not started with gusto. A revitalised AITIGA would compensate for any lost opportunities for engagement with ASEAN without necessarily bringing in the China factor.

 

ASEAN needs to understand this concern with China. It cannot become a conduit for Chinese goods into India. The EAM was quite clear in his remarks at the Delhi Dialogue that ASEAN would do well to understand India’s China policy, which was based on mutual respect, sensitivity and interests. He clearly said that what happens on the border will be reflected in the bilateral relationship with China. In this, India is not following the ASEAN template where economic relations are rapidly growing, even though China has gobbled up almost the entire South China Sea, including islands which were claimed by five ASEAN countries.

 

The main take-away from the Commemorative Ministerial meeting is that it did not make tall announcements or new funding mechanisms. It took stock, vowed to improve the realisation of goals and promoted confidence-building measures which will increase the strategic autonomy of both India and ASEAN in the region.