Indias Iron Ore Problem: Supply Vs.

Taxes
After more than four years of languishing, some hopes been rekindled in Indias iron ore mining
sector.

Ore production jumped 22% between April and October, according to figures released by the
government. Iron ore production stood at 100 million metric tons during the resurgence, against
81 mmt during the same April to October period a year ago. Whats brought even more cheer is
the news that exports, too, jumped 9 times their previous level, to 9 mmt from last April to
September, as compared to 1 mmt, the same period last year.

Export Taxes
With a steep price hike in global markets aided by protectionist measures for the domestic steel
industry, will India see a resurgence in iron ore exports? Not so fast.

India has plentiful iron ore stockpiled but taxes are holding up exports.

The protectionist measures imposed by Indias government previously included an export duty
tax of 30% on high-grade iron ore. Many within the mining sector are of the opinion that the
export tax must go, or at the very least be reduced, to boost exports.
India exported 5.4 mmt of iron ore in all of 2015-16, and the figure is likely to go up in 2016-17.

In addition to the 30% duty, the government of India also imposed a 5% levy on pellet exports in
January 2014, leading to a capacity drop to as low as 30%, and the closure of a number of
export-oriented units. Theres also a longstanding duty of 10% on the export of ore with iron
content of up to 58%.

The Federation of Indian Mineral Industries (FIMI), a representative body of ore miners here,
has demanded the removal of this duty. Most of the iron ore exports, largely of low-grade ore
from mines in provinces like Goa, seem to be headed to China. Obviously, Indian miners would
like to expand their exports, especially of high-grade ore, to markets as far away as North
America.
China consumes over 70% of the worlds seaborne iron ore. Some have estimated that despite a
slowdown there, the Peoples Republic may import 1 billion mt of the steelmaking raw material.

Mining Majors Take Advantage

The iron ore price has moved up from $40/mt to $70/mt in global markets in the last few months.

Because of multiple problems, including legal cases, India lost its position in the global iron ore
market about four years ago. Producers from Brazil and Australia such as Vale SA, Rio Tinto
(LON:RIO) and BHP Billiton (LON:BLT) have happily stepped into the space vacated by Indian
ore exporters, even doubling doubling down on capacity expansion and increasing seaborne ore
supply.

So, until India sorts out its export and tax problems that involve the iron ore sector, steel
companies in places such as China, Australia, Europe and even far away North America may not
be able to get their hands on ore from India.

Another problem for the domestic miners is growing stock but less domestic consumption. Its yet
another reason why they want to get exports going.
Data from the Indian Bureau of Mines shows the total stock of ore at the end of July was 144.5
mmt. 70% Of that total comprises ore with content below 62% in both lumps and fines.

The various export duties are simply getting in the way of ore exports. The sector is looking
forward to the countrys annual budget announcement where the government may lower the
export duty to boost the trade.
Source: Investing

Textiles and readymade garments

Future Outlook
At present, the Indian apparel and textile sector is struggling to survive because of
increasing costs of raw material, poor off take of yarns coupled with the poor
realization from yarn dealers and a sharp rise in interest rate and, the worse, the
rising value of the Indian rupee. As the industry is aiming an export turnover of $50
billion by 2010, amounting to more than US$ 100 billion including that for domestic
consumption, it is imperative that the country leverages its underlying advantages
and builds capabilities to place itself as a complete solution provider rather than
only a manufacturer.

Exports feeling the brunt of the rising rupee

The increasing value of Indian rupee is hitting exporters, with India's textile exports
to USA taking a plunge in value terms even though volumes have soared during the
period Jan-Apr 2007. During the period April-Jan 2007, exports of apparel and textile
products to US declined by 0.43% in value terms though export volumes increased
by 7.49% as compared to the corresponding period in the earlier year.

Remedial Measures
The textile exporting community of the country is looking to reduce dependency on
the US market and is focusing towards the European market for attaining further
growth and to fight currency pressure. This is because of the fact that even though
the rupee strengthens itself to Rs. 39.54 against the dollar, the Euro-rupee equation
is comparatively at a higher exchange price of Rs. 56.
While many exporters are in talks with European buyers to increase revenues from
the European market, keeping long-term interests in mind, they are also hoping to
ramp up domestic operations, improve production and manufacturing efficiencies.
For example, some companies are trying to convince their existing clients in Europe
to shift from paying in dollars to Euros. Some companies are also pondering over
market diversification with more emphasis on Europe.

According to industry experts, these are only short-term benefits and will not be
beneficial to small and medium enterprises to cope up with the appreciation of
rupee. They are expecting the government to take some measures on CENVAT
accumulation along with cancellation of 1% NCCD from POY. To compete with cheap
imports, duty on various raw materials / intermediates needs to be rationalized.

As per industry statistics, the European market cannot offer as much volumes as the
American market fetches. Secondly, there will always be a resistance to the
incremental prices, which exporters can enforce upon their foreign clients. Hence,
targeting the burgeoning domestic market, which has significant growth potential
should be the long-term strategy for the Indian textile sector. Besides this, while
some bigger companies have managed to plug losses by hedging, it is time for the
smaller companies too, to look at this option, as the textile industry has had to
grapple with issues such as job cuts and profit losses this year.
Indian Apparel and Textile Industry

The apparel and textile industry occupies a unique and important place in India.
One of the earliest industries to come into existence in the country, the sector
accounts for 14% of the total Industrial production, conduces to about 30% of the
total exports and is the second largest employment creator after agriculture.

The apparel and textile industry caters to one of the most basic requirements of
people and holds importance; maintaining the prolonged growth for improved
quality of life. The sector has a unique position as a self-reliant industry, from the
production of raw materials to the delivery of end products, with considerable value-
addition at every stage of processing. Over the years, the sector has proved to be a
major contributor to the nations' economy.

Its immense potential for generation of employment opportunities in the industrial,

agricultural, organized and decentralized sectors & rural and urban areas, especially
for women and the disadvantaged is noteworthy.
Challenges in marine products

1. Increase in Reefer base rates

All the shipping lines operating from Indian coasts have unilaterally announced an increase of
US$1500.00 in freezer container freight rates irrespective of the size of the container and port of
destination.

All ocean freight carriers carrying goods to US ports are required to file their tariff rates with
Federal Maritime Commission (FMC). However, these rates are not the actual tariff collected
from the shippers. They will vary from shipper to shipper based on a special contract signed
between individual shipper and the freight carrier. All other shippers will be subject to the open
tariff rate filed with FMC. The tariff rates between the contracted rate and the open tariff rate for
US East Coast may be as high as US$1500.00 or more. The lack of effective legislation for
fixing the freight rates to specific destinations have contributed to this unhealthy practice of
bargaining for the freight rates by the shippers.

2. Terminal Handling Charges (THC)

A major hurdle faced by the seafood export industry in India is the exorbitant Terminal Handling
Charges (THC) levied by Indian terminal operator. Although the scale of rates for the THC is
fixed by Tariff Authority for Major Ports (TAMP), the shipping services sector pays little heed to
the regulatory body knowing full well that no penal action will be taken against them. The THC
in Indian ports today are very high compared to ports in the neighbouring countries including Sri
Lanka and the Middle East region

. Anti-Dumping Duty

The US anti-dumping duty on frozen shrimp imports from India was imposed from August 4,
2004. The average duty imposed on Indian companies was 10.17 per cent and in the first AR this
was cut to 7.22 per cent. It was further reduced to 1.69 per cent in the second AR and to 0.79 per
cent in the third. In the fifth AR, this was raised to 1.69 per cent.
5. Withdrawal of SHIS for Marine Industry

The Director General of Foreign Trade (DGFT), on 5th June 2012, published the Annual
Supplement of the Foreign Trade Policy (FTP), in which the Status Holder Incentive Scheme
was expanded to cover more export product groups including marine products.However, the
words Marine Products was neither mentioned in Chapter 3 of FTP, nor in the Handbook.
Because of this anomaly, exporters couldnt avail of SHIS benefits.

4. CVD Petition Filed against Seven Countries including India

The Coalition of Gulf Shrimp Industries of the U.S. has filed a petition before the International
Trade Administration, the United States Department of Commerce (DoC) and the United States
International Trade Commission (ITC), demanding the imposition of countervailing duties on
certain frozen warm water shrimps from China, Ecuador, India, Indonesia, Malaysia, Thailand
and Vietnam. The petition makes several allegations regarding the countervailable subsidies
provided in India with regard to the manufacture, production and export of certain frozen warm
water shrimp.

Marine Products Exports from India Fetches a Foreign Exchange of USD 5.5 Billion in
2014-15

During the financial year 2014-15, exports of marine products reached an all-time high of
USD 5511.12 million. Marine product exports crossed all previous records in quantity, rupee
value and USD terms. Exports aggregated to 10,51,243 MT valued at Rs. 33441.61 crores and
USD 5511.12 million. Compared to the previous year, seafood exports recorded a growth of 6.86
% in quantity, 10.69% in rupee and 10.05 % growth in USD earnings.

Major items of export

Frozen shrimp continued to be the major export item in the export basket in
terms of quantity and value, accounting for a share of 34.01 % in quantity and
67.19% of the total USD earnings. Shrimp exports during the period increased by
18.60%, 16% and 15.54% in quantity, rupee value and USD value respectively.
However unit value realization decreased to 10.38 USD/Kg from 10.65 in 2013-14, a
negative growth of 2.59%.

The overall export of shrimp during 2014-15 was to the tune of 3,57,505 MT
worth USD 3,709.76 million. USA is the largest market (1, 12,702 MT) for frozen
shrimp exports in quantity terms followed by European Union (81,952 MT), South
East Asia (69,068MT) and Japan (30,434 MT).

The contribution of cultured shrimp to the total shrimp export is 76.45% in

terms of USD. The export of cultured shrimp has shown positive growth of 21.66% in
quantity and 15.53% in USD terms.

During 2014 -15 shrimp aquaculture has shown a tremendous growth

(30.64%) and achieved highest production (4,34,558 MT). Production of L. Vannamei
increased by 41% to 3,53,413 MT. Black Tiger production remained stagnant at
71400 MT. Scampi production increased by 32% to 7989 MT. Major shrimp
producing states have shown positive growth - Andhra Pradesh 2,79,727 MT
(+31%), Tamil Nadu 32,785 MT (+20%), Gujarat 30156 MT (+182%), Maharashtra
4426 MT (+113%), Orissa 22539 MT (+56.13%).

The export of Vannamei has shown positive growth of 2,22,176 MT from

1,75,071 MT and USD 2372.80 Million from 1,994.27 million, compared to 2013-
14. The export of Vannamei recorded a growth of 26.90% in quantity and 18.98% in
USD terms. About 42.77 % of total Vannamei shrimp was exported to USA followed
by 20.46% to South East Asian countries, 17.45% to EU, 4.55% to Middle East and
4.18 % to Japan in terms quantity. Export of Black Tiger shrimp has picked up from
negative growth during 2013-14 to a positive growth of 0.64% during 2014-15.

The downward trend in unit value realization for L.Vannamei in USA and other
markets started during December 2014. The price has dropped from 7.60
USD/pound during November 2014 to 6.95 USD/pound during December 2014. The
trend continued till the end of March 2015. It has recorded lowest of 5.90
USD/pound during March 2015. Hence even though export of total shrimp increased
by 18.61% in quantity, USD realization value has recorded only 15.55% increase.
 Fish, is the second largest export item, accounting for a share of about
29.44% in quantity and 11.24% in USD earnings. Fr. Fish shown negative growth of
4.60%, 12.02% and 12.55% in terms of quantity, rupee value and USD terms. Unit
value realization of Fr., fish also decreased by 8.34%.

Fr. Cuttlefish recorded a growth of 20.09% in quantity, 32.17% in rupee value,

and 31.81% in USD terms. Unit value realization also increased by 9.76%. Export of
Fr. Squid has shown negative growth of 20.44%, 26.37% and 26.27% in terms of
Quantity, Rupee Value in and USD terms. It has also shown decrease in unit value
realization by 7.33%.

Dried item have shown a positive growth in terms of quantity by 3.89% and in
Rupee term by 1.22%, but it has shown negative growth in USD terms by 1.41%.
Live items exports have increased by 8.03%, 6.97% and 2.25% in quantity, rupee
value and USD realization respectively compared to the previous year. Chilled items
have shown 59% increase in quantity. Unit value realization reduced by more than
25%. Other items like Surimi & Analogue products have shown a growth of 14.41%,
31.75%, 29% in quantity, Rupees and USD terms respectively.

Export of Value added products during 2014-15 has been increased to 95,436
MT from 84,549 MT with a growth of 12.88% and to 746.59 Million USD from 634.67
Million USD with a growth of 17.63 %. The major contributor to the export of value
added item is Value Added Shrimp items with a share of 63.54% in quantity terms
and 75.37% in USD terms. EU is the biggest destination for the value added items.
About 42.06% of total Value added products been exported to EU during 2014-15 in
terms of quantity and 32.82% in terms of USD followed by USA, South East Asia,
Middle East, China and Japan. The share of value added products to the total export
is 9.07 % in quantity terms and 13.54 % in USD terms.

Major export markets

USA is the largest market for Indian seafood products with a share of 26.46% in terms of
USD followed by South East Asia (25.71%), European Union (20.08%), Japan (9.11%), other
countries (8.58%), Middle East (6.04%) and China (4.02%).

Exports to USA had registered a growth of 16.94% in quantity and 13.39% in USD
realization and are mainly attributed to the export of Fr. Shrimp which showed a growth of about
17.49% in volume and 12.87% in USD terms. Exports of Vannamei shrimp showed increase in
US market by 21.71 % in quantity and 15.44% in USD realization.
 Exports to South East Asian Countries have shown positive growth by 7.86%, 7.14% and
7.26% in terms of Quantity, Rupee value and USD terms respectively.

Exports to European Union have shown growth of 7.64%, 9.56% & 9.22% in terms of
Quantity, Rupee, & USD respectively.

Export to Japan registered increase in terms of USD by 22.23%. Export of Frozen Shrimp
increased by 5.97% in quantity terms and 11.32 % in USD terms.

Export to Middle East countries has shown good growth of 11.32%, 26.35% and 22.17%
in terms of Quantity, Value and USD terms respectively.

Export to China has decreased drastically. The export has registered negative growth of
21.46%, 23.64% and 24.45% in terms of quantity, rupee value and US dollar terms. All products
including Fr. Shrimps, Fr. Fish, Fr. Squid, Fr. Cuttle Fish etc has registered negative growth.
Export of L. Vannamei decreased significantly by 47.45% in quantity and 44.82% in US dollar
terms. The weaker economic condition in China has lead to decrease in overall export to China.

The details on major markets for Indian marine products are given in the following table:

Major Port wise Exports:

Marine products were exported through 30 different sea/air/land ports. Exports improved from
Vizag, Kochi, JNP, Calcutta, Tuticorin, Krishnapatnam, and Mangalore compared to the
corresponding period during the last year. Pipavav is the major port in terms of quantity
(25.27%) and Vizag is the major port in terms of USD (22.59%).

Outlook for 2015-16

MPEDA envisages export of marine products worth USD 6.6 billion during the year 2015-16.
Increased production of L. Vannamei shrimp, diversification of Aquaculture species particularly
of Tilapia and Mangrove crab, Quality control measures and increase in infrastructure facilities
for production of value added items are expected to help in achieving this target.

Prospect of marines

Food Parks This initiative of the Government is targeted to provide common infrastructure
for the industry. As per the 10th Plan schedule a total of 56 Food Parks were planned. The 11th
Plan has a target of establishing 30 mega food parks across the country. The key objectives of
this initiative includes providing infrastructure, support value addition of agricultural
commodities, establish raw material supply chain, induction of latest technology, integration of
complementary resources and improved quality assurance.
Integrated Cold Chain Facility This scheme is targeted to improve viability of cold storages
and add capacity.
 Packaging Centre The Government intends to develop packing centers facilities so as to
help enhance the shelf life of food products and bring international acceptability.
Value Added Centre The value addition centres are intended to bring about value addition
leading to higher realization along with enhancing shelf life.
Irradiation Facilities The meet the challenges brought about by infestation, the Government
has plans to setup irradiation facilities.
Modernization of Abattoir For the 11th Plan, the Government is planning a comprehensive
scheme for modern abattoirs across the country

cashew
here are 32 countries successfully
cultivate cashews. Among these Vietnam, India
and Brazil are the top three producers and
processor of cashews. Cashew Kernels are
facing stiff competition from other edible nuts
like almonds, walnuts, pistachios, macadamia
nuts and hazel nuts and India also facing
competition from Vietnam and Brazil.
India has 24% of the global area under
cashew but contributes only 19% of global
product
ion of global production. Whereas,
Vietnam with 10% of the global area contributes
an average yield of 2.8 tones per hectare as
against Indias around 800 kg.
India was the first country started to
exporting manually processed cashew nut.
These processing operations were performed
by experienced skilled workers. In general
Indian processing system involves lower
investment and variable costs and achieves far
efficiency in terms of kernel. However this
system requires large number of experienced
workers who works at unhealthy level of
exposure to CNSL. Thus cashew has the
potential to increase the income of poor
producers, to create employment opportunities
during harvesting and processing and to
increase exports.

MAJOR PROBLEMS FACED BY THE

CASHEW EXPORTERS
1. Shortage of Raw Cashew Nuts:-
Shortage of raw cashew nut adversely
affects the export of cashew product. In India
Domestic production of cashew has been
fluctuating during the recent year. This is
mainly due to the inclement weather and aging
of cashew tree. This would drop the productivity.
Apart from the use hybrid variety, new
systematic and scientific method should be
used. The idea of re plantation programme and
organic cashew farming can enhance the
domestic productivity. Now, Indias domestic
productivity is around 7 lacks. While their
processing capacity is about 14 lacks tones. So
India has to depend on imported raw cashew
nuts.
2.Exchange Rate fluctuations:-
The exchange rate fluctuation directly
affects the profitability of the exporting
companies. Since the invoicing is done by the
companies against an assumed fixed rate.
When the domestic currency weakens against
the foreign currency the profitability is eroded.
The purchase agreement is signed for a period
of three to five years. For the firm most of the
contracts are fixed for term of three years.
3.Infrastructures:-
The export of cashew product requires
shipments from airport and sea ports. The Poor
infrastructure in the Indian Scenario creates
logistical problems. To agreement export
infrastructure is more important. The
warehousing and storage facilities are not
adequate and the standards are very poor when
compared with international parameters. The
rail net works is inadequate to serve the
transportation requirements of agro
commodities. This results in higher lead time
for procurement and cause delay in delivery.

4.Competitions:-
Indian exporters face stiff
competition from countries like Vietnam and
Brazil. Productivity of these countries is more
compared to productivity of India. These
countries using new modernized systematic
and scientific method. Production capacity of
Vietnam is more than that of India. This is
because the usage of high yielding variety crop,
their adequate harvesting technique, storage
and ware house facilities. Vietnam as a major
exporter of raw cashew at competitive price .The
Govt. of these countries gives various
concession to the cashew export community.
The tariff was imposed by union Govt. for the
Indian exporters. To increase the economies
of scales they enable to offer product at lower price.

5.Financial problems:-
The cashew industry not has
sufficient financial capacity. The bank and
financial institutions are providing few
amounts of loans and advances at high rate of
interest basis. At that bank and financial
institutions are ask for high securities and not
giving this loans and advances at correct time.
This lead to shortage of production. Some banks
unnecessarily delaying for opening Letter of
Credit (L\C). This type financial institutional
rules and procedure are very risky. Today cost
of production is very high .so the exporters
required huge amount of finance. Especially the
small exporters are highly faced in this
problem. The govt. spent some amount to
cashew industry, but this amount is not
sufficient for all exporters in India

gems and jewellery

The gems and jewellery industry being fully export oriented plays a vital role
in the Indian economy and shares a substantial amount of total exports.
Gems and jewellery exports accounted for 13.28 per cent of Indias total
exports in 2009-2010 and a downfall 10.58 %.
Prime Exporters-wise Export Potential :
Country wise analysis exhibit that the major export destinations of gems and
jewellery industry are UAE, Hong Kong, USA and Belgium and the countries
Singapore, UK, Japan are the minor importers.
During FY 2013-14, UAE accounted largest importer of Indians gems and
jewellery with a share of 30.65 percent, the second largest was Hong Kong
with a share of 26.72 followed by USA and Belgium having 18.73 and 6.42
percent share. It is evident that these 4 countries comprise around 82
percent of the total export.
The government is looking forward to enter new ventures and markets such
as Middle East, Russia, China by various initiatives and export promotion
activities.
GOVERNMENT INICIATIVES AND POLICIES:
Some of the major steps taken by the Government of India for the increment
in gems and jewellery exports in terms of duties and taxes, infrastructure
(SEZ, EPZ), etc., which plans to promote the gems and jewellery industry
through its new foreign trade policy (1009-2014) are :-
The number of days has been increased to 90 days for the re-import of
unsold items in case of participation in an exhibition in the US.
Tax incidence on gold jewellery has been neutralized and also the duty
drawbacks on such goods are permitted.
The limit of duty free re-import for rejected jewellery should be 2% of FOB
value of exports.
For an overseas exhibition the value of personal carriage has been
increased from $0.002 billion to $0.005 billion. Even the personal carriage of
samples for export promotion has been increased from $0.0001 billion to
$0.001 billion
The Government of India has allowed 100% FDI in gems and jewellery
industry.
The MoU is signed with Russian diamond mining firm ALROSA to share
trade and statistical data between the two countries that will help in
strengthening trade relations between the two countries.
Initiatives by GJEPC include the India - China Gemstones Buyer - Seller
Meet in Jaipur, India USA Buyer Seller Meet to be hosted for the first time
in Chicago, The 2nd edition of the global Gem & Jewellery fair in Dubai this
November.
The industry of gems and jewellery is a captivating industry. Millions of people have
been engaged in it. In India it is scattered throughout with every village having a
family of goldsmith. 85 per cent of the diamond is processed in Gujrat. With Surat,
Bhavnagar and Ahmedabad being the diamond centres.
There are also diamond processing units in Mumbai, Trichur, Coimbatore, Jaipur and
Goa. Mumbai is the prime trading centre for diamond exports as it accounts for 93
percent of diamond exports being dispatched from Mumbai airport.
Majorly the products can be categorized into 8 groups
Cut and Polished Diamonds
Gold Jewellery
Coloured Gemstones
Pearls
Non-gold Jewellery
Costume/Fashion Jewellery

2. PROBLEMS AND CONSTRAINTS

The export of gems and jewellery in India is marking a positive trend and elevating
every year. Despite that there exist a handful of problems. The various issues
related to production, consumption and marketing encountered by manufacturers
and exporters are both generic and specific in nature. The most important problems
to be dealt with are discussed below: Over reliance on imports:
In India 90 per cent of raw material is imported since the factual demands are
substantially more than the innate gems mineral production. The raw material being
imported comprises 50 percent of rough diamonds. In 2012-13 the total import of
raw material was 36.90 USD Billion out of which import of rough diamond was 14.89
USD Billion. Europe has become the largest importing destination of raw material for
Indian gems and jewellery industry. Prime export of raw material are from Belgium,
the UK, Israel, the, UAE Switzerland, South Africa, Australia and Hong Kong. An
increase in export would require increase in import. Also due to dependence on
import high level of inventory is maintained which increases the cost and
incorporate inventory price risk.

Emerging rivals:
Even though India is dominating in the export of cut and polished diamond, China
possessing similar qualities like cost effective labor, infrastructure and liberal
government may come out as a major rival in future. Another key aspect where
India faces a major threat from china is Technology. Italy is the prime competitor in
the field of gold jewellery and studied jewellery. Also, in order to gain monetary
gains from diamond value chain, large diamond producing countries in Africa i.e.
Namibia, Botswana and South Africa are seeking investments in cutting and
polishing industry. Moreover Israel being one of the three biggest countries in
diamond processing is turning out as a global coloured gem stones centre.
Identically for technologically advancement Belgium employs scientific and research
section and holds provision of social fund for the help of the highly skilled diamond
worker.
Disparity in growth:
The gems and jewellery industry gives ample amount of significance to one item,
i.e. diamonds which accounts for 85 percent of total exports whereas very less
significance is given to the other items.
Changing Trends of fashion:
India not holding adequate amount of design development centre to come up with
latest innovative designs and feedback makes it difficult to catch up with fashion
needs of the foreign buyers. Due to change of fashion, demand of previous products
declines which block manufacturers capital and huge stock is collected
. Traditional way of crafting:
The two factors which granted a cutting edge to gems and jewellery manufacture
are modern state of art machinery and computerized operations .Due to small size
and disordered nature of majority of the industry, practice of latest technology
Issues related to workforce:
Lack of Training Facilities: The manpower associated requires a feast of practical
knowledge, despite that the number of training institutions linked are very less and
only put up conceptual knowledge which are inadequate.
Existence of casteism: Casteism is blindly followed in this sector; distinct castes
have possession of specific works of processing. For example in Jaipur near about 90
per cent labourers engaged in this process are Muslims .Similarly Gujratee trainers
prefers Gujratee trainee only. On an account of this outlook inefficient persons have
entered in this occupation whereas workers with real aptitude are kept out of the
industry
. Lack of permanent work: In gems and jewellery industry about 10 per cent of
the total persons come in the trade every year. And before the establishment of the
trade they withdraw due to lack of permanent work. In case of ghat-making, there is
no organizational setup due to which the ghat-makers they dont have any
permanent work.
Unsuitable Working and Payment Conditions: The workers are facing despair
situation due to ill-suited working conditions and dearth of set schedule. When
required they work for more than 12 hours and in situation of no work labourers are
let helpless. There are not paid on fixed basis and on time. The provision of clean
water, proper shades and proper light are also not provided to them.
Services Export
Ministry of Commerce and Industry, Government of India, with a view to give proper direction,
guidance and encouragement to the Services Sector, has set up an exclusive Export Promotion
Council for Services in the name of Services Export Promotion Council (SEPC). SEPC was
registered under the Societies Registration Act in November, 2006. DGFT, vide Gazette
Notification dated 5/3/2007, included SEPC in the list of the recognised Export Promotion
Councils.Service sector is the largest and fastest growing sector in the Indian economy making as
high as 59% contribution in total GDP of India Services export is one of the key thrust areas of
the Government of India. Services exports have recorded about seven fold increases in ten years
from US$ 20.76 billion in 2002-2003 to US$ 142.325 billion in 2011-2012 and US$ 105.84
billion upto December, 2013.

Export of Service Rules, 2005 defines export of services in two

parts. Rule 3(1) defines export of services in terms of places
where services are provided or received. Rule 3(2) defines export
of services in terms of payment received in foreign exchange. It is
to be noted here that Rule 3(1) and 3(2) are independent of each
other, i.e. a provision of service is export of service if it satisfies
either the definition of 3(1) and 3(2).

Shifting Markets

The U.S. and Western European countries like the U.K. still remain the largest importers of
commercial services. However, BRICS nations China (19 percent), Russia (16 percent) and
Brazil (7 percent) were the fastest growing import markets for commercial services in 2012.
China and Hong Kong together account for 8.2 percent of global imports of commercial services,
as compared to the U.S. with 9.9 percent. Other rapidly growing import markets include
Australia, Japan, South Korea and Nigeria.

Unlike manufacturing, exports of services are not as dependent on the quality of basic
infrastructure or regulatory regime. In addition, India scores over other countries on the
availability of technically qualified workers with knowledge of English. However, the
contribution of the tertiary sector to Indias total exports of goods and services is still only 33
percent, even though the sector accounts for roughly 57 percent of GDP. Despite the hype about
Indias comparative advantage in services, as compared to Chinas 4.4 percent, Indias share in
global exports of commercial services stood around 3.4 percent in 2012.

Indias services exports have a narrow base (in terms of product offerings and market mix) with
IT and ITES alone accounting for 40 percent of the total. Of that, more than 75 percent goes to
just three countries the U.S., the U.K. and Canada. In 2012, Indias share of global export of
computer & information services was 18 percent, as compared to 4 percent in other business
services, the largest component of the global commercial services pie.
Meanwhile, Indias FTAs mostly cover trade in merchandise only. Even where trade in
commercial services is covered under its comprehensive trade pacts, in the absence of mutual
recognition agreement (MRAs), Indias service suppliers do not benefit from preferential market
access. The best examples are the India-Korea and India-Japan trade pacts. The slow progress of
the trade in services agreement under the India-ASEAN FTA has not helped.

The Way Forward

The proposed change in U.S. visa regulations and growing sentiment against outsourcing will
constrain Indias exports of IT & ITES to the U.S. India will thus need to push exports of
business services in addition to traditional services like travel & tourism, where there is immense
untapped potential. In 2012, Indias share of global exports of travel & tourism stood at just 1.6
percent ($18 billion), compared to Chinas 9.2 percent ($102 billion).

Given the growing share of emerging nations in imports of commercial services, India can expect
more growth in exports from countries like China, Russia, Brazil and Nigeria. China, including
Hong Kong, as well as Russia, Brazil, Australia and Japan imported $700 billion worth of
services in 2012. Of this, other business services alone was worth $146 billion, while computer
& information services stood at close to $20 billion.

The rising cost of skilled employees in a bleaker external environment can adversely affect
Indias services exports, as does increased competition from new players like China or
Philippines. A strengthening rupee could also dampen prospects.

In the shortrun, India needs to expedite its MRAs to push services exports through preferential
routes. The long-term solution lies in ensuring an adequate supply of skilled workers, in addition
to broadening its offerings in services and reaching out to key emerging markets. Moving up the
value chain is the way to go if India does not want to compete on labor costs alone. That calls for
intensifying the R&D effort.

A serious flaw in Indias negotiating strategy is placing too much emphasis on getting market
access for Mode 1 (covering BPO/KPO) and Mode 4 (covering movement of professionals),
which are politically difficult to push, especially in the current macroeconomic environment
when outsourcing is increasingly being seen as transferring jobs abroad. In addition, given the
ever-growing trans-boundary presence of Indian businesses, it is time India developed trade
interests in Mode 3 (commercial presence in the country of service receivers). India enjoys a
legacy of delivering IT & ITES offshore, a legacy that could be leveraged for the export of non-
IT business services.

Cotton and yarn

The profitability of spinning companies in the second quarter of 2016-17 likely to get hit, with
domestic cotton prices surpassing international cotton prices, adversely impacting the yarn
demand and export prospects for the spinning industry, ratings agency ICRA said.

The profitability of spinning companies in the second quarter of 2016-17 likely to get hit, with
domestic cotton prices surpassing international cotton prices, adversely impacting the yarn
demand and export prospects for the spinning industry, ratings agency ICRA said.

Domestic prices of ginned cotton have increased significantlyfrom about Rs 90-92 per kg in
April to around Rs 122 per kg now. Slow growth in domestic consumption and stagnation in
exports are likely to adversely impact demand and export competitiveness of the Indian yarn, the
agency said.

India Ratings & Research has revised its cotton outlook to negative for 2015-16 due to a decline
in domestic yarn production, an unlikely recovery in cotton exports and a fall in domestic cotton
prices below minimum support prices (MSP).

India Ratings had earlier given the outlook on cotton sector to 'negative-to-stable', the rating
agency said in a report here.

It attributed factors such as contraction in domestic yarn production for exports, unlikely
recovery in cotton exports, and a fall in domestic cotton prices below MSP have pushed domestic
cotton stocks high, for the revised outlook.

All these factors, it said, are likely to keep domestic cotton prices under pressure in 2015-16.

Further, the report said that the conversion of China's cotton reserve policy into a direct subsidy
policy in April 2014, will increase reserve cotton sales and reduce its cotton imports to half in
2015-16.

Cotton exports from India to China plummeted 26.4 per cent annually over April-October 2014,
compared to a 4.3 per cent dip in the previous year.

Lower global cotton prices and the relatively stable rupee will keep the attractiveness of Indian
cotton under pressure in the export market in marketing year (MY) 2015-16.

India's cotton exports to other destinations are unlikely to replace the quantum of lower trade
with China.

Domestic cotton consumption and cotton yarn production have shown tepid growth at 3.6 per
cent and 2.3 per cent, respectively, over October-November MY14-15, due to a drastic reduction
in off-take from Chinese counterparts.

In MY16, the agency expects cotton prices to trade lower y-o-y unless the demand of cotton yarn
recovers.

Cotton prices (represented by Shanker-6) are likely to trade between Rs. 40 per kg and Rs. 45 per
kg while lint prices will trade in the range of Rs. 85-100 per kg for MY15-16.

India Ratings expects domestic stock to use ratio for MY15-16 to be near 12 per cent compared
to 12.2 per cent in MY14-15.

In 2014-15, operating profitability of Indian cotton ginners and cotton exporters was under
pressure due to volatile cotton prices.