Air India loses exclusive rights over international flights

PTI | Feb 14, 2012, 04.10PM IST

NEW DELHI: Air India would no longer enjoy exclusive privilege over all bilateral air traffic rights with foreign countries as the government has decided to allow all Indian carriers to use these rights. As Air India had since inception continued to enjoy exclusive right (right of first refusal) over foreign routes due to its historic monopoly over foreign routes, private airlines could operate only when the national carrier said it would not operate on them. As a result, several routes and flying slots remained unutilised. However, Air India's operational plans would get due consideration when traffic rights and entitlements are allocated, new changes made in the bilateral policy show. The civil aviation ministry has now decided to allow all scheduled Indian carriers, including Air India, to utilise allocated bilaterals till they reach the maximum permissible limit under air service agreements (ASAs) with various countries, an official spokesperson said. The ASAs fix the maximum number of flights or seats to be operated by designated carriers of both countries each week. The allocation of traffic rights to Indian airlines would now on be done well in advance upto a maximum limit of five schedules, keeping in mind the demands from them, their capacities and capabilities, operational plans and other factors, the spokesperson said. The utilisation of these rights by airlines would be regularly monitored and oversight maintained on them by the Ministry. In case of underutilisation or non-utilisation of these rights, the ministry could cancel them and levy penalties on the airlines, according to the changes made in the policy. While code-share operations between an Indian and a foreign carrier would be encouraged under the new arrangement, all steps would be taken to promote development of hubs to enable Indian airlines to carry sixth freedom traffic and attain a dominating position in the region, the spokesperson said. Sixth freedom is the global aviation right to carry passengers or cargo from a second country to a third country by stopping in one's own country. For example, a passenger is carried from London to Sydney by a Singapore Airline flight via Singapore. The ministry would regularly review the bilaterals to promote global connectivity keeping in mind the demands by the Indian carriers, international passenger traffic, trade, commerce and potential global and regional issues, the spokesperson said. In order to cater to the travel, trade and commerce needs to countries which do not have air service agreements with India, the ministry would consider signing ASAs with them. The policy changes were carried out on the basis of the approach outlined in a discussion paper of an inter ministerial group on the issue. According to official estimates, private airlines have sought 50,000 international seats in 2011, over 40 per cent of which are for destinations in the lucrative Middle East. In Europe, Indian carriers use less than 10 per cent of the allowed capacity, leaving up to 90 per cent of the market share to foreign carriers. Air India, Jet Airways andKingfisher fly to France and Germany and no one flies to Spain, Denmark, Norway, Sweden or Switzerland. In the Asia-Pacific, foreign carriers have 55 per cent of the share Source: http://timesofindia.indiatimes.com/business/india-business/Air-India-loses-exclusive-rights-

over-international-flights/articleshow/11886668.cms

Feb 22, 2012

India opens up opium business

By Neeta Lal NEW DELHI - India plans to open up trade in opiate-based pharmaceuticals to private players, with the aim of enriching foreign exchange coffers while also tackling drug trafficking. The government has for a half-century kept strict control of the entire process of opium production, including pricing and the disposal of psychotropic substances. However, under the new National Policy on Narcotic Drugs and Psychotropic Substances, private players will be allowed to extract narcotic alkaloids such as morphine and codeine. Under the previous guidelines, licensed farmers were only allowed to sell poppy plants to two state-run opium and alkaloid factories that produce poppy straw concentrate. Now, reputable firms with

an annual turnover of over of US$20 million will now be able to buy poppy plants directly and manufacture their own medicines. "The ultimate aim is to graduate to mechanization of the extraction process as per international best practices, and to avoid illegal trafficking," a Health Ministry source told Asia Times Online. The official added that a comprehensive rehabilitation package will be worked out for the opium-producing farmers before the entire process is mechanized. The new policy also includes measures that aim at curbing drug abuse and improving the treatment, rehabilitation and social reintegration of addicts. "Implementation of the provisions of the policy will lead to reduction of crime, improvement in public health and uplifting of the social milieu," the Finance Ministry said in a statement. According to a United Nations report released in 2011, up to 272 million people or 6.1% of the world's population aged 15-64 used illicit substances at least once in the previous year. To keep the illicit cultivation of poppy and cannabis in check, the new policy also recommends use of satellite imagery for detection and eradication, and the development of alternate means of livelihood in pockets of traditional illicit cultivation. India is one of the world's three biggest producers of opium (also known as black gold), alongside Turkey and Afghanistan. It is also a primary exporter of alkaloids and caters to more than half of the global demand. Opium - derived from the word "opios", meaning vegetable juice - has enormous industrial value as a raw material for morphine (the final product in the extraction process) and codeine, which are used by pharmaceutical companies for a raft of medicinal preparations. Medical experts, however, are cautious about the government initiative, fearing it might have a domino effect on drug pricing. While the objective of the new policy is laudable, it might escalate prices of essential palliative medication for cancer patients," Dr M R Rajagopal, palliative care expert from Trivandrum Institute of Palliative Sciences, told the media. The specialist said morphine is currently available for 1-5 rupees (US$0.02-$0.10) per 10 mg. "But if prices go up, it would mean reduced availability for poor patients because most of them have no resources left even for the cheapest medicines by the time they land in palliative care clinics," he added. However, the media has noted that an increase in the number of

drug manufacturers could actually improve the availability of morphine. "Some medicines such as morphine are currently in short supply in the domestic market and increased production will change the dynamics of the trade in favor of better availability and lower drug costs. This can save hundreds of lives apart from saving the government precious money," India Today wrote in an editorial. "It is not fair to always assume that once private players come in, prices have to go up," Dr Nagesh Simha, president of the Indian Association of Palliative Care, told the newspaper. Despite stringent restrictions by global bodies like the United Nations Commission on Narcotic Drugs, some countries continue to grow opium poppies illegally. For instance, raw opium is illegally cultivated as a cash crop in Pakistan despite US efforts including checkpoints and . In India, poppy fields are strictly regulated by the government. Across vast swathes of North India (primarily Rajasthan, Madhya Pradesh and Uttar Pradesh), poppy fields produce tons of precious opium before being shipped to major pharmaceutical companies around the world. Each poppy plant branches near the ground and usually attains a height of 60 to 150 centimeters. The plants flower during May to June. The flower ranges in color from white and purple to red and orange. After fertilization, the flower petals fall off and the fruit, known as the "poppy capsule", can be seen. It reaches the size of a small pomegranate and looks quite similar to it as well. A single poppy plant bears about five to eight poppy capsules. According to existing regulations, narcotics in India have to be procured from licensed farmers strictly under the surveillance of Central Narcotics Bureau. The narcotics are then shipped to one of the two processing plants in the country - at Ghazipur in Uttar Pradesh or Neemuch in Madhya Pradesh. Once the opium reaches the factories, hundreds of workers turn it into a blackish opium paste kept in huge vats. For several weeks, the laborers diligently stir and fold the tar-like substance, drying it in the hot sun until it dries up almost completely. Once the opium is dry, it is repacked and readied for export. A small portion is refined chemically at the factory to be sold directly to Indian drug manufacturers for use in medicines.

India may levy anti-dumping duty on soda ash imports

February 24, 2012 (India) The Directorate General of Anti-dumping and Allied Duties (DGAD) has recommended levy of an anti-dumping duty on import of soda ash, widely used in textiles, from seven nations including Pakistan, China, EU and the US. The DGAD has made the recommendation of imposing anti-dumping duty of up to US$ 38.79 per ton on soda ash import to protect domestic industries from low-cost imports. About 90 percent of Indias required amount of soda ash is produced by chemical industries in the western state of Gujarat. In its probe, DGAD has found that increased amounts of soda ash imports have caused material injury to the local industry. In its probe, DGAD, which functions under the Ministry of Commerce, found the chemical being imported into India at prices below its normal value from Pakistan, China, Iran, Kenya, Ukraine, EU and the US. Earlier, the Alkali Manufacturers' Association of India had filed a petition for levying an anti-dumping duty ranging between US$ 2.38 per ton to US$ 38.79 per ton on import of soda ash. In India, the recommendation for anti-dumping duty is made by the Ministry of Commerce, while the Ministry of Finance has the authority to impose the same. India already levies anti-dumping duty on imports of yarn, fabrics and some chemicals like caustic soda. Under the multilateral WTO regime, countries can instigate a probe to check whether its local industry is being hurt due to low-cost imports, and if found affirmative it can impose anti-dumping duties, as a counter measure to save their domestic industries.

India seeks lower duty on carpet exports to China

PTI Feb 17, 2012, 07.42PM IST

NEW DELHI: Concerned over high import duty imposed by China on carpets, India today sought lowering the levy arguing it would help in addressing the trade imbalance between two nations. The issue was raised by Commerce and Industry Anand Sharma during a meeting with Governor of Qinghai Province of China, Luo Huining here.

Indian exporters want Beijing to lower the import duty on carpets from over 20 per cent at present to 5 per cent. The two leaders also discussed ways to boost exports of rugs and floor coverings to China. Sharma, according to an official present in the meeting, said import duty on carpet exports to China is high and as a result makes such items too expensive in their markets. The Governor on his part assured Sharma he will take up the import duty issue with the concerned authorities. Huining is heading a 22-member business delegation to India to explore opportunities for importing carpets. Of India's total carpets exports worth $ 653 million during 2010-11, China accounted for about 8 per cent. Since China concentrates mainly on machine made carpets due to labour shortage, the official said there is a large demand for Indian handmade carpets in that country. Sharma said carpet exports to China is way below the potential for imports from India. The official, referring to the discussion between Sharma and Huining, said the Governor said his country sees carpet imports as one of the ways for bringing balance in trade between India and China. The bilateral trade between the two countries had hit a record $ 73.9 billion in 2011, but the ballooning trade deficit in Beijing's favour rose to over $ 27 billion, raising concern among Indian authorities. Efforts are being made to improve market access for these Indian products in China. According to the official, Sharma said there is a need for setting up a joint working group to study ways for improving the carpets exports to China. In the first 10 months of 2011-12, India's overall carpets exports grew by about 21 per cent year-on-year to $ 608 million. The US and Europe together account for 60 per cent of India's carpet exports.

24 FEB, 2012, 05.30AM IST, AMITI SEN,ET BUREAU

India drags Turkey, Egypt to WTO for import duties on Cotton yarn
NEW DELHI: Striking against rising global protectionism, India has dragged both Turkey andEgypt to the World Trade Organisation for imposing special import duties on Indian cotton yarn, lowering competitiveness in these markets. New Delhi has been criticising Turkey for violating WTOnorms at several forums of the WTO for the past few months, but it has requested formal consultations on the issue for the first time, which is the first step towards filing a dispute. Egypt, on the other hand, will be asked to explain reasons behind imposing similar duties on cotton yarnin December 2011. Both countries have resorted to safeguard duties as such levies are easier to impose since a country only has to claim that rising imports were harming the domestic industry, a government official told ET. Indian cotton yarn producers say that Egypt and Turkey, the fifth and sixth largest export destinations for the products, were growing markets and all attempts to check imports through unnecessary restrictions have to be opposed. "We are concerned by the imposition of safeguard duties by both countries and hope the issue is resolved soon," said Siddharth Rajagopal, executive director, The Cotton Textiles Export Promotion Council or Texprocil. Turkey imposed safeguard duties between 12% and 17% with effect from last July over and above the customs duty of 5% making prices of India's exports shoot up. Egypt, on the other hand, imposed a specific duty of 55 cents per kilogram of yarn in December. "In Turkey's case we have questioned its claim that adverse effect on the domestic industry due to higher imports was because of unforeseen developments and imposition of global trade rules," the official said.

21 FEB, 2012, 08.23PM IST, REUTERS

China, India, Japan plan Iran oil cuts of 10% or more

BEIJING/NEW DELHI: China, India and Japan are planning cuts of at least 10 percent in Iranian crude imports as tightening US sanctions make it difficult for the top Asian buyers to keep doing business with the OPEC producer. The countries together buy about 45 percent of Iran's crude exports. The reductions are the first significant evidence of how much crude business Iran could lose in Asia this year as Washington tries to tighten a financial noose around Tehran. The cuts would add to a European Union ban on Iran oil imports, which comes into effect on July 1, to restrict the flow of vital foreign exchange to Tehran under pressure over its nuclear programme. Japan is close to an agreement with Washington on the size of cuts needed to win waivers from the US sanctions, two ministers said. The Yomiuri newspaper, citing unidentified sources, said the two sides would settle on an 11 percent cut. The Indian government is pushing its refineries to cut imports by at least 10 percent, two sources said. India has said it will not abide by US unilateral sanctions, so its response could indicate the increasing uncertainty of doing business with Iran. China's Unipec, the trading arms of Sinopec Corp, is likely to cut imports by 10 percent to 20 percent under 2012 supply contracts, a Chinese industry executive with direct knowledge of the deal said. had already cut back sharply on Iran crude purchases in the first quarter of 2012 while it haggled over full-year supplies contracts. Taking those cuts and planned purchases by China's only other major importer, Zhuhai Zhenrong Corp, into account, Reuters calculates China's total cuts this year will amount to about 14 percent.
China

In a further blow to Tehran, East Asian purchases of Iranian fuel oil is set to slump to a six-month low in March, according to comments from Singapore-based oil traders and an examination of shipping reports. JAPAN DILEMMA US financial sanctions imposed since the beginning of this year are playing havoc with Iran's ability to buy imports and receive payment for its oil exports. Washington is pushing ahead with the sanctions because it fears Iran might use its nuclear programme to develop nuclear weapons. The European Union has imposed an oil imports embargo on Iran. In response, Tehran ordered a halt of oil sales to Britain and France. Iran, the biggest producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia, denies Western suspicions that its nuclear programme has military goals, saying it is for purely peaceful purposes. For Japan, avoiding US sanctions is essential to protect its financial sector's operations abroad, but cutting oil imports could pose a risk to its struggling economy. Japan's reliance on oil imports has grown since a 2011 earthquake and tsunami triggered the Fukushima radiation crisis, leading to the shut down of most nuclear power reactors.

21 FEB, 2012, 02.39AM IST, RITURAJ TIWARI,ET BUREAU

India topped Thailand in rice exports last year

NEW DELHI: India and Thailand are caught in a race for the top slot in farm exports from southeast Asia. India has pipped Thailand to become the top rice exporter but the latter has won the day in sugar exports. For the first time in four years, India has overtaken Thailand in rice exports. According to industry estimates, India exported 2.3 million tonne of rice including basmati between October 2011 and January 2012 while Thailand could export around 2 million tonne during the period. But Thailand, the second largest exporter after Brazil, shipped 6.68 million tonne sugar in 2011 while Indian sugar exporters have been allowed to export only 2 million tonne till now. India has always had a price advantage over Thailand, which sells at a premium in the world market. Last year, the export price of Thai rice ranged between $525 and $575 per tonne. But this year, the price swelled to $660 tonne on the back of the Thai government's high support price to farmers. The government paid farmers 15,000 baht a tonne for 100% white paddy and 20,000 baht for fragrant paddy to fulfill its election promise. This raised the export price of Thai rice, making it non-competitive in global markets. India recently raised its export quota of non-basmati rice from 2 million tonne to 4 million tonne to boost exports further. "Rice-importing countries got a good alternative in India to expensive Thai varieties. While Indian rice costs $500-$530 per tonne, Thai rice costs $660 per tonne. This has led a surge in demand from countries like Indonesia and other African countries," said Om Prakash Arora, president Punjab-Haryana Rice Broker Association. The rise in exports is supported by the expected bumper production of rice this year. The estimated record output of 102 million tonne allows the government to shed worries on food security. Besides, high inventories of more than 30 million tonne paves the way for smooth exports. The economical Indian rice is making inroads into major Thai markets such as Africa, Indonesia, Malaysia, Bangladesh and Nepal. "We are getting good demand from overseas markets. We will cross the 3.5-million tonne mark this year. We expect to gain momentum in basmati once a formal order is issued on lowering the floor price from $900 to $700," said Vijay Setia, president, All-India Rice Exporters Association. However, India is way behind Thailand in sugar shipment. A good crop and a buoyant overseas demand keep Thai sugar steady in the global market. According to media reports, about 33 million tonne of cane have been crushed since the season started in mid-November in Thailand, with around 2.3 million tonne of raw sugar and around 913,000 tonne of white sugar produced till now. India is struggling to export one million tonne even as the government has further allowed the export of an additional one million tonne. Indian millers expect to produce 26 million tonne of sugar in 2011-12 while sugarcane production is likely to stand at 347.87 million tonne - higher by 5.09 million tonne over the previous year. "We have given a release order for over 9.9 lakh tonne. But we are not sure about their physical delivery. The release orders have to be consumed within 60 days. Given the capacity of our ports, we don't think we will able to export more than 3 lakh sugar a month. This poses a big question mark over the second tranche of 1 million tonne," said a sugar directorate official.

20 FEB, 2012, 08.04PM IST, PK KRISHNAKUMAR,ET BUREAU

Seafood exports rise 22 per cent

KOCHI: The seafood exports have shown 22% rise in value and 1.48 %increase in quantity for the April-December 2011 period. The exports touched 6,21,577 tonnes valued at Rs 12,190 crore compared with 6,12,505 tonnes valued at Rs 10,018 crore in the same period of previous year. Frozen shrimp and fish were the largest exported items. Frozen shrimp continued to be the major export item accounting for 51.35 % of the total earnings. The unit value realization went up by 16.98 %. Shrimp exports rose by 35 % in value with vannamei shrimp export showing an increase of 326 %. South East Asia has become the largest market for Indian seafood followed by European Union and USA. Jump in exports to South East Asia is attributed to shortage of raw material. The short supply from SE Asia and Indo-Japan trade pact had good impact on the exports to Japan. Depreciation of rupee against dollar has resulted in increasing the earnings. The Marine Products Export Development Authority (MPEDA) reckons that given the pace at which the seafood exports have been growing, they are likely to register a growth of 20 % to touch $3.5 billion in the current year.

19% import duty likely on power equipment for mega projects

19 Feb Power generation equipment for projects above 1,000 MW may attract import duty at the rate of 19 per cent. The Cabinet Committee on Economic Affairs (CCEA) is expected to take a call on the issue in the next 15 days. If the proposal is approved, it will give domestic equipment manufacturers such as BHEL, L&T and Bharat Forge a major boost. This will be the second piece of good news for the manufacturers after the Supreme Court's order in the NTPC issue, announced recently. However, the duty hike may not go down well with power producers such as Reliance Power, which rely heavily on imported equipment. A person familiar with the development told Business Line: The Finance Ministry has favoured the imposition of 5 per cent basic Customs duty, 4 per cent additional import duty and 10 per cent countervailing duty (imposed in lieu of excise duty for domestic producer) making a total of 19 per cent. This has been intimated to the Power Ministry and the Heavy Industry Ministry. Now, the Power Ministry is likely to move a formal proposal for the consideration of CCEA soon, he added. The Heavy Industries Minister, Mr Praful Patel, had been actively pursuing this matter. He took this matter up with the Prime Minister after discussing it with the Power Minister. Although some sections in the Government have talked about banning imports, Mr Patel clarified, on record, that import of such equipment cannot be discontinued. At present, power generation equipment for projects below 1,000 MW bears a duty of 5 per cent while there is almost nil duty on equipment for projects above 1,000 MW. The Arun Maira Committee had suggested that duty be levied at 14 per cent while a committee of Secretaries recommended 19 per cent duty for bigger projects. Domestic equipment manufacturers allege that there is no level playing field. Foreign machines are cheaper by up to 14 per cent. This is hurting the local players' investment and capacity expansion plans. A Heavy Industries Ministry official said that if nothing is done now, BHEL may find some of its capacity lying idle during the Twelfth Plan period. However, power producers are not very happy with such thinking. A source close to such companies said that, when the requirement is high, margins are thin and power is to be provided at a cheaper rate, any price increase will have to be borne by the end-user.

Industry seeks removal of excise duty on synthetic fibre

Sharleen D'Souza / Mumbai Feb 21, 2012, 00:43 IST

The textile industry is seeking the removal of a prevalent 10 per cent excise duty on the production of synthetic fibre. Industry apex body, the Confederation of Indian Textile Industries (CITI), has also said it would not mind the removal of the existing duty protection on imports if the present excise duty was removed. In fact, resultant competition from imported goods is welcome, according to D K Nair, secretary-general of CITI. The confederation also wants the removal of the customs duty of nine per cent on import of synthetic fibres. If such duty cuts are implemented, the price of synthetic textiles will fall and, eventually, trigger an increase in the demand for the products. The raw material for manufacturing synthetic textiles, such as DMT and PTA, are either imported or are priced by domestic manufacturers at rates near to the cost of imports. Compared to last year, the prices of these raw materials have risen due to a general strengthening of commodities and a fall in the value of rupee which is hurting the growth prospects of companies making man-made fibres. We are asking for removal of excise duty, as proposed in the National Fibre Policy, which also suggests a fibre-neutral duty structure. The cotton fibre, anyway, has no such so duties, Nair said. Also, the relief will help the textile sector as it will encourage production. Currently, one-fifth of the countrys total exports are based on synthetics textiles. The move, proposed by CITI, would encourage more players under this category, Nair added. Reliance Industries, Indorama and Grasim, the countrys big players in this space, would benefit if the excise duty on production was removed. If these players decided to pass on the tax relief, the unorganised sector would benefit the most from it, the confederation said. Revati Kasture, head of research at Care Ratings, said textiles firms profitability would be impacted if they dont fully pass on the duty cut benefit. The Clothing Manufacturers Association of India said the extent to which the consumer would see relief still remained uncertain. If it is a marginal reduction, retailers who sell garments may not even pass it on to the consumer, pointed out Rahul Mehta, the bodys president. The industry believes that the removal of the duty will help all textile producers across the country. Even players in the blended segment will benefit from this tax relief to the extent they use synthetic yarns for blending, it feels. A cotton textile industry representative said it would be unfair to tax the synthetic fibres industry when natural fibres were not taxed. While cotton textiles are mostly consumed by the upper class, tax is being levied on the synthetic fibre, he said

Govt allows direct jet fuel import by airlines

New Delhi: In a move aimed at helping the debt-laden airlines bring down their costs, the government on Wednesday formally allowed the local airlines to import jet fuel directly. The airlines would be allowed to import aviation turbine fuel (ATF) under the so-called open-general license, enabling them to avoid sales taxes of between 12 to 23 percent that are levied by state-governments. "...Indian Carriers who are interested to avail the opportunity to import ATF directly without going through State Trading Enterprises route may apply to the Directorate General of Foreign Trade (DGFT)," an official statement said. Jet fuel in India exceeds the global average by more than 50 percent mostly due to local taxes. Some estimates suggest that direct imports could cut fuel costs by up to 20 percent, but also require new spending in terms of putting up storage and logistics infrastructure. Carriers, led by Kingfisher Airlines, had demanded the right to direct import of fuel, which accounts for about half of their operating costs. Airlines, almost all of which are losing money, currently buy ATF from local refiners like Indian Oil Corp. Though the jet is priced at parity with international rates, the actual price for airlines is higher because of state sales tax. Industry sources, however, said that importing the fuel will pose its own challenges like storages and logistics involved in moving the product from sea ports to consumptions points at airports. The airlines would have to form tie-ups with the suppliers having infrastructure to import ATF directly for their use. Sales tax on the fuel varies between 4 to 30 percent from state to state. This is the second time that the direct ATF imports have been allowed by the government. Earlier in 1995-96, the import of ATF was undertaken on behalf of ATOs (Air Transport Operators) and Airlines against Special Import Licence. While airlines will not have to pay the state sales tax, they would have to pay 12.83 percent duty on the imported ATF (additional customs duty or CVD of 8.24 percent plus a 3 percent education cess on top of it and an additional 4 percent special CVD or SAD). Against this, airlines presently pay only 8.24 percent excise duty on jet fuel purchases made from oil firms. Besides, the airline would either have to build its own storage tanks or hire those from oil companies for stocking the imported ATF at the ports. It would then have to make arrangements for transporting ATF to airports in trucks. Sources said that Kingfisher's requirement of ATF during 2011-12 is estimated at 434,000 tonnes or 33,600 tonnes per month.