Showing posts from March, 2012

The multinational disambiguation

There are these terms, multinational, transnational, international and global that are used mostly interchangeably while talking about organizations that have their presence in multiple nations. I have seen such interchangeable usage even in policy documents. It helps to understand the demarcation between these terms, now that many of our Indian firms are going international in a big way. It doesn't sound good when we use 'multinational' as an umbrella term for all. To form a schema, let's assume we have two axes, the horizontal one being the pressure to localize (develop products to cater to national tastes) and the vertical axis being pressure to standardize (to take advantage of economies of scale), then we can define the terms as follows. International/Exporting organization : The organization that has low pressure to localize and low pressure to standardize is the international organization. It's a firm that grew locally, became big and started exporting

This carbon business

There is enough literature on Green house gases and global warming , the efforts to curb warming ,  Carbon trading , the old Kyoto and the Latest  Conference of parties (COP 17) on the internet. So I won't go into the general discussion about climate change talks and India's stand . I recommend Google for more. There's so much information about the 6th element of the periodic table that I would recommend it for the 1st place. If ever they create a periodic table based on the popularity on the internet, that is! What I am going to talk is slightly off topic. But not irrelevant. I will work backwards. Suppose there comes a time when the following comes true.  There is a consensus among a group of developed countries to impose a measurable Carbon labeling  or say an Ecolabel , on all the products. It's imposed irrespective of whether the product is manufactured locally or internationally. All products need to strictly mention the amount of carbon emissions durin

Niryat Bandhu - Handholding experiment for new exporters

Niryat Bandhu scheme is being devised by DGFT office. The last foreign trade policy (you can find it here ) talks about this scheme in the following words: "‘Niryat Bandhu’ - A scheme for International Business Mentoring  We are devising a novel ‘Niryat Bandhu’ scheme for mentoring first generation entrepreneurs. The officer (Niryat Bandhu) would function in the ‘Mentoring’ arena and would be a ‘Handholding’ experiment for the Young Turks in International Business enterprises. Under the scheme, officers of DGFT will be investing Time and Knowledge primarily to mentor the interested individuals who want to conduct the business in a legal way. Over time, it would be expected to develop a class of businessmen who carry out the international business in an ethical manner." It is an excellent idea. The way forward for our economy is through entrepreneurship. One of the challenges is to provide a conducive environment for start-ups to prosper. There are many steps taken b

Services data - some efforts by GoI

The services data availability is an issue that is being discussed for some time now in the policy circles. The chapter on services sector in India in the latest economic survey acknowledges it. To quote it verbatim, section 10.18 reads: "In last year’s Economic Survey, the weaknesses related to availability and quality of services data were highlighted. To reiterate, these are difficulties in compilation of an index of services sector production, non-representation of many service sectors in the calculation of the wholesale price index, limited availability of published data on pricing of services, and limited data on trade in services. Even where data are available, they suffer from deficiencies related to definition, method of collection, suitability for pricing, and construction of indices. The recent efforts in streamlining data in the services sector (Box 10.1), though welcome, need to be accelerated in a coordinated manner with the help of experts in the field."

Service trade of India - Economic Survey 2011-12

The services sector covers a wide range of activities from the most sophisticated information technology (IT) to   simple services provided by the unorganized sector, such as the services of the barber and plumber. National Accounts classification of the services sector incorporates trade, hotels, and restaurants; transport, storage, and communication; financing, insurance, real estate, and business services; and community, social, and personal services. In World Trade Organization (WTO) and Reserve Bank of India (RBI) classifications, construction is also included. The data available in the survey is computed mainly from RBI. RBI segregates the services trade data into the major heads of Travel, Transportation, Insurance, GNIE (Govt. not included elsewhere) and Miscellaneous. The Miscellaneous head includes important sub-heads which are Software and Non-software services. Under Non-software, business service, financial service and communication are included. There is also

Merchandise trade of India - Economic survey 2011-12

The International trade chapter from the latest Economic Survey can be found here . Interestingly, there is a new chapter on " India and the Global Economy " in this survey, which I believe should be of interest to anyone who wants to talk about international trade with respect to India. I am going to highlight some of the points from the above chapters in this and the following blog. I believe these points are of general interest while we talk about India's trade. One can refer the chapters for more details. This blog will focus only on merchandise trade. The next one will talk on services and general points.  India's merchandise export regained the pre-crisis levels in 2010-11, but is showing lesser rate of growth in the current year (Apr-Jan 2011-12). This is due to significant slowing down, in dollar terms, since Oct 2011 due to Euro zone crisis. The last quarter (Jan -Mar 2012) data is awaited to get the final picture.   After a long time, the trade defi

Should exchange-rate be a consideration in long term Foreign Trade Policy making?

We know that the Dollar/Rupee exchange rate plays an important role in trade dynamics of India. The question is, can the foreign trade policy of India take this into account while the policy is in making. If yes, what are the things that can be taken up at a trade policy level. And why?  To give a brief background, exchange rate in India is currently a concern of central bank (RBI), and trade policy formulation is commerce ministry's work. Of course, there are interactions at certain levels between ministry of finance, commerce and RBI. Going by the statements that make it to the press from commerce ministry, it seems exchange rate is something about which commerce ministry is helpless and the most it can do, in cases when exchange rate starts hurting, is to request for additional sops for exporters. It happened whenever rupee appreciated during the past few years(e.g. see this , somewhat old, but typical response). It's more of an ad-hoc lobby work which pressurizes the