Showing posts from June, 2012

Banning second hand capital goods, the policy perspective

There was an article in the Economic Times today, regarding India mulling about banning imports of second hand plant and machinery, basically capital goods. You can read the full article here.  It says: A panel headed by cabinet secretary AK Seth has decided to ban import of machinery more than five years old. "The big worry is that such imports would impact overall productivity and erode competitiveness of the manufacturing sector," said a government official privy to the development. The domestic capital goods industry says imports are partly responsible for the drop in output; a contention supported by government data that showed production of capital goods contracted 4.1% in 2011-12. and about the current situation of usage of such goods, it says: The usage of second-hand machinery is high in certain sectors. For instance, industry estimates show that use of second-hand shuttleless looms constitute about 80% of equipment purchases in the textiles sector. Wh

Foreign Trade Policy Reloaded - The blogger's review

The FTP annual supplement is out. It's 3 days since and your blogger was going through the details. It took time as the entire policy document and procedure handbook was revised and updated, and the annual supplement was incorporated into it. The two manuals ran into more than 300 pages. It was a good move, as there were hundreds of notifications and couple of annual supplements that had come since the last time the policy and procedure manuals were released. So, the manuals were to be read along-with these notifications and supplements. The new manuals are now up to date, and include the current annual supplement.  Now, the review about the latest annual supplement and views. You can read the official highlights here . The good points: You can read some good points from news sites here , here  and here .  Overall, the policy supplement was better than expected and is being welcomed by exporters and consultants. Additional incentives were announced in focus market

Waiting for the foreign trade policy

Tomorrow, on June 5th, the honorable Minister of Commerce will unveil the annual supplement to the Foreign Trade Policy. I keep my fingers crossed and I pray for some creative measures to boost exports. I wonder what measures would I take if I was the chief consultant or something like that to the minister. To put things in perspective, the key points in current scenario while making the policy are: A merchandise trade deficit of more than 180 billion USD. An increasing gap between exports and imports year on year, with imports showing highly inelastic behavior.  A decreasing global demand for our exports, with no signs of turnaround anytime soon. The real/perceived policy paralysis and lack of confidence in the markets.  The threat of loss in employment if growth (including trade) suffers. The exchange rate that is deteriorating, which on surface, seems to be helping exporters, but makes the imports costlier putting further pressure on Current Account Deficit, which is alrea