Showing posts from 2016

Light at the end of the tunnel - Indian exports hit the nadir

Exports have finally started to look up. While there is certainly base effect in play due to continuously decreasing exports for last two years, I have a hunch that we have hit the nadir and things will languish at this level or they might slowly (and very very slowly) start looking up as time passes. Till then, we shall have this silly increase and decrease of exports which do not carry much significance.  The merchandise trade situation is as below:  Exports and Imports - Merchandise/Goods trade from India October 2016 The services sector trade situation is as below:  Exports and Imports of Services September 2016 The global trade scenario has not improved. While the sentiment for more trade has mellowed down across the globe, there has to be a point which can be called lowest. Probably for India, this was it. Now the question is, how to climb back from this valley we find ourselves in. 

Institutionalizing Twitter governance - from chaos to order

A random guy feels cheated because Snapdeal, an online retailer, gave him an offer of 32GB iPhone memory expansion drive for Rs 51 (it usually retails for around Rs 4000); and then canceled it within a minute. Probably the deal was on the site by mistake, or maybe it was a technical glitch. Snapdeal sends a prompt message promising a refund of 51 rupees within four working days. The guy in question, who is obviously well enough to own an iPhone, takes offence at this and tweets about it. He tags the commerce minister on his tweet, which is indeed noticed by the commerce minister, who in turn directs a Joint Secretary to look into the matter, and the aggrieved guy is told to connect with the officer. All on twitter. You can google! This is not a lone case. It's bizarre to go through the twitter handles of most of the ministers and departments. People want all and sundry problems to be solved through them, instantly on twitter. Some of them are indeed picked up and solved, or direc

GST and Foreign Trade Policy : Effect on exemptions and incentive scrips - Part 1

GST will be rolled out sometime during April to October 2017. This would be single most radical reform of last decade. While the GST model law has been published, further procedures are being worked out in various committees formed for specific purposes. This post (and a couple more in continuation) would analyse, in a preliminary way, as to how the GST might impact Foreign Trade Policy (FTP) and the schemes therein, and some analysis based on the information available at this time. {A small video on the topic is also available at the link below: You may watch and leave your suggestions/comments} Assuming that the reader is aware of FTP schemes and basics of GST as outlined in the GST model law, I would proceed.  Currently, the duties levied at the border by customs are as follows: Total duty = Basic Customs Duty (BCD) + Additional duty of Customs (ADC, colloquially called CVD) + various cesses + Special Additional Duty (SAD, at 4%, to offset state taxes, refundabl

Video tutorials for export promotion

DGFT has come up with a series of video tutorials on their youtube channel to help newcomers in the area of international trade. The video series aims at providing the basic knowledge about fundamentals of international trade, such as introduction to incoterms, export import policy of India, starting an export business etc. As yours truly was deeply involved in the development of the project from the beginning, I thought of sharing some of the links here. The videos were developed in Bangalore DGFT office, and some more are in the pipeline for the beginner series. The videos will be accompanied on the official DGFT website with FAQs on various introductory topics in coming days. Given that e-learning has been popular for last few years, this initiative was designed to produce standardised, short and easy learning modules in the area of international trade from Indian perspective, keeping in mind the unique situation of an Indian exporter/importer.  Feedback welcome on officia

Wish a million exporters from India

A couple of months ago, I installed an app named ' wish ' on my phone. While all other e-commerce firms strive to deliver at the earliest, Wish didn't seem to be in a hurry. Most of the products listed seemed ridiculously cheap, originated from China, and showed delivery timeline of around 30 to 45 days. And there was no cash-on-delivery option, just upfront payment. I would have dismissed the site as hoax and deleted the app, but for the buzz it has already created. Items on the site are unbranded and usually cost less than 1000 rupees; and I could sense that their backend AI is pretty good given that it zeroed-in correctly on my interests within a few sessions. I seldom see useless recommendations, and given its Pinterest type clean layout,  the app is a joy to browse. No wonder millions are hooked.  I ordered some stuff, and all of them landed up between 30 to 45 days, except one which came in two weeks. No complaints there. The quality was better than what I expecte

Technology solution to the authenticity problem - Blockchain applications

I had blogged three years ago about the Bitcoin and the associated blockchain technology and how it might be used to create an international currency  in place of the existing SDRs of IMF.  A lot of icecaps have melted since that post and I thought of revisiting the topic of Bitcoin, chiefly relating to the interesting tail of the Bitcoin; the blockchain, and the potential applications that the world has since discovered.  For starters, Bitcoin is a digital cryptocurrency, stored and exchanged electronically to buy/sell whatever can be dealt online. More about Bitcoin  here .  The Bitcoin runs on a public ledger called a blockchain. The blockchain is the interesting part that has applications beyond running a digital currency. The blockchain per se is a dry piece of code that grows with every transaction of the underlying asset (e.g. a Bitcoin). The beauty of the blockchain lies in its ability to generate trust of authenticity of the underlying asset, without resorting to any g

9 Easy steps to get IEC code online from DGFT

IEC code online (While this blog is mostly about foreign trade and international economics, this post is for the benefit of those who are just starting out in the area of international trade from India - one needs an IEC number to get into foreign trade from India, and this is a post to help them) IEC stands for Import Export Code . IEC is mandatory for anyone planning to carry out import export business from India. IEC is issued by Directorate General of Foreign Trade (DGFT , online. Earlier the IECs were issued through manual as well as online mode at the choice of applicant. However, since 1st April 2016, IECs are mandatorily to be applied and issued online. Post GST, since July 1st 2017, IEC numbers issued are same as the PAN numbers. Vide Trade notice number 23 dated 08 August 2018, DGFT has made it very easy to obtain an IEC for anyone having a PAN and bank account. The trade notice can be found by clicking here . With this, it is very easy to get an IEC. Once the

Are we really ready for RCEP?

I had blogged a year ago about our approach to RCEP . My views at that time is reflected in this article of Business standard . At that time, the debate in the media was not vibrant about the RCEP topic. Now it has heated up. To sum up, from various articles here , here and here : India has taken the normal approach of hard-negotiating behind high tariff walls.  India doesn't have much choice as we are, among the RCEP nations, stuck with high tariff barriers due to legacy revenue generation issues. India has calculated that it stands to lose 1.6% of GDP in revenue if she gives up on some of these high tariff barriers.  It pinches India to give up these high tariff barriers when other countries don't have much to return due to their already low tariff barriers.  Therefore, in return to reduction in tariff barriers in goods, India is expecting others to reciprocate in services.  I have been, through this blog, an ardent supporter of open borders and low tariffs. Th

Rethinking barriers on steel imports into India

India has taken various measures to curb cheap steel imports into India during the last one and half years. They chiefly include: Anti-dumping duties on some steel items Safeguard duties on few, and, Making Minimum Import Price (MIP) mandatory on some steel items The intention behind the above is to protect domestic steel industry. To that extent, the measures are succeeding. The local steel industry led by leading capitalists of the country is surviving if not thriving. The above measures were the result of effective lobbying by the steel industry. The same has repeated across many countries, like USA, in the recent past. UK too is now feeling the heat with Tata Steel pulling out of steel sector there due to cheap Chinese imports. Why is steel so important? The argument in general policy circles goes this way. One, steel sector is a strategic sector. Defence and infrastructure depend on it. Two, it generates big employment. Three, the sector has unionised labor. Government

A case for trade invoicing in INR

Should it matter whether the international trade invoices are quoted in INR or USD? A simple thinking says it shouldn't. When buying/selling a good or service we mentally convert the currencies in the head or a calculator and it doesn't matter much. Like an inch or millimetre, they seem to be just units with a floating (or fixed or pegged or whatever) conversion ratio. It appears that it is not so. It does matter, and with profound consequences. Today, over 97% of India's exports are invoiced in freely convertible currencies (FCCs) mainly in USD. INR is not yet an FCC due to restrictions on movement and convertibility in capital account. The realisation of export proceeds in India need to be in FCCs as mandated by  FEMA and the master circular on exports and imports . While para 2.52 of India's foreign trade policy allows export invoicing in INR, in addition to FCCs, the trade prefers quoting invoices and contracts in USD, Euro and other FCCs. It appears that it is

Time for an RMS at DGFT?

DGFT is the body that deals with international trade policy making in India. Apart from making broad contour of policy, and issuing import export code; a mandatory document to start imports/exports in India, it also implements various tax nullification schemes (AA/DFIA), capital goods upgradation scheme (EPCG) and few schemes to offset infrastructural inefficiencies(MEIS/SEIS). It also runs a complaint resolution mechanism (chapter 8) in the area of international trade. DGFT implements various schemes through its field offices across the country.  DGFT field offices are severely understaffed in the recent times. The retiring staff have not been replaced, under the plea that computerisation leads to better productivity. While the argument of computerisation leading to higher productivity is true in general; it is not automatically applicable if the underlying workflow is not changed. DGFT processes the file manually even today, with each file moving along with the notes like a no