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Whoever wins or loses, it is status quo for India

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Mumbai :Market access restrictions in China and lack of manufacturing capability in technology items such as semiconductors could deprive India from taking advantage of the trade war between the US and China, which officially kicked in from . However, the industry is hoping that imports of several commodities may become cheaper as a result.
The US imposed up to 25 per cent import tariff on 818 Chinese products. The move is set to affect around $34 billion worth of US imports, mainly intermediate capital products, including industrial magnates, semiconductors and printed circuit boards that are used by American companies to assemble engineering goods. These are used for making electronic equipment and LED panels, among others.
Beijing retaliated, by slapping tariffs on 545 US products, including soyabean, pistachio, rice, salmon and cigars, worth up to total $34 billion in imports. China accounts for $12 billion of America’s total soybean exports of $21 billion.
According to data from the commerce ministry, India’s trade gap for electronics products doubled in the last five years to $38.94 billion in 2017-18 from $18.86 billion in 2013-14. India’s ambitious scheme to promote electronics manufacturing failed to bring in the desired results since many companies opted out of their planned investments due to the slow pace of approvals for disbursement of incentives. For instance, investments committed under the Modified Special Incentive Package Scheme (M-SIPS) reduced to Rs 914 billion as on April 2018, against the earlier proposals of Rs 1.57 trillion.
“Our exports will gain depending on specific products and their competitiveness in both markets. But since India’s exports are more attuned to global growth, any negative movement is likely to affect us badly,” according to Ajay Sahai, director-general, Federation of Indian Export Organisations (FIEO). India stands to gain little as barriers to trade remain high, especially with regard to those that are non-tariff in nature. India currently only has rights to export rice to China, of which the offtake hasn’t increased much.
For instance, government data on India’s overall exports to China in the fruit and nuts category includes a lot of items on which China has raised duties for the US. It shows exports fell to a low $6.37 million in 2017-18, a more than 60 per cent drop from $15 million a year ago.
China allowed India market access after 13 years. “After a persistent push from our side, China allowed market access to three Indian food products, mangoes, grapes and rice, back then. Even among these, China later introduced further subcategories for rice, and basmati varieties faced difficulties in exports,” a senior official from Agricultural and Processed Food Products Export Development Authority said.
Fears of China devaluing the yuan further are becoming more real. “Devaluation of the currency is one policy tool the Chinese have in their arsenal while dealing with the US. If that happen, pressure will be on the rupee as well,” said Tushar Arora, senior economist at HDFC Bank.
Although the rupee is on the verge of breaching 70 to a dollar, its fall vis-a-vis that other emerging market currencies is slightly more. This gives it a small advantage over its competitors, Arora said.
But there may be a silver lining for India. US exports to China currently under threat make up for nearly a fifth of total US exports in those categories, according to Washington DC. With that huge a market at risk, US sellers will now offer attractive selling prices, according to Indian businesses. According to the FIEO, consumer demand for many of these commodities have pushed up imports in recent years.


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India to get extra oil from major producers to make up for loss of Iranian oil: Pradhan

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New Delhi: India will get additional supplies from other major oil producing countries to compensate for the loss of Iranian oil, Petroleum and Natural Gas Minister Dharmendra Pradhan said.

The United States on Monday demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which had allowed Iran`s eight biggest buyers, most of them in Asia, to continue to import limited volumes.

Pradhan said on Twitter that India has put in place a robust plan for adequate supply of crude oil to refineries.

 

“Indian refineries are fully prepared to meet the national demand for petrol, diesel and other petroleum products,” he said.

Reuters last week reported that Indian refiners are increasing their planned purchases from the nations of the Organization of the Petroleum Exporting Countries (OPEC), Mexico and the United States to hedge against loss of Iranian oil.

Refiners in India, the worlds third-biggest oil importer and Irans top oil client after China, had almost halved their Iranian oil purchases since November when petroleum sanctions went into effect. At the time, the United States granted waivers from sanctions, known as significant reduction exceptions (SRE), for six months to countries that purchased some amounts of Iranian crude, including India.

U.S. President Donald Trump said on Monday that Saudi Arabia and other OPEC nations could “more than make up” for any drop in Iranian oil supplies to global markets now that the waivers are ended.

Saudi Arabia, the world`s biggest oil exporter, said on Monday it would coordinate with other oil producers to ensure an adequate crude supply and a balanced market.

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Industry delegation calls on RBI Guv, discusses steps for MSMEs, NBFCs

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Mumbai: A delegation led by PHD Chamber President Rajeev Talwar met RBI Governor Shaktikanta Das here on Monday and discussed concerns related to the growth of MSMEs, NBFCs, affordable housing and the real estate sector.

The chamber in its submission has also sought further cut in the repo rate in the coming quarters.

“PHD Chamber in its submission has urged RBI to increase the limit for classifying over dues of MSMEs to 180 days from the current level of 90 days as working capital cycle of MSMEs keeps prolonging due to delays in realisation of their bills/receivables,” said Talwar.

 

It has also requested that at least one year period should be considered for eligibility of MSMEs’ stressed and NPA accounts under the restructuring scheme.

All such Accounts which turned into defaulters or became NPAs after January 1, 2018 should be covered under the policy of RBI for being eligible for restructuring, said Sanjay Agarwal, Vice President, PHD Chamber.

It was also recommended that the loans given by banks to NBFCs for the purpose of on-lending to micro, small and medium enterprises (MSMEs) should be treated as indirect finance to MSMEs eligible for classification under the Priority Sector lending of banks, said D K Agrawal, Senior Vice-President.

The industry body said that infrastructure financing should ideally be carried out by specialist players like Infrastructure Finance Companies (IFCs).

“IFCs should be allowed to deploy a minimum of 50 per cent of their total assets in infrastructure loans, while the rest may be deployed towards financing allied and ancillary activities for infrastructure projects, which are essentially non-infra in nature,” PHD Chamber said.

The chamber said that IFCs should be allowed to issue tax-free bonds and on-tap resource mobilisation through issuance of Non-Convertible Debentures (NCDs) to retail investors.

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Jet Airways waits for buyer as rivals muscle in on territory

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Mumbai: A revival of Jet Airways India Ltd., once the nation’s biggest carrier by market value, is at risk as days roll by since its operations were completely halted.

While the cash-strapped carrier awaits potential investors to pump in money, rivals are aggressively going after its most prized assets. A government desperate to limit public backlash after flight ticket prices escalated is parceling off landing and parking slots at congested airports. Lessors are also adding to the woes by allocating grounded aircraft to competitors.

“It appears to me that lenders are not very confident of getting any serious bid,” said Harsh Vardhan, chairman of New Delhi-based Starair Consulting. “You can not hold on to slots, and planes are not Jet Airways’ property. They have to find a buyer as soon as possible.”

 

Jet Airways, the oldest surviving private airline which broke into a monopoly of Air India Ltd., had a fleet of 124 and flew profitable routes like connecting India, the fastest growing aviation market in the world, with London and Toronto. With nearly 23,000 jobs at stake, its collapse last week couldn’t have at worse time for Prime Minister Narendra Modi who’s seeking a second term based on his business-friendly image.

While the arrangement to give Jet’s landing slots and aircraft to rivals is temporary, the process to swap them again is complicated and is the domain of airports. It may get more difficult once rivals start new flights and sell tickets in advance, and that could potentially leave close to nothing for a potential new owner.

Jet Airways started flying in the early-1990s after India liberalized its economy, and quickly cemented its spot as a leading airline offering an alternative to Air India, while averting several downturns that forced dozens of its peers to close shop. But a boom of budget airlines in the mid 2000s, on top on rising fuel prices and a weakening rupee, kept adding to Jet Airways’ costs in the notoriously price-sensitive market.

The airline, which controlled 13.6 percent of the local market as recently as January, needs 85 billion rupees ($1.2 billion) to restart operations. So far, it isn’t clear whether Jet Airways will find a buyer to fly again, or if lenders will take it to a bankruptcy court. Over the weekend, local media reported Mukesh Ambani, Asia’s richest man, and salt-to-software conglomerate Tata Group are keen to pick up a stake or purchase Jet’s assets.

Shares of Jet Airways gained as much as 9.2 percent to 168.95 rupees in Mumbai and were trading at 167.35 rupees as of 11:06 a.m. local time. The shares plummeted 36 percent in the previous two trading sessions, after all flights were grounded last week.

Local carriers have been quick to take advantage of the situation. SpiceJet Ltd. plans to induct more than a dozen Boeing Co. 737 planes, offering flights on the routes previously operated by Jet Airways. Market leader IndiGo, operated by InterGlobe Aviation Ltd. has also added additional flights from New Delhi and Mumbai, the two busiest airports of the nation which hardly had any landing slots available when Jet Airways was operating.

Ambani, who controls Reliance Industries Ltd., may partner Abu Dhabi’s Etihad Airways PJSC to pick up a stake in Jet Airways, while also exploring a possible bailout of state-run Air India Ltd, the Indian Express newspaper reported over the weekend. Etihad, which already owns 24 percent of the Jet Airways, has put in an initial bid showing interest in purchasing a stake in the carrier, the newspaper said.

The Tata Group may jump into the fray if the sale process fails, and bankruptcy proceedings kick in, the Mint newspaper reported separately, citing two unidentified people. The government reached out to the group, which has a majority stake in two local airlines, last year to potentially bail out the airline but it did not materialize into a deal.

A Reliance spokesman declined to comment but said the company evaluates various opportunities on an ongoing basis. A Tata group representative also declined to comment.

With lessors taking over aircraft and slots going to rivals, the value of Jet Airways has eroded, said Mark Martin, founder of Dubai-based Martin Consulting.

“The lenders should have paid some money to lessors and urged them not to take over the aircraft while the sale process is on, and should have finalized a payment plan for past dues over the next 18 months, Martin said. “But they did not, and that’s really unfortunate.”

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