trade winds - volume 2 issue 2

8/6/2019 Trade Winds - Volume 2 Issue 2

http://slidepdf.com/reader/full/trade-winds-volume-2-issue-2 1/13

1

Snapshot of India’s exports in January

India's export in January grew by 32.5 percent to $20.6 billion year

-on-year, whereas the imports were $28.6 billion, up 13.1 per centfrom the same month last year, Commerce Secretary Rahul Khullar said. During the period Apr-Jan 2011 exports touched $184.6

billion, an increase of 29.4 percent, while imports were $273.60 billion with a growth of 17.6 percent.

China’s increasing Iron Ore imports

China’s iron ore imports in

the month of December rose by 1.2 percent (MoM)

to 58.08 million tonnes.This is the highest level innine months. Furthermore,Orissa, India’s top iron ore

producing state stopped 23iron ore mines fromoperating as they did not submit the proof of clearances. Suppliesfrom India have already been tight due to ban on shipments fromKarnataka. Railways’ hiking the freight rate by 50 percent to

1500/tonne is only adding to the cost.

Overall, price or iron ore is expected to continue to move higher given the positive drivers from both supply and demand side. Onthe supply side, challenging weather conditions in top producingnations like Australia and Brazil is leading to decline in outputwhile demand continues to remain in China. The risk factor for higher price however remains that if the higher price of steel detersdemand then it might even impact the iron ore prices.

News SnippetsAbhijith Vasudevan, MBA(IB), 1st year

Contents

News Snippets 1

Oil Prices:

Peaking Out? 4International Trade &

Logistic: Overview 5

WTO vs Regional Trade

Blocks 7

Company Profile:

Olam International 10

Implications of Budget

2011 on Trade 12

Chief Editor

Oojwal Manglik

Editorial Team

Ankush Mehta

Abhijith Vasudevan

Shiv Kumar Gupta

[email protected]

[email protected]

IIFT’s Monthly Newsletter on

National & International Trade

March 2011 Volume II, Issue II

mailto:mailto:[email protected]?subject=Reg:%20Trade%20Wind%20magazine


mailto:mailto:[email protected]?subject=Reg:%20Vyapar%20Magazine






2

India Malaysia CECAIndia and Malaysia have signed an economic

partnership agreement that is expected toraise bilateral trade to $15 billion by 2015, justtwo days after New Delhi inked a similar pactwith Tokyo, consolidating India's burgeoningeconomic ties with east and southeast Asia. Thecomprehensive economic cooperationagreement (CECA) will come into force July 1.Under the pact, the two countries will allow upto 100 percent foreign shareholding in morethan 80 areas, including health care,telecommunications, retail, environmentalservices and other areas. Service sectors likeaccounting and auditing, architecture, urban

planning, engineering services, medical anddental, IT and IT-enabled services, andmanagement consulting services will get accessto the Malaysian market. India will get access inthe Malaysian market for goods including fruitssuch as mangoes, banana and guava, basmati

rice, two-wheelers and cotton garments.

Consensus on import duty key

to Doha round success

Zeroing in on an agreeable rate of exchange onimport duties among member nations was key toconcluding the talks on a global free tradeagreement or the Doha round at the WorldTrade Organization (WTO), a top WTO spokes-

person said on February 19.

However, after the Davos summit, the sluggish pace of negotiations had finally set moving at a pace not seen in almost past three years, saidKeith Rockwell, official spokesperson, WTO ata press meet. Last month, at the WorldEconomic Forum (WEF) at Davos, leadingtrading nations agreed to conclude Doha round

of talks by July this year. “The Indian position

has been tough and they have been skillfulnegotiators. But they agree now that they willhave to give a bit more to get a bit more. Thereal question right now is what the rate of exchange is,” he said.

Differences in opinion among WTO member nations on farm subsidies and sectorals, have

been the main stumbling blocks in the Doharound, launched in 2001. Under sectorals,

negotiating countries have to agree to cut importduties in some sectors at a faster pace than other sectors. Rockwell said there had been asubstantial convergence in agriculture-relatedissues among nations, but talks in other sectorslike trade environment and intellectual propertyrights were at a lesser advanced stage. In 2008,at the WTO Mini-Ministerial in Geneva, thetalks collapsed on issues like sharp differenceson agricultural Special Safeguard Mechanism(SSM) and subsidies. “The picture has changed.

The negotiations have been accelerating at a pace not seen since 2008. For the first time,everyone is saying that they know what needs to

be done. All are saying that we know we need togive more,” he said.

Commodities Traders May

Face Curbs under EU

Proposal

Commodity traders in the European Union mayface restrictions including position limits under

proposals from the European Commissionaimed at curbing excessive price volatility. Pricefluctuations hurt farmers, food-makers andconsumers, including in the poorest countries,the commission said. This will help ease

pressure on world food prices that stem out of speculation in commodity markets. World food



3

costs rose to a record in December on higher costs for sugar, grain and oilseeds.

Rare Earths

The European Commission also said it plans toidentify “priority actions” to ensure access to 14

“critical” raw materials. This list includes so-called rare earths -- a group of 17 chemicallysimilar materials used in renewable energy,magnets, electric cars and weapons. Positionlimits restrict the relative share of the marketoccupied by one investor. Such limits shouldtake account of “the specificities of the different

types of derivative products,” and the “evolution

of the physical market of the relevantcommodity,” the commission said.

Restrictions could be applied to derivatives bothtraded on exchanges and over the counter, thecommission said. Barnier said the EU executiveis examining whether to apply them to “real”

markets as well as derivatives.

DGFT allows exports of varieties of rice

In a notification,India’s Directorate

General of ForeignTrade (DGFT) saidthe government has

permitted exports of 'Ponni Samba' and 'Matta' varieties of basmati,subject to a cap of 25,000 tonnes each, while

shipments of 'Sona Masuri' have been permittedwith a cap of 1,00,000 tonnes.

India Top Court Allows Iron

Ore Shipments From

Karnataka Ports

India’s top court today allowed shipments of

iron ore accumulated at ports in Karnataka, pending its verdict on a ban on exports of thesteelmaking raw material from the nation’s

second-largest producing state.

The regional government must enact by the nexthearing on April 4 rules covering transport andstorage of metals in the state’s new mining law,

the Supreme Court said today in an interimorder. About 400,000 metric tons of iron ore arelying at the ports, David Pichamuthu, director at

the Federation of Indian Mineral Industries, saidtoday in an interview.

Olam-Louis Dreyfus merger a

no-go

Olam International Ltd. said talks have ceasedwith French group Louis Dreyfus Commoditiesabout a possible business collaboration, puttingan end to speculation that the two companiesmight merge.

SIAM strikes protectionist

note with India-EU trade

agreement

The proposed India-EU trade agreement hasdivided car makers with Pawan Goenka, the

president of industry body Society of IndianAutomobile Manufacturers (Siam), opposingany move to cut duty on imported cars. g for-eign luxury car makers such as Audi, Mercedesand BMW, batting for lower tariffs.



4

Oil Prices - Peaking Out?Tirthakrit Mukherjee

MBA(IB), 1st year, IIFT Delhi

Recently with the Egypt protests dying down,there was some relief for the energy tradersaround the world regarding the crude prices , butwith the recent turmoil in Bahrain and Libya ,

North Sea Brent Crude goes past $119.79 a barrel last week and touching its 30 month

highs. The crude for March delivery in the NewYork Mercantile Exchange was up to anintraday high of $99.96 before coming down to$97.43 on Monday. It again raised the concernsregarding the stability of the crude pricesglobally. The race for the scarce energy supplies

because of the tension in the Gulf and the risingcrude prices are becoming a threat to thedeveloping countries of the world especially toChina and India. The Bahrain and Saudi ArabiaCDS also rose to their 19 month highs indicatingfears of a domino effect to the neighboringeffect to the oil rich countries. The five year credit default swaps for Bahrain closed at 285

bps on Friday. Bahrain itself is not a oil richnation but the real problem is that it is next toSaudi Arabia , the world’s largest crude exporter

arising the chances of a spillover effect.

The MENA (Middle East and North Africa)region has huge reserves of petroleum and

natural gas. Around 8 out of the 12 OPECcountries are in the MENA region. According tothe Oil and Gas Journal (2009 report) this regionhas 61% of proved world’s reserves and is

responsible for 36% of global oil production.Libya also pumped 1.59 million barrels of crudea day in January, making it the eighth biggest oil

producing OPEC nation with quotas. Traders areworrying that the protests which have alreadyremoved two leaders in power can lead to a

disruption in crude supplies.

The rising crude prices can bring about a serioushalt in growth for the emerging economies of Asia, which are already suffering from highinflation and can result in breaking thefoundations like it did in 2008 with crude pricesspiking up to $150 a barrel. These countrieshave a higher dependence on energy than theWest. They rely on the cheap shipping costs totransport their exports with paper thin profit

margins. Analysts predict that once the MiddleEast tension goes away , prices should severelycorrect downwards as current prices are wayhigh fundamentally. Though the OPEC nationsare bound by quotas , but according to the latestReuters survey , the members of the OPEC are

producing 2 million barrels per day above their joint goal of 28.4 million bpd. The oil producingnations are taking advantage of a strong marketto virtually pump all they can but it is not yetclear whether that will be enough to meet the

increasing energy demand in Asia. Thoughaccording to recent data , oil inventories in USAhave fallen , but still it is well supplied andaccording to some experts it is oversupplied inthe Midwest. Again at the same the demand is



5

forecasted to hit a all time high of 90 million bpd. The rate of growth is lower in West as it isstill under stagnation. As the Chinesegovernment is planning to increase the interestrates to control the inflation , this should curbthe consumer demand and that of fuel.

Any Wikileaks follower will know by now thatit was recently released in one of its cables that asenior Saudi government oil executive that thekingdom's crude oil reserves may have been

overstated by as much as 300 billion barrels – nearly 40%. This brings back the fear of “Peak

Oil” theory. It is said that the oil reserves will

reach a maximum rate of global petroleum production by 2010-2020 , after which production will decline resulting in huge rise inoil prices. Recently Russia surpassed SaudiArabia last year making it the biggest producer of “black gold” . The Saudi explanation given

for not increasing its production is that there isno demand. But it is indeed surprising that

Russia found customers for it 10 million bpd of production but Saudi Arabia could not find anyone for more than their present production. Asoil prices are rallying only in one direction

because of the shortfall in Libya , SaudiAramco , the world’s largest state oil company

is ready to compensate for any shortfall in crudesupply. More than half of Libya’s crude output

of 1.6 million has been halted. For all the shortterm traders out there the outlook for cruderemains bearish as long as it is under its

Resistance of $92 and Longs can be initiatedabove the Support of $85.

International trade logisticsand shipping: An overview

Abhijeet Pethkar, Paramjeet Singh NITIE, Mumbai

Logistic is the lifeblood of supply chain. No onecan think of successful supply chain withoutsuccessful logistics. Globalization indulge moreand more companies to hunt internationalmarkets, demanding logistics services to be

more sophisticated, pushing for integration anddiversification of services to help operateuninterrupted supply chains. Freighttransportation uses one or more than one of these major modes: rail, road, air and water carriers, while pipelines currently contribute avery little in transportation. Logistic solutionsalso include warehousing, insurance,distribution, brokerages, inventory management,information system, packaging services. Various

players providing logistic support can be

broadly classified as Express couriers (FedEx,UPS), 3rd party logistics, Freight forwarders andIn-house export services.

World ScenarioAs per World Bank’s Logistics Performance

Index (LPI), which is a benchmarking tool thatmeasures performance along the logistics supplychain within a country trade, is directly linkedwith important economic outcomes, such astrade expansion, diversification of exports, andgrowth. Germany has very stable logisticindustry and since 2007 has raised by two to



6

become Numero Uno. [Refer Table 1]

Countries which want to improve its LPI need torevolutionize transport regulation policy,restructure and modernize border managementinstitutions, and if needed, invest significantly intrade-related infrastructure.

ChallengesEscalating Cost: In logistics there are two typesof cost: direct and indirect. Direct cost coversfuel cost, government duties while indirect costcovers cost associated with various cross border

bureaucracies and agencies; for instance USdepartment of agriculture on perishables, Foodand Drug Authority (FDA) on product safety etcfrom U.S. Owing to the terrorism, securities,time required for check-in and check -out hasincreased incurring more access cost. Aberdeensurveyed and interviewed more than 400international logistics and trade managers in2005. When asked to choose top 3 areas where

expense was huge, 67% of respondent pointedout transportation expense.

Manual intensive Processes: Logistics provider relying on manual processes are finding itdifficult to sustain the performance pressure as itincreases time and cost. The greatest problem of logistics performance is the lack of visibility andmetrics for managing logistics service providers

which can only be solved through technologyand automation

Road to Success

Building Partners: It is almost impossible to goalone in international arena of logistic, given thedynamic nature of target locations. A provider should figure out ways to synchronize activitiesand control of processes with custom brokers,freight forwarders, ocean carriers, other logistics

service providers in order to succeed. It shouldalso involve local logistic and operationalsupport early and often, which can give a deepinsight in new and unexplored areas.

Visibility and Control: International logistics isall about managing a network of third-party

providers. Companies which use phone calls,emails etc. to track down shipments are at acompetitive disadvantage. Real-time knowledgeof the location of goods throughout the supply

chain makes for faster-moving goods andinventory management in case of troubles likecongestion on some port etc. Systems such asData loggers, GPS, which provide automaticstatus and alerts, need to be set up. An alert canalso act as a proactive measure of controllingdeviated and delayed activities.

Automation and Streamline Documentation:

Automation of the processes is the need of thehour for swift progress of the logistic services.Streamlining Custom Processes by automatingdocumentation or by creating paperless structurecan reduce the time and cost.

Add-ons: Logistic providers basicallyconcentrate on transportation but if they giveadditional services like consultancy in businessareas by point out new strategic locations for client business, easy access to letters of credit



7

then this will help logistic provider in businessenlargement and will enhance its significance inthe Value Chain.

Indian Outlook:Total value of logistic industry in the world isUS $3.5 trillion and the major contributor is USwith the 25% of total logistics industry. As per CII Indian logistic industry is about US $125

billion i.e. 3.57% and it is forecasted it willgrow at CGAR at 8% in next three to five years.

India being a developing countries has a huge potential for growing in the fields of Retail,Agriculture, Pharmacy, Automobile, FMCG,Textile sectors which is mainly affected bytransportation conditions. Today India hasopportunity to reduce logistics cost because of its huge investment in infrastructure and also if Goods and Services Tax (GST) is implementedin FY12 or in the near future, differential statestaxes will eliminate and number of warehouseswill reduce. This will pave a way for more

integrated logistics solutions.

EpilogueGoing global, brings additional cost to thecompanies as they are experiencing unexpectedtransportation, higher inventory, unpredictablecycle times but consumers are demanding

products at same or rather at a lower prices. Soin order to compete, companies are finding waysto make their logistics processes more reliable,

flexible and less expensive. Thus success of logistics providers lies in proper implementationof best practices of logistics and determiningwhere the weakest links are and addressing themthrough targeted development.

WTO v/s Regional TradeBlocs

Ankit Bansal, Rohini Raman JhaSJSOM, Mumbai

ABSTRACT

Free trade is a system of trade policy that allows

traders to act and or transact without

interference from government. Under a free

trade policy, prices are a reflection of true sup-

ply and demand, and are the sole determinant of resource allocation. This policy is supported by

well-known economists like Adam Smith, John

Maynard Keynes and Ricardo.

The World Trade Organization (WTO)

established on January 1, 1995 is an important

international organization that governs and

promotes free trade by providing countries with

a platform to organize trade negotiations,settlement of trade disputes and removing all

forms of trade barriers. With 153 members and

31 observer nations it represents over 95% of

world trade. Recently, Regionalism is sweeping

the world trading system like wildfire while the

multilateral negotiations proceed at a glacial

pace. In the last 2 decades there has been a rapid

growth in the number of regional trade

agreements (RTAs) led by Regional Trade Blocs

(RTBs) like EUROPEAN UNION in Europe,

NAFTA and MERCOSUR in the America,

ASEAN in Asia along with some smaller blocs

like ANDEAN, CIS, SAARC, COMESA etc.

http://en.wikipedia.org/wiki/Trade_policy





8

Consequences of RTBs: TradeCreation v/s Trade Diversion

In general, trade creation means that a free

trade area creates trade that would not have

existed otherwise. Let us take example of

European Regional trade bloc EU. The diagram

below illustrates a shift in domestic consumer

spending from a higher cost domestic source in

Albania to a lower cost partner source within the

EU, as a result of the abolition of tariffs on intra

-union trade. This reduction in the cost of

products to consumers leads to a rise in

consumer surplus and eventually a net

improvement in the economic welfare. The

orange triangle represents "A gain in the world

efficiency lost before with the tariff” and the

green triangle represents “A gain in the

consumer surplus also previously lost “.

Trade diversion occurs when lower-costimports from a non-member nation are

prevented from entering the PTA by tariff or

non-tariff barriers, and are replaced by

higher-cost imports from a member nation.

Trade diversion reduces world economic

well-being since it shifts production from more

efficient producers outside the PTA to less

efficient producers within the PTA.

In this example, Albania had an agreement with

India by which they could purchase shirts at a

price of P-India, If Albania signs an agreementwith the EU, and they’ll have to assume the

EU’s tariff on the Indian shirts (P - EU + T)

which is a price higher than the EU price for

shirts. In this instance, Albania ceases to trade

with India and, instead, purchases EU shirts

beyond domestic production. Therefore, the red

trapezoid represents the loss of world efficiency

(the left triangle and rectangle) and the loss of

consumer surplus (the right triangle) enjoyed before the agreement.



9

The Way Ahead: WTO or RTBsConsider a country which is not part of any

regional bloc as well as WTO. Let us assume for

a particular product the supply curve is S1 and

Demand curve is D. The equilibrium price is

then P1.Let us say it joins a regional trade bloc

and now it allows free trade of all the products

within that group without any tariff. The supply

curve of that product of the group is denoted by

S2. Consumers can now access the same product

at cheaper rate produced in some other country

and the equilibrium price is at P2. Hence there is

a welfare gain denoted by yellow colored tri-

angle.

Let us say now the country becomes part of

WTO and enters into multilateral trade

agreements with other member states. The

supply curve of the world of this product is

shown by S3. Now the product is available to

the consumers at much cheaper rate and the

welfare gain further increases by area of grey

colored triangle. So from above discussion it is

evident that formation of Regional Trade blocs

are good for the welfare of the people but due to

the protectionist policies they prevent further

expansion into free trade agreement with the rest

of the regions and a country is at a welfare lossshown by area of triangle BFC. The table below

aptly summarizes our findings:

Conclusion

Regional Trading Blocs has been growing in

importance in recent years. Trading blocs

account for about three-fourths of world trade.

By their nature, RTB favour trade among

member nations and discriminate againstnon-members. Trade among members grows at

the expense of the rest of the world. Whether or

not this situation is allowed to continue under

the new World Trade Organization remains to

be seen. Free trade is certainly more efficient

than discriminatory trade, but in a world of

less-than-free trade, RTB may permit major

economic gains under certain conditions. Long

term gains, such as increased competition,

economies of scale, and greater investment may

far exceed the short term gains from trade

creation. Policy makers should seek to

maximize the likelihood that regional

agreements eventually serve as building blocs to

achieve global liberalization.



10

OLAM INTERNATIONALThe story beyond the Salaries

Ashish AgarwalMBA(IB), 1st year, IIFT Delhi

We all know Olam as one of the highest paymaster not just at IIFT but throughout theMBA placement circuit. Here’s an attempt to

explore Olam beyond what meets the eye.

Olam: An Indian entrepreneurial

Foresight

Kewalram Chanrai group now a global

conglomerate was started in 1860 by brothers

Kewalram and Chanrai in Hyderabad. In 1989,

the Kewalram Chanrai Group established Olam

Nigeria Plc to set up a non-oil based export

operation out of Nigeria. In its initial years,

Olam began its operations by setting up cashew

exports from Nigeria. Its global operations were

based out of London. Over time, exports were

expanded to cotton & cocoa. From 1993

onwards, Olam expanded to other geographies

such as Toga, Senegal and Ghana and shifted

the base of its global business from London to

Singapore. This allowed Olam to expand the

reach of its business across the world to

Thailand, Indonesia, Vietnam, Brazil.

Today, Olam has an annual turnover of $9

billion and operations across more than 60

countries. It sources 20 products from over 45

origin countries and market them to over 10,000

customers with a global employee strength of

more than 13,000 employees.. It is the leader or

one of the top 3 supplier of all major

commodities be it Cocoa, Cashew, Sesame,

Cotton, Rice, Teak, etc worldwide. Olam’s

growth strategy in the first 20 years was driven

by a clear focus on their core business and a

systematic and repeatable formula for adjacency

expansion based on that core. In addition to

organic growth, they have also grown through

carefully selected acquisitions since 2007.

Growth at Olam has been a result of

innovation and the ability to spot opportunitiesbefore its competitors.

Olam has grown over the 20 years by taking

advantage of adjacent business opportunities in

business and acquiring new businesses and

competencies. Olam has strategized to evolve

from a one-product and one-country business to

a global business of 20 agricultural products

across more than 60 countries.

The Agri-business Value ChainThe agri-business value chain consists of four

parts:

An upstream piece which includes plantations, farming, forest concessions, dairyfarming, and agri-inputs.

A supply chain piece (Olam’s core) A midstream, value-added processing piece A downstream contract manufacturing,

private label manufacturing and distribution piece.

Olam has focused on developing expertise inwhole supply chain and processing of Agricommodities and while doing so extends thoseexpertises to new and more profitablecommodities.

http://www.olamonline.com/aboutus/ourbusiness.asp#upstream

http://www.olamonline.com/aboutus/ourbusiness.asp#midstream

http://www.olamonline.com/aboutus/ourbusiness.asp#downstream

http://www.olamonline.com/aboutus/ourbusiness.asp#downstream

http://www.olamonline.com/aboutus/ourbusiness.asp#midstream

http://www.olamonline.com/aboutus/ourbusiness.asp#upstream



11

The strong core has helped Olam to perform

strongly and consistently over the last 20 yearsacross both economic and commodity cycles.

Olam has built a strong business portfolio

based on key strengths developed over the past

two decades.

Olam’s Strengths Olam has historically maintained its business

model of dealing and enhancing its capabilities

in agri commodities.

Olam’s complete integration allows them to

control the supply chain, achieve operational

efficiencies, add value and manage the

various risks along the entire supply chain,

enabling Olam to exploit the margins that

can made in the supply chain.

Olam has consciously maintained the idea of

being the first mover in lookout for new

commodities in the new markets. Olam’s distinctive position is based on the

strength of their origination capability, their

strong position in the destination markets

worldwide by virtue of their ability to offer

customised marketing solutions and

value-added services to the customers.

The key to our strong core business is a

repeatable and scalable growth model that

has allowed the company to reinforce and

expand the core through geographic, value

chain and product adjacencies by sharing

customers, costs and capabilities.

The culture incorporated by Olam has made

sure that while management makes the core

decisions the teams at the lower level have

sufficient independence to access situations

and take charge.

Five typical roles in Olam

Branch manager: The Branch Manager is primarily responsible for operational efficiencyand control for the business of a product in thecountry.

Profit centre head: The PCH is overall

responsible for the bottom line of one or more products in a country.

Country head: The Country Head's primaryfocus is to be sensitive and responsive to thelocal market. He plays three vital roles: thesensor and interpreter of local opportunities andthreats, the builder of local resources andcapabilities and the contributor to globalstrategy for the businesses in his country.

http://www.olamonline.com/aboutus/ourbusiness.asp#growth

http://www.olamonline.com/aboutus/ourbusiness.asp#growth



12

Global product head: The role of GlobalBusiness Head or PMH is to capture the full

benefit of integrated world-wide operations byfurthering global-scale efficiency,competitiveness and extracting synergies acrossdifferent countries

Finance manager: The Finance person hasdirect responsibility for the accounts and financefunction for one or more Profit Centers.

Future Outlook Olam’s approach over the next six years strategy

(till 2015) is to:

1. Consolidate the core by focusing and

recognizing its full potential;

2. Identify the hidden assets, skills and

capabilities that we have acquired over the last20 years and explore how these could beleveraged;

3. Expand by exploiting the power of therepeatable adjacency expansion formula;

4. Refine the strategy by following profit pools

as a direction finder for our future investmentsin different parts of the agri-business valuechain.

Olam is looking all set moving into the new

decade with strong fundamentals and base set

in Africa which has become the new eye candy

of the corporate world.

Implications of Budget 2011on Trade

Vishnu RamMBA(IB), 1st year, IIFT Delhi

The Honourable finance minister, in paragraph

54 of his speech has stressed the importance of

edible oil, more importantly oil palm and has

provided an amount of Rs. 300 crore to bring

60,000 hectares under palm oil plantation; this

initiative will yield about 3 lakh metric tonnes of

palm oil. It is needless to say that this measure

will result in bringing down the price of the said

oil and also in the prices of other edible oil, this

would have a favourable impact on the economy

of country like India, dependent heavily on

imported oil.

Paragraphs 81-84 have dealt with measures tosupport exports, these include:

Commitment to reduce transaction cost, all

but two suggestions of the Department of

Commerce in this regard have been

implemented, the Minister in his budget

speech has affirmed that action on the other

two will be taken in the next few months and

has also quantified the reduction intransaction cost at Rs. 2,100 Crore.

Introduction of self assessment in Customs,

under which importers and exporters will

assess their duty liabilities while filing returns

and declarations in the EDI system. These

measures will quicken clearance of cargo by

the customs authorities and further modernise



13

customs administration.

Proposal to introduce a new scheme for the

refund of taxes paid on service used for

export of goods, in the lines of duty

drawback. This benefit will translate into

reduced and competitive export prices, and

thus has the potential to increase our exports.

Concessional rate of duty of 2.5% on

Agricultural machinery and parts of machin-

ery has great potential in increasing

agricultural productivity, through increaseduse of machines.

Iron ore has been recognised as an important

resource, the recent controversies have only

enhanced the belief and the export duty has

been increased to 20% from the existing 15

%, this will go a long way in keeping this

important resource within the country by

making exports unattractive.

About IIFT

Indian Institute of Foreign Trade (IIFT)

is India’s nodal institution of excellence in

the field of International Trade and

Business. Since its inception in 1963, IIFT

has kept pace with the extremely dynamic

Global business environment by

focusing on International Trade and

Logistics-related issues. The rigorous,extremely dynamic and up-to-date course

curriculum stands testimony to this fact.

Supplementing the classroom, IIFT

organizes several events and discussions on

currently relevant issues in the field of

Trade and Logistics, which are graced

by pre-eminent professionals, industry

veterans and academicians, alike.

Our students have maintained and

sustained IIFT’s rich legacy by

successfully exhibiting their skills time and

again in various Live Projects and

Competitions. The institution has groomed

international business managers for over

40 years and boasts alumni base spread over

geographies and business verticals

trade winds - volume 2 issue 2

Documents