Of India & Egg Exports....

A spate of avian flu outbreaks in the last few years has dashed India’s hopes of becoming a major egg exporter. Oman, the largest buyer of Indian eggs, has now imposed second ban on Indian shipments this year following the avian flu incidence in a research farm in Karnataka. The earlier embargo on Indian eggs enforced by Oman in March, was only lifted in September. Oman accounts for over 60% of the Rs.100-crore egg export turnover from India. West Africa and Afganistan are the other major buyers of Indian eggs.
India has been in the egg export business for nearly two decades and the export turnover had swelled to around Rs.450 crore six years ago. The first outbreak of avian flu in India happened in 2006 and ever since egg exports from the country have been showing a downward trend.
Often the ban is imposed not knowing that the places where the avian flu occurred are far away from the exporting centre. Namakkal in Tamil Nadu is the egg export hub of India. Two incidents of avian flu outbreaks happened in Tripura and Karnataka. The second among turkeys in a government research farm.

India & ASEAN on Services

India has decided to scale down its ambitions for the free trade agreement in services with the Association of Southeast Asian Nations in a frantic attempt to get the pact rolling after nine years of talks. Officials said Delhi is likely to settle for much narrower market openings for its professionals than what it had initially demanded.
On Monday, Prime Minister Manmohan Singh told Sultan Hassanal Bolkiah of Brunei that India is keen to further its relations with Asean and that “the best is yet to come” in the country’s relations with the 10-nation regional grouping. Singh is in the Cambodian capital Phnom Penh where the ruler of Brunei will take over the chair of Asean for 2013.
India had initially sought a more liberal visa regime for its professionals in areas like education, health, nursing, information technology, architecture and chartered accountancy compared to what Asean has offered to New Zealand and Australia in its FTA with the two countries.
Asean has offered longer visa permits and other qualification relaxations to professionals from Australia and New Zealand, which go beyond the commitments made at the multilateral trading forum of the World Trade Organisation.
However, India’s top priority after 14 rounds of negotiations is to get the deal sealed.
Asean includes Cambodia, Brunei, Myanmar, Malaysia, the Philippines, Thailand, Singapore, Vietnam, Laos and Indonesia. The commerce department has already got the nod for lowering its ambitions from the Prime Minister's trade and economic relations committee, the body that gives the negotiating mandate for all FTA talks. The main reason why Asean is playing hardball is no secret. Since it managed to convince India to implement the FTA in goods in January 2010 independent of the agreement on services and investments, the 10 member-states do not have any incentive to conclude the latter.
“India is much more competitive than Asean in most services and it is no surprise that the deal is getting delayed,” said a trade expert from a Delhi-based think-tank. “When India agreed to sign the FTA in goods first, it voluntarily sealed the fate of the services deal.”
In fact, Indonesia and the Philippines have told India that they would not improve their services offers beyond what they have committed at the WTO and were ready to get lower openings from India in turn. There is little that India can do about it.
Even in the area of investments, the two sides are expected to sign nothing more than an investment promotion deal as Asean is not ready to agree on India’s suggestions to ensure that an investment pact does not get misused.
Delhi is now banking on diplomatic pressure to get the services and investment deal through, although it would be a much watered-down version. Prime Minister Manmohan Singh is expected to do exactly that at the Asean Summit in Cambodia early next week.
“We hope we are successful in applying diplomatic pressure and getting Asean to conclude the services talks and sign the agreement,” the official added.

Civil Aviation - October 2012

Amid a steep decline of 15.7% in domestic passenger traffic, Air India clawed back some of its lost ground to garner a market share of 20.8% in October. Indigo, Jet Airways and SpiceJet improved yields and also gained market share after Kingfisher Airlines’ licence was suspended.
Air traffic in October fell sharply from 54.01 lakh in last October to 45.55 lakh passengers in 2012 despite the onset of the festival season, with analysts blaming exorbitant fares as the principal factor for the decline.
In the first ten months of the calendar year ending October, passenger traffic fell 2.5%. Low-cost carrier IndiGo led with a 27.8% though the Jet Airways-Jet Konnect combined managed to narrow the gap.
Naresh Goyal’s airline carved a 24.7% share from 23.8% in September. Spice-Jet inched to 19.1% up from 18.5% in September. Jeh Wadia’s GoAir reported a market share of 7.6%.
In what was a fruitful month for airlines, the passenger load factors improved considerably for airlines in October compared with September. Indigo reported the highest load factor of 77.2% followed by Air India with 74.7%. Spicejet and Go Air reported loads of around 70%. Though Jet-Lite had a passenger load factor of around 70%, its full service carrier Jet Airways reported the lowest among its peers at 67.5%. Air India was the biggest gainer in October. The domestic passenger data for the last six months shows consistent increase in the market share of Air India.
It has risen from 16.2% in May 2012 to 20.8% in October 2012. For June, July, August and September 2012, the market share of Air India was 16.8%, 18.2%, 18.2% and 19.3%, respectively.

Gadkari must go

Senior BJP leader Yashwant Sinha has demanded party president Nitin Gadkari’s resignation, piling pressure on the embattled leader who faces allegations of corruption related to business dealings of Purti Power and Sugar Ltd.
In a statement, Sinha rejected the clean chit orchestrated by the party recently and said that Gadkari’s continuance as BJP president would impair the party’s campaign against Congress over corruption.
In a frontal assault on Gadkari, Sinha suggested that the party president’s continuation at the helm would pull the party down the integrity chart. He also said the failure to address the issue would harm the party’s credentials.
BJP was, however, quick to dismiss the demand, saying that it was irresponsible of Sinha to issue the public statement. Sinha’s demand, which came just ahead of the winter session of Parliament, underscored the BJP’s handicap in targeting Congress over big-ticket scams. Unlike leading lawyer and Rajya Sabha member Ram Jethmalani, who was dubbed an ‘outsider’ when he fired the first salvo against Gadkari recently, Sinha carries considerable political heft and is a former senior minister who held portfolios of finance and external affairs. Gadkari’s backers may also find it difficult to invent conspiracy theories over the latest attack, unlike the last time when Jethmalani’s statement was sought to be painted as the handiwork of the Gujarat chief minister Narendra Modi. The party’s ideological mentor, RSS, had to then intervene and reject the claims.
In any case, the RSS-appointed in-house auditor S Gurumurthy’s explanation that ‘shell companies’ associated with Purti were part of “usual business practices” has failed to passed muster with many senior leaders in BJP. The party president has also not been able to explain the involvement of his driver, accountant and astrologer in these shell companies. There have also been revelations that Gadkari had business close links with Manish Mehta, who invested Rs 47 crore in Purti. Till 2011, Gadkari was a director in the Mehta-promoted Chintamani Agro. RSS, which has a decisive say in the selection of the party president, however, is yet to make up its mind on Gadkari’s successor.

IKEA

IKEA, the world’s largest furniture retailer, is poised to become the first major foreign company to open wholly owned stores in India after it received a crucial government clearance to invest Rs.10,500 crore ($1.9 billion).
The Swedish company’s investment proposal, the biggest so far by a foreign retailer, was cleared by the Foreign Investment Promotion Board and will have to be approved by the Cabinet Committee on Economic Affairs. All foreign investment proposals over Rs.1,200 crore have to be approved by the Cabinet panel, but this clearance is expected to be a formality since the government is keen to project a foreign investment-friendly image.
IKEA, which operates 336 stores in 44 countries, plans to invest $778 million to set up 10 furnishing and home-ware stores as well as allied infrastructure over 10 years. It subsequently plans to invest $1.7 billion to open 15 more stores. The company has said it will take three years to build a supply chain to roll out its first outlet in the country. It becomes the third foreign company after apparel maker Brooks Brothers and Pavers England, the UK-based shoemaker, to obtain FIPB approval under the foreign investment policy for single-brand retail.
The government diluted some contentious provisions to accommodate the demands of the Swedish company. These included doing away with the condition that the foreign company opening retail stores in India must own the brand being sold in these stores. The government also watered down the clause that made it mandatory for foreign retailers to source 30% of the products they sell in India from small-scale units.
Foreign direct investment into India has dropped 60% in April-August from a year ago amidst a general deterioration in the investment climate and experts hope the green signal to IKEA would spur foreign fund flows.

The government, while clearing Swedish furniture and homeware retailer IKEA’s application to set up shop in India, has disallowed it from selling food in its planned stores and offering financing to suppliers and customers.
The foreign investment promotion board (FIPB) has ruled that the firm will not be able to able to open its famed cafes and food markets, famous for selling products such as meatballs and Lingonberry jams, in its stores because that will violate the FDI policy on food retailing.
A government official privy to deliberations at a meeting of the FIPB, which on Tuesday cleared IKEA’s proposal to invest Rs.10,500 crore to set up retail stores in India, said the proposal had been cleared subject to several conditions.
Besides not being able to sell food, the company will not be allowed to mail newsletters to customers and also will be prohibited from selling old furniture, the official said. IKEA will also not be able engage in any finance activity on its own to customers or suppliers.
Globally, IKEA stores, which have long trading hours, have large cafes and food markets inside them and the company was keen on replicating the same international format in India as well. The cafes could not be approved because the single brand retail policy under which the application was made disallowed retailing of food.
It was felt that the company was engaged in the retail of furniture and other household products and thus food markets or restaurants could not be bundled. After carrying out several changes in its FDI policy to address concerns raised by IKEA, the government is keen to send out a signal that it has bent backwards to accommodate the company.
The company had put in its formal application earlier this month after the government relaxed the mandatory 30% sourcing clause in September.

Somewhere in Phnom-Penh....

Prime Minister Manmohan Singh holds hands with Association of Southeast Asian Nations (ASEAN) leaders including (L to R) Philippines President Benigno Aquino, Singapore's Prime Minister Lee Hsien Loong, Thai Prime Minister Yingluck Shinawatra, Vietnam's Prime Minister Nguyen Tan Dung, Cambodian Prime Minister Hun Sen, Brunei's Sultan Hassanal Bolkiah, Indonesian President Susilo Bambang Yudhoyono, Laos Prime Minister Thongsing Thammavong, Malaysia’s Prime Minister Najib Razak and Myanmar's deputy Foreign Minister Kan Zaw during the 10th ASEAN-India summit in Phnom-Penh.

Le Creuset

French cookware maker Le Creuset has proposed to start a fully owned single brand retail venture in India, becoming the fourth multinational retailer to do so after the country allowed 100% foreign ownership in single-brand retail in January.
Le Creuset, best known for its coloured castiron casseroles and saucepans, has agreed to the 30% mandatory local sourcing conditions as it already sources from Indian suppliers, a person aware of the development said. The company operates a cash-and-carry business in the country and opened a franchisee retail store in Bangalore this year.
Once it gets clearance from the Department of Industrial Promotion and Policy (DIPP), Le Creuset India Pvt Ltd plans to open company owned outlets, shop-in-shops in hypermarkets and department stores, and push franchisees to grow faster in India, the person said.
Le Creuset is only the fourth overseas company to apply for 100% FDI in the single brand retailing after UK-based shoemaker Pavers England, US-based accessories retailer Fossil Inc and Swedish furniture and homeware maker IKEA.
The lukewarm response to the policy initiative is mostly attributed to tough riders such as mandatory sourcing of 30% items from local small and medium vendors. In recent months, the government sugarcoated the pitch by changing the norm of mandatory sourcing from local SMEs from “compulsory” to “preferably”.
Some potential investors have sought further clarification on this. Clasis Law, a law firm facilitating the entry of single-brand retailers such as Massimo Dutti and Promod in the country, recently wrote to the DIPP seeking further clarification on whether a foreign company's global centralised base that sources from India would qualify as the mandatory local sourcing.
The policy says a company registered in India and receiving FDI should source products from the country.
Le Creuset’s cookware is sold in about 60 countries including the US, UK, Japan, Australia, South Africa and dozens of other nations.