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India, Pak Bonhomie on Trade Deal
 Building upon a recent "constructive" meeting between their leaders in the Maldives, senior officials of India and Pakistan Monday held talks to firm up timelines for complete normalization of trade ties, with Islamabad urging New Delhi to have "faith" in the ongoing process of removing barriers.
"Our agenda has been clearly laid out for us in terms of preparing specific timelines for the complete normalisation of our trade relationship and implementation of committed SAFTA obligations," Commerce Secretary Rahul Khullar said at the sixth round of talks on commercial and economic cooperation between India and Pakistan.
He added that trade ministers have mandated the officials to lay down "specific timelines for normalisation of all trade relationships, dismantling of all non-tariff barriers and full implementation of the South Asia Free Trade Agreement (SAFTA) obligations".
Armed with "political backing and mandate", Pakistan's Commerce Secretary Zafar Mahmood stressed that his Government was committed to complete normalisation of trade relations with India.
"We have to fully normalise our relationship and you cannot fully normalise the trade relationship without invoking the MFN principle (and) so we will be working on that," Mahmood told.
"I want to assure you that please have trust and faith in the process (normalisation of trade). Times have changed. The world is coming closer," Mahmood said as he began the two-day talks with his Indian counterpart.
The meeting of the commerce secretaries takes place barely days after Prime Minister Manmohan Singh and his Pakistani counterpart Yousaf Raza Gilani met at a resort in the Maldives and decided to open a new chapter in bilateral ties, of which trade normalisation is an important part. The two leaders sought to move beyond the MFN status and agreed to work towards a preferential trade agreement that will give a big boost to economic ties between the two countries.
The Pakistani cabinet decided to grant India most favoured nation (MFN) status, 15 years after India granted Pakistan a similar status. Commerce ministers of India and Pakistan recently set a target to increase bilateral trade to $6 billion. "The cabinet not only gave its full approval but also mandated the comme
2012 Economic Outlook: Growth Concern Moves Back into Focus
 Union Finance Minister Pranab Mukherjee Wednesday said India's economy is in a 'difficult situation' because of slowing growth, stubborn inflation and a widening fiscal deficit, but its basic fundamentals are strong. 'The economy is in a difficult situation but that does not mean that we shall have to start eating lizards,' Mukherjee said in the Lok Sabha.
India's economic growth slumped to 6.9 percent in the July-September quarter against the budgetary target of 9 percent growth for 2011-12. During the first half of the fiscal, the economy grew by 7.3 percent. Mukherjee said the projection of 9 percent growth during the budget was not a pipe dream, but the unexpected high prices of oil and other commodities coupled with a slowdown in global economies, notably in Europe and the US, had hit the Indian economy hard. 'The hard fact is there are certain situations on which you do not have a control but you have to face the consequences,' he said.
The Finance Minister said because of the high oil and other commodities prices in the international market, expenditure on oil, fertiliser and food subsidies has increased exponentially, widening the fiscal deficit. He said fertiliser subsidies were likely to increase to Rs.90,000 crore against the budgetary target of Rs.40,000 crore. 'During the budget in February, average oil price of Indian basket I assumed $90 per barrel. However, oil price has been consistently at around $110 per barrel,' he said.
However, Mukherjee emphasised that the basic fundamentals of the Indian economy were strong. 'Basic fundamentals of the Indian economy are still strong. Rate of savings is high. Yes, it is not as high as 35-36 percent but it is around 33-33.5 percent. Rate of Investment is around 34-35 percent despite depression.' He said the proposed reforms could help improve the situation.
Mukherjee said the slowdown in growth was a cause of anxiety. 'From 2004-05 to 2007-08, we grew at 9 percent. Therefore we placed our standards high and from there we have come down. That's why it is my anxiety,' he said. Indian economy grew 8.5 percent in 2010-11. In the union budget, Mukherjee said growth target was 9 percent, plus minus 0.25 percent for 2011-12. However, the growth declined to 7.7 percent in first quarter and it slumped further to 6.9 percent in the second. 'There was a time when these percentage could have been an object of celebration when we place it in perspective on the economic development and growth of this country.
Textile companies may get better loan options
 Commerce and textiles minister Anand Sharma has appealed to the finance minister Pranab Mukherjee for restructuring of textile companies’ loans as well as for extending a 2 per cent interest subvention for SMEs and bigger garment and knit-wear units. If the proposal is approved, it would help textiles mills hit by high raw material costs and slowing global economy affecting the order books.
According to industry insiders, Sharma has asked for a suspension of repayment of the principal amount by the capital-intensive textile units for two years from July 1, which account for 90 per cent of the industry’s loans, and a one-year moratorium for other textile segments. Since dozens of mills were allowed restructuring of loans during the slowdown in 2008-09, the ministry has also asked for tweaking of the Reserve Bank’s prudential norms that stipulate any repeated rescheduling of loans be declared non-performing assets.
Textile mills were badly hit when they bought cotton at record prices last marketing year that started October 1, 2010, and product prices suddenly fell significantly from April on poor demand with signals of another economic slowdown in the US and the EU which together account for around 65 per cent of India’s textile exports. To relax the interest burden, the ministry has suggested that banks should provide foreign currency loans to all textile exporters to help reduce the credit cost considerably.
CEOs Press “Pause” Button on Investments : CII
A majority of the country's leading CEOs have muted investment plans both in India and abroad, reflecting the difficult environment for investments, a study has revealed. "It is worrying to note that a majority of CEOs have muted investment plans both in India and abroad, reflecting the difficult environment for investments," Confederation of Indian Industry (CII) Director General, Chandrajit Baneerjee said.
According to the respondents, factors such as cost of power, environmental clearances and high cost of capital were the prime issues which were holding back domestic investment, apart from issues such as governance, discretionary powers, slowness of decision making, high transaction costs and corruption. However, a majority of respondents felt that the new manufacturing policy announced recently is likely to improve the investment environment. CEOs feel domestic and international investments are likely to register single digit increases or even decline in 2012.
"Only 33.3 percent of respondents expect domestic investments to increase by more than 10 percent in 2012 while 66 percent expect it to increase by less than 10 percent or to decline," said CII as per its snap poll conducted among leading CEOs of the country. "Similarly, 32.1 percent of respondents expect international investments to increase by more than 10 percent while 67.9 percent expect it to increase by less than 10 percent or to decline," it added.
The survey has been done on the backdrop of the downturn in investor sentiment and the decline in fixed capital formation seen in the second quarter gross domestic product (GDP) numbers.
Responding to the significance of the Eurozone for the Indian economy, over 60.6 percent rated it as moderate while 33.3 percent said it was high and 6.1 percent felt it was low.
However, over 80 percent felt that the sluggishness in the western world and growing uncertainty and risk averseness are likely to have a moderating impact on India's exports, foreign direct investment and external commercial borrowings. Over 70 percent did not agree when asked if India should contribute to the Eurozone's bailout fund. When asked whether the trend of Indian companies investing abroad would strengthen despite the global economic turmoil, 44.1 percent of respondents agreed while 35.3 percent did not.
"While the global crisis has made Indian companies more conservative towards investing abroad, many companies will continue to expand abroad," said Banerjee. According to the CEOs, some of the countries they are looking for investments include Malaysia, Singapore, Indonesia, US, Canada, Brazil, Britain, Germany, Austria, Nigeria, Sub-Saharan Africa, Russia and Italy.
GDP @ 6.9% Slowest in Two Years
The Indian economy grew at the slowest pace in over two years at 6.9 percent in the quarter ended September, official data showed, amid a slowdown in demand, high inflation and steep interest rates.
According to the data on gross domestic product (GDP) released by the Ministry of Statistics and Programme Implementation, the growth during July-September was the lowest since the 6.3 percent expansion in the April-June quarter in 2009.
The GDP growth was 7.7 percent in the quarter ended June and 8.4 percent in the like period of the previous fiscal, the data showed, which also came amid a general slowdown in the global economy and a crisis of sorts in the eurozone.
The latest figures further showed a sluggish manufacturing growth at 2.7 percent, compared to 7.8 percent in the like period of last year, while the agriculture output rose 3.2 percent. Mining output, in fact, declined 2.9 percent against 8 percent. The construction sector, too, registered a retarded growth of just 4.3 percent against 6.7 percent, while the financial, insurance, real estate and other business services grew at a healthy 10.5 percent against 10 percent. The electricity and gas sector also rose reasonably well at 9.8 percent, while the hotels, transport and communication business reported a 9.9 percent increase in output.
Spurt in US Textile Exports to India
The US textile and apparel exports to India are witnessing the fastest growth among other importing countries. India has been at the top of the list for American apparel and textile exports during the first eight months of this year. This comes as a surprise especially when the US industry is reeling under the impact of continuing slowdown and with the US textile and apparel industry severely affected by its lack of competitiveness.
According to recent data from the US Department of Commerce, during the first eight months of 2011, textile and apparel exports to India went up 30 per cent, though the total value of the exported articles is relatively small at $164 million (Rs 8,482 million). The products imported from the US into India include: apparels, hosiery products as well as speciality and industrial fabrics and yarn.
Of the total imports from the US, yarns made up the biggest chunk at $51 million (Rs 2,637 million). The Netherlands tops the list of export markets for American apparel and textile products, followed by Brazil, with India coming third. Interestingly, Indian textile and apparel exports to the US are losing ground with Vietnam, Indonesia and Bangladesh taking advantage of weakening Chinese hold over global textile markets.
AEPC to Launch DISHA
 Apparel Export Promotion Council (AEPC) has announced the launch of ‘DISHA’ – Driving Industry Towards Sustainable Human Capital Advancement.
DISHA is expected to encourage members to follow better social practices, which will give them a competitive edge in the global market where social compliance is increasingly becoming an important buying decision. Sponsored by Ministry of Textiles, this initiative by AEPC attempts to educate apparel exporting members on a code of ethics that covers all critical social and environmental concerns like child labour, health and industrial safety, etc.
On this occasion, Mrs. Rita Menon, Secretary, Ministry of Textiles, Govt of India declared, “Some view the increasing requirement of social compliance of the Western markets as non tariff barriers. With value realization remaining stagnant, increasing compliance requirements indeed pose a challenge for the garment manufacturers. However, I would urge the industry to view this challenge also as an opportunity. India is well placed to emerge as one of the most compliant sourcing destinations amongst the developing nations and this can be built upon as our biggest value proposition. It is imperative that the garment manufacturers understand the reputational risks associated with non compliance, as also the long term business merits of developing compliant workplaces.”
Under the programme, root cause analysis and guidance will be given by a team of experts as part of the capacity building programme. A toolkit will be prepared based on the Common Compliance Code by which the enrolled units will undergo an orientation and training program. Remedial plans will be introduced and after monitoring the improvement, necessary certifications will be given. There will be international agencies that will be empanelled to audit the programme to provide it with international credibility.
AEPC has an ambitious target of enrolling a large number of garment factories for the initial orientation programme. The council will help the garment manufacturers comply with the global social standards and norms. ‘DISHA’ will not only give the opportunity for the industry to negate international claims against child labour promotion in the garment industry, but will also help to improve the overall image of the industry on the global front and not the least, to win more international businesses,” added Premal Udani, Chairman, Apparel Export Promotion Council.
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