OECD for opening up of Indian market, raps SEZs + ISO & India + Olive Oil Import

[Guest guest]

NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development *********************************** 1. OECD for opening up of Indian market, raps SEZs 2. India elected to ISO governing council - Global Standards Body 3. Italian olive oil major set to trickle into Indian market - Spain lobbys for import duty cut -- OECD for opening up of Indian market, raps SEZs http://www.financialexpress.com/news/OECD-for-opening-up-of-Indian-market-raps-SEZs/219542/0 ASHOK B SHARMAPosted online: Friday , September 21, 2007 at 1922 hrs IST A report prepared by the Paris-based Organisation for Economic Cooperation and Development (OECD) has described India as “a closed economy both in absolute terms and relative to other developing countries, including China.” This is despite the on-going reform process in the country, it said. OECD, the inter-governmental body of 30 developed

countries, suggested further opening up and removal of tariff barriers to usher in a manufacturing-led growth. “Current protection levels on imports of both goods and services are still much higher when compared to other BRICs, “ Arguing for opening up, the OECD study – India’s Trade Integration, Realising the Potential – authored by Przemyslaw Kowalski and Nora Dihel said that the overwhelming majority of India’s imports (between 72% and 100%) were not imported for domestic consumption, but were used as intermediate inputs by domestic manufacturing and service sectors. The remaining trade barriers combined with domestic red tape, infrastructure bottlenecks and factor market rigidities restricted new entry and competitiveness particularly in agriculture and manufacturing at relatively low levels. “Indeed, the 2005 trade-weighted average tariffs of close to 52% in agriculture and 12% in manufacturing still

imply a significant wedge between domestic and world prices and act as an indirect tax on exports through imports. This puts many Indian producers that rely on imported inputs at a competitive disadvantage, while shielding uncompetitive domestic producers from competition,” it said. The OECD paper clearly indicates the developed countries’ insistence for opening up of markets in the developing world on the pretext of growth. It is particularly relevant when the discussions are due in Geneva on Don Stephenson’s draft on non-agricultural market access (NAMA). According to the OECD paper the recent growth in India’s trade has been led by services rather than manufacturing and that manufacturing trade was highly concentrated in low-technology goods and the share of high-technology manufactured goods in the total exports barely changed since mid-1990s and remained under 5% as compared to 30% for China. Regarding services sector, the study said that barriers in India still remain high and the sector suffers from domestic constraints in terms of burdensome regulatory measures and state monopolies. However, the study admitted that India has emerged as a global player in information technology, business process outsourcing and pharmaceuticals. Mode-4 related trade represented over 90% of total cross-border service exports, but achieved marginal gains in market shares in some OECD markets. In terms of Mode-4, half of total remittances received by India sent by Indian expatriates in the US, represents almost 2% of India’s GDP. Foreign direct investment (FDI) inflows have rapidly grown and shifted away from manufacturing to services sectors, but remain negligible to what the BRICs received. In 2004, India attracted less than 10% of the inflows into China, it said. Saying that India’s path of

development has been different from that of China and from the paths followed in the earlier decades by Japan, Korea and other Asian tigers, the OECD study criticized the setting up Special Economic Zone (SEZ) in the country which is essentially a Chinese model. However, in China there is a limited number of SEZs – about six in number – and are highly regulated by the government. In India the number of SEZs have run into hundreds. There is popular resistance by farmers and the local people in different parts of the country against the government’s SEZ policy which causes diversion of farmlands. Raping India’s SEZ policy, the OECD study observed : “In an effort to offset the high taxation of intermediate products and barriers to services trade, India has opted to maintain and cultivate an extremely complex system of duty exemption schemes, special investment and establishment rules and SEZs that provide

incentives particularly to exporting firms.” Further questioning the SEZ policy on promoting economic efficiency and growth, the study said “the discriminatory export-oriented policies may in some circumstances bring more harm than good.” It criticized it as “negative incentive.” The study noted that India’s growth has been concentrated in capital-intensive sectors with high productivity growth rates that are relatively more reliant on skilled labour. In this context, it suggested that dynamic, sustained and balanced economic growth can continue if India manages to harness the growth of its human capital by sustaining the improvements in investment and productivity. ----------- India elected to ISO governing council - Global Standards Body http://www.financialexpress.com/news/India-elected-to-ISO-governing-council/219976/ ASHOK B SHARMAPosted online: Saturday , September 22, 2007 at 2036 hrs IST New Delhi, September 21: India has been elected to represent in the governing council of the International Standards Organisation (ISO). ISO is the global non-governmental standards setting body consisting of representatives from national standards bodies of 157 countries. The Bureau of Indian Standards (BIS) represents India in the ISO. On Friday in election to the governing council took place in Geneva for 7 vacancies, India, along with China, Brazil, Spain, Holland,

Kenya and Tunisia were elected for two years, begining from January 2008. Earlier India represented in the ISO governing council in 2002 and 2003. The ISO governing council has 18 members in total. ISO members are ranked according to the contribution in quality setting as well as country’s GDP. India ranked 18 and is in the second group of countries alongwith China, Brazil, Spain and Holland------------- Italian olive oil major set to trickle into Indian market - Spain lobbys for import duty cut http://www.financialexpress.com/news/Italian-olive-oil-major-set-to-trickle-into-Indian-market/219377/ ASHOK B SHARMAPosted online: Friday , September 21, 2007 at 0112 hrs IST New Delhi, Sep 20 World’s famous Italian olive oil brand, Filippo Berio, is set to enter Indian markets in a big way. The Mumbai-based RR Oomerbhoy Pvt Ltd, which owns the exclusive brand rights of the products, is eyeing a 15% share of Rs 150-crore olive oil market in India in the first year of its launch. The extra virgin olive oils and pure olive oils in different packs are priced according to the content. A bottle of one litre of olive oil is priced at Rs 720, half litre bottle will cost Rs 420, a 200 ml bottle will cost Rs 180 and 100 ml bottle will cost Rs 100. Filippo Berio brand was floated in 1867 and was restructured in 1919 under the guidance of Dino Fontana, the founder of the Salov Group. The Salov Group, now

led by Eugenio Fontana continues to dominate the global olive oil market. Oilve oil has a high mono-saturated fatty acid content and is naturally rich in antioxidants and vitamins A and E. The oil is used as a cooking medium as well as for external applications. "There is a large market for olive oil in Uttar Pradesh and Bihar were people traditionally use it for external application. The Indian domestic market is, however, with a size of 2000 tonne valued at Rs 150 crore. We hope with the rise in disposable income and changing life style of the people, the demand for olive oil as an alternative cooking medium would grow in the days to come," said the managing director of RRO Pvt Ltd, Riyad R Oomerbhoy. Meanwhile, Spain, the world's largest exporter of olive oil has asked India to reduce tariff and non-tariff barriers to allow easy entry of olive oils. At present the effective duty on

olive oil is about 50%, which includes a basic duty of 45%. Spain has also pointed out the existence of other domestic levies on olive oil like excise duty VAT and maximum retail price that guarantee a 35% margin to the retailer---------------

Bring your gang together - do your thing. Start your group.