BALI & Climate Change + AVIAN FLU (Bird Flu) + ORGANIC Farm + Indian Econ Updates‏

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NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development***************************** 1. Can the environment and trade tango? - The US and EU proposal to introduce freer trade in green goods and services on the WTO agenda meets with opposition at the climate change conference in Bali INTERNATIONAL MINISTERIAL CONFERENCE ON AVIAN AND PANDEMIC INFLUENZA, New Delhi, India Dec 4-6---- 2. 'Bird flu fight not equitable' alleges Indonesian health minister3. Pledge assistance for combating

Avian Flu declines 4. CERTIFIED ORGANIC FARMING IN INDIA - Uttarakhand, Sikkim ahead in organic farming On CHEMICAL FERTILISERS--- 5. Urea production & distribution cost skyrockets by 81% in 1995-2006 period 6. Rs 3,890-cr (Rs 38900 million) special fertiliser bonds issued UN, ADB, Child Labour, SMEs & Economy----- 7. UN wants India's private health sector regulated 8. ADB says will up India funding to $ 3 bn a year 9. Child labour audit mooted 10. Govt to remove 24% FDI cap on small scale industry (SSI) units 11. Economically correct : 9% growth, US-like inflation ------------ Can the environment and trade tango? The US and EU proposal to introduce freer trade in green goods and services on the WTO agenda meets with opposition at the climate change conference in

Bali http://www.financialexpress.com/news/Can-the-environment-and-trade-tango/248580/0 ASHOK B SHARMAPosted online: Monday , December 10, 2007 at 0055 hrs IST The US and the European Union (EU) are proposing the introduction of freer trade in green goods and services in the WTO agenda. It prompted a meeting of trade ministers on December 8 on the sidelines of the UN climate change conference in Bali. According to OECD, global market for environmental goods and services is estimated at more than $550 billion a year, out of which green services account for 65% and green goods 35%. The EU accounts for 30% of this

market. The US-EU joint proposal has invited severe criticism from environmentalists and trade advocacy groups, which allege that it is based on a recent World Bank proposal that suggested "huge gains in trade volumes" from 3.6% to 63.6%. While some of them say that there is no need to introduce an additional proposal when those on the table have not yet been resolved. Developed countries are not yet eager to open up their Markets for goods from developing countries. They are also not prepared to reduce their level of farm subsidy and support. The introduction of the new proposals will only complicate and delay the process of trade negotiations, they say. Environmental groups have criticised the US by saying the country, which has not signed the Kyoto Protocol and other environment treaties, has no right to suggest how other countries should deal with the situation. India has already made its position clear by opposing

the introduction of environmental agenda in trade negotiations. India has said that the criteria of per capita emission by countries should be considered, if the developing countries are called upon to make emission cuts. Union commerce minister Kamal Nath has opposed the idea of terming India as an emerging Economy. "We are still a developing country with a large number of poor people," he said. According to one indicator in the OECD report, released recently in Paris, India is the world's third largest Economy behind the US and China. The US-EU proposal made on November 30, 2007, is a two-tier process for much freer trade in "green" goods and services as part of the Doha Round of negotiation. The first step suggests an agreement to liberalise trade by reducing tariffs in at least 43 goods with clear environmental benefits drawn from a list prepared by the World Bank. The list includes solar panels, wind mill turbines, clean coal and energy-efficient

lighting. The US is now shifting to clean coal technologies as global prices of crude oil are firming up. In the second process, the proposal suggested more far-reaching environmental goods and services agreement (EGSA) to be negotiated by the WTO members which would foresee further binding commitments to eliminate tariffs and non-tariff barriers in trade in green technologies. In services, highly ambitious and comprehensive commitments would be undertaken to address environmental and climate change challenges such as waste management. Developing countries would be asked to make contributions proportionate to their level of development. Intellectual property right is an issue in trade as far as green technologies are concerned. The developed countries have already failed in their assurance to transfer clean energy technologies, and the funds to finance it which was agreed upon at the Rio Earth Summit. Clean technologies with high price tag of

intellectual property rights would make it difficult for developing countries to address the problems of climate change. Even in San Francisco Bay Area of California, there is no consensus within the industry about the necessity for global monopoly patents on important new clean energy technologies. The reduction or elimination of tariff barriers on green goods and services as suggested by the US-EU proposal would severely affect the developing countries that have either developed some of these technologies or are in the process of development. It would be better to leave the option of applied tariff reductions to countries that want to mitigate climate change rather than making the tariff reduction binding. Government action is more important in mitigating climate change, rather than emphasis on trade. Government action like placing a price on greenhouse gas emission, while trade rules will minimise government action or incentives. Cost

internalisation can come in many forms, including caps and/or taxes on carbon, renewable energy criteria, or even energy-efficiency standards. The imperative to internalise carbon costs should compel policymakers to protect and expand their policy space so that they have the freedom to enact necessary. The US-EU proposal in the name of "breakthrough" priorities for a Doha deal include the opening of Markets for its energy services Companies like Halliburton in countries with large oil and gas reserves. So any benefits from trade in clean technologies would have to be offset with the WTO deepening world's dependence on fossil fuels. Even though trade in cargo is fuelled by one of the dirtiest of all energy sources (bunker fuel), the US-EU proposal has not questioned the inherently increasing carbon footprint that will result from shipping. The UNFCCC is more competent to address the issues of climate change than the WTO. As suggested in the

background papers for trade ministers meeting in Bali, one area where trade policy could reduce its restraints on climate policy is by increasing flexibilities to allow many forms of public support needed to accelerate the research, development and deployment of clean, efficient, energy technologies. The background paper also proposed a discussion on "non-tariff barriers to investment", which could cover zoning codes, tax incentives, operating permits, or just about any measure governments enact that impact investment. "Non-tariff barriers" have too often, in recent trade policies, implied the legal protections for the environment or community development. Again, trade policy makers must keep away from restricting governments from internalising costs in energy investment and production today. According to International Energy Agency, $22 trillion investment in new energy infrastructure is required for the next 25 years to meet what

it calls "runaway demand" for energy led by China and India. However with the likely carbon pricing regime in different countries, investors are uncertain about their future. Even OPEC's recent Riyadh Declaration has asked the oil-importing countries to clarify their future demand for petroleum. The massive bio-fuel programme backed by huge subsidy across the world has also become controversial. The recent UNCTAD annual report said that such bio-fuel programmes in Europe and US have distorted global trade and skyrocketed the prices of grains. It apprehended that massive cultivation of bio-fuel crops would displace food crops from cultivation and create food security problem. The Nobel prize winning chemist, Paul Crutzen, best known for his work on ozone layer has concluded that bio-fuels could increase global warming with laughing gas. Leading scientists like David Pimentel of Cornell University, Tad Patzek of University of California,

Florian Siegert, managing director, Remote Sensing Solutions GmbH , Munich, Mario Giampietro of Institute of Environmental Sciences, Barcelona and Helmut Haberl of Klagenfurt University, Austria have questioned the very basis of the contention of the IPCC report that bio-fuel programme causes a reduction in carbon dioxide emission. The mayor of London, Ken Livingstone, who was in Delhi recently said that bio-fuels do not reduce emissions to the extent desired. London has prepared its own Climate Change Action Plan to deal with the intention of reducing 60% of the city's emission by 2025. According to the action plan, London is to promote low-carbon vehicles with hybrid fuel system which cut transport emissions by up to 4 to 5 million tonne .''Carbon dioxide emission from road transport would fall by as much as 30% if people simply bought the most fuel efficient car in each class,'' the action plan said-------

INTERNATIONAL MINISTERIAL CONFERENCE ON AVIAN AND PANDEMIC INFLUENZA, New Delhi, India Dec 4-6 'Bird flu fight not equitable' http://www.financialexpress.com/news/Bird-flu-fight-not-equitable/248586/ ASHOK B SHARMAPosted online: Monday , December 10, 2007 at 0102 hrs IST New Delhi, Dec 9 Global efforts to combat the spread of the deadly Avian Flu virus has not been equitable and on the desired level of transparency. Apart from this, there is the problem

of a sharp decline in pledge assistance and disbursements. The Indonesian health minister, Siti Fadilah Supari, at the recent International Ministerial Conference on Avian and Pandemic Influenza, which concluded in Delhi on December 6, brought to the fore certain problems faced by developing countries in combating Avian Flu. Supari's pronouncements are also relevant to India, which was twice a victim of the incidence of Avian Flu in poultry - in early 2006, in western parts of the country, and in July 2007 in Manipur, in the northeastern part. In 2006, the poultry industry suffered an estimated loss of Rs 30,000 million, while in 2007 it was Rs 6,700 million. Supari raised the issue of transparency in the virus sharing issue. He alleged, "The affected countries are asked to send H5N1 virus collected from avian flu victims to WHO-CCs. After the virus are sent, the originating countries do not have any right about the destiny of the

shared virus. I do not really know whether they are used for researches and publications or they are shared with vaccine manufacturers for vaccine production or they are utilised for development of biological weapons." He alleged a presumptive polarisation between developing and developed nations. "Those who have the virus are developing countries, while those who benefit are developed countries, where vaccine manufacturers are located," he said. The total pledge assistance by different countries has declined. In the Beijing ministerial in January 2006, $1.8 billion was pledged for the year 2005-07. In Bamako ministerial in December 2006, $474 was pledged the year 2006-08. In the Delhi ministerial $406.1 million was pledged. Out of the $2.3 billion pledged so far since November 2005 till the beginning of the Delhi ministerial, $1.7 billion has been committed, of which $1 billion had been disbursed. Pledge assistance for combating Avian Flu declines http://www.financialexpress.com/news/Pledge-assistance-for-combating-Avian-Flu-declines/247571/0 ASHOK B SHARMAPosted online: Friday , December 07, 2007 at 0040 hrs IST Ten countries including India have pledged a total assistance of $ 406.1 million to combat the spread of deadly Avian Flu across the world as the three-day International Ministerial Conference on Avian and Pandemic Influenza came to a close here on Thursday.

Among other countries which pledged their assistance to the programme are UK, Greece, Germany, France, Norway, Japan, US, European Commission. Peter Harrold of the World Bank at a joint press conference, however, said. :"In the last ministerial conference at Bamako the pledge was higher at $ 475 million" He also said that this was not a meeting for making pledges. It was a meeting for taking stock of the situation and acting as "one world, united against Avian and pandemic influenza", he said. India had experienced the outbreak of Avian flu for the first time in poultry in early 2006 in the western part. This incidence caused an estimated loss of Rs 30,000 million to the industry. After being declared as free from Avian flu by the OIE in August 2006, the incidence of Avian flu occurred in July, 2007 in Manipur in the northeastern India. However, the incidence in Manipur remained confined to a solitary area and was

successfully contained. The outbreak in Manipur caused a loss of Rs 6700 million to the industry. The Indian health minister, Ambumani Ramadoss, in this context said that UN systems lauded the way India handled the situation. On being asked weather he can assure that there would be no further occurrences of Avian flu in the country, he said : "Much depends upon the situations in our neighbouring countries which had earlier become victims of Avian flu. The virus travel across borders." The Indian health secretary, Naresh Dayal said : "The outbreak in western India and in northeastern India were not related as the strains detected were different." The US special representative on avian and pandemic influenza, John E Lange said : "Today's pledge by US represents an increased contribution of $ 195 million. There is no presence of deadly Avian flu virus H5N1 in the western hemisphere. Earlier incidences were due to low

pathogenic virus". The conference adopted a road map prepared by India with an ambitious vision of measures and actions proposed till December 2008. This immediate short-term strategy is linked to long-term sustainable planning. The next ministerial meeting would be hosted by Egypt. The New Delhi ministerial conference was attended by representatives from 111 countries and 29 international organizations and ministers from 40 countries. The conference was hosted in cooperation with US (IPAI chair), European Commission, WHO, FAO, OIE, World Bank, UNICEF and the UN System Influenza Coordinator for Avian and Human Influenza. The third global progress report of the UN System and the World Bank --- Response to Avian Influenza and State of Pandemic Readiness --- was presented in the conference. The report confirmed considerable progress in country responses to highly pathogenic Avian Influenza. It also said that 95% of

countries have developed pandemic preparedness plans but most of the plans were not sufficiently operational. Therefore, the report called for greater inter-country cooperation in capacity building for coping with a potential pandemic. Delegates from several developing countries spoke of their successful containment of outbreaks of Avian Flu in the last two years, despite limitations of resources and capacities. They attributed their success to the cooperation of the local community, open communication between the public and government officials, well functioning surveillance systems, effective responses to outbreaks and prompt compensation to culled birds. An update of the coordinated international financing programme shows that out of the $ 2.3 billion pledged so far since November 2005 till the beginning of the Delhi ministerial, $ 1.7 billion has been committed of which $ one billion had been disbursed. The financing programme

was launched in Geneva in November 2005 as a flexible framework to be monitored by the World Bank. In the Beijing ministerial in January 2006, $ 1.8 billion was pledged by different countries for the year 2005-07. In Bamako ministerial in December 2006, $ 474 was pledged by different countries for the year 2006-08. Top 15 donors are World Bank, US, European Commission, Australia, Asian Development Bank, Germany, Netherlands, Japan, Finland, Russia, UK, African Development Bank, South Korea, China and France. The decline in pledges and low disbursement remain as a matter of concern. Paul R Gully of WHO and Bernard Vallet of OIE were of the view that majority of risks of outbreak of Avian Flu were due to commercial movements and wild birds. Developing nations would face difficulties in avoiding contacts between domesticated and wild birds. J Domenech of FAO said that if the developing countries were lacking testing facilities they can use labs of developed

nations and those of FAO and OIE. ---------------------------- CERTIFIED ORGANIC FARMING IN INDIA Uttarkand, Sikkim ahead in organic farming http://www.financialexpress.com/news/Uttarkand-Sikkim-ahead-in-organic-farming/248088/ ASHOK B SHARMAPosted online: Saturday , December 08, 2007 at 0135 hrs IST New Delhi, Dec 7 The total certified area for organic farming in the country is low at only 1.00 million acre, while about 60% of the crop land is un-irrigated, rain-fed, and organic by default.

Uttarakhand, Sikkim lead in organic area followed by Rajasthan, Maharastra, Karnataka, Kerala, Himachal Pradesh. Manipur, Meghalaya, Mizoram, Assam have begun the process of getting areas certified organic. The newly elected president of the International Competence Centre for Organic Agriculture (ICCOA), Mukesh Gupta said that this was due to the fact that the state governments concerned have not come forward to get these areas certified. Gupta commented that, "There is no problem as per global standards. The problem is with Japanese standards, which do not recognise the use of the bio-pesticide, neem as organic." He said proper marketing linkages need to be established to market the produces at a premium price. He said at present only 5,00,000 farmers have been certified as organic farmers, while it should have been higher. Gupta said the certification cost for an individual farmer is Rs 10,000 a year, the the cost per farmer

per year through group certification would come down to about Rs 500. Gupta added that the US and European norms suggest a 1-year "conversion period" even for traditional organic farmers, which means after paying fees for certification, he has to wait for 1 full year. Another problem is that farmers in a specified group have to sell their produces to one certified buyer through a single contract. India's export of organic produces stood at only Rs 300 crore. In this context, Gupta suggested the creation of a domestic market for boosting organic produces. He said that 5-star hotels and the retail chains should take the lead in marketing organic produces in the country. ---------------------------- Urea P & D cost skyrockets by 81% in 1995-2006 period http://www.financialexpress.com/news/Urea-PD-cost-skyrockets-by-81-in-19952006-period/245956/ ASHOK B SHARMAPosted online: Sunday , December 02, 2007 at 2259 hrs IST New Delhi, Dec 2 The Fertiliser Association of India (FAI) has estimated that the cost of urea production and distribution in the period 1995-2006 increased by 81% to around Rs 12,220 crore. The FAI study said that the total cost push of Rs 12,220 crore was, however, offset to the extent of Rs 4,480 crore, on account of increases in the maximum retail prices (MRPs) for urea in this period. Increases made in the subsidy to the industry also could offset high accumulated cost to the extent of Rs 6,110 crore. The

burden of the balance Rs 1,630 crore had to be borne by the industry due to "disallowance of genuine costs actually incurred by the industry", the study said. Saying that the burden of Rs 1,630 crore had severely hit the industry bottomline, the study said that the removal of the administrative price mechanism (APM) for naphtha, fuel oil, LSHS had already distorted the situation and significantly increased the subsidy bills Keeping in view the results of the phasing out of the APM for naphtha, fuel oil, and LSHS, the FAI suggested that the APM for gas should not be phased out in a hurry. The government should not only facilitate priority allocation of gas in adequate quantity at a reasonable price to the fertiliser sector but also help the industry in gas pipeline connectivity. The gas pipeline connectivity has a potential for substantial savings in subsidy and to prepare the industry for the ultimate decontrol regime, the study said.

The FAI study pointed out the structural mismatch within the sector, with controls on urea and indirect controls over phosphatic and potash fertilisers. While the central government fixes the concession (subsidy) rate on single super phosphates (SSPs) on a uniform basis, its MRPs are decided by the state governments, leading to multiplicity of prices across the country. --------- Rs 3,890-cr (Rs 36900 million) special fert bonds issued http://www.financialexpress.com/news/Rs-3-890cr-special-fert-bonds-issued/247857/ ASHOK B SHARMAPosted online: Friday

, December 07, 2007 at 2335 hrs IST New Delhi, Dec 7 The government on Friday announced the issuance of 8.3% special fertiliser bonds for Rs 3,890 crore (Rs 38900 million). The first tranche of the special bonds would be issued at par to 22 fertiliser Companies as compensation towards fertiliser subsidy during the current fiscal, an official press release said on Friday. The Fertiliser Association of India (FAI) had earlier alleged that it has become a practice to carry forward a large amount of unpaid from a year to the next year for want of allocated funds. According to FAI estimate, the outstanding subsidy dues carried forward from the previous year amounted to about Rs 4,000 crore in 2005-06, Rs 6,000 crore in 2006-07 and Rs 8,000 crore in 2007-08. Even during the current year, the subsidy allocation so far has been only at Rs 37,451 crore against an estimated requirement of about Rs 48,000 crore. The Rs 37,451 crore subsidy

allocation included Rs 15,000 crore in the first supplementary. Out of the Rs 15,000 crore allocation in the first supplementary, Rs 7,500 crore was in form of bonds, in lieu of fertiliser subsidy. FAI has said that mere issuance of bonds would not help the fertiliser industry as they are under cash crunch. According to a recent government notification the investment in the Fertiliser Companies' Government of Special Bonds 2023 by banks and insurance Companies will not be reckoned as an eligible investment in government. However, such investment by the insurance Companies will be eligible to be reckoned as investment under "other approved securities" category as defined under IRDA (Investment) Regulations, 2000. Further, the investment by the provident funds, gratuity funds, superannuation funds, in the special bonds will be treated as an eligible investment under the administrative order of the ministry of finance.

The special bonds will be transferable and eligible for market ready forward transactions (repo). The bonds, however, will not be an eligible underlying security for ready forward transactions (repo/ reverse repo) with the RBI ----------- UN wants India's pvt health sector regulated http://www.financialexpress.com/news/UN-wants-Indias-pvt-health-sector-regulated/246753/ ASHOK B SHARMAPosted online: Tuesday , December 04, 2007 at 2352 hrs IST New Delhi, Dec 4 Even as a debate rages over mandatory rural stint for medical

students proposed by health minister Anbumani Ramadoss, a report prepared by the UN special rapporteur for the government has suggested regulation of private health sector in India. "Private practitioners have a human rights responsibility to provide predictable and sustainable assistance to public facilities in rural and undeserved areas," said UN special rapporteur on health rights, Paul Hunt, at a press conference here on Monday. Hunt visited two states, Rajasthan and Maharashtra, to prepare a report with regard to maternal mortality and health. "The rate of maternal mortality in India is shocking," said Hunt. As per his report, 20% of the world's maternal deaths (500,000 women die globally during childbirth or pregnancy) occur in India, where a maternal death occurs every 5 minutes. "In India, more than 300 maternal deaths occur for every 1,000 live births" compared with Sri Lanka with only 56 deaths and China with 45 deaths.

He said while the Indian government had doubled the allocation for health—from .9% to 2-3% of GDP, due to bottlenecks there were instances of unutilisation of funds. Lauding the UPA government's flagship National Rural Health Mission, Hunt suggested the scheme could benefit if all states introduced a system of maternal death audits, as was being done in Tamil Nadu and Rajasthan on a pilot basis. Also, the health workforce in India was inadequate. The government aims at ensuring life-saving care in 2,000 community health centres. For this, 6,000 trained people are required, but there are only 700 specialists in maternal care in government service, compared with 20,000 in the private sector. Hunt, therefore, suggested that the government set up autonomous health commissions that report directly to the legislature, to monitor the health sector, both private and public.

------------- ADB says will up India funding to $3 bn a year http://www.financialexpress.com/news/ADB-says-will-up-India-funding-to-3-bn-a-year/247465/ ASHOK B SHARMA Posted online: Thursday , December 06, 2007 at 2254 hrs IST New Delhi, Dec 6 : Asian Development Bank on Thursday said it will enhance its funding in India to $3 billion per annum for the next three years from the present $2 - 2.5 billion. ADB managing director general Rajat Nag told reporters on the sidelines of the CITI-FT Financial Education Summit here that

the bank would raise funds in India's bond Markets for investing in infrastructure development in the country. Pointing out that India needs an estimated $1.6 trillion for infrastructure development over the next decade, he said 70% of the annual $3 billion would be spent for development of roads, power and rural infrastructure. At present, the bank lends around $2-2.5 billion dollars to India. Nag said, from 2008, this amount would be hiked to $3 billion dollars, adding that it would later be invested through the public sector for infrastructure development. India's $906 billion Economy has grown at more than 9% since April 2005, making it the second fastest growing country after China among the world's top 15 economies. The government wants to accelerate growth to a 10% pace by 2012 and it is of the view that the present level of investments in infrastructure is good enough to sustain only a 7-8% growth.

Last year, India had tripled its investment target for infrastructure to $490 billion, or 9% of gross domestic product, to build new and improve existing roads, ports, airports and telecom network. Nag said, ADB is in the process of raising money through bonds in fiscal 2009 for investment in India. Though Nag declined to disclose the quantum of money that the bank would raise, he said, "We are ready and have talked to the authorities concerned to raise local currency for investment in the country. We are waiting for the market conditions to be right and we will move quickly. But there is no timeline." ------------ Child labour audit mooted http://www.financialexpress

..com/news/Child-labour-audit-mooted/246517/ ASHOK B SHARMAPosted online: Tuesday , December 04, 2007 at 0208 hrs IST New Delhi, Dec 3 In a move that would impact several labour-intensive sectors, the government wants independent agencies to undertake a child labour audit of export units. The move comes close on the heels of global clothing major GAP pulling from shops in the US and Europe garments made in India after allegations that local contractors employed children to manufacture them. The government also proposes that representatives of the ministries of labour, women & child development and commerce meet every three months to review progress. The government is of the view that the allegations of child labour could adversely affect India's exporters, already reeling under the impact of a rising rupee. According to estimates, there are

around 1.5 crore children at work in various export units across the country, although domestic laws have banned employing anyone below 14 years of age. The government has increased budgetary allocation from Rs 662 crore in the 10th Plan to Rs 4,000 crore in 11th Plan for a national child labour rehabilitation project and to set up schools for them. The export sectors under the government's child labour scanner are the five labour-intensive sectors of apparel, handicrafts, carpets, Sports goods and gems & jewellery. The export promotion associations of these sectors have also given their consent to the move. Apart from the exporters themselves, the entire chain of sub-contractors and suppliers would have to conform to laws relating to child labour. A decision to this effect taken on Friday at a meeting held between labour minister Oscar Fernandes and women & child development minister Renuka Chaudhary, minister of state for commerce

Jairam Ramesh and National Commission for Child Rights chairperson Santha Sinha. In addition, export promotion councils and NGOs belonging to Uttar Pradesh, Gujarat and Delhi were also present. Plans for child labour abolition in specific geographical areas of industry concentration would also be undertaken. They include Varanasi, Bhadhoi and Mirzapur for carpets, Jalandhar for Sports goods, as well as Surat and Bhavnagar for gems & jewellery. ------------ Govt to remove 24% FDI cap on smal scale industry (SSI) units ASHOK B SHARMAPosted online: Thursday , December 06, 2007 at 0243 hrs IST New Delhi, Dec 5 The government is set to remove the current foreign direct investment (FDI) cap of 24% for all Companies in the small-scale industry

(SSI) sector. SSI units will be allowed to raise foreign equity in accordance with caps governing the sectors in which they operate. "At present, no big industrial house, whether domestic or foreign, can have more than 24% in an SSI unit. But that is being removed now. The notification is under the Industries (Development & Regulation) Act. This needs to be on the table of the House for 30 days. The idea is that SSI units must have access to technology and capital," said commerce & industry minister Kamal Nath on Wednesday at the Idea Exchange interaction organised by The Indian Express Group. Under present norms, any small unit with more than 24% FDI loses its SSI status. Once the changes are brought about, the unit would still retain its SSI status with a higher FDI, provided this was within its sectoral cap. Elaborating on the new provisions, the minister said, "In sectors where most of it (FDI) is free, it will be

governed by the investment policy. For instance, if a large industry is allowed 51% in a particular sector, then that becomes the new limit for the SSI unit, too. But, what will remain is the criteria of size of investment in plant and machinery, which is Rs 5 crore." According to government data, there are about 12.8 million small & medium enterprises in India, which produce goods worth over $140 billion. These Companies also export goods worth $33 billion, accounting for around a third of India's total exports. According to government officials, for equity participation in excess of 24% or in cases where a non-SSI unit wants to manufacture a reserved item, it would have to obtain an industrial licence and also undertake a minimum export obligation of half the production. Nath said the move was important, as the government wants to modernise SSI units and generate employment. Existing excise exemptions and other benefits would

remain. "If someone wants to set up an SSI unit or ancillary, they cannot fund it because it is not allowed. Now there is no limit. They can own an SSI," he said -------------- Economically correct: 9% growth, US-like inflation http://www.financialexpress.com/news/Economically-correct-9-growth-USlike-inflation/247844/0 ASHOK B SHARMAPosted online: Friday , December 07, 2007 at 2313 hrs IST The Economy is expected to log an over 9% GDP growth rate in 2007-08, after a 9.4% growth rate in 2006-07 with inflation expected to dip to the low rates of developed economies like the US and

Japan soon. The mid-year review of the Economy released by the finance ministry on Friday, however, has identified excessive capital flows and spreading benefits of the growth rate among the poor as the key challenges for the Economy. The Indian Economy now ranks fifth in contributing to the global growth rate, after the US, EU, China and Japan. "The buoyant growth in the first half of the current year reaffirms continuation of the momentum," survey says. On inflation, it has said domestic commodity prices have become linked with international rates, which in turn would lower domestic prices to the low levels of developed countries. The review has also claimed "there is no one to one relation between (currency) appreciation and exports". There could be sops for exporters in the short term but they have to improve productivity in the long term. It has also endorsed the move towards capital account convertibility and

making labour Markets flexible, stating that these would make the Economy more resilient to the impact of currency appreciation. The review tabled in Parliament has also suggested a fresh look at subsidies, replacing the current system with cash transfers and adoption of smart card technology to reach the benefits to the poor. On capital Markets, the review says the interest differentials between the domestic and foreign Markets will persist and has to be managed along with large capital flows. Foreign investors have pumped in more than $16 billion into the Indian market so far this year. The flood of inflows has resulted in rupee appreciating by almost 12% against the dollar in last one year. "The problem of plentiful capital inflows is an 'inexorable part' of the process of successful capital account liberalisation and has to be managed actively in the context of likely persistence of positive macroeconomic fundamentals, and prevailing

interest rate differential," the review adds. There has to be innovative responses to the problem. "While there are international experiences in this regard, the specific Indian context requires innovative policy responses. Going forward this would be a major challenge," the review notes. It has also said the perceived slowdown in parts of the industrial sector has been more of a statistical aberration that a review of the IIP figures would correct. -------------------------------

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