Farmers' loan waiver & WTO + India-NZ + India-Turkey + India-Africa + Northeast India

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NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development --- 1. Farmers' loan waiver scheme - WTO norms would not come in the way, say experts On FTAs & Bilaterals---- 2. New Zealand proposes FTA with India 3. Turkey offers to have FTA with India 4. India tries to woo Africa in trade

and investment 5. Northeast India can be a major player in bamboo-rhino trade : NIPFP --- Loan waiver scheme should benefit more farmers & aim at ultimate solution WTO norms would not come in the way, say experts http://www.financialexpress.com/news/Loan-waiver-scheme-should-benefit-more-farmers- & -aim-at-ultimate-solution/287617/0 ASHOK B SHARMAPosted online: Monday , March 24, 2008 at 0021 hrs IST New Delhi, Mar 23 The Rs 60,000 crore (Rs 600,000 million) loan waiver scheme announced by finance minister P Chidambaram in his Budget speech and subsequently suggesting the procedure for mopping up this corpus to fund banks to waive off farmers' loans has become a hot topic for discussion. For those, it is a burden on the exchequer, the finance minister has said that the package would cost less than 0.25% of the GDP and even this would decline every subsequent year in the

four financial year period. Some also raise the issue that the bail out package would not be compatible to the WTO norms and would amount to heavily subsidising farmers. However, there are recent instances of waiving off of farmers' loans in different parts of the world. Thailand has set up Cane and Sugar Fund (CSF) and according to records 20,286 million baht had been disbursed to cane growers as interest free long-term loan in 1998-2004. Most of the loan has not yet been recovered, which practically amounts to making "direct payments". Even till date, despite no recovery, CSF continues to extend loan. The then deputy secretary general of Thai Cane and Sugar Board, Nattaphon Nattasomboon at the 10th Asia International Sugar Conference in May 2004 in Kaula Lampur in

Malaysia had admitted that the outstanding loan amount was 15,598 million bhat. The loan was extended to growers to keep them in cultivation as they were severely affected due to low prices for both sugar and cane. The director-general of Indian Sugar Mills Association (ISMA), SL Jain had suggested to the government to raise this issue of veiled subsidisation of sugar sector done in Thailand and Australia when these two countries threatened to challenge India's subsidization of inland transportation of sugar for exports. But India instead of countering the allegations of Thailand and Australia preferred to wind up its sugar export subsidy by September, this year. "The government has taken the right step for removing the distress of some indebted farmers. It should stand firm to defend its position if the issue is raised in the WTO. Our level of support to farmers is negligible as compared to subsidies given in many countries, particularly the developed countries," said Krishan Bir Chaudhary, president of Bharatiya Krishak Samaj. Despite the finance minister's assurance that needy farmers would be benefited, there are several doubts. Chidambaram has gone by the general definition, a marginal farmer is one who has holding up to one hectare (2.47 acre) and the small farmer is one who has holding up to two hectare (5.94 acre). But there are many resource poor farmers in dryland region who have less productive land of acreage more than what general definition says. The UP chief minister, Mayawati has already raised the issue that many resource poor farmers of her state,

particularly in the suicide-prone Bhundelkhand would not benefit under this scheme. The Budget loan waiver package only refers to indebted farmers who received credit from institutional sources and not the debt-trapped farmers who sourced credit from private moneylenders. "Had the government earlier thought of waiving off loans in select the 31 suicide prone districts of country much of the problem could have been resolved," said Chaudhary. Commenting on the loan waiver scheme, the director of the National Centre for Agricultural Economics and Policy Research (NCAP), PK Joshi said, "It is clear that to some extent it is good for few farmers in the short run. But what is the guarantee that such a situation would not arise again." Others feel that a low-cost input farming coupled with better returns for farmers can be the ultimate solution.... - New Zealand proposes FTA with India http://www.financialexpress.com/news/New-Zealand-proposes-FTA-with-India/287814/0 ASHOK B SHARMAPosted online: Monday , March 24, 2008 at 1947 hrs IST New Delhi, March 24: New Zealand has proposed to have a free trade agreement (FTA) with India. It also wants that India import wine, dairy and timber products to boost

the bilateral trade between the two countries to more than 616 million NZ dollars. Speaking to FE, the visiting New Zealand minister for agriculture, forestry, bio-security and forestry, Jim Anderton said: "In our meetings with the Indian science and technology minister, Kapil Sibal and agriculture minister, Sharad Pawar, we proposed that there should be a FTA between the two countries. Tomorrow, I would also be meeting the Indian commerce minister, Kamal Nath with the same proposal for a FTA." Anderton is leading a business delegation to India consisting largely of timber industries. He said that in his meeting with Sibal a MoU was signed for research and development in the areas of climate change, dairy development and other areas of scientific and technological cooperation. He said that during his discussion with Pawar, though no MoU was signed but both sides agreed to

increase cooperation in agriculture and sort out the issues of bio-security, sanitary and phytosanitary and quarantine norms at the earliest. India and NZ already have a MoU on plant quarantine issues. A tripartite MoU among Indian Council of Agricultural Research, Land Care Research and Massey University, New Zealand is also being discussed and will be signed as soon as all the clearances are available. Anderton said : "India need not fear to import dairy products from New Zealand as it is a major producer of milk and yet not a major exporter of dairy products. We should understand the counter-seasonality of the agri-products in both the countries and accordingly liberalise trade. NZ Companies are eager to enter into joint ventures with Indian Companies to boost the dairy sector." He said that India should understand the importance of maintaining its natural forests and allow easy imports of high quality timber products from NZ, which can used used in construction industry and in home interiors and exteriors. He said that a FTA can adequately take care of the tariff regime. Anderton informed that his country would sign a FTA with China in April this year which would include a number of agro commodities. "India is regarded as a priority relationship for NZ. Last year both the countries agreed to study the implications of a FTA, which is a clear indication of our commitment to the relationship," he said. NZ has 80% of its forest area under the private sector, while only 20% are in the government sector so as to ensure the claims of the indigenous people – the

Moaris. "We have large areas of sustainable forestry of exotic trees where harvesting and plantation take place," said Anderton.and added Indian investors can take up plantation on lease basis with 25% equity. NZ wants to boosts its exports of soft wood, particularly, radiate pine and also laminated timber (Glulam), Douglas fir, eucalyptus grandis, various China species and wood pulp Anderton said that exports of chip woods were not viable. Chip wood is required by the paper industry. He said that joint ventures in timber industry in India could be possible if both sides were willing NZ wood industry currently generates $ 3.1 billion in exports (or 3.15% of GDP) with India as NZ's fifth largest export market for wood products, worth 65 million NZ dollars in 2007. NZ's total exports to India rose to 366 million NZ

dollars in 2007 while India's exports to that country was around 250 million NZ dollars....----- Turkey offers to have FTA with India http://www.financialexpress.com/news/Turkey-offers-to-have-FTA-with-India/286383/0 ASHOK B SHARMAPosted online: Wednesday, March 19, 2008 at 1851 hrs IST New Delhi, March 19: Turkey has offered to have a free trade

agreement (FTA) with India and boost its exports of food products, textiles, plastics, chemicals, machinery and construction materials. The bilateral trade between the two countries has surpassed the target limit of $ one billion in 2004 and reached $ 2.6 billion in 2007. Among agro products, Turkey wants to boosts its exports of olives and olive oil, rose oil, tomato paste, canned fruits and vegetables, pasta, pulses, pistachios, sugar and chocolate confectionery, cut flowers, fishery, bulger made from durum wheat. It also wants to export natural stones. "With a view to aligning our preferential regime with the EU under Customs Union, we would like to initiate and conclude FTA negotiations with India. I believe that a FTA to be concluded between our two countries will stimulate trade figures to the expected levels while diversifying the products subject to bilateral trade,"

said the visiting Turkey minister of state for foreign trade and foreign contracting services, Kursad Tuzman. Tuzman while speaking at the Business Forum organised by FICCI in association with Turkey's Prime Ministry Undersecretariat for Foreign Trade, Aegean Exporters' Association and Tuskon in Delhi on Wednesday invited Indian investments in mining, biotechnology, medicine, tourism including coastal development projects and hotel management, automotive, information technology, railway and energy sector. He said that Turkish

Companies were interested in investing in India in areas like food and food processing, textiles, plastics, chemicals, machinery, construction and infrastructure projects. He informed that a Turkish textile company has decided to make Greenfield investment of $ 45 million in India to serve the expanding internal market and as well as the Southeast Asian market. Tuzman, who is leading a delegation of 170 Turkish Companies, also met the Union Commerce Minister, Kamal Nath on Tuesday. Vouching for Indian investments in energy sector, he said, "Turkey is located at the epicenter of the Eurasia where four regions of the world, namely Europe, the former Soviet Union, West Asian countries and north Africa intercept. Thus Turkey's role as a crossroad in the region is best observed not only in trade or transportation corridors, but also in energy issues." The geo-strategic position makes

Turkey a leading energy corridor and a transit centre for the main oil and natural gas producers in the Caspian, Caucasus and Central Asia as well as for consumer Markets in Europe, he said. Contracting services was one area which offered promising cooperation between the two countries said Tuzman and added 'the initiative between Tirkey's TAV Holding and India's IL & FS Transport Network Ltd and Parsvnath Developers to bid for Greater Noida Airport project near Delhi constitute an exemplary case in this regard'. Regarding his country's bid to join the European Union, Tuzman said, 'We began the accession talks in 2003. We are prepared to wait'. He, however, said that the strong external anchor like the initiation of accession talks with EU contributed to the consolidation of the Economy. The average real GDP growth rate of 2.4% in 1999-2001 reached 7.5% in 2002-06. In 2007,

GNP increased by 5% reaching $ 480 billion while per capita income has been rising to about $ 7,000. Turkey has become the 17th largest Economy in the world and fastest growing Economy in the OECD. Turkey's total exports and foreign trade volumes are expected to surpass $ 125 billion and $ 325 billion respectively by the end of 2008. Tuzman said that his country had initiated a number regional integration programmes like the neighbouring and surrounding countries strategies in 2000, African countries strategy in 2003, South East European Cooperative Initiative (SECI), Euro-Med Partnership, Economic Cooperation Organisation, Black Sea Economic Cooperation, Organisation of the Islamic Conference. Turkey has concluded FTAs with 11 countries including Mediterranean, Balkans and EFTA countries. It has commenced negotiations with 10 more countries in West Asia, Balkans and South America as well as with the regional economic initiatives like the Gulf Cooperation Council and ASEAN. It has launched a trade development strategy

towards Asia-Pacific region from 2005, in which India constitutes one of the main pillars.... ---------- India tries to woo Africa in trade and investment http://www.financialexpress.com/news/India-tries-to-woo-Africa-in-trade-and-investment/287815/0 ASHOK B SHARMAPosted online: Monday , March 24, 2008 at 1953 hrs IST New Delhi, March 23: Indian

industry could spin out a good opportunity for investments in and exports to Africa, last week. The leather products industry can now easily source best quality raw leather from Ethiopia. A MoU to this effect was signed between the Ethiopian Leather Industries Association (ELISA) and the Confederation of Indian Industries (CII) at the conclusion of the three-day 4th CII-Exim Bank Conclave on India-Africa Project Partnership-2008. "This has resulted in a win-win situation for both parties. India can help Ethiopia boost its leather exports and in turn Indian leather products made out of Ethiopian leather would find greater acceptability in global market," said the chairman of CII-Africa Committee, Shyamal Gupta. The ELISA chairperson Yizzaw Assefa invited Indian investments in Ethiopian leather industry for production of quality leather products. He also invited Indian Companies to participate in the 2nd All

African Leather Fair scheduled to be held in January, next year. The Exim Bank of India agreed to extend $ 30 million line of credit to the African Export-Import Bank (Afreximbank) to facilitate India's exports to member countries of Afreximbank as per the MoU signed between both the parties. The Cairo-based Afreximbank represents 38 member countries across Africa. Thus, the Exim Bank of India has now in place 88 lines of credit, covering 85 countries in Africa, Asia, Latin America, Europe and the CIS countries, with credit commitments amounting to $ 2.88 billion for financing exports from India. The director-general of Congo's National Agency for the Promotion of Investments, Bwabwa Wa Kayembe invited Indian investments in the mining sector. Congo also invited Indian investments in hydroelectric power generation, processing of fish, roads and transportation, railways, cement industry, diamond processing, automobiles, timber and pharmaceuticals. The Ivory Coast minister of industries and private sector, Amah Marie Tehoua invited Indian investments for production of generic

drugs. The India-Africa Project Partnership Conclave had the participation of about 500 delegates from 33 African countries, including 37 ministers and two vice presidents, namely Ali Mohamed Shein from Tanzania and Alhaji Aliu Mahama from Ghana. A large number of CEOs from African Companies also participated. Indian commerce minister, Kamal Nath expressed the hope that the partnership conclave would set the agenda for the first India-Africa Summit scheduled in Delhi from April 8, 2008. The African delegates also emphasized that India should not only be a stakeholder, but also a shareholder in the development of the continent. African countries also sought India's cooperation in development of agriculture, livestock and fisheries as well as for fighting poverty alleviation and unemployment. As a run up to the proposed first India-Africa Summit to be organised by the ministry of

external affairs from April 8, this year the Union commerce ministry has, for the first time, taken the initiative to establish systems for the direct imports of rough diamonds from Africa. To kick-start this initiative, the minister of state for commerce, Jairam Ramesh is leading a high-powered delegation to Namibia and Angola from March 26. Joining him are senior representatives of the Gems and Jewellery Export Promotion Council (GJEPC). India must buy rough and uncut diamonds directly from these and other African countries, Ramesh said on the eve of his six-day trip. He also said that in the next couple of months, he would be visiting other important diamond producing countries like South Africa and Botswana as well. He emphasised that in future India would find it difficult to source rough diamonds unless it demonstrates to African nations that it would collaborate actively in helping them move up the value-chain and assist in

value-addition in these producing countries itself. The Africanisation of the diamonds processing industry was not a threat to India but a great opportunity which we must proactively embrace, he said. India's estimated imports of rough diamonds in 2007/08 was around $ 10 billion, while estimates of exports of cut and polished diamonds in 2007/08 was about $ 14 billion. It is the

world's largest importer of roughs and exporter of cut and polished diamonds with over 90% market share. Rough diamonds are procured presently through a variety of sources with the bulk of it coming into India through Antwerp in Belgium. Angola produces about 10% of the world's rough diamonds and is also a country with which India has been trying to establish a relationship in the oil industry since Angola is rich in oil. Namibia accounts for about 6% of world rough diamonds production. Angola and Namibia are the world's fifth and sixth largest producers of diamonds respectively after Botswana (25%), Russia (22%), Canada (12%) and South Africa (12%). India has embarked on exploration of diamonds but it will take at least a decade before commercial deposits in states like Chattisgarh, Andhra Pradesh and Karnataka are proven and established. The diamond cutting and polishing industry will continue to be entirely dependent on imports of rough

diamonds for a long time to come. According to Ramesh India's cashew processing industry—another employment-intensive industry—depends crucially on imports of over half a million tonnes of raw cashews from Africa with India's own domestic production itself being roughly of that amount. India is now the world's largest importer of raw cashews, largest producer of raw cashews and the largest processor and exporter of cashews but that position now depends crucially on how its relationship with countries like Tanzania, Guinea-Bissau, Benin and Ivory Coast evolves, Here too, African nations were keen on moving up the value-chain themselves and India must see this not as a threat but as an opportunity, he said. "India must take care to see that it is not perceived as being interested only in Africa's raw materials and resources", said Ramesh and added that partnerships in diamonds must be embedded in the framework

of broader economic and technological cooperation. "That is why the diamond delegation has representatives of other public sector Companies like STC, MMTC, BHEL and ONGC-Videsh as well, " he said.... ------- Northeast India can be a major player in bamboo-rhino trade : NIPFP http://www.financialexpress.com/news/Northeast-can-be-a-major-player-in-bamboorhino-trade-NIPFP/287619/0 ASHOK B

SHARMAPosted online: Monday , March 24, 2008 at 0022 hrs IST New Delhi, Mar 23 The National Institute of Public Finance and Policy (NIPFP) has estimated that if adequate market infrastructure is set up the northeastern India, within a span of 10 years, can garner $ one billion out of the total global market of $ 7 billion for bamboo-rhino value chain. The regional planning body, North Eastern Council had entrusted the Delhi-based NIPFP to formulate a Vision-2020 document. The study done by NIPFP director, Govinda Rao and his team found that the international competitors produce more efficiently and sell to the lucrative customers of bamboo-rhinos at $ 20 per unit, whereas the entrepreneurs in northeastern India sell at $40 per unit. The global entrepreneurs are more competitive despite not having access

to the remote Markets of northeastern India. The study found the raw material cost for bamboo-rhinos in northeastern India $2 higher "Bamboo is grown in clumps and not thinned so that rhinos can feed efficiently and without hindrance. Rhino-bamboo stuffing is inefficiently harvested. Higher adhesive and chemical costs to treat the shell for bamboo-rhinos is $ one higher in comparison. Another added cost of $ 2 is the low labour productivity due to lack of commercial training, but also because the raw material processing technology and machinery is outdated," the study said. Lack of export zones which cluster a set of exporters around an efficient location with efficient availability of electricity, maintenance and services, water and other direct costs adds an additional non-competitive cost of production by $ 4. Inefficient transportation to processing units and logistics add up to the costs by $ 2 and

inefficient market access and quality control also add up to the costs by another $ 2. Inefficiencies in packaging and in containerization and in transportation to and through ports that afflict the region take another $ 5 toll, according to NIPFP. To improve planting, feeding and harvesting practices and technology for bamboo-rhinos, the NIPFP suggested involvement of National Mission on Bamboo Application, Bamboo Development Agency, Cane and Bamboo Technology Centre and Indian Rhino Foundation. Agri-business extension agencies, tribal councils should be mobilized and entrepreneurship development institutes should impart adequate training. The "hub-and-spokes" concept of linking production centres to processing units located in urban centres like Guwahati and Agartala which have better connectivity to outside world through cargo hubs and inland container depots has been suggested. The Asian Development Bank

president Haruhiko Kuroda said : "ABD is considering financial assistance to create economic opportunities for business in the northeastern India." The ADB has undertaken the work for integrating northeastern India with the neighbouring countries in the region through South Asia Subregional Economic Cooperation .... ------------

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