NEW DHELHI, MARCH 30:THE Union government has warned the US and the European Union that it could exercise the option of moving the world Trade Organistion (WTO) Dispute Settlement Body if the two countries impose carbon tax on exports.

    Following the collapse of the Copenhagen summit, the US and the EU have hinted at the levy of carbon tax on exports to force large polluters, especially the developing nations such as china and India, to take a clean environment stance. The US and the EU had also attempted to link climate and trade issues.

   Carbon tax is an environmental tax on carbon emissions. However, the EU and the US have been threat ening to use carbon tax on exports from developing countries under the guise of controlling emissions.

   The Environment Minister, Mr Jairam Ramesh, said the imposition of such an import barrier by the developed countries was virtually certain.

   Mr Ramesh said, “We will deal with this through hard negotiations. Such barriers are not going to be WTO compatible and we will fight it,”

   Stating that BASIC countries Brazil, south Africa, India amd China were united in their opposition of carbon tax proposed by the rich countries, he said. “China has more at stake than India, considering its volume of trade,”

   The government has opposed attempts by the rich nations to mix trade and climate matters, India, which is against any legally binding agreement, had voluntarily agreed to reduce its carbon emissions by 20-25 per cent by 2020.

   On the other hand, the Commerce Ministry is looking at the possible impact of the proposed carbon tax on export of items like steel, iron, aluminium, cement and chemicals.

   It is also learnt that the European leaders participating in an Eu summit in Brussels are, however, divided on this issue.

         CORE SECTOR GROWS BY 4.5 PC IN FEBRUARY 10

      SIX core infrastructure industries expanded by 4.5per cent in February 2010 against a meagre 2.9 per cent during the corresponding month last year. This was the slowest pace of growth in the last four months. Incidentally, the core sector growth was as high as 9.5 per cent in January 2010. This slowdown is likely to be reflected in the country’s industrial growth rates, which have been showing double digit increases since October 2009.

    The month’s fall was triggered by an unexpected decline in the growth of steel production. This does not gel with the recovery story that is playing out in the country. Steel is a key input in construction and automobile industry, industries that are leading the revival in economic activity The slowdown in the porduction of cement (5.8 per cent against 12.4 per cent in  January 2010 and 6.9 per cent in February 2009), another indicator of the strength of the economic activity, could also be suggestive that the growth story is beginning to lose momentum due to inflation .

    Even if February IIP growth figures fall to single digit levels, the RBI is likely to raise interest rates in the monetary policy review on April 20, 2010. Economists opine that even with a 25-50 basis points hike in the key policy rates in the April review, the economy can clock high growth rate, The strength of recovery is more dependent on the strength of global recovery than cost of funding.

                   FOREX RESERVES FALL BY $ 1,515 MILLION

   Foreign exchange reserves fell by $1,515 million to $2,78,193 million during the week ended March 19,2010 according to data released by the Reserve Bank of India Bulletin weekly Statistical Supplement. The reserves have fallen after having risen for two consecutive weeks ; the rise for the previous week  (ended March 12) being $1,227 million.

   Foreign currency assets fell by $1,476 million to $2,53,845 million during the week under review, as dollar gained against other major currencies. Gold reserves remained unchanged at $17,920 million. SDRs dropped by $ 30 million to $ 5,039 million and reserve position in the IMF tranche was down by $9 million to $1,389 million.

                     RUPEE AT 18 MONTH HIGH AGAINST DOLLAR

    The Indian rupee touched an 18-month high against the dollar, as the US currency came  under selling pressure in both local and international markets. The rupee ended at 45.24, the level last seen in September 2008, on March 26, 2010.

    The dollar’s weakness against other major currencies, selling of greenback by corporates and capital inflows into the country helped the rupee gain, The continued strength of the equity market, the rising interest rate differential and prospects of economic growth are factors for the appreciation of the rupee.

                WORLD TRADE TO GROW BY 9.5 PC IN 2010

      World trade is expected to grow by 9.5 per cent in 2010, after suffering its biggest collapse in 2009 since World war II, according to WTO. The volume of world trade had dropped by 12.2 per cent in 2009 -the biggest contraction in more than 70 years.

    The forecast growth for 2010 comprises 7.5 per cent for developed countries and 11 per cent for developing countries.

                 WORLD URBAN POPULATION BREACH 50 PC MARK

     The world urban population breached the 50 per cent mark for the first time in human histroy. Contrary to the general impression, the bulk of this urban population does not stay in big metropolises. Over 53 per cent of the world’s total urban population of 3.4 billion resides in towns with less than 5 lakh population, Only about 9 per cent of the world’s urban population lives in the 21 such mega cities existing today.

   It is expected that world population will increase to 9.1 billion by 2050, The urban segment will jump by 84 per cent to reach 6.3 billion (3.4 billion now) by that year. In other words, 70 per cent of humanity will be living in urban areas by then. Rural population is projected to start declining by the end of this decade and by 2050. there will be 0.5 billion less rural people than today.

                        BANK CREDIT GROWS BY 16 PC

    Bank credit touched the target of 16 per cent, set by the Reserve Bank of India , according to the fortnightly statement of RBI. The latest data, as on March 12,2010, show bank credit grew by 16 per cent or Rs4,32,091 crore to Rs 31,24,850 crore from Rs 26,92,759 crore a year ago.

   This is the fourth fortnight in a row that bank credit has expanded. In the fortnight ended March 12, bank credit expanded by Rs 35,528 crore. Deposits during the fortnight under review increased by Rs 39,613 crore to Rs 44,02,943 crore, Investment in government securties went up by Rs 7,641 crore to Rs 13,86,937 crore during the year under review.

      NEW DELHI, MARCH 30: ALREADY reeling under the impact of dismal overseas demand, exporters now have to deal with the strengthening rupee as it inched closer to Rs 45 a dollar on Monday. The rise has been attributed to foreign flooding the country’s stock markets.

     To bring about some regulation in the FII inflows, the President of Federation of Indian Export Organisations (Fieo), Mr A. Sakthivel, has written to the Finance Minister, Mr Pranab Mukherjee urging him to create a lock-in period of two years. The Fieo chief feared that if the FII inflows continued unabated, exporters alone would face the brunt of it.

    So far this month, FIIs have pumped in nearly $4 billion, which is the second-highest monthly net flow ever, according to the Securities and Exchange Board of India (Sebi) data.

    Despite a large number of domestic fund managers feeling that most of the quality stocks are fully valued at the current levels, FII fund managers have been pouring money into the country. Such dollar inflows have helped the rupee to strengthen.

    “Those sectors that would be the worst hit are the ones not dependent on Imports for raw materials,” the Director General of Fieo. Mr Ajay Sahai, said.

     He identified textiles, carpets, leather and marine products to be the worst hit,

         Sectors like gems and jewellery would not be impacted too much because they would mard up the appreciation by  importing raw materials.

        Since the rupee is apprect ating, exporters will have to sell products at even higher prices. In fact, exporters say that if the government does not intervene, they would lose out heavily to their chinese counterparts.

     Since china has artificially kept its currency come at a much cheaper tate to consumers in the West vis-a-as indian products.

     Standard Chartered Bank has projected that rupee will strengthen even further in the months  ahead. By December 2010 the bank has stated that the rupee may be around Rs 42 to a dollar.

     “We have taken FIIs and FDI inflows into consideration before reaching this figure. Since we are withnessing an increase in FII inflows, the  rupee is expected to harden even more in the months ahead,” Mr Anubbuti Sahay, analyst with standard  chartered, said.

     On the other hand, a commerce Ministry official stated that the appreciation of the rupee was so far not a cause for concern since in 2008 the rupee was hovering at Rs 40 to a dollar He pointed out that  the exporters were used to a strong rupee, but admitted that if the rupee but strength ened more of it could create some temporary hardships for the exporters

     “The economy has been growing at healthier rate relative to other economies and Indian financial market has been deep and liquid. This has resulted in a robust inflow of foreign capital into county. Inturn, this has led to appreciation of the rupee,” said Mr N.S. Kannan of ICICI Bank .

      Top bankers now feel the trend will continue, helping the rupee to rise further from the sub-45 level.

       Some days ago, the dollar was strengthening against other currencies, but the rupee did not weaken against the dollar, pointed out another banker.

     SINGAPORE, MARCH 30: ASIAN shipowners have once again voiced their concerns over the problem of piracy in the Gulf of Aden.

     They also highlighted the persisting operational concerns ahead  of the implementation of the Ballast water Convention of 2004 at the 18th interim meeting of the Asian Shipowners’ Forum (ASF) Safe Navigation and Environment Committee (SNEC) here.

     Shipowners’ associations from India, China, Hong Kong, Japan, Korea, Chinese Taipei and the Asean participated.

    They urged all governments and the UN to take more action to deal with the problem.

   The committee discussed the US proposal to ban the payment of ransom to the pirates, There was “great concern that in the absence of any effective efforts to stop piracy, a  ban on ransom payment would have a very adverse effect on the crew being held hostage by pirates,” the committee pointed out.

  On the 2004 convention, the committee said, “Whilst there are a number of International Maritime Organisation (IMO)-approved ballast water treatment systems available, these systems are not necessarily operationally effective for all types and sizes of ships.

   The committee also expressed grave concern over India closing grave concern over India closing down major shipping lanes in the Bay of Bengal for two days at very short notice in early February.

   “The committee’s opinion is that such very short notice and unilateral nature of the closure of the Bayof Bengal, a Major shipping lane, is not in accordance with IMO regulations.

     NEW DELHI, MAR 30: Shipping secretary K Mohandas, there was a need to redefine major ports in a more rational way as the government is trying to liberalise the tariff regime and corporatise them, As per the current deifinitions, any port administered by the Centre is a major port irrespective of its cargo and passenger handling capacity while all other ports are termed as non major ports.

   Going by the current definition, there are 13 major ports and 187 nonmajor port or minor ports in the country. Interestingly some non major ports have capacities larger than those of few major ports  For example, mundra Port and Special Economic Zone has a capacity of 30 million tonne, higher than three major  ports Ennore, Tuticorin and Cochin.

   A major reshuffle will be required, in case the government decides to change the definition of ports as per their capacity. “ports have been defined in a manner, which has nothing to do with capcity. It is necessary to define them in a more rational way,” Mohandas said.

   The shipping ministry is working on a plan to liberalise the current tariff fixation regime -under which Tariff Authority for Major Ports (TAMP) fixes the port charges that major ports can charge, The move is aimed at giving major ports a level playing field with minor ports, which are free to fix competitive tariff and are able to attract higher traffic.

    The ministry also plans to corporatise major ports, starting with Jawaharlal Nehru port. Rationalising the definition of ports is expected to enable the government to take better decision on which ports to corporatise and which not.

   Mohandas also said the ministry is preparing a revised draft to extend shipbuilding subsidy beyond August 2007. “We had talked to the finance ministry regarding shipbuilding subsidy but our proposal was not accepted.

   Now, we are in the process of preparing a new draft for shipbuilding subsidy as there is still a lot of demand from the industry for subsidies,” he said. The shipping ministry is trying ministry to extend the shipbuilding subsidy August 15,2007, when the earlier subsidy ended.

HOSTAGE INCLUDE SEAFARERS FROM SAURASHTRA AND KUTCH; THE INCIDENT OCCURRED BETWEEN SOMALIA AND UAE.

      NAIROBI/ NEW DELHI/ AHMEDABAD: In the biggest hijacking ever, somali, pirates have captured eight boats taking over 120 indian  sailors hostage. The sailors were on their way from somalia to Dubai.

     The pirates seized the dhows of Indian sailors between March 23 and 25, off the coast of somalia. Some sailors belong to the saurashtra and kutch regions of Gujarat. Navy spokesman P B S Satish said that they learnt of the hijackings on Monday “The captain of a recently released fishing boat - MV Arzoo, told the authorities that several other boats had been seized by pirates,” he said.

      “This information was received as a report from MV Arzoo, which was comandeered by some pirates,” satish said. The MV Arzoo, was seized be tween March 18 and 20 before being released near seychelles.

      The vessels are belived to have been moving goods between somalia and the United Arab Emirates.

      The sailors had anchored last in the rebel territory of Kismayo in Somalia where they loaded cargo into their boats. But moments after leaving the port pirates captured them. so far, the pirates have not asked for any ranson.

      Satish said the Indian Navy was also working with Indian shipping authorities for more information on the hijackings. somali pirates, targeting one of the world’s busiest maritime trade routes, raked in an estimated 60 million dollars in ransoms last year.

     NAVY SEEKS REPORT

    Meanwhile, the Indian Navy has sought a detailed report from the Director General of shipping on the reported abduction, of 120 Indian sailors off the somali coast.

    “We have heard about the reported abduction of 120 Indian sailors and have sought a report on this from the Director General of Shipping,” an Indian Navy officer said on Tuesday.

    On Monday, a maritime official in Mombasa was quoted as saying that somail pirates had seized a UAE-Owned cargo ship with 24 crew in the waters off Somalia .

    Andrew Mwangura of the East African seafarers’ Assistance programme said the 4,500 tonne panamanianflagged Iceberg I, owned by Iceberg International Ltd, was carrying general mechanical equipment from Aden to the UAE, The Icerberg I crew was composed of Indians, Yemenis, Filipinos, pakistanis, Ghanaians and Sudanese, Mwangura said. He said the seizure took place about 10 nautical miles from Aden. 

            NEW DELHI, MAR 30: DP World announced that it handled 25.6 million TEUs across its portfolio of 28 consolidated terminals in 2009. reflecting 8 pc fewer containers handled than last year. Excluding the contribution from new terminals which joined the portfolio during 2009, volumes declined by 10 pc (having been down 13 pc in the first half) Across all 50 of its operational terminals in 2009 the company handled 43.4 m TEU a decline of 6 pc over 2008. ” 2009 has been a very challenging year for container port operators and we are pleased that we have delivered somewhat better results than the industry due to our focus on emerging markets which have remained more resilient to the global downturn As anticipated, all our regions handled more containers in the second half of 2009 than in the first half and the early signs of stability seen in the third quarter have continued into the final quarter of the year. “Mohammed sharaf, chief Executive of DP world said in a statement.

      During 2009, the company opened two new terminals it has been developing over the course of the last few years: Doraleh Container Terminal in Djibouti at the be ginning of the year, and Ho chi Minh city, Vietnam in the final quarter of the year. Inaddition, it was awarded concessions for two new terminals in algeria.

         NEW DELHI, MAR 30: The Steel Ministry is learnt to have sought the Prime Minister Dr Manmohan singh’s intervention for imposition of 20 pc export duty on iron ore shipments. “Yes, the Steel Minister, Mr Virbhadra singh, has written a letter to the prime Minister seeking imposition of a minimum of 20 pc ad valorem export duty on all grades and varieties of iron ore to curb its export,” a senior Steel Ministry official said.

       At present, there is a 10 pc export duty on iron ore lump and 5 pc on iron ore fines.

      Earlier, the Steel Ministry had sought the duty structure to be doubled in the Union Budget 2010-11, but the demand was not met. The Ministry had also written a letter to the Finance Minister on March 12 requesting imposition of flat 20 pc duty on iron ore exports.

         CHENNAI: Yet to come out of the global recession, the onword march of the rupee has come as a double whammy for leather exporters. with 10% of $3.59 billion exports headed for the US last year, the appreciation of the rupee will drain the already low margins of the industry.

        Germany, Italy, the UK, the US, Hong Kong, Spain, France, the Netherland, UAE and Australia account for nearly 75.3% of india’s total leather exports. And 70% of these contracts are dollar denominated.

       When the rupee appreciated to Simallar levels in to in 2007 the industry sufered a loss of about 40% in revenues, This  Time the hit will be much larger because the recession has already cost many orders, says another industry official.

      From a growth of 16% in 2007-08 in leather exports, the growth dipped to just 1.41% in 2008-09-the recession year. According to the council for Leather Exports, in 2009-2010, exports would register a negative of 8.3%.

    COIMBATORE: It has been a duble blow for garment exporters. With the dollar and the euro on a steady downward spiral in the last three months, garment exports are scurrying for cover. The decline has put the nascent recovery in the $10 billion -ayear apparel exports industry in trouble.

   “We are asking better rates for new contracts. But not many (buyers) are listening new (price) negotiations have come to a standstill,” says Rajendra Hinduja, MD, Gokaldas Exports, the country’s largest garment export the country’s largest garment export firm. While large exporters such as Gokaldas have taken forward covers for about 50% of their orders as a hedge against currency volatility , small and medium export houses in Tirupur have covered 15-20% of their orders,

   With the rupee approeciating 2.39% against the dollarand 3.39 against the euro in past three months, the profitability of small and medium export firms, which work 7.8% operating margins,has taken a hit, A5% rise is the dollar would knock  3% off a firm’s bottomline says Hinduja.