Foreign Trade Policy for 2012-13: 7-Point Strategy To Boost Exports

Commerce and Industry Minister Anand Sharma has unveiled the Foreign Trade Policy for 2012-13 on June 5. He announced a seven-point strategy to boost exports which include extension of interest subsidy scheme by one year until March 31, 2013. The policy is based on a seven-point strategy which includes thrust to employment intensive industry, encourage domestic manufacturing for inputs to export industry and reduce the dependence on imports, promote technological upgradation of exports, persist with a strong market diversification strategy, encourage exports from the northeastern region, incentives for manufacturing of green goods and reduce transaction costs.

The policy continued with most of the export tax sops and increased the ambit of some others to help exporters rack up $360 billion in exports in the current fiscal. It is indeed a difficult task to present a policy which aims for rapid growth in exports in the face of weak global demand and the unabated persistence of the global economic crisis which erupted four years ago.

Market Diversification

The seven-pillars to boost exports, Sharma said, would also include efforts to increase exports from the north-east region and provide incentive for manufacturing of green goods.

In addition, there would "endeavor to reduce transaction cost through procedural simplification and reduction of human interface. Efforts would be made to promote technological upgradation of exports to retain a competitive edge in global markets and encourage domestic manufacturing for inputs to export industry, thus reducing dependence on imports. The zero-duty Export Promotion Credit Guarantee (EPCG) scheme would be extended by an year to March 31, 2013.

On market diversification, market-linked focus product scheme has been extended until the end of the current fiscal 2012-13 for exports to the United States and European Union (EU), in respect of apparel sector.

Special Economic Zones

As regards the Special Economic Zones (SEZs), he said, "we will come out with new guidelines to make the operation of the SEZ policy more buoyant." In addition, the minister said the government would revamp the 100 per cent Export Oriented Unit (EOU) scheme in the next few months.

The benefits under the scheme, he said, would also be available to those units which had taken benefits under the Technology Upgradation Fund Scheme (TUFS).

The EPCG scheme will also be available for those who had surrendered their benefits under the Status Holder Incentive Scrip (SHIS) scheme.

The government will come out with new guidelines to revive export hubs, SEZs which have lost their sheen after the imposition of the minimum alternate tax and a proposal to take away tax incentives. The government accepted the key demand of industry to extend the two per cent interest subsidy until March 2013.

India’s Exports

India’s exports grew by 21 per cent in 2011-12 to touch $303 billion. The country’s exports inched up 3.23 percent to $24.5 billion in April from a year earlier after falling in March, a far cry from the more than 20 percent growth recorded in recent years. India has been hit by falling demand from its traditional export markets in the United States and Europe.

The export figures compounded an already gloomy economic picture — Gross Domestic Product (GDP) data showed the economy grew at its slowest pace in nine years in the first three months of 2012.

Salient Features

* Foreign Trade Policy document made more user friendly

* Incentives for exports from north-eastern states

* The government to come out with new guidelines to promote SEZs

* The government aiming 20 per cent export growth in 2012-13

* Two per cent interest subsidy scheme extended until March 2013

* Seven new markets added to Focus Market Scheme

* Single revolving bank guarantee for different export deals

* Focus on market diversification to continue

* Steps announced to reduce transaction cost of exports

* Market linked focus product scheme extended until March 2013 for apparel export to the United States and EU

* Ahmedabad, Kolhapur, and Shaharanpur new Towns of Export Excellence

* Zero per cent duty EPCG scheme for technology upgradation extended until March 2013

* Shipments from Delhi, Mumbai through post, courier or e-commerce to get export benefits

New National Telecom Policy 2012: Roaming To Become Free

The Union Cabinet has approved the National Telecom Policy (NTP) 2012, which has been released after a delay of over a year. The policy aims to ultimately abolish roaming charges, allow users to retain their numbers even if they move from one zone to another, in addition to boosting transparency and growth in the scandal-hit sector. 

The draft of the new policy was released by Minister for Communications and IT Minister Kapil Sibal in October 2011. The target is one nation-one mobile number portability and working toward one nation free roaming.

Advantage

Under the new policy, roaming charges would be done away with thus allowing subscribers to use same number across country without having to pay extra money. Also, it would allow a subscriber to retain his/her original number while shifting base from one city or state to another.

However, consumers will have to wait for some time for this, as the Department of Telecom will first work out modalities of the new scheme before it is brought into force. No timeframe has yet been fixed for the implementation of the policy. The new policy seeks to provide a predictable and stable policy regime for a period of nearly 10 years.

The NTP 2012 envisages increasing penetration of telecom services in rural area from current level of around 39 to 70 per cent by 2017 and 100 per cent by the year 2020. Incidentally, the draft NTP had suggested a 60 per cent rural penetration by 2017.

Under the new policy, broadband speed has been increased to minimum of 2 megabit per second (mbps). This change will come into force with immediate effect.

Delinking of Licenses

Moreover, the NTP-2012 will also separate telecom licenses and spectrum, against the current practice of bundling them, and will charge a market-derived price for the airwaves; the same will apply in the case of broadcasters. Also, rules for Internet telephony would be relaxed under the new policy as it envisages increasing penetration of telecom services in rural areas from the current approximately 39 per cent to 70 per cent by 2017, and 100 per cent by 2020.

However, post the Supreme Court judgment of February 2, 2012, which mandates spectrum auctions, the separation of license and spectrum has already become an undeniable reality. Regardless of the NTP 2012, the DoT would have to separate licenses from spectrum just as it did through an executive order following a Group of Ministers (GoM) direction to auction 3G and BWA spectrum in 2010.

The policy also seeks liberalization of spectrum even though the Telecom Regulatory Authority of India (TRAI), in its latest recommendations, while setting up the reserve price, has already cleared service and technology neutrality with regard to future spectrum auctions. Critical of this move, industry body AUSPI says the proposal to liberalize spectrum in the 1800 MHz band is one of the policy's biggest flaws.

Provisions Under Draft Policy

Originally intended to be NTP 2011, the draft policy was released for public comments only in October 2011, forcing it to be rechristened NTP 2012. The actual timelines for implementation of individual announcements within the new telecom policy are yet to be made known.

With the new policy in place, consumers who use national roaming can now expect to pay local call charges though it is unclear when ‘free roaming' will be initiated. At present, consumers pay local call charges and a premium when traveling outside their service area. The policy also allows national number portability, but again, with no visible timelines.

Other forward-looking propositions like resale of services could become critical in the backdrop of the Supreme Court's cancellation of 122 licenses, which will cease to exist as of August 1, 2012. A sharp reduction in the competition level from 14 operators currently to 7-8 operators could be made up by allowing mobile companies to set up resellers. Services resale is universally recognized as a way to increase competition without duplicating infrastructure or fragmenting the spectrum.

Additionally, it mentions cloud computing, next generation networks, IPV6 and Voice over Internet Protocol (VoIP) as thrust areas — all of which are forward-looking and embrace future technologies. It remains to be seen whether average Internet users will be allowed to use VoIP, especially since this move has been opposed vehemently over the last 5 years by cellular mobile operators.

There is very little in the policy that will help end the impasse faced by the telecom sector. Spectrum pricing, reserve price for the upcoming 2G auctions, historical pricing of spectrum for operators who have received spectrum beyond 6.2 MHz and the more recent contentious issues of reframing, etc, will have to be dealt with through executive decisions, most of which fall outside the purview of the NTP 2012 announcement.

It is also unlikely that the policy by itself will see any major reestablishment of investor confidence, which has been on the decline since late 2010. Both Foreign Direct Investments (FDI) and domestic investments faced a sharp decline during 2010-11 vis-à-vis previous years, according to a recent PWC report. The trend has continued downwards even for the fiscal year ending 2012.

Global Hub of Domestic Manufacturing

The policy aspires to make India a global hub of domestic manufacturing, though not much detail on how this mammoth objective will be achieved is available. The draft policy had mentioned preferential market access for Indian vendors as one of the tactics to ensure a boost to telecom manufacturing in India. This drew severe criticism from the Commerce Ministry on grounds that it violated India's commitments at WTO and GATT. The DoT was forced to give an explicit commitment that WTO and GATT's concerns would be kept in view while issuing guidelines on operationalization of the policy.

The NTP 2012 expects to take India's rural teledensity from 39 to 70 percent in the next 5 years with the target that every single Indian will have a phone by 2020. The policy also gets a formal approval of the new unified licensing regime which allows companies to provide ISP, fixed line, international long distance, national long distance, and a few other services through a single license, whose cost has been proposed by the Department of Telecommunication (DoT) at Rs. 10 crore. So far, very few companies, if any, have shown a desire to acquire the new unified license.

Earlier policies

The policy will be seen as driving small incremental changes with very little ability to solve the existing sector crises, unlike the NTP 1994, which spurred not just private sector investment in mobile and fixed line services but also initiated 49 percent FDI for the first time — ushering in telecom liberalization.

Earlier in 1999, a second policy — which lasted nearly 13 years — slashed costs across the board for the operators and by extension the consumers by moving from a license fee regime to a revenue share structure.

It also opened up the sector to future competition, breaking the duopoly contractual arrangements which had existed in mobile and fixed line telephony until 2000.

Later, starting 2002, additional competition was introduced in the national and international long distance sectors, which led to the slashing of tariffs, in some cases, by more than 90 percent.

Assessment

The new telecom policy is very welcome as, among other things, it brings in transparency and takes away powers of vital decision-making from the telecom minister of the day and vests it with a ministerial panel. Perhaps there should be a time frame set for the panel so that decisions are not in limbo waiting for the panel to meet.

The other laudable provision is to make India a manufacturing hub for telecom equipment. This is a challenge as manufacturers will have to compete with China in terms of price and volume.

New Benefits

Roaming Fun: With national roaming set to become free, the subscribers need not worry about charges being levied on them while traveling to a different city or state.

Broadband Boost: Speed increased to minimum of 2 mbps. This will come into force with immediate effect

More Transparency: Licenses to be de-linked from spectrum. The policy will allow operators to provide services based on any technology by using airwaves and will not restrict them to use it for particular service using any specific frequency band.

Viswanathan Anand Retains World Chess Champion: Rediscovers India’s Crowning Glory

World champion Viswanathan Anand of India has been the face of Indian chess for more than two decades. The 42-year-old Indian clinched his fifth title on May 30 defeating Israeli challenger Boris Gelfand 2.5-1.5 in a tense tie-breaker at the Tretyakov Gallery in Moscow after being tied 6-6 in the 12 classical games. In the event, it was hardly surprising that he stretched the 12-game series to the rapid tie-break games, something Anand had not faced in his two previous title-matches. Anand was prepared for the grind and, as he did in the 2010 match against Topalov, won the title after wiping out a one-point deficit.

After a 6-6 deadlock in the 12 Classical games, the rapid finale ended 2.5-1.5 in Anand’s favor. The victory also meant that the ‘King of Chess’ will keep the crown until the 2014 World Championship.

Undoubtedly, the hallmark of Anand’s success was his speed. Often, Gelfand was seen down to his last few seconds when Anand still had a few minutes left.

Gelfand played white in first and got nothing out of the opening. In fact, an inaccuracy by the Israel gave Anand a huge advantage as the game progressed out of a Semi-Slav defense but it was Anand’s chance to go wrong if the battle had to unfold the way it did.

Positive Start

The first play-off game was a violent affair where both players attacked their opponent's kings without concern for lost pawns. With both players down to less than three minutes on the clock, most of the attacking pieces were neutralized and a draw was agreed after 32 moves.

The second rapid playoff game was an epic battle which Anand won only on the 77th move, the longest game of the match. Anand surprised Gelfand in the opening phase and gained plenty of time on the clock but the Israeli challenger sacrificed a pawn and soon acquired powerful counter-play.

Gelfand succeeded in doubling his rooks on the seventh rank on the 31st move, normally a crushing maneuver, but by then he had only 42 seconds left on his clock to avoid a time forfeit and he was relying on the 10 second increment per move to keep him in the game. Anand defended stoutly and, after a mistaken series of exchanges by Gelfand, reached an endgame which was a technical draw, despite Anand's extra pawn.

Best Rapid Player of Generation

Forty-two-year-old Anand displayed how he is the best rapid player of his generation. That the victory was well deserved can be seen from the outpouring of commendations for the Indian grandmaster, who has a string of impressive victories to his credit.

Anand has left his mark on the game ever since he won the National Sub-Junior Chess Championship in 1983. Just 14, Anand, who had been taught the game by his mother, scored a perfect nine to win the championship. Of course, he has notched up many successes since then and is considered by many as the greatest Indian sportsperson. No wonder, even cricketing legends salute this grandmaster of chess.

In fact, Anand was the first Indian to become a grandmaster. His success has spurred more interest in the game, and today the nation boasts of 27 grandmasters, including the 15-year-old Vaibhav Suri, who won the title just a month ago. The number of international chess masters has also risen dramatically and India is among the top 10 nations in chess. Women have also made a mark in the game, especially world number four, Koneru Humpy, who is one of the eight Indians who figure in the top 100. In this list, there are five women and three men. These individuals and the almost 25,000 Indians, who have a world rating, prove that Indians have the knack for the game, and show how family support can hone talent.

Former world champion Garry Kasparov had said in a recent statement that the Indian grandmaster had peaked and that many of the latter’s games in recent times showed a lack of ‘newness.’ But that is not true, because in the recently concluded championship, Anand did employ novel variations. In any case, there is no point for a player to use ‘creativity’ in a world championship if he is convinced that such a move is unessential.

Phenomenal Record

Anand has stayed in the world's top 10 since 1991 and he is one among seven players ever to hold the topmost ranking in 40 years. Considering that every Anand maneuver over the board has been clinically analyzed by the best chess brains, mostly from the erstwhile Soviet Union and Europe, for 25 years, it is truly commendable how he has managed to stay a step ahead. His longevity as a performing champion is the result of his uncompromising nature when it comes to discipline and training.

In a country where celebrities flaunt their status and expect and demand preferential treatment, the unassuming Anand is a whiff of fresh air. If there is an icon that India can truly be proud of, it is Anand.

Anand’s Other World Crowns

* Won for the first time winning in knockout format. Starting with 128 players, Anand marched his way ahead in New Delhi to set up the finale with Alexey Shirov of Spain in Teheran in 2000. It was a six-game final that lasted only till the fourth. Anand won three and drew one at Tehran in Iran to be crowned the world champion.

* Pitted against the best in the world in a match tournament spread over 14-games between eight players, Anand was in his element and won this event in style in Mexico City (Mexico) in 2007. This also gave him the right to play the next world championship in a match format against the seemingly invincible Vladimir Kramnik of Russia.

* The World championship was back to a match format, something which the chess world had been craving for a long time. Anand started as the underdog against Kramnik but the entire world saw a grand transformation in the Indian in Bonn (Germany) in 2008. It was a 12-games match that ended after 11. Anand won three, lost one and drew the remaining seven to reach 6.5 points.

* It was eruption of an Icelandic volcano that disrupted all flights across Europe. Anand had to undertake a 30-hours journey by road to reach Sofia (Bulgaria) in 2010. He asked for three days extension but was granted only one day.

He was playing against all odds against the lion — Veselin Topalov — in his own den. Anand started with a first round loss but won the title winning the last game with black pieces. The loss was shattering for Topalov. He slipped from being the top player then to number 12 now.