EXPORTS UP 2.09 PER CENT IN APRIL

India's exports went up by 2.09 per cent in April 1999 at $ 2.63 bn compared to $2.57 billion dollars recorded in the same period in 1998. Imports, however, fell by 8.66 per cent at $3.15 bn against $3.45 bn in April 1998 mainly due to a dip in non-oil imports. The trade deficit for the month is estimated at $523.76 mn, which is 40 per cent lower than the $876.80 mn recorded in April 1998. Non-oil imports during April 1999 are estimated at $2.57 bn, a 13.43 per cent drop from the $2.97 bn in April last year. Oil imports during April 1999 are valued at $580.54 mn which is 20.88 per cent higher than $480.27 mn in the corresponding period last year. In rupee terms, the exports were up by 9.99 per cent at Rs 112.45 bn in April 1999.

US ASKS INDIA FOR WTO CONSULTATIONS ON AUTO POLICY

After European Community (EC), the United States has pressed for consultations with India on its contentious auto policy under the dispute settlement mechanism of the World Trade Organisation (WTO). "We received a communication from the U S yesterday seeking consultations to resolve the row over the auto policy", a senior commerce ministry official said. The U S had taken exception to the policy saying that it was violative of trade related investment measures (TRIMS) agreement and article 13 of general agreement on tariffs and trade (GATT), the official said. The U S, which was a third party in a similar dispute raised by the European Community, said India's auto policy was restrictive as it stipulated foreign car makers to meet certain indigenisation standards and foreign exchange requirement through exports. The process of consultations is the first step a WTO member country has to take for requesting setting up a dispute settlement body (DSB), if the two parties fail to reach an understanding bilaterally. Foreign car manufacturers have been putting pressure on India to relax its auto policy ever since it came into existence in 1997.

INDIA WINS WTO CASE AGAINST TURKEY ON TEXTILE RESTRICTIONS

A World Trade Organisation (WTO) panel has ruled in India's favour in a case against Turkey for imposing quantitative restrictions on imports of 19 categories of textiles. The dispute settlement panel (DSP) of WTO held that the measures adopted by Turkey were inconsistent with the provision of general agreement on tariffs and trade (GATT) and asked Turkey to ring the measure in conformity with its obligation under the WTO. Turkey had imposed the import restrictions on shipments from India after it joined a customs union with the European Union. The three member panel, headed by ambassador Wade Armstrong, has said that Turkey could make its import policy WTO compatible and still be part of a customs union with the European community. The dispute settlement body (DSB) was set up on India's insistence on April 24, 1996 after both the parties failed to enter into consultations due to disagreement over the participation of European communities in such consultations. The panel report has to be adopted by the DSB within 60 days unless Turkey decided to appeal against the ruling. The DSB has also got the right not to adopt the report if there was consensus within the panel.

INDIAN STOCK MARKETS OUTPERFORM OTHER ASIAN MARKETS IN MAY

Indian stock markets have outperformed other Asian markets in May, with returns of over 19 per cent, despite political uncertainity and mounting tension in Kargil. The BSE sensex gained 19 per cent from 3326 points at the end of April to 3963 points on 31 May, while National Stock Exchange (NSE) Nifty was up by 16 per cent from 978 to 1132 points during the month. Malaysia's Kuala Lumpur stock exchange composite index, appreciated by 10 per cent from 675 to 743 points, and was the only other market in the region to provide positive returns during the month. Bangkok set index in Thailand dropped marginally from 459 points to 453 points during the month while in Phillipines the Manila composite index dropped by 0.57 per cent to 2420 points from 2434. "The gain by Indian markets was primarily due to re-rating of cyclical stocks by foreign institutional investors (FIIs) on anticipated revival of the economy," Ashu Dutt, chief executive Dutt Stock Broking said. The rally in domestic stock markets was mainly on account of FIIs doubling their investment in the country to around Rs 17.50 bn in May from Rs 9.65 bn in April. Subrata Ray of DBS Securities felt the rise in share prices in May was due to undervaluation of Indian stocks compared to other emerging markets in Asia, which gained phenomenally in April.

FIAT, FEDDERS INTERNATIONAL AMONG RS 14 BN FDI CLEARED

The Foreign Investment Promotion Board (FIPB) has cleared foreign investment proposals worth Rs 14 bn including that of automobile major Fiat and white goods company Fedders International of USA. Fiat of Italy would infuse an additional paid up capital of Rs 10.90 bn in its wholly owned Indian subsidiary for manufacturing new car models like Sienna and Palio, taking up its total investments to Rs 20 bn, official sources said. The Fiat proposal would be put up before the cabinet committee on foreign investment (CCFI) for final approval since the total infusion would exceed the cap of Rs six bn. U S-based Fedders International's proposal to set up a new venture with an initial equity capital of Rs 85 mn for making state-of-the-art room airconditioners was also approved by the board. The board has given approval for the company to take the total investment to Rs 340 mn over a period of time.
Entertainment company Polygram of Netherlands will buy out the 49 per cent stake held by Mumbai-based Patel group for a consideration of Rs 300 mn making the existing venture, Polygram India Limited, a 100 per cent arm of the Dutch firm. BTP India will buyout the 26 per cent stake held by RPG group's KEC International in the chemical company for an investment of Rs 100 mn. The company specialises in biocides and other industrial chemicals.

Loral Space and Communications Systems of USA will set up a media software company with 49 per cent equity alongwith the K K Modi group, which would hold the majority stake, with initial investment of Rs 42.5 mn which would go up to Rs 850 mn in a three year period. LG Soft India Private Limited, a 100 per cent arm of LG Electronics, have been allowed to issue zero coupon optionally convertible shares of Rs 160 mn. Shanxi of China will pick up a five per cent stake in the new venture Balaji Coke India Private Limited as per another proposal cleared. Rediff Communication has been permitted to pay royalty to its foreign partners Dentsu, Young and Rubicon for a further
period of three years.

POLICY

NO NEED FOR FIPB APPROVAL FOR ADDITIONAL INFUSION: GOVERNMENT

Companies need not seek prior approval of Foreign Investment Promotion Board (FIPB) for additional infusion of foreign equity if it was within the percentage already approved, government has said. However, the original project cost should not exceed Rs six bn in such cases, it clarified. Companies wanting to infuse additional funds as equity
through foreign direct investment (FDI) may file a formal intimation of intent for inward remittance of FDI to Secretariat of Industrial Assistance in the industry ministry.

EXPORTS TO RUSSIA ALLOWED AGAINST REPAYMENT OF STATE CREDITS

Recognised export houses have been allowed to export tea and tobacco, to begin with, to the Russian federation on consignment basis against repayment of state credits, according to Reserve Bank of India (RBI). Initially, this facility would be available only to export houses, trading houses, star trading houses and super star trading houses with a good track record, RBI said in a circular to foreign exchange authorised dealers. The eligible exporters are required to obtain specific prior approval from RBI for availing this facility. Indian exporters who have been granted permission by RBI to export goods to Russia on consignment basis would first ship the goods and store them in customs bonded warehouses (CBW) of their choice in the Russian federation. Insurance cover for the transit period as well as for storage in CBW would have to be taken in India through General Insurance Corporation (GIC), RBI said. The Indian exporters would have to finalise a suitable sale contract with Russian buyers and the latter would arrange to open the letter of credit (LC) through the Bank for Foreign Economic Affairs of the USSR (BEFA). On receipt of payment instructions by the central bank from BEFA, RBI would reimburse the claim to the designated branch of the bank in Mumbai nominated by the exporter. 

CMC TO RAISE CAPITAL FROM MARKET, GOVT EQUITY CUT TO 51 PER CENT

The government has decided to bring down its equity in the public sector Computer Maintenance Corporation (CMC) to 51 per cent by allowing the company to raise an additional equity of Rs 98.5 mn from the market. The union cabinet gave its clearance for this purpose as the existing equity base of CMC was quite low at Rs 151.5 mn and the fresh injection of equity was necessary for its diversification plans. With the infusion of fresh equity the government's stake will come down to 51 per cent from the present level of 83.13 per cent. CMC's diversification plans include software development, besides system integration and solution. The company also proposes to improve customer service, education and training.

INDUSTRY UPDATE

ISGEIC TO EXPORT SUGAR TO EUROPEAN COMMISSION

The Indian Sugar and General Export and Import Corporation (ISGEIC) will export 20,700 tonnes of white and raw sugar under the preferential quota to the European Commission (EC) in June, official sources said. Under the preferential quota for exports, government allows private traders and mills to export 30,000 tonnes of sugar to the United States and the EC. ISGEIC's exports will include 10,000 tonnes of raw sugar and equal amount of white sugar, which would shipped to Europe from the Chennai port in early June, sources said. The corporation has already registered the full quantity with the Agriculture and Processed Food Products Export Development Authority.

ISGEIC is the body floated by the private sugar mills to undertake export of the commodity to international market. ISGEIC's attempts to export sugar to Europe at a time when global prices are lower than domestic prices have been prompted by private mills' eagerness to remain in the international market, source said. While the white sugar to be exported to the EC is being produced by MC Agro, a private mill in Tamil Nadu, the raw sugar is being manufactured by Malegaon factory near Chennai. Though the union cabinet had earlier this month approved
export of sugar in value-added form upto 25,000 tonnes, private mills have developed a cold feet to the proposal, fearing incurring of huge losses.

FORD NEW CAR TO BE CALLED "IKON"

U S auto giant Ford Motor Company has announced that its new car slated for launch in November in India would be called "Ikon". "While the name Ikon, derived from icon, is a tribute to the automobile's past, this vehicle is designed for India's future," said Ford Motor Company President Jacques Nasser in a statement. The car, hitherto referred to as "C195", is currently under exhaustive trials in different parts of the world. Based on its popular 'Fiesta' platform, the Ikon would be priced competitively in the lower end of the mid-size segment, currently dominated by Maruti Esteem, Honda City and Daewoo's Cielo. The car would be built at Ford's new manufacturing facility near Chennai and would be rolled out by year-end.