VITAL INDUSTRY UPDATES – 06/04/2015

April 6, 2015 11:39 am Published by

India to iron out Basmati import row with Iran

Indian Basmati rice exporters, hit by Iran’s decision to restrict imports last year, are likely to get some encouraging news next week.

Senior officials from both sides will meet in Tehran on Monday to sort out pending issues related to high import duties, quality norms and import licenses so that shipments can start moving soon.

Commerce Secretary Rajeev Kher is leading a delegation of officials and businesspersons to Iran next week with the primary agenda of removing all hurdles on rice imports and also to promote other potential business areas such as pharmaceuticals.

Pesticide residues

“In 2013, Iran had imported a lot of rice and had huge stocks. So, they raised their import duties when their own harvest came in the market in order to protect their farmers. They also raised the issue of (high) pesiticide residue in our rice,” Commerce Secretary Rajeev Kher told BusinessLine. Kher said that the problem related to the pesticide residue will get sorted out in his meeting with Iranian officials as it was basically related to the issue of high stocks which is not a big problem anymore.

“I am hopeful that all issues including high import duties and the pesticide residue will get addressed and licences will be issued soon for imports,” Kher said.

Sliding shipments

Iran is India’s largest Basmati rice market with exports in 2013-14 rising to 1.4 million tonne (mt) – roughly 40 per cent of total Basmati shipments. Iran stopped issuing import licences since October last year as there was a glut in the domestic market. It also raised its import tariffs to 45 per cent. “In 2014-15, exports are expected to be lower at 0.9 mt because of the restrictions. In the new fiscal, we hope to export about 1 mt,” AK Gupta, Director, Basmati Export Development Foundation, APEDA, said.

Higher duty

While Iran brought down import duties to 22 per cent in January this year, but exporters claim that they are still being made to pay 45 per cent under various other categories.

Coal India chief blames poor availability of rakes for lower growth in offtake

Coal India Chairman Sutirtha Bhattacharya blamed it on poor availability of rakes from Railways for lower growth in offtake in 2014-15.

The State-owned miner recorded the highest ever incremental growth in production (31.8 million tonne), in a single year, during the last fiscal.

As against a robust 6.9 per cent growth in output to 494.23 mt, offtake or sales grew by only 3.8 per cent to 489.34 mt.

“Growth in coal offtake ought to have been more,” Bhattacharya has been quoted saying in a company release issued on Saturday. “One of the reasons was the wagon availability was not commensurate with the indents of coal companies,” the release added.

CIL’s daily loading increased by a mere 2.3 per cent (4.3 rakes a day) during the last fiscal. On an average 194.5 rakes (a goods train) were loaded a day during the last fiscal as against 190.2 rakes a day in 2013-14.

Higher inventory

The low-offtake triggered a jump in pithead stock from 48.6 mt in 2013-14 to 53.64 mt in the last fiscal. Of the total, 9.78 mt or over 18 per cent was accrued in March. The miner diluted inventory by nearly 22 mt between 2012 and 2014. The inventory, left in the open on pitheads, is close to 11 per cent of the annual production in 2014-15. Since heat value of coal deteriorates if left in the open, higher inventory will cost CIL both in terms of higher finance cost and lower returns on the sale of fuel. While CIL release is silent on inventory position, the development clearly indicates the pitfalls of a production push without creating necessary coal evacuation infrastructure. The curbs on open market sales and restriction on fuel sales to non-power sector also limited the miner’s market access over the last two years.

More supplies to power

A focused attention on power sector is apparent on the despatch growth. While the total despatches grew by only 3.8 per cent, supplies to electricity generation utilities sector increased by 8.5 per cent during the last fiscal.

“Despatch of coal to power utilities increased by 30.35 mt to 384.18 mt in 2014-15,” CIL release said. The bottom line is while Coal India is accumulating inventory, steel and cement sector are resorting to imports.

Centre mulls higher import duty on Chinese steel

Mines Minister Narendra Singh Tomar on Thursday said that the Government is actively considering higher import duty on steel from China.

“China dumping steel in the country is a concern for both the industry as well as the Government. The industry have met with us and relayed their concerns and we have been talking to the Finance Ministry about the need to implement a higher import duty,” said Tomar, at an official event here.

Recently, junior Mines Minister Vishnu Deo Sai had informed Rajya Sabha there no ban on Chinese steel had been considered and added that with steel being a deregulated sector, the Centre’s role was restricted to facilitating industry growth.

China is the world’s largest steel producer with a capacity of more than 700 million tonnes (mt), substantially higher than India’s 80 mt. The Centre has set a target of 300 mt of steel by 2025 to become the second largest steel producing nation. Indian imports from China touched 2.9 mt in the April-January period.

Prime Minister Narendra Modi had highlighted the need for India to surpass China in the production of steel earlier this week.

 

 

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This post was written by Atlantic Admin