India flays IMF for remarks on SEZs
SINGAPORE:India has ticked off IMF Chief Economist Raghuram Rajan for his attack on India's Special Economic Zones, which he said was being set particularly in the IT sector to take advantage of tax concessions impacting the economy.

"IMF should get its facts right. They should go to the field and not sit in Washington and criticise," India's Commerce Minister Kamal Nath said, strongly reacting to the IMF Chief Economist's criticism on Thursday at the ongoing annual World Bank-IMF meeting.

Special Economic Zones are a success, said Nath, a strong advocate of SEZs for boosting exports and manufacturing in the booming Indian Economy that has been clocking over eight per cent economic growth making the success story of India and China as focus of discussion at the annual meeting.

Detractors of Special Economic Zones, a policy initiative taken last year, have been critical of the concept saying they would be revenue rip-offs and feared that ultimately industrial units elsewhere in the country would shift to SEZs to take advantage of the tax holiday given to them.

Kamal Nath said there was no justification in saying that there would be revenue loss as it was notional. "When there is no levy how can you say it could lead to revenue loss," he added.

The Government has already approved over 160 SEZs in the country and the Board of Approval is scheduled to meet in the third week of this month to clear 225 pending applications for the zones in the country..

India, GCC bilateral trade up
NEW DELHI: The two-way trade between India and Gulf Cooperation Council (GCC) will touch $ 25 billion by 2010, said industry chamber Assocham.

Of the projected estimates of $ 25 billion bilateral trade between India and GCC, the share of India’s exports will touch the level of $ 15 billion, while their imports to India will go up to $ 10 billion by 2010.

According to a White Paper on ‘Indo-GCC Trade Prospects’ brought out by the chamber, GCC at present level staggers at $ 17 billion.

The current level of two-way trade as mentioned above is about $ 16.3 billion of which Indian exports to GCC comprise $ 9.4 billion against their imports to India which are pegged at $ 6.9 billion, reveals the findings of Assocham.

According to the findings of the paper, India’s trade with GCC countries in terms of its exports have registered an increase of 33.04 percent from 2003-04 to 2004-05 from an export figure of $ 7 billion to over $ 9.4 billion.

As regards to imports, India’s imports from GCC countries went up by 115 percent from 2003-04 to 2004-05 from a little over three billion to 6.9 billion.

The total trade in terms of percentage has gone up by 58.59 percent during the period.

Assocham President Anil K Agarwal said that crude oil import from GCC countries will form a major contribution in India’s import trade basket as manufacturing in the domestic industry will accelerate substantially, and lead to higher energy demand for the domestic industry.


India is projected to replace South Korea and emerge as the fourth largest consumer of energy after the US, China and Japan.

The Gulf is enormous important to India, given the fact that it meets the bulk of its energy needs, pointed out Agarwal.

In view of this, the Assocham estimates that including crude oil and petroleum products, India’s imports from the West Asia increased from $ 5.4 billion in 1996-97 to about $ 27.5 billion in 2004-05.

The paper has highlighted that India and GCC signed a framework agreement on economic cooperation as a first step towards exploring the possibilities of FTA between them on August 2004 which seeks to expand and liberalise bilateral trade relations as well initiate discussions on the feasibility of FTA.

The major items that are exported will further accelerate from India to GCC countries with the signing of this agreement will include basmati/non-basmati rice, tea, manmade yarn, fabrics, made-ups, cotton yarn, primary and semi-finished iron and steel, chemicals and pharmaceuticals, plastic and linoleum, machinery and instruments.

India’s import basket which will swell from GCC countries apart from crude oil will also comprise organic and inorganic chemicals, artificial resin, plastic materials, sulphur, iron pyrites, pulp and waste paper, ores and metal scrap, coal, coke and briquettes, iron steel and non-ferrous metals.

India and Gulf can also cooperate in small and medium enterprises (SMEs) for rapid industrialisation and employment opportunities.

Large ventures can be set in areas of mutual interests like petroleum and petrochemicals, gas exploration and production, refineries and pipelines, fertilisers, food processing and packaging industries, automobiles, pharmaceuticals etc, the paper concluded.

Export subsidy hike ruled out
KOLKATA: The government would not be able to increase export subsidy in the coming years as this would not be compliant with the WTO framework, Director General of Foreign Trade K T Chacko said.

Speaking at an interactive session on ‘India's foreign trade – challenges and prospects' organised by Merchants' Chamber of Commerce, he said the government was giving Rs 6,000 crore to the industry in the form of various incentive schemes.

He said that since under the WTO regime, subsidy to exports was prohibited, the government would not be in a position to step up that amount in future.

Chacko also said that there was a need to increase exports to raise foreign exchange reserves of the country in view of the high import bill.

He said that by 2008-09, India has set up an export target of USD 150 billion.