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Tag: export

  • Why Indian Rupee Is Falling Against US Dollar? (Explained)

    The Bretton Woods agreement made the US Dollar the official leader of the World’s reserve currency supported by the world’s largest gold reserves. This was after the Second World War. Even today the USD is one of the world’s strongest currencies. The Dollar bill as we know it today was printed in 1914. Even today, the central banks of various countries, including India, hold almost 60% of their reserves in USD.

    Currency Demand and Force
    Indian Rupee against the USD
    What Does the Future Hold for Indian Rupee?

    Currency Demand and Force

    In simple terms, the value of any currency increases with an increase in the demand for it and decreases with the decrease in demand for it. On the global stage, the force of currencies is determined by central banks. However, the demand for the said currency is determined by the demand for the goods and services produced by the country.

    The same rule applies to foreign exchange requests. The higher the demand for foreign exchange, the more currency falls.

    Why the Indian Rupee Is Falling Against the Dollar?

    In the post-Covid world of 2022, India has seen a steady decline in the value of INR against the dollar. It is imperative to understand that the Indian Rupee has steadily downgraded against the dollar for several decades. One of the key reasons for this has been the rising inflation affecting the Indian Economy.

    Currently, the Indian Rupee is valued at around INR 79 to 1 USD. The last couple of weeks has seen the Indian Rupee reach an all-time low value of INR 79 against 1 USD. There are several reasons for this steep decline, some domestic as well.

    One of the key reasons for this decline is the pullout of FIIs in an uncertain global market. Added to this are the geopolitical uncertainties due to the Russia-Ukraine war.

    This has led to investors retreating from emerging markets like India to the safety net of the USD. According to the latest figures, the Foreign Portfolio Investor outflow is to the tune of 2.11 Lac Crore.

    Reasons domestic in nature include the steep price rise in crude oil. Added to this pressure is the elevated cost of edible oil again due to the Russia-Ukraine conflict. In light of the fact that most of India’s crude oil and edible oil requirements are imported, this elevated price will continue to put pressure on the Indian Rupee.

    The Indian Rupee’s performance has been backed into a corner. Worsening terms of trade on the global platform, geo-political instability, FIIs foreign institutional investor outflow and the crowning glory – RBI’s FOREX stance. However, the scenario is not as grim as it looks on the outside.

    On the Global Stage, the Indian currency has held up against the dollar a far sight better than some other counterparts. This showcases a light at the fast-approaching end of the tunnel.

    US Dollar to Indian Rupee Exchange Rate
    US Dollar to Indian Rupee Exchange Rate

    What Does the Future Hold for Indian Rupee?

    The effects of the war in the short term will be seen in the upcoming quarter which might continue to put pressure on the Indian Rupee. In the short-term future, the Indian Rupee may settle down between INR 77 to INR 79 against 1 USD. However, there are many reasons to look forward to a strengthening INR in the global markets in the future.  

    First and foremost is the fact that the RBI has a comfortable FOREX reserve. Even though the Indian current deficit is well over 90 billion USD, this reserve would help prevent further weakening of the Indian Rupee against the USD.

    While the COVID-19 pandemic brought the world to a standstill for a few months, it also triggered companies to relook at their internationally located manufacturing units, most of them based in China.

    The overall unfriendly policies of the Chinese Government have also prompted most manufacturing companies to start looking at alternative emerging markets like India and Indonesia to set up their plants. This is also likely to attract FIIs back into the country and increase their investment portfolios

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    Conclusion

    As the Indian economy strengthens with the domestic financial markets edge towards a bull run, the signs are all there, that even though the immediate future is slightly bleak, there is every reason to hope for a fantastic recovery of the Indian Rupee against the USD.

    FAQs

    What are the reasons for the decrease in rupee value?

    Rising crude oil prices, rising import costs and the Russia-Ukraine war are some of the reasons for the fall in the rupee against the us dollar.

    What happens when the rupee falls against the dollar?

    If the rupee faals against the dollar the cost of raw materials will increase which will be passed on to the consumers so the cost of products will also increase.

  • How ITC Can Benefit From the Russia Ukraine War?

    On the 24th of February 2022, Russian President Vladimir Putin shocked the world when he had announced the decision to launch a “special military invasion” in the eastern parts of neighbouring Ukraine in order to “protect the Russian-speaking people” there.

    While there are various reasons speculated for the war, such as Ukraine wanting to join the North Atlantic Treaty Organization (NATO) or Putin’s vision of bringing back the old erstwhile Soviet Union, the economic effects of the war have been brutal for the world.

    While the catastrophic effects of the invasion on the energy sector have been well-documented, given that Russia is one of the largest exporters of petroleum and natural gas and the subsequent oil embargo it has faced at the hand of the United States, this war also has effects on other sectors of the economy. One such sector is the agricultural sector, especially wheat production.

    Russia is the largest exporter of wheat in the world, and Ukraine is the fourth largest exporter of the same commodity. Together they combine for a whopping 30% of the worldwide wheat production. But now, due to the various instability issues in the supply chain, there is a need for other countries to fill the void. India can be one of those countries.

    And in India, one of the largest wheat exporters is the agribusiness section of ITC Ltd (formerly known as the Indian Tobacco Company). The agribusiness section of ITC accounts for about 21.88% of their revenue as per FY21 (Fiscal Year ranging from 1 April 2020 to 31 March 2021).

    With ITC’s agribusiness section being one of the major contributors to India’s wheat exports, this article would discuss how they can benefit from this war, like, for example, the geographical conditions which help India’s aims, unlike exporters. We would also briefly discuss how ITC procures wheat from its farmers.

    Procurement of Wheat by ITC
    How Much Wheat Does ITC Export?
    The Opportunity That Beckons
    How Can ITC Exploit This Opportunity?
    Role of the Government (Central and State)

    Procurement of Wheat by ITC

    ITC procures wheat through their e-Choupal initiative. Launched in June 2000, it has provided computer and Internet by e-Choupal kiosks access to the rural regions across multiple agricultural regions in the country.

    Through e-Choupals, farmers can negotiate with the representatives of ITC, eliminating the need for a third party. They also help farmers place orders for basic agricultural needs like seeds and fertilizers, which enhances their productivity.

    In 2020, ITC launched e-Choupal 4.0 which gives farmers information on weather and markets on a real-time basis. Today, around 4 million farmers growing a wide variety of crops like soybean, coffee, wheat, rice, pulses, and shrimp in over 35000 villages, are connected with ITC through 6100 e-kiosks. These farmers are spread across 10 states (Madhya Pradesh, Haryana, Uttarakhand, Uttar Pradesh, Rajasthan, Karnataka, Kerala, Maharashtra, Andhra Pradesh, and Tamil Nadu).

    How Much Wheat Does ITC Export?

    As per a March 2022 Business Standard report, out of the nearly 7.25 million tonnes of wheat exported in FY 2022, ITC is responsible for about a whopping 50% of it. With the Indian government targeting a record 10 million tonnes of wheat export for FY 2023, it is reasonable to expect that ITC would be a major contributor to it.

    According to domestic brokerage firm Edelweiss, the poor production of wheat in Russia and Ukraine in the third quarter of FY 2022 (July 2021- September 2021), was a major reason for a 100% YoY (year-on-year) increase in ITC’s agribusiness division revenue as they slowly started to fill the void. They were also aided by other factors, such as a growth in demand for spices and leaf tobacco.

    The Opportunity That Beckons

    The invasion of Russia on Ukraine has further exacerbated the issue regarding the poor yield of wheat exports.

    In the case of Russia, it is because of the various sanctions the Western World has imposed on them due to the invasion. These sanctions also affect other Russian exports like petroleum and potash. In fact, Russia has even temporarily stopped exports to ex-Soviet countries in Belarus and Kazakhstan for the time being.

    In the case of Ukraine, it is mainly due to the Russian airstrikes on all their major port cities on the Black sea like Odessa and Chornomorsk. This has led to supply chain disruptions worldwide.

    So if we consider these two factors, then it should be no surprise that wheat prices have touched a record high of around $13.50 per bushel (roughly around $500 per tonne). This had led to a huge void in the market, especially with countries dependent on wheat imports like Egypt struggling right now, given its ever-increasing population at a rate of 1.9% per year.

    How Can ITC Exploit This Opportunity?

    Given that wheat is a crop that is mainly harvested in the months of April and May, it looks like India is at the right time to help the world overcome the consequences of the Russian invasion of Ukraine as there has never been a demand for wheat higher than what it stands right now.

    Another thing that needs to be considered as per the Edelweiss report mentioned before, the wheat produced in India is comparable in all parameters to Russian Red Sea Wheat, be it in quality, taste, or texture. Thus, all these factors help us conclude that the wheat produced in India is primed to fill in this huge void of wheat exported by Russia and Ukraine.

    And who else is better positioned than ITC here? ITC already has a strong market in Bangladesh, the Middle East, and countries based in southeast Asia like South Korea and the Philippines.

    Top Wheat Export to Countries From India
    Top Wheat Export to Countries From India

    No wonder it has started taking steps to exploit this advantage, such as scaling up its wheat development program and introducing location-specific superior seed varieties. It has also started exporting its wheat to countries like Lebanon as well.

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    Role of the Government (Central and State)

    Even the current Prime Minister of India, Narendra Modi, has acknowledged this need to fill this void and recently said that India should seize this opportunity of exporting the best quality of wheat the exporters can.

    The government has also decided to aid these companies so that India’s exports can be further boosted as per the directive of our Prime Minister. They have started establishing laboratories at a faster rate for quicker testing. They have also told port authorities to give priority to wheat exports.

    Admittedly, a major issue that still persists that the exporters continue to raise is state-specific taxes. For example, in Punjab, they have to pay 3% taxes as per the fee they have paid to the market and 1% service charges. Exporters have appealed to the respective state governments to give tax relief, which would ease their business a lot.

    Conclusion

    Thus, in this article, we have talked about why there is a huge gap in the wheat exports market due to the Russian invasion of Ukraine and how ITC can exploit this gap. This gap is something that not only ITC but other exporters like Cargill or Olam Agro can take advantage of. And thankfully, it seems all of them are.

    As per various reports, India could potentially export 4 million tonnes of wheat (around 55% of what it used to export annually) within the next two months, so it can be seen that Indian exporters are seizing this moment. This bodes well for the Indian economy and, thus, the country as a whole.

    FAQs

    Was Russia a major exporter of grain?

    Yes, Russia is one of the largest exporters of wheat in the world and accounts for 16.5% of wheat production in the world. The country exported 37 million tonnes of wheat in 2020.

    Does Ukraine produce a lot of wheat?

    Yes, Ukraine accounts for 11.5% of wheat production in the world. It exported 18 million tonnes of wheat in 2020.

    Who does Ukraine export wheat to?

    Egypt, Indonesia, Turkey, Pakistan, and Morocco are some of the top countries to which Ukraine exported wheat.

    Who does Russia export wheat to?

    Egypt, Turkey, Nigeria, Bangladesh, and Pakistan are some of the top countries to which Russia exported wheat.

    How can ITC benefit from the Russia Ukraine crisis?

    As the Russia Ukraine war has caused a huge shortage of wheat in the world, ITC can seize this opportunity by providing the wheat to the countries that Russia Ukraine exported to.

  • How to Start an Import Business in India in 2022? (Complete Guide)

    With the advent of globalization, there has been a massive growth in the import business of our country. Moreover, there is no denying that it is one of the largest and fastest-growing economies in the world. For the unversed, consumers are the ones who drive the economies including the production, marketing, and distribution.

    People in India are crazy about imported items. So, it becomes a lucrative business option for many aspiring entrepreneurs. There is no denying that you can earn whopping amounts by doing import business. But how well do you know India’s import business? We have curated some facts below for you to brush up on your knowledge.

    The production scale in India has also gone up in the past few decades. It is because Indian goods have a great demand in the foreign market. That is why more goods and services are exported to other countries at present times. The result of these exports is an increase in income generation and foreign exchange. This, in turn, helps the Indian economy to grow further.

    Now, keeping this in mind, some of you might have planned to start an import business of your own. However, before diving in, you must understand that this business has its own set of challenges that you will have to face in the course of time. You need to familiarize yourself with everything including the guidelines, rules, and regulations to properly govern import business. Moreover, information about the same is scanty, so you need to be careful when investigating the same. So, Here’s a complete guide on how to start an import business in India in 2022.

    Why is India Imports Rising?
    A Complete Guide to Starting an Import Business in India
    Top Imported Products of India
    Top Trading Partners of India
    FAQ

    Why is India Imports Rising?

    Rising demands

    Consumers’ demands are increasing daily in today’s world. So, the imports help bridge the gap between domestic supply and domestic demand.

    All about quality

    There is no denying that imported goods are of better quality as compared to domestic goods. So, the consumers who can afford the product will always go for imported goods.

    Cheaper price

    In some cases, the imported goods come at a much cheaper price. The reason behind this is the larger production capacity of the foreign producer as compared to domestic producers.

    A Complete Guide to Starting an Import Business in India

    Select a Business Model

    You need to choose the most effective business model for your franchise. It is important for you to select the business entity that you want to work on in the future. It will help you decide the financial expenses, manpower, and other factors required to start the business.

    Final documentation process

    You must settle the final documentation before beginning the business. Right from a PAN card to a trade license – you must make note of everything to avoid last-minute hassles or issues. It is necessary for businessmen to possess every legal document required for their business.

    Compliance with rules

    You must be aware of the rules and compliances associated with import business. Guidelines are a way of making people comply with the law and order. Once you are well-versed with the same, you can start your business smoothly.

    Shipping the order

    You need to ship your first order as soon as possible to get the business off the ground. Making connections with other dealers is another way of moving a step further to flourishing your import business.

    You need to know effectively about learning to grow and navigate your business. You can take assistance from learned professionals or experienced persons in this regard. The mentorship and guidance that you will get from these people will help you discover a better version of yourself.

    Pan Card is a Must

    A PAN card is one of the most important documents that you need to possess when doing business. You must have a valid identity and address proof for all transactions and verifications. It is mandatory for everyone involved in businesses to apply for a PAN card at the Income Tax department in India.

    Choose the Type of Business Entity

    You need to choose the type of business entity you want to be a part of in the future. In this case, you need to choose from company types like LLP, private limited, partnership firm, and more. Your decision will depend on the structure of ownership of the said business. Also, do not forget to choose a unique name for your business entity.

    Open a Current Account at the Bank

    You must open a current account at the bank which will be used as your business account for all future purposes. This particular account is always used by business entities in the bank. Moreover, you will always need a current account to deal with other businesses or vendors.

    Get the IEC and DGFT

    You should also not forget about getting the Import Export Code (IEC). The Directorate General of Foreign Trade (DGFT) issues this unique registration code for all businesses. Moreover, you also need to produce various supporting documents with the same.

    Choose the Right Product or Service

    You must make sure to choose the correct product or service that suits your business needs. You need to keep various factors in mind when doing the same. It includes profitability, trade barriers, demand for the product, etc.

    Find the Perfect Market and Buyers

    You need to find the perfect market and buyers to sell your products or services at reliable profits. You should select your buyer only after having decided on the product and the market for the same.

    Make sure your Finances are in Place

    You also need to ensure that your finances are in place to help your business prosper further. Businesses are unlikely to take off without initial funding. So, make sure you estimate your business’s financial requirements before starting with anything else.

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    Top Imported Products of India

    Here are the top 10 commodities imported by India in 2020-2021.

    1. Coal, coke, and briquettes – 4.7%
    2. Crude petroleum – 21.6%
    3. Electric machinery and equipment – 2.3%
    4. Electronic components – 3.4%
    5. Gold – 5.9%
    6. Industrial machinery – 2.5%
    7. Organic chemicals – 2.5%
    8. Pearl, precious, and semi-precious stones – 4.7%
    9. Petroleum products – 5.8%
    10. Telecom instruments – 3%

    Top Trading Partners of India

    List of Top trading partners from where India imported commodities in 2020-2021.

    1. China – 13.7%
    2. Hong Kong – 3.5%
    3. Iraq – 5%
    4. Indonesia – 3.1%
    5. Saudi Arabia – 5.6%
    6. Singapore – 3.1%
    7. South Korea – 3.3%
    8. Switzerland – 3.5%
    9. United Arab Emirates – 6.3%
    10. United States of America – 7.5%

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    Conclusion

    Import business has a great demand in India. Even the COVID-19 wave of 2020 could not dim the spirits of this business that flourished at its own pace. In fact, the country’s foreign trade relies heavily on imports. It has led the government to encourage domestic exports and manufacturing. However, India will still be dependent on imports for the long term as it is necessary for its export ambitions. So, if you are waiting to start your import business, now is the right time to do so.

    FAQ

    What is the best import products in India?

    Jewellery and precious stones, Shoes, Perfumes, Electronics, Heavy machinery, Silk import, and Oil import are some of the best products you can import.

    Which country does India import most?

    China, the United States, United Arab Emirates, and Saudi Arabia are some of the top countries India imports the most.

    How do I find international buyers?

    Visit Trade fairs and exhibitions, Approach Government bodies like Export Promotion Councils or Embassies, and Market research about companies.

  • Why is North Korea Facing its Worst Financial Crisis?

    The onslaught of the novel coronavirus pandemic has had disastrous effects ever since it broke out the past year. Though the mortality rates have significantly reduced in many countries this year, the harrowing aftermath of the disease is what is still dragging on in many others, including North Korea.

    North Korea is witnessing the worst slump that has happened in a span of more than two decades, according to experts.

    But why is the Democratic People’s Republic of Korea in such distress?

    For this, let’s delve into the background of the situation:

    North Korea Crisis – Latest News
    The Background of North Korea
    What went wrong with North Korea?
    The Aftermath
    Kim’s Intentions
    FAQ

    North Korea Crisis – Latest News

    June 21, 2021 – Food crisis continues to soar in North Korea, along with the economic breakdown that the country is facing. Essentials like bananas are selling at Rs 3300/kg, a packet of black tea is priced at Rs 5190, and a pack of coffee is retailing at Rs 7415.

    May 4, 2021 – In a series of statements released by North Korea on May 2, 2021, the country slammed US president Joe Bidden’s policies and rhetoric. Any talks of diplomacy are still stalled between the two nations as suspense rises in a fashion similar to that of the Cold War.

    April 8, 2021 – North Korea has decided to stay away from the upcoming Tokyo Olympics. It is clear from the state-run website that the country would not be participating in the behemoth of sports events to protect its players from risking their health amidst the pandemic crisis. With this decision, it has become the first country to drop out of the Olympics.

    The Background of North Korea

    With the onset of the pandemic, North Korea had to also resort to restrictive measures on international trade and commerce to keep the pandemic at bay. However, these plans of limiting international sanctions have grown to become a self-imposed blockade on the trade, which has, in turn, backfired unprecedentedly.

    What went wrong with North Korea?

    There were a series of missteps along with some unfortunate events that together steered the situation towards the worst for North Korea.

    Thriving in a pandemic situation it was evident to define a sustainable economic plan, which North Korea did, however, it failed miserably.

    The inner circle of the government was poor with “innovative viewpoints and clear tactics” and failed to draw an effective plan that would work, Kim Jong-un said while addressing the frightened delegates of the ruling Workers’ Party last month. The economy minister, who was appointed in January has also been fired following the backlash.

    China fuels North Korea with an ample supply of spare parts for factories and other manufacturing plants based out of the East Asian nation. As North Korea had already put a stop to their international trade, it has therefore blocked the influx of raw materials and other spare parts, fearing the spread of the deadly virus. This has resulted in the shutdown of some of the major North Korean factories including the country’s largest fertilizer plants.

    Electricity has long been a chronic problem for the people of the country, which has been further aggravated by this acute deficit of materials. In addition, it has also disabled some of the country’s oldest power plants by limiting their total production of electricity. Furthermore, the production in coal mines and other mines is also experiencing massive disruption.

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    Estimated GDP of North Korea in South Korean Won
    Estimated GDP of North Korea in South Korean Won

    The Aftermath of North Korea

    As per the words of Alexander Matsegora, “Without imported materials, raw materials and components, many enterprises stopped, and people, accordingly, lost their jobs,” said the Russian ambassador to the Interfax news agency.

    Times are so rough that if you manage to get something in the country, you might have to pay three to four times the prices before the crisis,” he told Interfax.

    Situations are similar even in Pyongyang, the capital and the stronghold of North Korea, which houses the country’s elites. The necessary products, including the basic food items like pasta, flour, vegetable oil and sugar, clothes, and shoes, are reducing at an alarming rate, mentioned Matsegora.

    North Korea’s trade with China depleted by around 80% last year after Pyongyang shut its borders, intending to stop the spread of COVID-19, which would have otherwise easily penetrated the feeble health infrastructures of the country.

    Though this crucial economic juncture that the country is now experiencing echoes of the famine of 1990, things have changed since then and North Korea doesn’t risk a famine at present. This is partly because of the significant development of food production and distribution across the nation and a supportive ally, China, who might come to the rescue of North Korea.

    The present economic pain would not risk Kim’s regime nor would it pressurize the country to retreat from the standoff over Pyongyang’s nuclear program but it surely portends a period of excruciating pain and agony for the countless ordinary citizens of North Korea.

    Kim’s Intentions

    The way Kim Jong-un is responding to the crisis happens to be making the situation worse. Kim, who seems to be retreating to de facto Leninism, has started focusing on central planning. This has been distinctively limiting the private entrepreneurial activities, which are central to the country’s economy. This has been summed up by the Seoul-based Russian university professor, Andrei Lankov, as the “dramatic U-turn” of Kim.

    The Supreme Leader of North Korea demands the restoration and strengthening of the system under which the economy runs under the supervision of the state, which has become clear in the speeches to the ruling party. He has further added that the metal and chemical industries are the “main link in the whole chain of economic development.”

    Furthermore, Kim also has disclosed his plans to maximize the control that the state has on society along with putting a stop to the growth of foreign culture and media. In addition, he also wants to suppress the “powerful mass campaign against practices running counter to the socialist lifestyle.”

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    Conclusion

    Kim’s recent move towards establishing a Stalinist economy work across the country, Lankov said, “is pretty much as hopeless as teaching pigs to fly”. The Seoul-based professor has also stated that Kim realizes that but he is also insecure about losing control. Therefore, he is choosing these times of crisis to expand his control over the economy and population and make his place secure.

    Kim’s intentions revolving around central planning and the “juche” philosophy of self-reliance that he seems to be adhering to, is termed as “unrealistic” where the economy of the country is dependent on the trade with China, according to the experts.

    FAQ

    Is North Korea having a food shortage?

    North Korea is facing a severe crisis after the Covid-19 pandemic, as prices of essential food items have increased sharply due to shortage.

    Why is there food shortage in North Korea?

    North Korea is going through an acute food crisis, due to the aftermath of floods, typhoons and pandemic, wherein the food prices have been as high as bananas selling for $45 (Rs 3,335) per kilogram, a packet of black tea for $70 (Rs 5,190) and a pack of coffee for $100 (Rs 7,414).

    Why is North Korea poor?

    Poverty in Korea has been attributed to poor governance by the totalitarian regime. It is estimated that 60% of the total population of North Korea live below the poverty line in 2020.

  • How did India’s leather exports witness a growth of $641 million in 2021?

    The Leather Industry of India has seen a drastic change in the exports of the country. The country being a mere raw material supplier has transformed itself into a value-added product. Leather is one of the most widely traded commodities globally. The leather export in India has seen an increase during the 2020-21 fiscal year and let’s look at the reason for it.

    Leather Export in India – Latest News
    Chairman of the council for Leather Exports, Sanjay Leekha on the growth in leather exports
    Reason for the Growth in Leather Exports in India
    The necessity for Digitalization in Leather Industry
    FAQ

    Leather Export in India – Latest News

    The leather, footwear, and the export of its products have seen an increase in its export value to around USD 641.72 million in April – May 2021. The council of Leather Exports had provided the information.

    The council for leather exports and the organization for apex trade promotion of the leather and leather products industry has also conveyed that the leather exports will maintain a similar trend in their growth and is expected to continue for the next few months.

    Chairman of the council for Leather Exports, Sanjay Leekha on the Growth in leather exports

    The newly elected chairman of the council for leather exports, Sanjay Leekha had said in a statement that the sector is back on the growth track after a long slowdown in the market due to the ongoing Coronavirus Pandemic which had led to a fall of around 27.72 % in the exports for the year 2020 – 21.

    He said that the sector has been growing and added that the outbound shipments have shown impressive growth during the current fiscal year. As per the latest data compared to the previous fiscal year, i.e., 2020 – 21 there was an increase in the number of exports.

    The leather, footwear, and its products have seen an increase of around USD 641.72 million during the fiscal year April – May 2021 from USD 146.79 million during April-May 2020. He stated that this is considered to be a really good beginning for the sector and they are expecting to maintain it in the coming months. He also added in his statement that India is considered to be one of the favorite sourcing and investment destinations.

    Top 10 Largest Leather Producing Countries in 2021
    Top 10 Largest Leather Producing Countries in 2021

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    Reason for the Growth in Leather Exports in India

    The Indian Footwear Accessories and Development Programme (IFLADP) that was started by the Department for Promotion of Industry and Internal Trade (DPIIT) during the year 2017 – 21 has played a major role in the modernization and technological up-gradation of production units and also adding more skills to the workforce.

    This programme is one of the major reasons for increasing the production and skilling the workforce which has indirectly increased the exports of the country. With the support of the Government, there has been positive been efforts taken in the past in order to increase the capabilities of production as well as certain infrastructure facilities such as testing laboratories and design studios.

    However, all these have collectively helped in increasing the exports of the country and also helped in becoming the exporter of high-quality products that adds value. CLE has stated that they have requested the government in order to continue the IFLADP programme and is under consideration.

    The necessity for Digitalization in Leather Industry

    The chairman of the organization had stressed the importance of digitalization and added that pandemic has bought the light for the importance of the digital era. In order to gain a lot of market access, they will have to ensure to use the various digital platforms effectively.

    The e-commerce platforms and virtual exhibitions have been growing and being adopted by consumers.

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    Conclusion

    The council has organized around 12 virtual buyer-seller meets and various B2B events which are expected to be held in 17 different countries and have also planned around 20 different events which include international exhibitions, buyer-seller meets, and designer fair.

    FAQ

    Where does India export leather?

    Hong Kong, Italy, China and Vietnam are the top leather export partners of India.

    Which state is the largest producer of leather in India?

    Tamil Nadu is the largest leather producing state in India. It accounts for 40 per cent of the country’s leather production.

    Which city is famous for leather in India?

    Kanpur is famous for its leather and is also known as the leather capital of India.

  • How India-UK Agreement will benefit Indian Entrepreneurs?

    The United Kingdom has been trying to negotiate with India in terms of a free trade agreement between both the counties. The UK has launched a 14-week consultation process in order to seek the opinions from the public as well as businesses before negotiating on the agreement. Let’s look at what exactly is the free trade agreement and how it would benefit the countries.

    Free Trade Agreement – Latest News
    What is Free Trade Agreement?
    How India-UK agreement will double the trade between UK and India?
    What are the 5 Cs in India-UK Free Trade Agreement?
    Other Advantages of India-UK agreement
    FAQ

    Free Trade Agreement – Latest News

    The trade secretary of the UK, Liz Truss had begun the preparations for the trade deal between India and the UK. The country wants to remove the trade barriers in order to conduct the business and trade with India which includes removing a tariff of 150% on whisky and 125% on British-made cars.

    The UK government is looking forward to seeking opinions from consumers and businesses from different sectors in order to help in crafting a deal that would help in increasing cooperation in the future. The industries which will be concentrated include science, technology and services which are expected to create high value jobs in the UK.

    What is Free Trade Agreement?

    A Free trade agreement is a situation or an pact between two or more nations in regards to imports and exports in between the countries. It can be understood as a removal of the barriers involved in imports and exports.

    Under a free trade agreement good and services can be purchased or sold across international borders with very little or zero government intervention such as charging of tariffs, quotas, prohibitions or subsidiaries.

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    How India-UK agreement will double the trade between UK and India?

    Both the countries already have a trade agreement and according to 2019, the trade between India and UK was worth 23 billion Euros and both the countries want to double the figures by the end of 2030. The recent free trade agreement is focused on concentrating much more than the movement of goods.

    The free trade agreement concentrates on covering services, digital business and SMEs. So, it is expected to have a huge amount of content in a free trade agreement.

    India exports to United Kingdom
    India exports to United Kingdom

    What are the 5 Cs in India-UK Free Trade Agreement?

    While both the governments are moving forward with the free trade agreement, it is expected to be characterized based on the 5 Cs.

    1C

    Where the 1st C would be Covid which both the countries have and are still suffering from. In India, the second wave has seen a drastic rise in the number of cases. The United Kingdom has been sending a lot of medical supplies and even both the countries are working together in rolling out the vaccines. Around a billion doses of Oxford-Astra Zeneca vaccines are being produced by the Serum Institute of India.

    2C

    The 2nd C would be commerce and the main focus of the Free trade agreement as seen both the countries are trying to double the trade by the year 2030. It is also seen that around half a million of jobs in each other’s economy are supported through the trade. India is also keen on UK’s expertise in Life sciences, Med Tech and diagnostics.

    3C

    The 3rd C refers to the community. It refers to the British Indian community which is expected to be around 1.5 million providing an advantage to the relationship. It is considered that the Anglo-Indian community is an entrepreneurial one and research has shown that around 174,000 people are employed under the companies owned by Anglo-Indians and all the companies have a combined revenue of over 35 billion Euros.

    4C

    4th C refers to the commonwealth which is considered to be the important glue of the relationship. The UK is the chair in the office with India in the commonwealth and India is a founding member of the Commonwealth summit. Both the countries are working together to increase the effectiveness.

    5C

    The 5th C which is the final one refers to the climatic changes. In the month of November, the UK will host COP-26 which is a climate change talks and India being the key country that is expected to be most affected by global warming will have a scope to working together in finding shared solutions. They have already started by scaling up the electric mobility market in the country.

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    Other Advantages of India-UK Agreement

    It is expected that the UK will open up its fisheries sector to more Indian players, providing more opportunities for nurses and in return, India lifts the restrictions to import British fruits to the country and improved access to medical services. These actions are expected to create around 25,000 direct and indirect jobs in India.

    Ranil Jayawardena who is the international trade minister of the UK has conveyed that the trade deal with India will break down certain barriers and will make it easier for British Businesses to sell goods in India. It will also help in gaining more investments, increasing wages and lowering prices in Britain.

    FAQ

    Is there a free trade agreement between UK and India?

    Yes, UK and India has signed a free trade agreement which is concentrated on science, technology and services.

    Which country has the most free trade agreements?

    UK has the most free trade agreements with 37 FTA agreements with  different countries.

    Is FTA beneficial for India?

    Yes, FTA is beneficial for India as it will ease export in the country and will create more jobs for the people of India.

    Conclusion

    Over the last 10-15 years the European Union had tried to sign a free trade agreement with India and failed. But since now the UK is an independent nation it is considered that the chances of getting into an agreement with India are higher than it was ever been.

  • Reasons Why India saw growth surge in Exports and How does it affects Economy

    The exports of India during the month of April have seen a significant rise. Experts have said that it is mainly due to the low base effect caused by the Covid-19 pandemic. Let’s look at the reasons for an increase in the exports of the country.

    India’s Exports figures
    Increased Demand for Products
    Imports Data
    Further Estimations
    FAQ

    India’s Exports figures

    The exports of India during the month of April have increased to up to 197 % due to the low base effect. A Low base effect is a small change from an initial amount which would be translated into a large percentage change.

    The Covid-19 lockdown during the previous year had temporarily stopped the economic activity which has led to the merchandise export of India which nearly increased three times to USD 30.21 billion over the same period year.

    The exports have seen an increase of 16.03 % compared to the previous year that is 2019. This indicated that the low base was also supported by an increased demand in the first month of the fiscal year.

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    Increased Demand for Products

    The increase in exports during April was mainly increased due to the demand for products such as petroleum, gems, jewellery and engineering products. The latest data has shown that the increase in the cases due to the second wave of Covid-19 and the lockdowns in the country in different regions have not affected the demand for the products.

    In the month of April, the value of exports from non-petroleum goods has increased by 200.62 % of up to USD 26.85 billion when compared to April 2019 which was USD 19.44 %. There has been an increase in the value of non-petroleum, gems and jewellery products compared to April 2019 of about 19.89 % which led to an increase of 164.28 %. The imports have amounted to USD 23.51 billion.

    Oil imports for April 2019 have amounted to USD 10.8 billion which is an increase of 132.36 % on a year-on-year basis. However, when compared to April 2019 there was a decrease of about 6.62 %.

    India Exports by Country in Feb-21
    India Exports by Country in Feb-21

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    Imports Data

    The preliminary data from the Ministry of Commerce and Industry has shown that there has also been an increase in the imports of the country. In the month of April, the merchandise imports of India have seen an increase of 165.99 % which is at USD 45.45 billion.

    The import of shipments when compared to April 2019 has seen an increase of 7.22 % from USD 42.39 billion. This has resulted in a trade deficit in the country which has increased on a year-on-year basis of 120.34 %.

    The increase in the imports was mainly due to the increase in demands for gold and petroleum products as well as electronic goods according to the received data.

    Further Estimations

    Sharad Kumar Saraf who is the President of the Federation of Indian Export Organizations (FIEO) has conveyed that the impressive growth in exports has made it clear that the order booking position of the exporters of the country is extremely good and it is estimated that the gradual improvement of the situation of the country is expected to increase the exports.

    He added that even though there is an increase in exports, the increase in imports and the huge widening of the trade deficit is a concern that should be looked into.

    Mahesh Desai who is the chairman of the Engineering and Export Promotion Council of India (EEPC) has said that the recent increase in the Covid-19 cases has increased the risks on the growth and said that the country remains hopeful for the recovery during the year.

    He added that the lockdowns and night curfews imposed by various states would create problems regarding to logistics and the workforce in the country.

    FAQ

    What are the main exports of India?

    India’s major exports included petroleum products, gems and jewelry, and drug formulations.

    What are India’s traditional exports?

    Gems and Jewelry is at the top exporting commodities from India.

    What is the rank of India in exports?

    India ranks 19 in countries with most number of exports.

    Conclusion

    The World Trade Organization (WTO) had changed their projection in regards to global trade volume and has an estimation that there would be an increase in the global trade volume by 8% in the year 2021. This may lead to an increase in the exports in India.