FICCI demands additional stimulus, fiscal package, criticizes US move for duty cuts

The Federation of Indian Chambers of Commerce and Industry (FICCI) asked the central government for more fiscal measures to tackle the current economic downturn, along with demanding more rate cuts from the Reserve Bank of India (RBI) to ease liquidity crisis and reduce cost of borrowing. The fiscal relief asked include, cutting the Cash Reserve Ratio (CRR) further to 4.5%, Repo Rate to 5%, Reverse Repo Rate to 4% and Statutory Liquidity Ratio (SLR) to 22% along with the all important reduction in bank interest rate by 100 bps.

Growth stimulus is now very important according to the industry body, especially with the slow down happening in the domestic economy, and inflation worries subsiding. The industry body has also asked for further rate cuts in home loans, re-imposition of countervailing duty and higher import levies.

For the housing sector the association has sought to raise the upper limit of loans to Rs 50 lakh in the existing Rs 5-20 lakh slab lower rates of interest of 9.25%, besides cutting the rates to 6-7% from 8.5% for home loans below Rs 5 lakh.
For the domestic steel industry, the association has asked for restoration of countervailing duty on imported steel items along with raising import duty to 15 % from the existing 5% to "prevent dumping" of cheaper products in India.

For the textile sector, the chamber asked for deferment of 8th quarterly installments of principal amounts on loans taken by the industry, besides asking for restoration of drawback rates that prevailed before reduction in September 2008.

Earlier this week, FICCI had sharply criticized the US’s move to seek zero duty commitments on sectors such as chemicals from India and other developing countries. The association further said that US-based National Association of Manufacturers (NAM), which has been consistently pressing for sectorals, has recently stated that WTO Ministerial Meeting must await consensus on sectoral agreements.

Sectoral talks relate to complete slashing of import duties in 14 identified industrial sectors. These cuts are additional to the proposed formula-based import duty cuts that every country will have to undertake, if the Doha deal is inked. Indian industry is wary of pressure by the US to make sectoral talks mandatory, as it could mean slashing of import duty on key sectors, including chemicals, industrial machinery as well as electrical and electronic goods. This would mean that cheap goods from abroad could flood the domestic market, causing problem to the Indian industry.

Textile, Jewellery & Auto-components- Unemployment rises amongst India’s Forex Earners

The global economic slowdown has impacted different sectors with varied degree of severity. Textiles and Gems & Jewellery sector, which are one of the biggest contributor’s of India’s exports earnings, are in shambles. Both the sectors are tied with discretionary consumption of global clientele for their produce thus heavily dependent on global market. With discretionary consumption taking nose dive with economic uncertainty all over the world, consumptions of products likes jewellery and garments have fallen dramatically.

This has direct impact on the economic viability of business units related to these two sectors. As a large number of units in these sectors are small and medium size units and most of the workforce belong to unorganised sector. As the new orders have dried out, a large number of these SME units have shut shops leaving workers in lurch. Around 50,000 works have lost jobs in gems & jewellery industry, which expects job losses to go further. Textile industry also expects to cut 5 lakh employees in next five months. Adding to the woe is auto components industry, which in last few years had become darling of global automotive giants, as automobile industry faces question of declining demand the small components manufactures are already showing door to the contact labourers.

India ranks poorly in the top 50 of UNIDO’s global Industrial Competitiveness; Automobiles and Textile industry make it to the top

India has been ranked 41st in the latest industrial competitiveness report prepared by United Nations Industrial Development Organisation (UNIDO). The ranking is based on the competitive industrial performance of countries. It is based on two sets of components viz., industrial development indicators and the competitive industrial performance index. It benchmarks a country in the backdrop of liberalization and globalisation. The scorecard suggests about competitive performance of a country, which is measured in terms of manufacturing value added per capita and manufacturing exports per capita.

The scorecard also takes note of industrialization, which suggests share of manufacturing value added in GDP and of medium and high technology in manufacturing.
UNIDO, in an accompanying statement said, that the scorecard brings out a persistent pattern of performance over the years among regional groupings of countries, with industrialized countries leading the rankings and transition economies tightly grouped in the middle ranks.

Singapore topped the ranking followed by Ireland, Switzerland, Japan, Belgium, Sweden, Finalnd, Germany, Republic of Korea, Taiwan, France, USA, Hong Kong SAR, Austria and Slovenia in the top 15. India although ranked 41st fared better than its neighbours with Pakistan ranking at 55, Bangladesh at 67 and Sri Lanka occupying the 75th position.

However, India made it to the top 15 automakers of the world, and among the top five in the leading developing countries category of a separate UNIDO report on motor vehicle manufacturers, thanks to a growing auto industry. According to the report, India ranked 12th in the list of world's top 15 automakers, which is led by Japan followed by the US and Germany. In the leading developing countries category, India ranked fourth. The list is topped by Mexico, followed by Korea, Iran. Brazil held the fifth position.

Also, Indian textile industry came fifth amongst top 15 textile producing countries in the world and India also made it to the list of world's top 15 producers of chemicals, electrical machinery, basic metals (iron and steel, non-ferrous metals) and other products.