Centre may have to hike MEP of onion

NEW DELHI: The Centre may have to hike the Minimum Export Price (MEP) in August for the politically sensitive onion, since increased temperatures in May and June and higher exports compared to last year threaten to increase pressure on supply and consumer prices, especially in northern India. Onion MEP is currently pegged at $200-205/tonne and National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED) is understood to be keeping a close watch on both domestic demand and on exports, with a view to calibrate onion MEP expeditiously if necessary. Exports in 2009-10 were pegged at 18.14 lt compared to 17.03 lt in 2008-09.

Onion output this season is expected to be around 95l tons compared to a lower 85l tons last season. In the capital and other parts of the north, onions primarily come in from MP and Rajasthan, with prices ruling from Rs 800-1000/qtl for the former and Rs 300-600/qtl for the latter. But increased heat this summer in Rajasthan has put a strain onion production and quality in that state, traders contend, and is likely to show up in tightened supply in the north and upwardly mobile prices in the coming weeks.

Maharashtras onions increase in July when supply in the nroth from both MP and Rajasthan are expected to dwindle. But stockists mainly access most of that crop. In addition, any onion crop that comes into Delhi and the north at the time from Maharashtra will factor in higher transport charges, consequently boosting prices for consumers, a commodity monitor said. The developments are expected to boost retail prices for the tuber atleast until such time as pressure over supply eases on account of Karnatakas onion crop which is not expected before August-September.

In the recent past, NAFED hiked onion MEP gradually since November 2009, when the prices of onion spurted in the domestic market. The MEP was around $200/t in April 2009 but a much higher $320-325/t earlier in March. However, the MEP was eased after domestic prices were seen as cooling. Earlier, Nafed raised the MEP by a whopping $150/t in phases between November 2008 and January 2009 to make exports expensive and check high domestic price before reducing the minimum price by $ 60 for February 2009.

Foreign Trade Policy - aiming at continuity, stability

From CEO'S Desk

The recently announced foreign trade policy (FTP) in the current difficult times was indeed a tough task, but our Commerce Minister, Mr Anand Sharma, has done a fairly good job. Two facts in the blueprint of the 2009-14 Foreign Trade Policy that came as good news was the realistic target of $ 200 billion in the next two years and the focus on 26 new markets.

I feel the new trade policy has aimed at continuity and stability, technology upgradation, reduction in transaction costs, diversification and market expansion, and also focuses on giving a boost to the labour-intensive export-oriented sectors. Without doubt the slew of measures and incentives announced in the FTP will greatly benefit the exporters who have been hit due to the slowdown in the country's traditional export markets.

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The FTP rightfully provides an extended tax holiday, duty refund for exporters and allows duty free import of capital goods. These initiatives will help to double the country's share of global trade in the next five years, and will also help in increasing employment opportunities.

Meanwhile, the employment-oriented sectors, especially textiles, leather and handicrafts will get a major thrust from the increased incentives available under the Focus Markets Scheme to promote exports in new markets in the Latin American and Asia-Oceaniaic region. The scheme as of now covers 83 countries in Africa, Central America, CIS and Eastern Europe.

In addition, the hike in allocation for existing schemes under the Markets Development Assistance and Market Access Initiative will also benefit exporters who can now seek financial assistance under these schemes to hold trade fairs, buyer-seller meets and brand promotion to develop new markets.

Another positive factor is that the policy seeks to rationalize and simplify procedures and duties across the board by implementing e-governance in trade for the benefit of exporters. The Minister has indicated that the process will start with nine products and services with five states and hopes that by 2015 all states will be covered by this initiative. However what needs to be seen is how states ruled by political parties other than those in the UPA react and act to this.

With the notifications on the Foreign Trade Policy to be released in the next couple of days, the Finance Ministry's reactions to the various incentives announced in the policy is not yet known considering the in-fight between the two ministries on earlier occasions. Hope good sense will prevail.

Bikky Khosla

CEO, Trade India

FTP to have positive impact on Indian exports in long-term

The Union Minister of Commerce and Industry, Anand Sharma said that the Foreign Trade Policy that has been unveiled recently, will have a positive impact on the growth of the Indian exports in long-term.

Sharma pointed out during a conference organized by FICCI in New Delhi on Friday, that there is a need to create new markets as the major world economies are under great trouble. He expressed his hope that the new FTP will help exports to bounce back.

The Commerce Minister mentioned that the new two-year trade policy aimed at stability and continuity, technological upgradation, diversification and market expansion, reduction in transaction costs and focuses in giving the labour intensive export-oriented sectors a boost.

He said that they (the ministry) is waiting for the revival of the western economy, especially in the key export markets such as US and Europe. The economy of US and Europe should take a fillip in their growth.

"Recovery can take place...somewhere as V-shape and somewhere as U-shape but the recovery will take place definitely. We are  waiting for the recovery to take place. However, we would also be pro-active in our engagements with the world." he added.

"Until and unless there is a recovery or a turn around in the major markets, we cannot expect much. There is a negative growth in those economies...," Sharma added.

The minister is positive about doubling India’s trade volume by 2014 and doubling India’s share of global trade in percentage terms by 2020.

Sharma also said, "The Foreign Trade Policy has sought to rationalize and simplify procedures and duties across-the-board. The Directorate General of Foreign Trade (DGFT) is trying to implement e-governance in trade for the benefit of exporters."

"We have started with nine products and services with five states and hope that by 2015 all states will be covered by this initiative. Our hope is that the states, across party lines, will come on board to support the initiative to make exports competitive."

Moreover, it was also clearly stated by the Commerce Secretary, Rahul Khullar that the issue of dollar credit would be made available to exporters.

However, it was also proposed by the industry stalwarts that there should be speedy action on reimbursement of state-level taxes and levies as the impact of such imposts ranged between 3% and 12% of the fob value of exports.

In fact, there should be exemption of service tax for all services, expeditious reimbursement of tax claims and greater incentives for services exports.

Beat Competition, stay ahead

 From CEO's Desk

I have observed that most Small and Medium Enterprises (SMEs) waste their time thinking about what they did last week, month or year when they should instead be thinking about what they need to do tomorrow. My advice for these SMEs would be: instead of spending valuable hours analyzing results, put your energy into developing future market strategies, and in identifying how you can position your business as a market leader.

I believe that before you decide that you want to be the best in your domain, it is of utmost importance to look into your strategies and ask yourself whether the tactics you are applying are focused on dealing with competitors' actions or not. Unless you do so, your profits and your standing in the market will remain stagnant.

Cliched though it might seem, and as all management gurus will reiterate, I strongly believe that any business has to satisfy its customers, earn their satisfaction and loyalty, and subsequently achieve the maximum share of its target market on its way to the top.

However, it is easier said than done. Market capturing process is however not easy since your competitors too will not sit idle as you work on your strategies, just to see you capturing the market. And even if you are able to climb to the No 1 position, the game will continue, which is why your planning needs to continue to maintain the top position.

To keep one's business ahead of competition, one needs to develop marketing strategies smartly. Certain activities in businesses including competitive pricing, promotional strategies, advertising, quality consciousness, innovation, after-sales service, distribution network and sales force, etc. need to be focused on to beat one's competitors.

Ideally, I have seen several SMEs cutting costs and trimming corners to maximise their gains without even thinking that doing so weakens one's ability to execute and thus eliminates resources to do new things. Smarter companies on the other hand, recognize the opportunity to pounce on customers and take away business during weak market dynamics.

If you always do what you have always been doing, then you will end up doing nothing new. So pull up your socks and don’t just do what you want to do. Take stern actions intended to hurt your competitors. Because that's not just one of the many options you have...it's the only option to take you to the top.

Bikky Khosala 

CEO, Trade India

Exporters should look east to maximise gains

From CEO's Desk

There seems no end to the woes of exporters to Europe. Months of slowdown, then when the situation started to look up, the rupee appreciated eating into the profits of the exporters. While the exporters were still in the midst of re-evaluating their strategies, exports to key European markets have now been affected by flight disruptions over the past few days as planes remain grounded following a volcanic eruption in Iceland.

In the last couple of days I have met a few number of exporters who have been affected for these reasons. However, I felt that the exporters who solely depended on European markets were the most affected, while exporters who had diverse countries in their trade basket were not affected much in their profit bookings.

I think the situation calls for looking at all geographical directions, rather than just looking at the West, from which we are at present not profiting much. As such, turning our attention towards the Eastern nations can be a good idea. It's a fact agreed by experts that the region today provides immense opportunity for Indian manufacturers and service providers to expand their global footprint.

For instance, Indian seafood exports to Europe and US have declined in volume and value over last year and interestingly, for the first time, seafood exports from India to the East have surpassed those to the West. A fair indication of the potential the region holds for Indian exporters.

Even Union textiles minister Dayanidhi Maran had acknowledged that India's 'Look East Policy' was paying good dividends, especially in the textile sector.

The slow revival in the US and Europe is in stark contrast to the rapid recovery witnessed in the eastern economies which unfolds new vistas for India's manufacturers and exporters as attractive propositions for exports.

I believe the Indian government's 'Look East' policy has certainly helped as far as economic gains are concerned. The Asian region is now our largest trade partner and our economic exchanges with Southeast Asia as well as the more mature economies of Northeast Asia like China, Japan, Korea, Hong Kong have been facilitated by this policy. I have no doubt that had these nations not figured prominently on our trade profile, we would have been much more severely affected by the global economic downturn.

I think it's time for us to look at our eastern partners with more vigour and take advantage of the opportunities that lie before us.

Bikky Khosla

CEO, TRADE INDIA

Branding - success mantra for every business

From The CEO's Desk

Branding today is the success mantra for every business, and particularly for SMEs. There is no doubt whatsoever that an effective brand name, combined with a well known corporate image, usually allows a company to charge more for its products and thus increase its profit margins. No one can deny the fact that a brand value reflects how a product's name, or company name, is perceived by the marketplace.

Companies often err in their thinking when they presume that branding is not very important for old businesses and only rookies need to worry about it. In reality, branding is equally important for both newbies and established businesses as corporate branding strategies will significantly help a company in creating a highly effective and well-established corporate identity.

Contrary to what SMEs usually think, branding is not about getting one's target market to choose oneself over competition. Branding for SMEs should actually be about getting one's prospective clients to view the SME as the only solution provider to its problems.

I believe that for a SME to succeed in branding it must understand the needs of its customers and prospects and this can easily be done by integrating one's branding strategies through those of the company at every point of public contact.

In actuality, the experiences and perceptions of buyers and future prospects of the brand you are offering is what makes it a success. SMEs should understand that a good brand will deliver the message you want to convey clearly and thus confirm your credibility. A good branding strategy will also connect your target prospects emotionally and will motivate the buyer and thus cement user loyalty for future deals.

Lost in the crowd? Get yourself an effective branding strategy. This is what the doctor will prescribe for a growing SME. As the battle for customers intensifies day by day, a strong brand can work wonders. It is thus very important for SMEs to spend time in researching, defining, and building one's brand. SMEs need to take brand building seriously owing to the fact that ultimately it is the brand that is the source of a promise to one's customers. Branding is the foremost level of marketing for a company and one you cannot do without –right?

Bikky Khosla

CEO,Tradeindia.com

Asia's emerging markets - are you there?

The recent World Bank report on India's economy indicated that while India may grow at a rate of 9 percent, the export sector may not be doing well though. With major global powers, the bastions of India's exports, still in uncertain waters, the country's export sector indeed needs to fight hard to bring in orders.

The report noted that the Indian economy is expected to make huge strides in 2011 growing at a pace of 9 percent with South Asia poised to grow a little slower. However, it cautioned that the shoots of recovery for the export sector of the whole region may not be strong enough.

India's drop in growth during the global economic crisis was minuscule compared to other nations and our economy had shown great resilience. However, I fear that if the current Eurozone crisis spreads to major nations in the continent, India too would see a slowdown in exports to the region. Even the industry body, FICCI seems to agree with my apprehensions when their recent study said that 'the sovereign debt crisis of Greece may spread over to other European nations which could have a catastrophic impact on Indian exports.'

While there is good chance of the crisis spreading to other economically vulnerable nations like Portugal, Spain and Ireland owing to their already weak public finances, I would say that the impact of the crisis on Indian exports will be marginal if it remains restricted to these nations because our exports to this part of the globe are limited. But if the crisis spreads across the bigger nations in the EU region, we will see a negative growth in exports to EU, which accounts for about a fifth of our total global exports.

As such Indian companies should work to expand the domestic demand which can help them grow better as opposed to export markets. It will perhaps be needless to say that the domestic market in today's context appears even more important, than it was a couple of years back before the recession. Moreover we can highly benefit from new engines of growth and adapting to requirements of the emerging markets in Asia.

It's a fact that emerging markets have gone up spectacularly this year and 2010-11 too will be no different. While it will be a year of consolidation for the developed world, emerging markets will see more growth, which in turn means more demand. Emerging markets enthusiasts will now reiterate that Asia's emerging markets are where the future lies, and this time it looks like these markets could be the lifeline for India's export community.

India becoming favourite destination for Canadian cos: Survey

VANCOUVER: Despite China remaining the economic powerhouse of Asia, more and more Canadian companies are now eyeing the mounting investment opportunities in India, says a survey by the Asia Pacific Foundation here.

The Asian Investment Intentions Survey, released by the foundation here Monday, has found upsurge in interest among Canadian companies to invest in India.

From eight percent in 2005, the percentage of Canadian companies showing interest in India has gone up to more than 13 percent in 2010, said the survey.

As many as 504 Canadian companies were targeted by the survey. China was the first choice of 21.1 percent respondent companies. About 13.4 percent opted for India, 9.9 percent for South Korea and 9.2 percent for Japan.

More than 55 percent of companies recognised the shift towards markets in Asia, said the survey.

"While China remains the top investment market for Canadian companies, the economic might of the region as a whole is a growing reality that Canadian companies ought to explore and seize," foundation president and CEO Yuen Pau Woo said.

"Canadian firms are slowly latching onto these investment opportunities, especially in growing economies in India and Southeast Asia," he said.

Woo said survey findings were no surprise as India, with average annual growth of 8.75 percent between 2003 and 2007, was emerging as an economic heavyweight in the region.

Launching the survey, Export Development Canada president Eric Siegel said: "Canadian investors are smart to be feeling bullish about investing in Asia. The long-term competitiveness of Canadian companies will be increasingly determined by how well they can integrate into supply chains in the emerging economies of Asia."

A foundation statement said Prime Minister Stephen Harper's visit to India in November 2009 has intensified talks on economic and trade opportunities between the countries, including the possibility of a Comprehensive Economic Partnership Agreement (CEPA).

The two-way annual trade between India and Canada is still languishing at about $5 billion.