Watchmakers dont want us to buy watches

BS reports

The domestic watch industry has demanded sops from the government to help it improve its competitiveness and achieve its objective of every Indian having at least one watch.

Among the demands of the industry are increase in abatement rate on watches from 35 per cent to 50 per cent, rationalisation of duty structures and curbing of illegal imports.

Fairer taxes are fine, but I cant understand how buying watches can be illegal! I mean, why should there be any restriction on importing watches in first place?

Steel makers want to ban iron ore exports and steel imports

PTI reports (in BS):

The government will soon formulate a policy on export of iron-ore but has ruled out imposing a blanket ban as demanded by the domestic steel industry.

“The government is very concerned about the issue but it is not possible to put a blanket ban,” Union Minister of State for Steel Akhilesh Das said today.

He, however, said a policy would be framed soon to keep export of the raw material to the bare minimum.

Another report, also by PTI in BS, says

Steel Minister Ram Vilas Paswan today favoured framing a policy specific to the entry of Chinese steel companies into India, amid concerns in domestic industry about the market being flooded with cheaper steel.

“The government should frame proper policies on the entry of Chinese companies into India. They (Chinese steel firms) could be looking for opportunities here,” he said after inaugurating the Ministry of Steel’s pavilion at the India International Trade Fair.

Given the capacity of Chinese companies to manufacture and sell steel at cheaper rates, the domestic steel industry is apprehensive that allowing entry could threaten their existence.

What else can you ask for?

Log-unrolling

BS reports

The finance ministry has turned down Railway Minister Lalu Prasad’s proposal to set up a coach factory at Rae Bareli, the constituency of Congress President Sonia Gandhi.

In addition, the ministry has also questioned the plan to manufacture diesel locomotives at a new manufacturing facility at Chapra, Prasad’s constituency.

“Setting up a third coach factory at Rae Bareli is not financially viable, as the railways already have two factories in Chennai and Kapurthala, which at present produce 2,300 coaches annually and will be able to meet the demand of nearly 4,550 coaches by the end of the Eleventh Five-Year Plan,” a government source said.

An investment of Rs 1,685 crore is envisaged for the Rae Bareli factory, which aims to manufacture 1,150 state-of-the-art passenger coaches every year. In fact, the railway ministry did not agree to set up the project under the public-private partnership route.

Lazy capitalism

FE says,

The commerce secretary’s statement that free trade agreements (FTAs) would drive domestic reforms, and not vice-versa, indicates that India, making the best of a bad multilateral trade situation, is following the successful approach taken by the likes of Japan and Korea. Both countries used FTAs to break the stranglehold of pressure groups on trade policy and domestic reforms, even in sensitive sectors. Japan’s new FTA with Mexico, which not only opened up the Japanese market to cheaper agricultural imports but also blunted opposition from that country’s powerful agriculture lobby, best exemplifies this. Clearly, a country-based approach to opening up the economy makes pressure groups more amenable to persuasion. Moreover, given the Doha round’s virtual demise, FTAs are probably the best way to open up the Indian economy further.

Not everyone feels that way, though. Jagdish Bhagwati for one. He says,

We are thus (through these FTAs) reproducing in the world trading system, in the name of free trade but through free trade areas that spread discrimination against producers in non-member countries, the chaos that was created in the 1930s through similar uncoordinated pursuit of protectionism that discriminated in favour of domestic producers. In both cases, the preferred solution would have been non-discriminatory pursuit of freer trade.

It's interesting to see how the special economic zones are so much like free trade agreements. Like FTAs, SEZs are created in the name of friendlier policies (better infrastructure, less constraining labour laws, lower taxes etc), and like FTAs they discriminate against non-members. And yes, like FTAs, SEZs have support from reformers.

Education

Business Standard says

A government-sponsored Public Report on Basic Education in India, for example, has disclosed that teaching goes on in only 53 per cent of government schools in the villages of MP, Bihar, UP and Rajasthan. Teachers were found absent in one-third of the schools; many were found to have brazenly closed their schools and were busy running shops. Yet, governments continue to be hostile to the idea of private institutions, of public-private partnership, and of a suitable incentive system to make the public education system work better. Some state governments in the southern cone have taken the attitude that private educational institutes should be liberally allowed; this explains the sharp increase in supply of engineers in the south, though all the privately-run institutions cannot lay claim to providing quality education. Indeed, some of them already face a shortage of students, but this situation has the virtue of being a problem of excess supply and therefore student choice. In most places, however, it is still a case of supply shortage.

I think the piece confuses between primary and higher education, but raises a valid point. Wonder why the government is reluctant even to try something like a voucher system, at least in a couple of districts, see how it works, and if it's satisfied expand it to more locations.

National security is the last resort of protectionists

Business Standard reports:

Tata had written to the minister in October on various issues related to Press Note 5, including the suspension of Para 2, which said conditions related to security issues were also to apply to existing telecom operators with an FDI cap of 49 per cent.

The note puts various restrictions on telecom companies with foreign direct investment, on issues such as having foreigners at key management positions and remote access.

With uncertainty prevailing for around two years now, the telecom industry has urged the government to go back to the earlier regime that had an FDI cap of 49 per cent.

Those of us who cried foul when businesses and governments abroad seemed to be against Mittal's bid for Arcelor, should also take a look at our views on foriegners.

Some, however, say being cautious is not protectionism.

Log-unrolling?

Business Standard reports

Union civil aviation minister Praful Patel today put his weight behind Jet Airways' application seeking to fly to the US and said the issue of security clearance by home ministry to the country's largest carrier is unnecessarily delayed.

"The home ministry has given the security clearance to Jet to fly domestic routes. Why can not the carrier be given permission to fly to the US.

"If it cannot be given security clearance to fly to the US, then it should also not be allowed to operate in domestic routes," Patel said adding that the issue should be put to rest by the home ministry at the earliest.

Strange are the ways ministers behave. Or may be not. We have instances of logrolling when politicians try to cooperate with each other to pass laws that might satisfy each other's constituencies, but perhaps not the society at large. And you have such instances as above when ministers, even of the same government, don't.