Tata: we have proof of rivals’ role in Singur

FE reports

Tata group chairman Ratan Tata on Monday reiterated that competitors have had a role in stoking the controversy over farmland acquisition for Tata Motors’ small-car project at Singur, and said he has evidence which he will make public at the right time.

“This is true. We have quite clear evidence about it and we will make it public in due time,” Tata said, when it was pointed out to him that the managing director and CEO of Maruti Udyog Ltd, Jagdish Khattar, had dared the Tatas to name the competitor.

Industry for dumping duty on Chinese equipment

BL reports

The industrial sector today fielded one of the top Indian companies to convey to the Government the need for imposing an anti-dumping duty or countervailing duty on import of Chinese equipment.

Speaking in the context of the manufacturing sector, at a World Bank conference on public private partnership in infrastructure, the Larsen and Toubro Chairman and Managing Director, Mr A.M. Naik, said that with the Chinese currency at artificial levels and Chinese firms getting equity from their Government at zero cost, the firms enjoy a cost advantage vis-à-vis their Indian counterparts.

"In most of the contracts that the Chinese firms bag in India, domestic companies lag by a margin of 5-10 per cent," he said adding that Indian firms have to build in a 14-15 per cent cost of equity.

"Till China floats its currency and abides by the WTO norms, the benefit of low or zero duties (on goods imported to India) should not accrue to Chinese firms," Mr Naik said.

'Industrial sector', the report says. Wonder if it includes importers of these Chinese equipment.

Here's another way of looking at this: "A top industrialist complained that Chinese tax payers subsidize Indian buyers, lowering the price they have to pay for equipment. These products made by domestic companies cost 5-10% more. Now, Government should force these buyers to shell out more."

After tur & urad, traders want delisting of wheat

FE reports

The Indian Merchants Chamber, Federation of Associations of Maharashtra (FAM) and Poona Merchants Chamber have demanded the delisting of wheat from the MCX and NCDEX.

After tur dal and urad dal, the traders want wheat off the list. Kanhaiyalal Gidwani, president of the Maharashtra Pradesh Congress Committee’s consumer protection, market, industry & commerce department has sent a memorandum to the Prime Minister, finance minister and agriculture minister Sharad Pawar demanding a delisting of wheat.

Gidwani said, “Delisting of wheat would bring down prices by a minimum of 15-20%.” FAM president Mohan Gurnani said, “Trading of essential commodities will be successful only if there was a maturity level amongst the transacting parties else it will led to price fluctuations.”

BS in an editorial explains why it would be a bad idea to restrict futures trading - here:

The deeper reason why futures trading is extremely important lies in a strategic sense of Indian agriculture. Where is India going on the terrible distortions of the agricultural sector? Is India ever going to move away from the knee-jerk responses of hurting milk farmers one day by banning milk export, and then trying to set up a minimum support price for milk because milk farmers are unhappy? If India is going to make progress towards a well-functioning agricultural sector, then there is no question that futures trading belongs in it. Futures trading is as much a part of modern agriculture as fertilisers, drip irrigation and bio-technology.

Mr Hooda is not alone in his views. The political and bureaucratic establishment that deals with agriculture is deeply steeped in the mindset of a government that prevents agricultural markets from functioning. For this reason—if not for any other—the regulation of commodity futures trading needs to be moved to the ministry of finance, merging it with all organised financial trading, as is the case with all other mature market economies.

And have a look at this earlier editorial as well - here

If the government is concerned about inflation, meanwhile, it should consider how to strengthen the forces of competition in the system—an objective that could also spur growth. The country’s import basket suggests one course of action—the overwhelming bulk of India’s imports consist of intermediate products, which go into final products. The biggest items of import are petroleum and products, engineering items, minerals and metals. Finished products figure very little, except when it comes to electronic goods and technology-intensive items for which India still has a weak manufacturing base. If the imports of more finished consumer goods were to be encouraged, it would add a new element of competition in the Indian marketplace—and discourage producers from jacking up prices when margins are already comfortable. This suggests sharp tariff cuts as the required course of action. The government has already moved in this direction recently, but more can and should be done—judging by companies’ profits to sales margins.

The other reason for encouraging more imports is that capital can be expected to flow into the country in even greater quantities, following the economy being bumped up to investment grade by Standard & Poor’s (Moody’s did it two years ago). Sterilising the dollar inflow will be a challenge to the Reserve Bank of India, which is already grappling with the issue of monetary growth of 20 per cent. The natural balance is when the surplus on the capital account is matched by a deficit on the current (trade) account. This latter figure is now between 1.5 per cent and 2 per cent of GDP. Given the scale of capital inflow, and the cushion provided by foreign exchange reserves, the case can be made for targeting a higher current account deficit. That means encouraging more imports.

Hyundai Motor workers reject plan to double workforce

Well, this is not about India, but it's worth reading this report that came in FE today, filed from Seoul by AFP

Unionised workers at a commercial vehicle plant of dispute-plagued Hyundai Motor on Friday rejected a company plan to double the workforce by adding another shift.

Of 678 union members at the auto maker's plant in the southwestern city of Cheonju, 428 voted against a tentative deal reached last month by the company and union leaders.

The rejection frustrated the company's plan to hire some 700 new workers and introduce a night shift in order to double production to an annual 100,000 buses.

"We badly need to increase production to meet rising overseas demand. Export orders are backed up for up to four to six months," Hyundai Motor spokesman Jake Jang said.

A lot of us assume that capitalists are for capitalism, but keener observers have pointed out (and the news reports linked here suggest), they don't want new players to get a chance.

Same with workers unions. Apparently they are for workers' rights, but what they end up doing is to make it difficult for other workers -- by putting pressure on the company they work for as in the case above; or on the government as reflected in the tough labour laws in India. Another example here

Cars: Why these high tariffs?

Commenting on the competitiveness of Indian automobile sector, Business Standard writes

So it bears asking why the industry and government want to continue with the current high level of import protection—with basic duties of 100 per cent for cars, and total duties going up in some cases to the region of 160 per cent. Only sin products like alcohol and cigarettes, apart from sensitive agricultural items, continue to attract very high import tariffs—and there is no reason why a healthy automobile sector should enjoy the same privilege. After all, the basic duty on most inputs for the industry vary from 5 per cent to 12.5 per cent, Indian factory labour costs less than it does in most other countries, and productivity levels are now comparable with the best in the world. So much so that Maruti Udyog in India threatens to get bigger than its parent company, Suzuki Motors, in its home market of Japan, and contributes an increasingly sizeable chunk of the latter’s profits. With so much going in its favour, India’s automobile industry does not need to hide behind protectionist curtains.

The story of the high tariffs goes back to the issue of low-cost imports coming in from China, amid allegations that their costing was not transparent and that Indian industry was therefore at a disadvantage. When leading lights of the automobile industry lobbied with the then finance minister, Yashwant Sinha, they were persuasive enough to get exactly what they wanted.

When a government runs a business

Reuters reports

The government ordered sports television channels, radio stations and content providers on Thursday to share live telecast rights with the state broadcaster for sporting events of "national importance" at home and abroad.

Analysts said the move was the first towards a planned law making it mandatory for private broadcasters to share major sports events with Prasar Bharati, legislation the government hopes to pass in the parliament session beginning this month.

"The union cabinet gave its approval to ... the Sports Broadcasting Ordinance, 2007, to make it obligatory to every content right owner and TV and radio broadcasting service provided to share live telecast signals," the statement said.

Please check this earlier post. The same views apply.

Export ban seen easing milk prices in India

Reuters reports

The government's decision on Thursday to ban the export of skimmed milk powder could help ease domestic prices of both milk and milk products, but also erode farmers' earnings and the nation's export credibility, industry officials said.

The ban comes days after a couple of dairies raised retail prices by 1-2 rupees a litre and a half a dozen others declared plans for similar increases, as farmers began charging them more.

However, the markets were also abuzz with talk that the government could impose a ban to boost local availability. The talk proved partially correct with the government decision against powder exports.

"We were presuming that government cannot ban exports and that this was only a rumour," D.K. Jha, general manager for marketing at Gopaljee group, told Reuters.

Proves the point of the previous post, does it not?