RBI breather for exporters on foreign exchange earnings
The Hindu Business Line: August 01, 2012
The Reserve Bank of India relaxed some of the restrictions it had placed on the foreign exchange market over the last six months.
On Tuesday, it allowed exporters to retain all their foreign exchange earnings in foreign currency, for a limited period. It allowed them to partially cancel and rebook forward contracts.
The moves appear to be aimed at boosting the turnover in the foreign exchange market. Exporters will also get some relief. But the movement of the rupee will not be impacted by these tweaks. In May, the RBI had ordered that only half of the foreign exchange earnings could be held as it is in foreign currency in Exchange Earner’s Foreign Currency (EEFC) account.
The move was aimed at stemming the rapid depreciation in the rupee against the dollar
Partial relief
On Tuesday, the RBI gave partial relief to companies by allowing them to retain the entire foreign exchange earnings in EEFC account, but for a limited period only. The foreign currency has to be converted in to rupee on the last day of the month following the month in which the money is received.
For instance, if $1,000 is received on June 14, 2012, it can be parked in EEFC account only till July 31, 2012.
The amount converted to rupee can, however, be reduced to the extent of payment commitments in foreign currency of the company.
Lobbying by industry
According to Mr Abhishek Goenka, CEO, India Forex Advisors, factors such as lobbying by exporters and industry could be behind this move. Banks complaining about contraction in volumes could be another reason why the central bank has backtracked slightly.
Foreign exchange turnover in over-the-counter market is down from daily average of $26 billion in March to $20 billion in June. It could be to resurrect volumes and activity in forex market that the RBI has now allowed exporters to cancel and rebook 25 per cent of their hedged position. There were apprehensions of misuse of this facility by exporters. They could buy and sell multiple times with the same invoice as underlying under the guise of adjusting the hedged position. This facility was entirely withdrawn in December last year to curb speculation in rupee.
India takes the lead in national standards for organic textiles
New Delhi, The Hindu Business Line: July 31, 2012
India has become the first country in the world to introduce national standards for organic textiles. This follows the Commerce, Industry and Textiles Minister, Mr Anand Sharma, on Monday launching the “Indian Standards for Organic Textiles” (ISOT).
The standards will be introduced in the National Standards for Organic Production (NPOP) and will be administered by the Commerce and Industry Ministry as part of the Foreign Trade Policy, an official statement said.
There are over 1,000 branded organic products produced in India and each one is backed up with certification and traceability.
Last year, India supplied certified organic products worth Rs 1,866 crore to Europe, Asia and the US, Mr Sharma said. “The NPOP includes norms for organic production and processing of agriculture crops and certification standards.
Certification standards for organic textiles were not a part of it earlier. By introducing ISOT, India took over the long-standing position of the Global Organic Textiles standards (GOTS), a private standards prevailing in the organic textiles industry,” said the Commerce Secretary, Mr. S.R. Rao.
New body for faster clearance of infra projects
New Delhi, Business Standard: July 20, 2012
To expedite project implementation, the government on Thursday announced a single-window mechanism under the Cabinet secretary for review and issue of clearances associated with major projects.
After putting in place a problem-resolution mechanism for infrastructure projects and an investment tracking system for projects over Rs 1,000 crore directly under the Prime Minister’s Office (PMO), the government has decided to set up a project clearance board, on the lines of the Foreign Investment Promotion Board (FIPB), chaired by the Cabinet secretary, for review and issue of one-time clearances, including security clearance.
The Board will include representatives from the ministries of home, defence, environment and forests, commerce, coal, department of space and other infrastructure and energy-related ministries and departments. The decision was taken at a meeting held at the PMO to review the status of clearances of oil and gas blocks awarded under the New Exploration Licensing Policy.
The Board will meet monthly. Ministries would report to the Board on the status of clearances after following their internal processes. For the petroleum and natural gas sector, the special cell for clearances being set up in the Directorate General of Hydrocarbons will act as the secretariat. A common mechanism for all sectors will be evolved soon and the Board set up in the coming weeks, said a government.
Explaining the need for such an entity, the PMO said one of the biggest hurdles to speedy implementation of projects was the delays faced by project implementing agencies and private companies with concessions, in obtaining security-related clearances from diverse agencies.
“For example, progress in exploration work in over 70 oil blocks awarded under Nelp has slowed due to lack of clearances. There are similar problems in other areas such as ports and infrastructure sectors,” it stressed. There was a need to have an institutionalised mechanism for issuing time-bound clearances on the lines of the model for clearing foreign investments in the form of the FIPB, where foreign investment clearances were given through regular meetings, outlined the PMO. “A need for a similar mechanism was felt for other clearances, so that the issue of delayed clearances is resolved.”
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