Government likely to extend export incentives in a bid to revive key sectors
The government may extend export incentives such as cheap credit to even large players in sectors like pharmaceuticals, chemicals and electronics, in a desperate bid to revive the sector after nine straight months of exports fall due to weak global demand and overvalued rupee.
The Union cabinet is likely to consider this week an interest subvention scheme to provide cheaper credit to exporters and expansion of the Merchandise Exports from India Scheme (MEIS), an official privy to developments told ET.
In the first five months of the current fiscal, exports fell 16.17% year on year, impacting the country’s industrial growth as well as employment in a number of sectors, setting alarm bells ringing in the commerce ministry. Commerce minister Nirmala Sitharaman and commerce secretary Rita Teaotia met finance ministry officials recently to seek fast-tracking of the interest subvention scheme—whereby banks provide credit to exporters at subsidised rates for which they are later compensated by the government—and expansion of benefits under MEIS.
Commerce secretary Teaotia has also called a meeting of all export promotion councils to discuss issues related to decline in exports of various commodities from India, the official said.
Courtesy: Economic Times
Big banks under the spotlight for allegedly fixing precious metals prices
Switzerland’s competition regulator identified seven banks that are being investigated as part of a probe into whether companies in Europe, the U.S. and Japan colluded to manipulate the prices of gold, silver and other precious metals.
UBS Group AG, Deutsche Bank AG, HSBC Holdings Plc, Barclays Plc, Morgan Stanley, Julius Baer Group Ltd. and a unit of Tokyo- based trading company Mitsui & Co. Ltd. are part of the probe, which was opened in February, the Competition Commission said in a statement Monday.
European Union antitrust regulators in August disclosed they are investigating precious-metals trading, specifically anti-competitive behavior in spot trading, following a U.S. probe that embroiled some of the same banks. UBS was ordered to give up 134 million Swiss francs ($137 million) in profit by the Swiss financial regulator last November after it found “serious misconduct” by the bank’s employees in foreign exchange and precious metals trading.
U.S. prosecutors have been examining whether at least 10 banks, including HSBC, Barclays, JPMorgan Chase and Deutsche Bank manipulated prices of precious metals. The scrutiny follows international probes into the rigging of financial benchmarks for rates and currencies, which have yielded billions of dollars in fines.
Pure Gold Jewellers announces new store openings in the UAE and Oman
In Dubai, Pure Gold Jewellers is now present in two more retail locations at Shindagah and Dragon Mart. Residents in Sharjah can now purchase Pure Gold Jewellers exquisite gold and diamond jewellery more conveniently with a new store opening near National Paints. Located in key shopping outlets in Oman, Pure Gold Jewellers plans to reach a significant number of customers in Oman with its new modern stores in Wave Mall and Lulu Sohar.
“The new retail outlets are centrally located in high footfall locations and help us to reach more customers. All the stores follow our customer friendly design concept and display our signature collections, giving shoppers a wide range of choices in precious jewellery for various occasions. We are right on target with our growth plans in the Middle East and we aim to open more stores in the region,” as stated by Karim Merchant, CEO & MD of Pure Gold Jewellers. Pure Gold Jewellers currently boasts 125 modern retail outlets making it one of the fastest growing jewellery retail chains in the Middle East. By 2020, Pure Gold Group expects to increase its presence to 250 stores.
Courtesy: www.zawya .com
MMTC to produce, market sovereign gold coins
MMTC, under the Union commerce ministry, will manufacture and market sovereign gold coins in India and abroad. “We have been given the responsibility. Finance minister Arun Jaitley had anno- unced about the issue of these gold coins in his Budget speech in February,” MMTC chairman and managing director Ved Prakash told Business Standard. The coins will be launched by Prime Minister Narendra Modi in October before the peaking of festive season gold buying for Dhanteras and Diwali. The coins will come in five grammes and 10 grammes weight category. The price will be at par with coins sold by other agencies and banks.
“We are not taking it up as a commercial venture,” said Prakash, adding the design of the coins, with Ashok Chakra and image of Mahatma Gandhi on them, has already been approved. The state-owned trading company intends to produce 20,000 gold coins a month initially and would scale it up to 50,000 coins a month, depending on the demand. The gold coins will be sold through MMTC offices and showrooms in the country and abroad in places such as the UK, the US and South Africa, which have a sizable non-resident Indian population. “We are also in talks with India Post and State Bank of India to market the coins,” he said.
Prakash said MMTC need not have to step up gold import to produce these coins as it will ride on the gold monetisation scheme of the Government of India recently. The monetisation scheme is expected to tap 22,000 tons of gold stocks lying in the households. He said these gold coins will cater to the demand of people currently buying “gold sovereign” of other countries even at a premium in the absence of India made sovereign gold coins. Jaitley had said in his Budget spe-ech that Indian gold coins would help reduce the demand for coins minted outside India and also help recycle the gold in the country.
Courtesy: Business Standard
Maharashtra raises VAT on auto fuel, diamond and gold jewellery
The Maharashtra government on September 30 decided to increase value-added tax (VAT) on petrol and diesel, gold and diamond jewellery, cigarettes, alcohol and soft drinks from October 1 for the next five months. The increase in VAT on petrol and diesel is `2 a litre. At the same time, the Bharatiya Janata Party-led government headed by Chief Minister Devendra Fadnavis waived the local body tax on petrol and diesel. This move, the state government claimed, would make the burden on vehicle users marginal.
While the VAT on cigarettes, alcohol and soft drinks has been raised by five per cent, the same has been increased to 1.2 per cent from one per cent on gold and diamond jewellery. The government hopes to mobilise `1,600 crore from the tax hike, which will be used for relief and rehabilitation measures in Maharashtra’s drought-hit districts. Maharashtra Finance Minister Sudhir Mungantiwar defended the VAT rise on petrol and diesel saying it was necessitated as the state was incurring a monthly loss of `300 crore due to fall in auto fuel price largely due to reduction in global crude oil prices. The government has already abolished local body tax on traders with an annual turnover of `50 crore.
The state government’s move comes at a time when there are concerns that the revenue deficit, currently estimated at `3,757 crore, would be higher than `7,500 crore by the end of 2015-16 due to burgeoning expenses and a fall in revenues due to a slump in the economy. Meanwhile, Ashok Minawala, Director of All India Gems & Jewellery Trade Federation, said the government’s decision would encourage illegitimate business with jewellers as they would prefer to deal in cash to showing sales on their books of account.
Courtesy: Business Standard
Credit off take by industry slows down to 5% in August
Credit off take growth by the industry has fallen to 5 per cent in August compared with 7.8 per cent rise in the same month last year, reflecting subdued industrial activity. “Credit to industry increased by 5 per cent in August 2015 compared with the increase of 7.8 per cent in August 2014,” RBI said in a report. Slowdown in credit growth was observed in all major sub-sectors barring basic metal, all engineering, chemical and chemical products as well as gems and jewellery, it said.
However, there is a silver lining as the RBI lowered benchmark interest rate by 0.5 per cent yesterday, which may prompt banks to bring down lending rate. Lower lending rate could lead to pick up credit growth. Credit to the services sector increased by 5.9 per cent in August compared with an increase of 8.3 per cent in the same month a year ago. However, personal loans increased by 17.3 per cent from the 13.4 per cent rise in August last year. On year-on-year basis, the apex bank said, non-food credit increased by 8.4 per cent as against an increase of 10.2 per cent in August last year.
Exports shrink for 10th month in a row to $21.84 bn
According to the data released by the commerce and industry ministry, India’s merchandise exports dipped 24.33 per cent in September to $21.84 billion while the imports shrank 25.42 per cent to $32.32 billion year-on-year, resulting in a trade deficit of $10.47 billion. The trade deficit stood at $14.47 billion in the corresponding month in last financial year. Exports in September 2014 were valued at $28.86 billion. Further, cumulative exports during the first half of 2015-16 also contracted by 17.36 per cent to stand at $132.93 billion as compared to $161.39 billion during the same period last fiscal.
According to the data, as against seven sectors of 30 which were in positive in August, only six were positive during September. Sectors including tea, coffee, ceramic products and glassware and gems and jewellery, which were positive in August, have turned negative in September, the Federation of Indian Export Organisations (Fieo) said. “However, tobacco, oil meals and cereal preparations have been added to the new list of products showing positive growth besides drugs and pharma, jute manufacturing including floor coverings and handicrafts,” it said. Gold imports declined by 45.62 per cent in September to $2 billion from $3.78 billion in the same month last fiscal.
Courtesy: ENS Economic Bureau
Gold fever in China and India could spark market turmoil: report
China and India’s aggressive acquisitions of gold could bring turmoil to global stock markets, reports Duowei News, a US-based Chinese political news outlet. Citing Russian news network Sputnik, the report notes that the London Metal Exchange is almost completely out of gold reserves, with the exchange’s largest dealer, A-Mark Precious Metals, confirming that the short supply stems largely from Chinese and Indian purchases.
This assertion is supported by Peter Hambro, founder of Petropavlovsk, one of Russia’s largest mining and metallurgical companies. “My baseline is [the Chinese] have been buying and the Indian have been buying in enormous quantities. It’s virtually impossible to get physical gold in London to ship to those countries,” he said. “And I really worry that the market, that paper market, could be stamped on and people will say ‘sorry we’ll have a financial close out’, and it’s all over,” he added. John Butler, author of the book Golden Revolution, agrees. “Gold is moving from place to place. This is a lot of talk. Apparently, its removal from London; maybe in New York as well. The major importers — it is India and China,” Butler said.
Economic analysts note that the growing interest in gold could lead to problems in the banking industry in the West, as Asian countries buying precious metals from around the world to form their own gold market can put a lot of pressure on the US dollar monopoly. This in turn could have a major impact on securities markets. “Credit institutions themselves take the gold from the commodity exchange and return it to their store,” said London-based financial program broadcaster Max Kaiser. “They hoped that the central banks will find a way out of the global liquidity crisis. That did not happen, and now they are afraid.”
Gold Imports by India Said to Slump 52% in September from August
Gold imports by India, the world’s second-biggest consumer, dropped 52 percent last month after shipments surged in August. Overseas purchases tumbled to 67 metric tons from 141 tons in August, according to two finance ministry officials, who asked not to be identified. Imports were valued at 123.8 billion rupees ($1.9 billion) last month, they said.
Shipments jumped in August as jewelers stocked up to meet a surge in demand during the festival and wedding season that started this month. A decline in gold prices to a four-year low in July also spurred purchases. Prices have since recovered 7 percent, tempering imports. “Most jewelers have already stocked up and that’s why they are not buying aggressively,” Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities Ltd., said by phone from Hyderabad. “Globally prices are quiet and are not showing any direction awaiting clarity on U.S. Fed’s rate decision. People are not ready to sit on stocks and get caught on the wrong foot.”
Demand usually peaks in the final quarter in India with gifting during festivals and culminates with the start of the wedding season in November. Local demand is poised to climb in the final quarter to the highest level since 2012 and may jump as much as 15 percent from a year earlier, Bachhraj Bamalwa, a director with the All India Gems & Jewellery Trade Federation, said last month. Bullion for immediate delivery traded at $1,152.35 an ounce at 2:10 p.m. in Mumbai, according to Bloomberg generic pricing. The commodity plunged to $1,077.40 an ounce on July 24, the lowest since 2010. Futures in Mumbai are little changed at 26,586 rupees per 10 grams this year.
Courtesy : www.bloomberg.com
Dubai’s DGCX launches new silver and WTI futures contracts
The Dubai Gold and Commodities Exchange (DGCX) said it would list two new futures contracts to trade. The derivatives bourse said the first, the India Silver Quanto Futures contract, would trade before and after the closure of Indian markets to offer traders increased trading opportunities and would be cash settled and denominated in U.S. dollars. The second contract will be the Mini WTI contract sized at 100 barrels and will look to provide market participants cross margin benefits with the exchange’s existing WTI futures contract.
“The introduction of a Mini sized WTI contract is a logical step to ensure our participants have greater accessibility to the energy markets,” CEO Gaurang Desai said in a statement. “The Mini WTI contract will enable price discovery for many new market participants, offering protection and hedging opportunities to all,” he said. The bourse had announced plans for a spot gold contract early last year as part of its growth as a top trading centre for the precious metal. The launch was originally scheduled for June 2014, but has been repeatedly delayed. DGCX has said it was talking with a local bank about the contract.
Courtesy : Reuters India
Absence of real profitability in the business
Massive downturn in China and Euro zone Markets is severely impacting the demand and prices of polished diamonds and finished jewellery.So with sluggish markets with strong rough diamond prices the industry is facing prolonged absence of real profilability in the business. According to the Gem and Jewellery Export Promotion Council (GJEPC) for the first time ever, imports of rough diamonds have fallen so drastically on a yearly basis, During April-September, the imports fell around 26 per cent compared to the same period last year. The industry scenario has resulted in erosion of capital base of many small and medium diamantaires.
To aid the slump hit industry, the new committee has already made a slew of pre-budget recommendations to the government. This includes the on-going demand to bring the sector under Interest Subvention Scheme and Merchandise Export from India Scheme (MEIS). The council also urged the government to introduce transparent taxation system for the diamond industry. Abolition of minimum alternative tax and forming special notified zones for diamond industry are also in the demand list.
Courtesy: Economic Times
Praveenshankar Pandya elected GJPEC chairman
Praveenshankar Pandya, chairman of Diamond India Limited (DIL), was elected on Tuesday as the chairman of Gem and Jewellery Export Promotion Council (GJEPC), an apex body of the Indian gems and jewellery industry.
Russell Mehta, managing director of Rosy Blue India Pvt Ltd, has been appointed the vice-chairman for 2015-17.
Apart from this, regional chairpersons were also elected on Tuesday. Dinesh Navadiya, president of Surat Diamond Association (SDA), was elected as the regional chairman (Gujarat) for GJEPC, while Ashok Gajera of Laxmi Diamonds has been appointed as the regional chairman (Western Region) of the GJEPC.
India’s diamond trade hub to be opened by November
The 4,500 sq ft special notified zone (SNZ) for rough diamonds in Mumbai at Bharat Diamond Bourse will become functional from November, bringing relief to Indian traders. They will be able to deal directly with international miners and save on money paid to middlemen. It will enable miners like Rio Tinto, Alrosa and De Beers to showcase their rough diamonds and invite bids.
“We have communicated to all miners that the SNZ will become operational from November. The miners are also getting approvals and permissions from their respective governments to showcase their diamonds at the SNZ,” Praveenshankar Pandya, the newly-elected chairman of Gem & Jewellery Export Promotion Council.
Courtesy: Economic Times