INDIA & THE WORLD BILATERAL AFFAIRS OCTOBER 2014
- Vietnam offers two more offshore oil blocks to India
India has been offered two additional offshore oil exploration blocks in Vietnam. In addition, Vietnam has agreed to extend by another two years the opportunity for Indian oil companies to consider the option of exploring another offshore oil field, which was offered to it earlier.
The offers were made at the official level talks between the visiting Vietnam Prime Minister Nguyen Tan Dung and Narendra Modi on 28th October. This is the second two-year extension that India has got for the oil block. It was first extended in 2012 for two years, which expired earlier this year. Official sources emphasised that the oil blocks offered were in Vietnam waters and were part of the original lot of five blocks which it had offered India some years back.
Following the talks an agreement was inked between ONGC Videsh Ltd and Petrovietnam Exploration Production Corporation Ltd (PVEP) for mutual cooperation for exploration in two blocks 102/10 and 106/10 of PVEP and Block 128 of ONGC Videsh in offshore Vietnam. In addition, ONGC signed a memorandum of understanding with PVEP for mutual cooperation for exploration in the NELP Blocks of ONGC in the Andaman and Cauvery Basins. With the two leaders agreeing that enhancing economic cooperation between the two countries should be pursued as a strategic objective, India extended a $300-million line of credit to expand trade and investment and enhanced Indian participation in energy, infrastructure, textiles, chemicals, machinery, agro-processing and information technology in Vietnam.- The two sides also decided to enhance the bilateral trade target to $15 billion to be achieved by 2020. To facilitate the process, Bank of India was given a licence to set up a bank in Vietnam.
- India has also agreed to increase cooperation in space, including in space applications and launch Vietnam’s satellites.
- Calling India’s defence cooperation with Vietnam “among our most important,” Prime Minister Narendra Modi gave a commitment to “modernise Vietnam’s defence and security forces”
- India ‘overdoing’ safeguard action: US, European Union
India has initiated the largest number of safeguard actions this year to protect its industry against a surge in imports of products such as iron, filament yarn and non-steel items. The US and the EU, at a recent meeting of the World Trade Organisation’s (WTO) safeguards committee, expressed concerns about the increasing use of safeguard duties by WTO members, which are to be used only as an emergency measure.
Safeguard duties are imposed on imports to check a steep rise in inflow of products which cause injury to the domestic industry. While fingers were not pointed particularly at India this time, earlier this year the EU had accused the country of not meeting the requirements of the safeguard agreement while launching investigations.
The WTO’s safeguard committee reviewed 36 safeguard actions — wherein penal duties are imposed on imports to stop surge in inflow of particular items — the highest number since 2010, and the third highest number ever.
India notified eight safeguard actions, followed by Indonesia with Five, Colombia with four, and Turkey with three, according to figures made public in the safeguard committee meeting. New Delhi announced that it had terminated two of its safeguard investigations — on PX13 and on non-alloyed ingots of unwrought aluminium — which brought down the total number to six. - India invites investments from Saudi Aramco
India has invited Saudi Arabian oil and gas companies, including Saudi Aramco, to participate and invest in crude oil storage facilities and downstream industries in the country. This was done during the visit of Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas, to Saudi Arabia. Pradhan held bilateral energy consultations with Prince Abdul Aziz Bin Salman Bin Abdulaziz, the Saudi Asistant Minister for Petroleum and Mineral Resources. - India votes against UN draft norms on nuclear treaty
India has voted against the provisions of draft resolutions that would have required it to accede to the Nuclear Non-Proliferation Treaty (NPT), saying there is "no question" of it joining the treaty as a non- nuclear weapon state.
Deeply concerned about the growing dangers of nuclear and other mass destruction weapons caused by proliferation networks, the First Committee of the 193-member UN General Assembly that deals with disarmament and international security issues approved a draft resolution on 30th October urging all member states that had not yet done so to sign and ratify the Comprehensive Nuclear-Test-Ban Treaty.
Prior to approval of that draft as a whole, votes were polled on provisions, including on operative paragraph, by which the Assembly would call on all those countries that have not joined the Nuclear Non-Proliferation Treaty (NPT) to accede to it as non-nuclear weapon states.
The provision was retained by a recorded vote of 164 in favour, with Democratic People's Republic of Korea, India and Israel voting against it. In its explanation of vote, India said it cannot accept the call to accede to NPT as a non-nuclear-weapon state.
The text was approved as a whole by a vote of 166 in favour to seven against, with Korea, France, India, Israel, Russian Federation, the UK and the US opposing it. By another provision in the resolution, the Assembly would stress the fundamental role of NPT in achieving nuclear disarmament and non-proliferation and urge India, Israel and Pakistan to promptly accede to the Treaty as non-nuclear- weapon states and place all their nuclear facilities under IAEA safeguards.
The provision was retained by a recorded vote of 163 in favour with India, Israel, the US and Pakistan voting against. In its explanation of vote, India said it remains committed to the goal of complete elimination of nuclear arms.
India said in urging it to accede to NPT "promptly and without conditions," the draft resolution negates the rules of customary international law, as enshrined in the Vienna Law of Treaties, which provides that a state's acceptance, ratification or accession to a treaty is based on the principle of free consent. - SAARC Delhi declaration on education
Education Ministers and officials of eight South Asian countries have resolved to collaborate on increased use of information technology and improving the quality of education.
At the second meeting of Education Ministers of the South Asian Association for Regional Cooperation (SAARC) in Delhi on 31st October, representatives of Afghanistan, Bangladesh, Bhutan, the Maldives, Nepal, Pakistan and Sri Lanka issued a joint statement titled “The New Delhi Declaration on Education.” Human Resource Development Minister Smriti Irani chaired the meeting.
The priority areas of action decided upon include enhancing the learning and development readiness of pre-school children, ensuring education for all, expanding skill development, facilitating mutual recognition of qualifications and mobility of students and teachers and expanding alternative ways of learning such as open and distance education.
The Ministers discussed India’s use of information and communication technology in education, development and sharing of e-resources, connectivity, e-learning and Massive Open Online Courses. - India and China to bond over art in Pink city
The Pink City will play host to a meeting of Indian and Chinese artists when they will exchange views on art and architecture. The programme called ‘Maitri’, which translates to friendship, creation of new bonds and cementing existing connect, begins on November 5.
Workshops on block painting and Chinese water colour art are on the agenda. On November 9, an exhibition of the works created by the artists will be held in Jaipur.
The artists will later travel to Agra to visit the Taj Mahal to explore Mughal and Hindu styles of architecture, design and décor. The confluence will end in New Delhi with a heritage tour. The Indian Council for Cultural Relations has conceptualised ‘Maitri’. - India signs up for China’s Asian Bank
China led 21 Asian nations, including India, in forming a multilateral financial front in the form of the Asian Infrastructure Investment Bank (AIIB), being seen as a challenger to the U.S.-backed Bretton Woods institutions. India signed a memorandum of understanding, along with Pakistan, Sri Lanka, Bangladesh and Nepal and others, as the founding member of the AIIB on 24th October.
Usha Titus, Joint Secretary, Economic Affairs division of the Finance Ministry, signed the MoU on India’s behalf. With an initial subscribed capital of $50 billion, the setting up of the Beijing-headquartered AIIB has been welcomed by the World Bank and the Asian Development Bank.
The 21-nation group comprises Bangladesh, Brunei, Cambodia, China, India, Kazakhstan, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, the Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam.
China says it's willing to pony up just about all of the $50 billion to capitalize the bank, while other institutions and private lenders are expected to provide another $50 billion. That $100 billion is still relatively small compared with existing institutions. The World Bank's capital is about $220 billion, while the Asian Development Bank has $175 billion capital.
The bank is in large part China's reaction to being constantly relegated to second-class status at existing institutions. China is also backing another alternative institution, the New Development Bank, sponsored by the so-called BRICS countries that also include Russia, India, Brazil and South Africa.
In addition, the bank is expected to bring solid economic benefits to China, whose companies already benefit massively from policy loans offered abroad by the country's state banks. They can expect to pick up port, railway and telecommunications contracts for projects tied to China's oft-mentioned dream of restoring ancient Silk Road trade links to Europe. The bank could also absorb some of China's $3.89 trillion in foreign currency reserves.
Asia needs infrastructure development. The World Bank estimates that $8 trillion in spending is required between 2010 and 2020 just to keep Asian economies humming along. Only a tiny slice of that can now be provided by the Asian Development Bank and other institutional lenders, so the AIIB hopes to help fill some of those enormous gaps. - India, china agree to step up military interaction
India and China have agreed to take steps to improve border management, including the establishment of a hotline between the two Army headquarters and designating additional border posts for meetings between local commanders.
Chinese Foreign Ministry spokesperson Hua Chunying disclosed on 20th October that both countries decided to step up military-to military interaction during last week’s Working Mechanism for Consultation and Coordination on India-China Border Affairs (WMCC) held in New Delhi. - 13 agreements between India and Norway
As many as 13 agreements were signed between Indian and Norwegian entities on the second and concluding day of President Pranab Mukherjee’s visit to this Scandinavian nation.
The agreements, which range from a statement of intent between the Defence Research & Development Organisation (DRDO) and the Norwegian Defence Research Establishment and setting up a state-of-the-art fish farming unit outside Delhi, also had IIT-Kanpur, Hyderabad University and several other educational institutions reaching accord with their Norwegian counterparts.
The President, in his address to a joint business gathering, announced that Norwegian tourists would soon be given the visa-on-arrival facility, even as Norwegian Prime Minister Erna Solberg said Oslo would open a new consulate in Mumbai.
As Mr. Mukherjee suggested that Norway’s $900-billion pension fund would increase its exposure to India, given the new Narendra Modi government’s intent to create an enabling business climate, Ms. Solberg said pension fund decisions were made independently of the government. - EU, India tie-up for social sciences
UK’s Economic and Social Research Council (ESRC) and Indian Council of Social Science Research (ICSSR) on 14th October launched EU-India Social Sciences and Humanities Platform (EqUIP) to promote research in social sciences and humanities. EqUIP is a three-year initiative with €1.5-million funding by the European Commission under its 7th Framework Programme for Research. The platform aims to bring together 12 European research funding organisations with key funding agencies in India. Michael Bright, Head of International Strategy, ESRC, said, the key objective is to share knowledge and best practices and establish networks between researchers. - India, Finland to double bilateral trade to $2 b
India and Finland have agreed to double bilateral trade to $2 billion over the next three years. To achieve this target the two countries signed as many as 19 agreements for cooperation across various areas including education, biotechnology, nuclear and radiation safety and renewable energy.
These agreements were signed in the presence of President Pranab Mukherjee and his Finnish counterpart President Sauli Niinisto. Among the agreements signed between the two countries is also a joint venture partnership agreement between Chempolis Oy and Numaligarh Refinery Ltd to build the first Bio-Refinery in India.
An MoU has been signed between the Department of Biotechnology and Tekes, the Finnish Funding Agency for Innovation for Cooperation in the field of biotechnology. The MoU shall enable collaboration in the areas of diagnostics in health and well being through joint funding of projects and workshops. But in comparison to India, Finland has a higher level of trade with China with as many as 300 Finnish companies in that country.
Key deals- Chempolis Oy, Numaligarh Refinery sign pact to build the first Bio-Refinery in India
- Dept of Biotech pact with Finnish funding agency to boost ties in biotech
- WTO rules against India’s curbs on US chicken imports
India’s import restrictions on chicken legs and some other farm products from the US on fears that “low-intensity” bird flu can affect public health are not in line with multilateral trade rules, a World Trade Organisation panel has ruled.
This means New Delhi will now not be able impose restrictions on imports of farm products, including poultry products, from countries reporting low-intensity bird flu on health grounds which would in turn open the Indian market to low-priced chicken legs from the US.
The US had dragged India to the WTO on the issue in 2012 claiming that the restrictions were based on “unscientific” reasons, which the dispute settlement panel has upheld.
India will now examine if it would challenge the verdict in the Appellate Body, the highest decision making body of the WTO.
The US had argued that the ban imposed by India on import of poultry products from countries’ reporting outbreaks of low pathogenic notifiable avian influenza has no basis in science and was also not supported by World Organisation for Animal Health.
The ruling has left the domestic poultry sector worried. It wants the Centre to go to the WTO Appellate Body in appeal against the ruling as it is jittery over the prospects of cheaper US chicken legs getting dumped in the Indian market. - India, Canada to host workshop on nuclear security
India and Canada will jointly host a workshop on nuclear security later this month for which 15 other countries and persons from the International Atomic Energy Agency have been invited. This is the first time that India is collaborating and cooperating with another country to host a workshop on nuclear security, a spokesman of the Ministry of External Affairs said on 14th October.
The idea of holding of the workshop in India came up at discussions between John Baird, the visiting Canadian Foreign Minister, and Sushma Swaraj, External Affairs Minister, during the ‘Strategic dialogue between India and Canada - Administrative Staff College, Maldives tie up
Administrative Staff College of India (ASCI), on 17th October, signed a Memorandum of Understanding (MoU) with Maldives to extend cooperation in training the staff of the island nation’s Civil Service Commission (CSC), the senior officers of the Maldives Civil Service (MCS) and the trainers of its Civil Service Training Institute (CSTI).
Besides training the top officials of Maldives, the ASCI will also provide consultancy and advisory for CSC, MCS and CSTI and collaborate in research needs of these institutions. - India, China agree to defuse tensions
Indian and Chinese diplomats agreed to defuse tensions of the past three months at a two-day meeting of the Working Mechanism for Consultation and Coordination on India-China Border Affairs (WMCC) in Delhi that concluded on 17th October. But a month after Chinese President Xi Jinping and Prime Minister Narendra Modi committed to restarting the high-level talks of Special Representatives on border issues, India is yet to announce its nominee for the dialogue. - Cabinet approved Iran port project
The Union cabinet on 18th October paved the way for setting up a $85.21-million joint venture firm for equipping two fully-constructed berths in Iran's Chabahar port. It also approved the framework of an inter-government memorandum of understanding for this.
The cabinet gave a nod to constitute a joint venture or other appropriate Special Purpose Vehicle, comprising the Jawaharlal Nehru Port Trust and the Kandla Port Trust, to participate in the development of Chabahar port.
Located on the border of Indian Ocean and the Sea of Oman in southeastern Iran, the Chahbahar Port is India's first foreign port project. While it's located outside the Persian Gulf, its strategic significance is in its proximity to Afghanistan.
According to the framework, approved in the cabinet on 18th October, an Indian joint venture company would lease two fully constructed berths in Chabahar port's Phase-I project for a period of ten years, which could be renewed by "mutual agreement".
ABOUT PORT:
The Port of Chabahar (or Chah Bahar) is a seaport in Chah Bahar in southeastern Iran. Its location lies on the border of Indian Ocean and Oman Sea. It is the only Iranian port with direct access to ocean. The port was partially built by India in the 1990s to provide access to Afghanistan and Central Asia, bypassing Pakistan. - India puts Jaffna train back on rails
The iconic Yal Devi Express from Colombo to Jaffna will resume its run on October 13, some 25 years after the link was suspended during the height of the Sri Lankan civil war.
IRCON, an Indian Railways subsidiary, restored a section of the line from Omanthai to Pallai in the Northern Province, damaged during the war, with a $800-million line of credit from India. Nearly 4,000 people, 400 of them skilled labourers from India, have been working on the project for over four years. Connecting the south to the north, the 339-km line, inaugurated in 1894, is the longest on the island.
After the war ended in 2009, the line was gradually restored section by section, first to Omanthai, then further north to Kilinochchi, and then to Pallai, 40 km short of Jaffna. Now, IRCON plans to extend the line to Kankesanthurai, the northernmost tip of the island.
The first train from Colombo to Jaffna on the northern railway line of Sri Lanka ran over a century ago in 1905, with the journey taking 13 hours.The iconic Yal Devi Express, introduced in 1956 and now being restored, reduced travel time by almost half to six hours.
Passing through many important stations, the train ran full for many years until different militant groups attacked the service through the 1980s, raising fear among passengers.
As the civil war intensified in 1990, the train ran only up to Vavuniya, as areas north of the town came under the control of the Liberation Tigers of Tamil Eelam. - Tripura to supply 100 MW to Bangladesh
India has initiated the process to supply 100MW of power from Tripura to Bangladesh, an Indian diplomat said on 7th October.
Supplying power from Tripura to Bangladesh will be similar to the system between West Bengal's Baharampur and Bheramara in Bangladesh.
India had commenced supply of 250MW of power to Bangladesh last year after the government-run Bangladesh Power Development Board and India's NTPC Vidyut Vyapar Nigam Ltd (NVVN), a subsidiary of India's National Thermal Power Corporation (NTPC), signed a deal February 28, 2012 to supply 250MW of electricity, following an agreement signed during Bangladesh Prime Minister Sheikh Hasina's visit to New Delhi in January 2010.
To provide power to Bangladesh, 400kV switching station has been set up at Baharampur in West Bengal. The cross-border inter-connection has been established between Baharampur (India) and Bheramara (Bangladesh).
The power generation from the first unit (363MW) of the Rs 9,000-crore Palatana power plant began December 2013 and the second unit (363MW) is expected to start generation by next month.
Tripura would be the second power surplus state in India within the next three-four months after Sikkim, once full generation started from the Palatana and Monarchak power plants, both gas based project. - Chhattisgarh inks deal with Chinese firm for gadgets
The Chhattisgarh government on 8th October inked a Memorandum of Understanding (MoU) with Chinese company Forstar Industry Ltd to manufacture computer devices, smart phones and laptops.
As per the agreement, the Chinese company will set up an industry at Urkura, an industrial zone in the outskirts of the capital Raipur, to manufacture computer devices, smart phones and laptops
In the same sequence, an MoU has been signed with Chinese company to set up an IT industry in Chhattisgarh. This will expedite the socio-economic development of the state by opening the doors of Chhattisgarh to global market, ranging from Eastern Europe, Middle East, Africa and South Asia, it said quoting Raman Singh. - ‘Japan plus’ created
To fast-track investments from Japan into India, the Centre on 9th October announced the establishment of ‘Japan Plus’, a team to facilitate investments from Japan, as promised during Prime Minister Narendra Modi’s visit there last month.
Japan Plus, operationalised on October 8 and managed by four Indian and two Japanese officials, will work as a special management team comprising members from the Department of Industrial Policy & Promotion (DIPP) under the commerce and industry ministry and Japan’s Ministry of Economy, Trade and Industry.
During his visit to Japan from August 30 to September 2, Modi was able to garner an investment commitment of $35 billion. He had also vowed to create a channel to obtain investments from Japan without any hurdle.
The government has also constituted a Core Group chaired by the Cabinet secretary on India-Japan Investment Promotion Partnership. This group will comprise the Railway Board chairman, foreign secretary and secretaries of DIPP, economic affairs, expenditure, financial services, revenue, commerce, urban development, electronics and information technology.
This group will coordinate and closely monitor the process to ensure that investments from Japan, as envisaged in India-Japan Investment Promotion Partnership, are facilitated in various sectors and opportunities of investment and technology transfer are fully exploited.
The commitment by Japan to invest $35 billion or 3.5 trillion YEN is for infrastructure sector over five years. This will include ongoing projects such as the Delhi-Mumbai Industrial Corridor or the Chennai-Bangalore Economic Corridor.
Apart from public and private investments, this amount would include Japanese Overseas Development Assistance at a concessional rate.
On 9th October, India and Japan also inked the bilateral advance pricing agreement, which is expected to bring clarity on taxation issues between both authorities. - India, US joint forum on Investment
The Indian and American governments are jointly developing a forum that will lay down a road map for easier inflow of both foreign direct investment (FDI) and foreign institutional investment (FII) into this country.
The forum will aim at enhancing flows from institutional investors and corporate entities, primarily by facilitating individual proposals and projects.
MoF will set up a single-point problem resolution and facilitation arrangement, to ensure prospective investments do not face unnecessary hurdles and do actually materialise, the official said. It will have a particular focus on capital market development and financing of infrastructure.
It appears an infrastructure collaboration platform is also being set up between MoF and the US department of commerce to enhance participation of US companies in projects here. This was envisaged during Prime Minister Narendra Modi’s meeting with US President Barack Obama in Washington last month.
US FDI inflows into India have declined in recent years. It came down from $1.94 billion in 2009-10 to $1.17 billion the next year and to $1.11 billion in 2011-12. In the next two years, the inflows were each less than $1 billion.
India needs over $1 trillion in five years from 2014-15 for infrastructure development, according to a study by the Confederation of Indian Industry. As much as 40 per cent of it is hoped for from the private sector.
What is the difference between FDI and FII?
Both FDI and FII are related to investment in a foreign country. FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country. On the contrary, FII or Foreign Institutional Investor is an investment made by an investor in the markets of a foreign nation.
In FII, the companies only need to get registered in the stock exchange to make investments. But FDI is quite different from it as they invest in a foreign nation.
The Foreign Institutional Investor is also known as hot money as the investors have the liberty to sell it and take it back. But in Foreign Direct Investment, this is not possible. In simple words, FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily. This difference is what makes nations to choose FDI’s more than then FIIs.
FDI is more preferred to the FII as they are considered to be the most beneficial kind of foreign investment for the whole economy.
Foreign Direct Investment only targets a specific enterprise. It aims to increase the enterprises capacity or productivity or change its management control. In an FDI, the capital inflow is translated into additional production. The FII investment flows only into the secondary market. It helps in increasing capital availability in general rather than enhancing the capital of a specific enterprise.
The Foreign Direct Investment is considered to be more stable than Foreign Institutional Investor. FDI not only brings in capital but also helps in good governance practises and better management skills and even technology transfer. Though the Foreign Institutional Investor helps in promoting good governance and improving accounting, it does not come out with any other benefits of the FDI.
While the FDI flows into the primary market, the FII flows into secondary market. While FIIs are short-term investments, the FDI’s are long term. - India, Russia discuss joint ventures in Aviation, Pharmacy industry
India and Russia discussed cooperation in a number of areas including setting up of joint ventures in sectors such as civil aviation, pharmaceuticals, automobiles and fertilizers in a meeting of the working group on modernization and industrial cooperation on 10th October.
The two sides also reviewed progress in the priority investment projects identified in earlier meetings and do some ground-work for the visit
The Russian side, led by First Deputy Minister of Industry and Trade Nikitin Gleb, included representatives from a number of Russian companies with business interests in India such as Kamaz Motorz Ltd, GAZ Group, REP and Uralmashzavod.
The working group, which is divided into sub-groups of mining, fertilizer and civil aviation and modernisation, also discussed means of fast-tracking possible joint ventures in various fields. The Indian side was led by senior officials from the Commerce Ministry and included representatives from the Ministries of Civil Aviation, Fertilizers and Heavy Industry. The Russian delegation also included the Deputy Director of Aviation Department Rostovtseva Lyudmila and Heads of the Departments of Metallurgy and Heavy Machinery and Foreign Economic Relations.
India and Russia are already exploring the possibility of a Free Trade Agreement to boost bilateral trade from the existing $6 billion, which is less than one per cent of India’s total foreign trade.
Russia is interested to do more business in areas such as tractors, industrial machinery and civil aviation, while India wants to attract investments in the Delhi Mumbai Industrial Corridors, the New Manufacturing and Investment Zones and export more pharmaceuticals and agriculture products.
The two countries are already pursuing joint projects in a number of areas, which need to be pushed. Severstal and NMDC are exploring the possibility for the construction of steel plant and development of the iron-ore deposits in Karnataka.
The GAZ Group and Motijug Group of Kolkata are working on setting up an automobile plant in Haldia. Russian fertilizer companies Akron and Orgsintez were in talks with India’s IFFCO for a joint venture, but not much progress has taken place. - UK, India in financial partnership
The United Kingdom and India on 10th October launched a new financial partnership which would establish closer ties and deepen financial cooperation between London and Mumbai, two prominent financial centers.
The financial partnership would be led by Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank from India and Gerry Grimstone, chairman of Standard Life, from the UK. The partnership would initially focus on five themes including collaboration to develop the corporate bond market, mutual sharing of expertise on banking regulation and capitalization and enhancing financial training and qualification.
The other two themes are financial inclusion and developing programmes to improve cross-border provision of financial and insurance services.
The financial partnership would examine key priorities across the UK and Indian financial services industries, and would make recommendations for deepening financial cooperation to the UK and Indian governments ahead of the next UK–India Economic and Financial Dialogue.
No comments:
Post a Comment