"They who drink beer will think beer."
—Washington Irving (American, 183-1859)
Word for the day
Alpenglow (n)
A reddish glow often seen on the summits of mountains just before
sunrise or just after sunset.
(Source: Dictionary.com)
Malice towards none
The reaction of the global
community to every misadventure of Kim is a surety that no one is prepared for
a bigger war, and it's not happening in foreseeable future.
First random thought this morning
A full scale Sino-Indian partnership can solve many of world's
problems today. Capital starved India could benefit from idle factories and
decongested ports of China. Demand starved China could benefit from most
confident Indian consumers. Indians could learn discipline and austerity from
Chinese commoners. Chinese could learn English and democracy from Indians.
With more than one third of global population, they both could
together dominate the global markets and politics.
But how do we do away with history of mistrust? Utopian
thought...duh!
Douse the fire, and make house fireproof
Continuing with the efforts to protect domestic steel industry,
last week the government prescribed minimum import price for 173 steel
products.
The primary objective of the measure is to protect domestic steel
producers from dumping of cheap produce by global competitors. The collateral
benefits will accrue to the banking industry saddled with huge amount of loans
to the domestic steel industry.
For an insider the measure might be necessary and unavoidable
given the financial stress steel industry is facing and the extent of banking
sector exposure to the industry that would have gone bad but for this measure.
But sitting at an arm's length, it appears an act of black mailing
and arm twisting by large steel producers, who judged demand growth wrongly and
rushed to set up new capacities. No surprises if the bankers who extended huge
amount of loans, apparently without due diligence, to these steel czars are
also found in cahoots.
Thinking philosophically, prescription of minimum import price for
steel products, appears illogical and incongruent with the vision of the
government.
First, it is an impediment to the Make in India mission of the
government. In words of Engineering Export Promotion Council (EEPC) imposition
of minimum import price on certain steel products will have a "serious
debilitating" impact on the sectors' exports which are already declining.
The introduction of minimum import price (MIP) on steel products
will raise the cost of raw materials for engineering products by about 6-10%,
EEPC said in a statement.
"Segments like auto and auto parts, industrial and electrical
machinery, products of MSME sector, which in any case have low margins and are
facing cut throat competition will face sudden escalation in raw material
price, giving a further jolt to the exporters," it added.
The move would also have an inflationary impact on the entire
manufacturing sector, it said, adding "the government must provide steel
at global competitive prices."
Second, the practice may encourage over-invoicing of imports to
evade additional duties. This will defeat the government's mission to minimize
the incidence of black money in the economy. Higher cost for domestic economy
and flight of capital by way of rise in hawala transactions have been the
outcome historically.
Third, and the worst, it may not help the steel industry much as,
the measure may result in an inverted duty structure for many engineering
products, making import for manufactured items more beneficial rather than
importing raw material and making it here.
We have seen similar situation in edible oil and tyres.
...to continue
No comments:
Post a Comment