Winning Bizness Economic Desk
India has made its first-ever rupee payment for the purchase of crude oil from the United Arab Emirates (UAE). India is the world’s third-largest energy consumer.
This initiative is considered as a part of the country’s broader efforts to diversify oil suppliers, slash transaction costs and establish its currency (the Rupee)) as a viable trade settlement currency.
This also aligns with the Reserve Bank of India (RBI)’s move in July of last year to allow importers to pay in Rupees and exporters to receive payments in the local currency.
In July 2023, India formalised an agreement with the United Arab Emirates for Rupee settlements leading to the Indian Oil Corporation (IOC) making payment for buying one-million barrels of crude oil from the Abu Dhabi National Oil Company (ADNOC) in Indian Rupees.
A point to be highlighted here is that some Russian oil imports have also been settled in Rupees.
India is presently concentrating on sourcing its requirements from different markets so as to make its purchases cost-effective while simultaneously following all international obligations.
Since last year, India has been following this policy; after the Russia-Ukraine war started and several nations led by the United States imposed sanctions on Russia, India started importing oil from Russia at a huge discount, thus saving a lot of money. This also helped India in combating inflation to some extent.
While there has been success in non-oil trade settlements with specific countries, many oil exporters have been unenthusiastic in embracing the Rupee. This is because they probably feel that transactional costs could shoot up and also because they fear there could be problems in fund repatriation.
In the last financial year (FY 23), the country imported 232.7-million tonnes of crude oil for which its expense stood at Rs 157.5-billion.
The major exporters to India were Iraq, Saudi Arabia, Russia and the UAE with West Asia contributing a huge 58 per cent of all supplies. Here it must be pointed out that domestic supplies meet less than 15 per cent of the country’s demand.
India’s Agriculture Exports Likely to Touch USD 53-bn in FY 24: Commerce Min Official
Despite a few challenges which include restrictions on exports of some key products such as rice, wheat and sugar, India’s agriculture exports this fiscal (FY 24) will likely touch the USD 53-billion mark. This number is the same as last year when exports stood at USD 53-billion.
“We expect that we would reach that level in spite of USD 4.5-billion-to-USD 5-billion impact due to the restrictions (on export of some commodities),” Additional Secretary in the Commerce Ministry, Mr Rajesh Agrawal, had said recently.
Here, it must be pointed out that the Indian government has prohibited the exports of wheat and non-basmati white rice besides imposing curbs on sugar exports as well.
Mr Agrawal also said that India was aiming to increase its banana exports over the next three-years.
Exports of fruits and vegetables, cereals, meat, dairy and poultry products have registered a healthy growth rate during the April-to-November period of this year.
A point to be highlighted here is that rice exports have moved southward 7.65 per cent to USD 6.5-billion during the same period.
The Commerce Ministry official further said that the government was now promoting exports of new products such as bananas and value-added millet products to new global markets.
India Targets USD 1-billion Fresh Banana Export in Next Five Years
India is now aiming to boost its banana exports and touch the USD 1-billion mark over the next five-year period.
Recently, India successfully exported a trial shipment of fresh bananas to The Netherlands through the sea-route. This trial shipment reached Rotterdam in the European country early this month (December 5). The consignment originated in Baramati in Maharashtra.
Here it must be highlighted that the use of a sea-route is an important development. This is because presently, most of India’s fruits exports are conducted through air-routes on account of lower volumes combined with different ripening periods.
India has recognised the need to up its export volumes and to this end is now developing sea protocols for fresh fruits and vegetables such as bananas, mangoes, pomegranates and jackfruit to promote its exports through sea-routes.
The protocols include understanding voyage times, scientifically understanding the ripening of these commodities, harvesting at the correct time and training of farmers.
It goes without saying that these protocols will be different for different fruits and vegetables.
For bananas, the Agricultural and Processed Food Products Export Development Authority (APEDA), along with other stakeholders has developed these protocols.
India is today the world’s largest producer of bananas; however, its export share is a shockingly meagre one per cent in the global market. A point to be noted here is that the country presently accounts for 26.45 per cent of the global banana production of 35.36-million tonnes.
In 2022-23, India exported 0.36-million tonnes of bananas worth USD 176-million.
The main banana producing states in the country are Andhra Pradesh, Maharashtra, Karnataka, Tamil Nadu and Uttar Pradesh.
Retailers Clock Lower Than Anticipated Festival Sales Growth, says RAI
Retailers in the country have registered a lower than anticipated growth during the recently-concluded festival season, as per a survey released by the Retailers Association of India (RAI).
As per RAI’s latest survey, Indian retailers registered an average growth of seven per cent in October and November of this year compared to the same period last year (2022).
The growth was driven by high-value products while demand for low-value products was muted.
“Retailers had anticipated double-digit sales growth during the puja and Diwali season in October and November 2023; however, sales growth has been muted for many retailers. Most retailers have indicated that footfalls were not even equal to 2022 though sales were just about the same as in the previous year,” RAI’s CEO, Mr Kumar Rajagopalan, said.
A point that needs highlighting here is that many retailers, especially in the apparel segment, managed to grow their sales over last year only because of new store openings and on-line sales. Mr Rajagopalan pointed out that like-for-like store business was negative for more than 50 per cent of the retailers surveyed.
However, there was a growth in high-value products such as jewellery—the segment grew on the back of higher gold prices and demand in the latter part of November because of the wedding season. Low-value products, however, clocked a quantitative dip.
Jewellery grew 13 per cent, sports goods 11 per cent and footwear segment 10 per cent. Sales of consumer durables and IT products were up nine per cent during the festival period over last year driven by higher consumer finance schemes, RAI stated.
According to the Association’s survey findings, retailers in east India registered a 11 per cent growth during the two festival months as compared to the same period in 2022.
In south India, there was a seven per cent growth, while north and west India clocked a six and five per cent growth, respectively.
Among other segments, furniture and furnishings and beauty and personal care segments witnessed a nine per cent growth each while food and grocery sales were five per cent higher.
The quick service restaurant segment clocked a seven per cent growth while apparel and clothing segment witnessed a growth of around six per cent during the festival months this year as compared the same period a year-ago.
India Close to Sealing Deal for Acquiring Lithium Blocks in Argentina
India is close to sealing a major deal involving the acquisition of five lithium blocks in the Latin American nation of Argentina.
This move comes even as the country is involved in negotiations with other nations rich in critical minerals.
A news report stated that a contract would soon be formalised between Khanij Bidesh India Ltd (KABIL), a joint venture firm that focussed on discovering, purchasing, developing, processing and commercially exploiting strategic minerals from foreign locations to supply in India and Catamarca Minera Y Energetica Sociedad Del Estada (CAMYEN),
The latter is a government-owned mining and energy firm in the Argentinian province of Catamarca.
According to a news report, the Indian government will invest around Rs 200-crore for the exploration and development of the mines over a five-year period.
This Argentinian endeavour is India’s second attempt to seal a foreign alliance for sourcing critical minerals. Here, it must be pointed out that last year (2022), India inked a Memorandum of Understanding (MoU) with Australia’s Critical Minerals Facilitation Office (CMFO) to explore five blocks.
Of these, two were for lithium while the remaining three were for cobalt.
Argentina possesses the world’s second-largest lithium reserves while the first spot is held by another South American nation Bolivia.
Lithium is widely used in numerous applications, most notably in the production of lithium-ion batteries.