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    CURRENT AFFAIRS 17.02.2011

    Japan for joint effort in developing rare earth minerals

    Signs bilateral Comprehensive Economic Partnership Agreement with India

    Japan on Wednesday proposed joint exploration with India for the development ofrare earth minerals. Tokyo would like to make progress in this domain.

    Disclosing this, Japan's spokesman Hidenobu Sobashima and other officials toldThe Hindu that Tokyo also affirmed its commitment to the steadyimplementation of the Delhi-Mumbai Industrial Corridor (DMIC) and the relatedDedicated Freight Corridor.

    These issues figured in the talks that Commerce and Industry Minister AnandSharma held with Japanese Foreign Minister Seiji Maehara after they signed the

    bilateral Comprehensive Economic Partnership Agreement (CEPA) in Tokyo. Mr.Sharma proposed a two-way trade target of $25 billion by 2014, a doubling of the

    pre-CEPA level. The economic pact will come into force after the completion ofnational procedures.

    It was not immediately clear whether the sensitive issue of a Japan-India civilnuclear deal was discussed when Mr. Sharma called on Japanese Prime Minister

    Naoto Kan. However, Mr. Kan told Mr. Sharma that Japan has the infrastructureand the technology which are needed by India at its current stage of development.

    Mr. Sharma briefed Mr. Kan on the DMIC progress and suggested that Japan joinIndia for a matching contribution towards the proposed revolving fund of $9

    billion for this project, an Indian official said later from Tokyo. India was now inthe process of mobilising $4.5 billion in this regard. India's Ambassador AlokPrasad and Commerce Secretary Rahul Khullar assisted Mr. Sharma during hismeetings with the Japanese ministers including his counterpart Banri Kaieda.

    Describing the CEPA as New Delhi's most ambitious economic pact so far, anIndian official said the country's sensitive sectors are fully protected.Agriculture, fruits, spices, wheat, basmati rice, edible oils, wines and spirits andalso certain categories of industrial products in the auto and auto-parts sector werecited.


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    Significant access to the Japanese market was now possible for Indian textiles,petrochemicals, chemical products, jewellery and cement. Japan would now extendits own national treatment in respect of Indian generic medicines.

    Greater access to Japan would now be available for Indian contractual suppliers,accountants, researchers, tourist guides, management consultants, computerscientists and engineers.

    India's existing policy on foreign investments was the norm adopted in this CEPA,while New Delhi would go by its national laws in honouring its commitment tointellectual property rights in this document.

    GoM on coal to meet today

    The Group of Ministers (GoM), headed by Finance Minister Pranab Mukherjee,will meet here on Thursday to work out a solution to the complex issue of go' andno-go' areas in coal blocks. The issue has become a subject of dispute between theCoal Ministry and the Ministry of Environment and Forests.

    Prime Minister Manmohan Singh, who had constituted the GoM after the UnionCabinet on January 13, decided to refer the entire matter to the GoM.

    Go' and no-go' issue

    Environment and Forests Minister Jairam Ramesh and Union Coal MinisterSriprakash Jaiswal had locked horns over mining in these sensitive zones. Thedispute had reached the Union Cabinet after which it was decided to designate it tothe GoM to come to a final resolution on the whole issue.

    However, it is learnt that the Thursday's meeting will not lead to any finalresolution on the whole issue and it will take some time to work out an acceptablesolution. There is no need for additional coal to meet the demand of varioussectors but at the same time the issue of environment and protection of forests andhabitat cannot be overlooked,'' a senior official remarked. The other members of

    the GoM include Home Minister P. Chidambaram, Agriculture Minister SharadPawar, Law and Justice Minister Veerapa Moily, Commerce and Industry MinisterAnand Sharma, Surface Transport Minister C. P. Joshi, Mr. Ramesh, Mr. Jaiswaland Planning Commission Deputy Chairman Montek Singh Ahluwalia.


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    The main issue to be discussed at the meeting is in relation to the environment andforest with regard to the coal blocks besides rehabilitation and resettlement policyand offtake.

    Last year, the Environment Ministry had prohibited mining in no-go' areas, wherethe forest cover was 30 per cent. The no-go' classification disallowed mining in203 blocks with the potential of producing 660 million tonnes of coal a year.

    Domestic coal demand

    Despite being the third largest producer of coal in the world, India has to import 72million tonnes to meet domestic demand last fiscal. According to the government'sestimates, the requirement is likely to go up to 82 million tonnes in the currentfiscal and to 142 million tonnes in 2011-12. Out of the total installed power

    generation capacity of 1.59 lakh MW, almost 50 per cent is based on coal.

    Indo-Tibetan Border Police camp opened near Madurai

    First such facility of the elite paramilitary force in the south

    Union Home Minister P. Chidambaram inaugurated a camp of the Indo-TibetanBorder Police (ITBP) at Idayapatti, about 15 km from here, on Wednesday.

    The ITBP, an elite para-military force, was established in 1962 to protect northern

    frontiers of the country. It works in some of the most inhospitable, snow-boundand remote areas of the country.

    Among all the Central para-military forces, it is the ITBP, which performs itsduties under most difficult and hostile conditions, Mr. Chidambaram said.

    The Indo-China border is very important for us and bearing this in mind, we haveto recruit more and more personnel into this growing force. Initially, youth fromStates such as Uttar Pradesh, Uttarakhand, Bihar, Himachal Pradesh and Punjabamong others joined the force. Today, there are 4,167 jawans from southern States,

    including Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.

    Mr. Chidambaram said that this was the first camp in a southern State. Such acamp would not only bring the jawans close to their families, but also assist theState governments in times of emergency, Mr. Chidambaram said.


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    The ITBP was examining the possibility of establishing similar camps in AndhraPradesh and Karnataka.

    He hoped that the local youth would come forward to join the elite force afterwitnessing jawans in the sprawling 80-plus acre camp. He thanked the Stategovernment for providing assistance to ITBP officials in establishing the facilityand urged ITBP personnel to make the 45{+t}{+h} Battalion camp a model oneand introduce solar energy and rainwater harvesting structures that would make itsenvironment unique in several aspects.

    Earlier, ITBP Director General Ranjit Kumar Bhatia welcomed the gathering.Madurai Collector C. Kamaraj, Superintendent of Police M. Manohar andCongress MLA M. Sundaram participated.

    ITBP Inspector General of Police Nitin Agarwal proposed a vote of thanks.

    Mr. Chidambaram also laid the foundation stone for phase 2 construction work inadjoining Sivaganga district.


    Textiles, pharma sectors to gain most from trade pact with Japan

    Tariffs on agreed products to be scrapped within 10 years

    India and Japan, with a combined GDP of around $7 trillion, on Wednesday inkeda Comprehensive Economic Partnership Agreement (CEPA) to liberalise theirmarkets and boost not only their bilateral trade in goods and services but alsoinvestments.

    India has now set a bilateral trade target of $25 billion by 2014 with Japan, anofficial statement said. It said, This is the most ambitious (such) agreement signed

    by India so far, adding that India stands to gain significantly from the pact.

    The move comes at a time when India-Japan trade had fallen in 2009-10 by 5 percent to $10.36 billion from $10.91 billion in 2008-09. Trade balance has been inJapan's favour with India imports being $6.7 billion and exports only at $3.6

    billion in 2009-10.


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    The pact covers around 90 per cent of India's tariff lines of around 12,000 lines andabout 95 per cent of Japan's 9,000 tariff lines. The agreement will result inelimination of tariffs in these items within 10 years of the pact coming into force.

    Boost to Japan

    Recently, Japan had fallen behind China to be the world's third largest economy interms of GDP. The market-opening pact with India, the second fastest growingemerging economy after China, is expected to perk up Japan's growth.

    Among those imports from Japan that will be duty-free immediately after the pactis implemented are SIM and memory cards, electronics-indicator panels of LCDsand LEDs, calculators and battery chargers.

    The sectors in India that would gain the most from the CEPA are textiles (they willimmediately get duty-free access to the Japanese market) and pharmaceuticals.Indian pharmaceuticals will get access to a highly developed Japanese market andfor the first time ever Japan has committed to give the same treatment for Indiangenerics (off-patent drugs) as their domestic industry, the statement said.

    The pact was finalised in October 2010, during the Prime Minister, Dr ManmohanSingh's visit to Tokyo.

    The CEPA was signed on Wednesday by the Union Commerce and Industry

    Minister, Mr Anand Sharma, and the Japanese Minister for Foreign Affairs, MrSeiji Maehara, at the Japanese capital.

    Protracted talks

    The CEPA negotiations were protracted as they had begun as early as in January2007 and were spread over 14 rounds. This was the third CEPA signed by India,which has signed similar pacts with Singapore and South Korea. However, thiswas Japan's 12th such Economic Partnership Agreement.

    In the services sector India has obtained considerable concessions from Japan, thestatement said.

    Indian professionals who be able to provide services in Japan include contractualsuppliers, accountants, researchers, tourist guides, management consultants,computer engineers, engineering services professionals, yoga practitioners,classical musical and dance practitioners, chefs and English language teachers.


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    Also, talks are on for creating greater opportunities for Indian nurses and caregivers in Japan.

    India's negative list (items excluded from any duty cuts) include vegetables, edibleoil, betel nut, apples, coffee, spices, wheat, rice, edible oils, wines and spirits,tobacco, fish, milk and its products, honey, flowers and certain categories ofindustrial products such as plastics, polymers, sanitary ware, rubber, tyres, fans, aircompressors, split air-conditioners, freezers, water purifiers, colour TVs, auto andauto parts.

    Nabard to raise Rs 5,000 cr

    To meet the increased demand from farmers (with the kharif crop doing well), theNational Bank for Agriculture and Rural Development (Nabard) intends to raise Rs

    5,000 crore before March 31, 2011.

    Mr Prakash Bakshi, Executive Director, Nabard, told Business Line that the bankexpects to increase its target for short-term crop loans to Rs 30,000 crore from its

    budgeted Rs 25,000 crore.

    Without disclosing details, Mr Bakshi said that the additional resources raisedwould be a mix of short-term loans and long-term loans.

    Today, prompt-paying farmers get loans at 7 per cent interest, while the lender gets

    9 per cent the difference of 2 per cent is borne by the government (subvention).

    Mr Bakshi said Nabard is asking the government to raise this subvention to 7 percent, because interest rates are going up.

    Cost of credit up

    We expect to place a request with the government to increase the subvention to 7per cent, said Mr Bakshi. The cost of credit has gone up and therefore the demandto increase the subvention.

    Meanwhile, Nabard expects 400 of the State and district cooperative banks toadopt core banking solutions by September this year. Currently, 80 co-operative

    banks have evinced interest to implement CBS, he said. On behalf of these co-operative banks, Nabard would negotiate with the service provider to maintain andmake investment on setting up the CBS platform and the co-operative banks would

    pay the user charges.


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    Doha cannot go Round and Round

    The Doha Round, launched in September 2001, is yet to conclude. The stalemate islargely over developed countries' reluctance to make considerable reductions intheir trade-distorting agricultural subsidies and unbalanced proposals for furtherreductions in industrial tariffs. After several failed attempts to revive the Roundand bring it to an end, there is still hope that it could be saved, with the G-20leaders, at the November 12, 2010 Summit (held in Seoul, Republic of Korea),giving a strong commitment to direct negotiators to engage in across-the-boardtalks to bring the Doha Development Round to a successful, and balanced, end,consistent with the mandate of the Doha Development Agenda, and build on the

    progress achieved. They recognised that 2011 is a critical window of opportunity,albeit narrow, and that engagement among different groups and countries mustintensify. They also reaffirmed their commitment to resist all forms of protectionist


    Similarly, APEC leaders, at their November 14, 2010, Summit (held in Yokohama,Japan) reaffirmed their strong commitment to bring the Round to a prompt andsuccessful conclusion. They agreed to take steps to roll-back trade- distortingmeasures introduced during the global financial crisis and extended theircommitment to resist all forms of protectionist measures.

    Gains from the deal

    Further, at the November 30, 2010, informal meeting of the Trade NegotiationsCommittee, the WTO Director-General, Mr Pascal Lamy, outlined a process fortranslating the leaders' commitments into the Doha Round negotiations in Geneva.Mr Lamy urged the WTO members to operate on a tight deadline to conclude theRound by the end of 2011. To this end, he proposed the following work

    programme for the first quarter of 2011: From January 10: The Rules, TradeFacilitation, Trade and Environment, TRIPS and Development groups to beginintensive sessions; from January 17: Agriculture, NAMA, Services and DisputeSettlement groups to begin intensive sessions.

    But why is the Doha Round so important and are we anywhere near striking adeal? The conclusion of the Doha round is necessary for several reasons. First, theagreement is expected to provide a cushion against future protectionism byconsolidating the large amount of unilateral liberalisation that has taken place sincethe Uruguay Round in the 1990s. Second, the deal would bring in large-scalereforms in farm trade by binding subsidy levels in the developed world and


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    eliminating export subsidies. Third, it is estimated that the gains from theconclusion of the Round are around $ 360 billion and, if the deal is struck, it could

    be one of the most ambitious packages of trade liberalisation negotiatedmultilaterally.

    Last and most important, the conclusion of the Doha round would protect the WTOand the multilateral trading system itself, which could be damaged by the failure ofa Round, especially one explicitly designed to integrate the emerging economiesinto the multilateral trading system and give many developing countries a stake inthe system's success. According to Prof Bhagwati, the permanent collapse of theDoha Round is likely to provoke a wave of preferential trading agreements thatwould fragment, rather than integrate, the multilateral trading system. The efficacyof multilateral institutions, especially the WTO, is at stake and everything dependson the successful conclusion of the Doha Round.

    Re-starting talks

    In this backdrop, the importance of re-starting the talks and negotiations at theearliest cannot be overlooked. One, it is going to determine the future role of theWTO as a facilitator of a multilateral trading regime. And, two, it will alsodetermine the role of developing countries in world trade.

    In spite of the all the furore over the success and future role of the WTO and theinability of the member countries to conclude the Round, there is no doubt that the

    WTO has gained in traction over the years. The number of countries waiting toseek accession and become members corroborates this.

    The WTO Annual Report 2008 indicates that its total membership stands at 153and a further 20-plus countries, most of which are LDCs, are negotiating accession.These countries account for nearly 90 per cent of world trade. In another WTOAnnual Report 2005, it is said that elimination of barriers to merchandise trade in

    both industrialised and developing countries could result in welfare gains of $250-620 billion annually.

    WTO, the right platform

    A more rapid growth associated with a reduction in global protection could reducethe number of people living in poverty by as much as 13 per cent by 2015. It

    proves that trade liberalisation and poverty reduction go hand in hand. Therefore, itis clear that for the small and poor countries, the WTO is the right platform to go


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    ahead with reforms and pursue their goals of economic development throughenhanced trade liberalisation.

    Differences between the rich and developing nations have been a stumbling blockin the conclusion of the talks. India and other developing nations are defendingtheir agricultural markets to protect millions of subsistence farmers from easyimports that may result from the multilateral agreement. The US and otherdeveloped countries, however, seek more market access in developing nations,including India. It is important that the countries intensify the talks and holdnegotiations with an open mind.

    Unless both the developed and developing move from their established positions, itwould be difficult to conclude the Round. 2011 is being touted as the make or

    break year for the Doha Round. But in the meantime, it is essential that developing

    countries such as India continue to follow unilateral trade policies suited to theirdomestic needs but within the framework of the changing international tradeenvironment. Hopefully, Doha' won't prove a jinxed venue for the WTO but thename for a landmark agreement in the history of multilateral trade.

    FTA could double trade with Japan to $25bn by 2014: Anand

    NEW DELHI: The India- Japan comprehensive market opening pact signed on

    Wednesday could more than double bilateral trade to $25 bn by 2014, commerce &

    industry minister Anand Sharma has said.

    India will eliminate tariffs on 90% of its goods and Japan on 95% over ten years

    while movement of professionals between the countries will become much

    smoother once the comprehensive economic partnership agreement is ratified by

    the Japanese Parliament.

    Some products like mobile phones, calculators, battery chargers, CDs and DVDs

    from Japan and textiles from India would face zero import duty right from the day

    the agreement is implemented. Japan would also lower tariffs on petrochemicals,

    chemical products, jewellery and cement.

    In the services sector, India has been given concessions, including commitments

    for providing greater access for contractual suppliers, professionals such as

    accountants, researchers, tourist guides and management consultants.


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    It has also agreed to simplify visa regime for instructors for yoga practitioners,

    classical musical and dance practitioners, chefs and English language teachers. The

    Indian industry, which had fought hard to keep automobiles and auto parts from

    the tariff elimination list, is hopeful of increasing business with Japan once the

    treaty is implemented

    "As the majority of Japan's non-agricultural tariff lines would see immediate duty

    elimination for exports from India, with a strategic approach India could

    significantly improve its share in Japan's total imports from the existing low level

    of 0.7%", Ficci secretary general Amit Mitra said.

    According to CII chief Hari Bhatia, at $ 10.3 billion the trade relationship between

    our two countries has been far below its true potential. "We are certain that CEPA

    will lead to a quantum increase in bilateral trade and investment flows," he said. Inhis meeting with Japanese foreign minister Seiji Maehara, Mr Sharma set a target

    of doubling bilateral trade to $ 25 billion by 2014 from $10.36 billion last year. He

    suggested establishment of a joint revolving fund of $ 9 billion for kick starting the

    Delhi-Mumbai industrial corridor project.

    Petronet to set up 5MT Terminal atKochi

    Petronet LNG Ltd, India's largest liquefied natural gas importing firm, today said it

    will build a 5 million tonne import capacity terminal at Kochi by October 2012.

    Petronet was originally building a 2.5 million tonnes a year import terminal at

    Kochi by July 2012 at an estimated cost of about USD 650 million.

    But the company has now decided to add a few more facilities to double the

    capacity of the terminal that will cost an additional USD 70-80 million.

    The terminal would have to import natural gas in its liquefied state (LNG) in

    cryogenic ships and then turn it back into its gaseous state, Petronet LNGManaging Director and CEO A K Balyan said here.

    "We will complete construction by October 2012 and the terminal will be

    commissioned in a month thereafter,"he said.


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    The additional facilities for storage and regassification would double Kochi

    capacity to 5 million tonnes, he said.

    Petronet has tied 1.5 million tonnes a year of LNG from Gorgon project in

    Australia for import at Kochi on a long term contract. Supplies under the contractwould begin from December 2014, he said. It is looking to buy more LNG from

    Australia and Qatar for import at Kochi.

    Petronet currently operates a 10 million tonnes a year import facility at Dahej in

    Gujarat. It imports 75 million tonnes of LNG from RasGas of Qatar on a long-term

    contract for Dahej.

    "We are looking at long-term, short term and even spot purchases,"he said.

    Petronet had in January signed deals to buy 1.1 million tons a year of LNG for two

    years, beginning April 2011.

    ''Centre to impart vocational training to 50 cr people by 2022''

    Centre has evolved a plan to impart training and education in vocational skills to

    50 crore people by 2022 to address the critical issue of unemployment, Union

    Minister Ashwani Kumar said today.

    The central government has also decided to set up an Academy of Scientific andInnovative Research with powers to award degrees, and a Bill for the purpose

    would be introduced in the ensuing Budget session of Parliament, the Minister of

    State for Science and Technology said.

    The minister was addressing the third convocation of Guru Jambeshwar University

    of Science and Technology in Hisar.

    India has a unique opportunity to emerge as a global leader in formulating an

    inclusive innovation agenda, Kumar said.

    "We need to develop innovative ways of applying the results and products of

    research for finding affordable solutions to national challenges," he said.

    Kumar said that Department of Science and Technology has launched ''Innovation

    in Science Pursuit for Inspired Research'' (INSPIRE) to attract bright young minds


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    to creative pursuits of science and build a human resource pool for strengthening

    and expanding science and technology system.

    Technology should be used to increase food productivity to meet the demand of a

    growing population, he said.

    Scientists cutting across all disciplines need to work to transform agriculture into

    climate and resource efficient production system for ensuring food security to the

    increasing population, Kumar added.

    Corn export may more than triple at 2.5 mt this year: USGC

    Corn export from India may more than triple to 2.5 million tonnes in 2010-11,

    buoyed by estimates of a record domestic output and scope of higher global prices,

    an international body USGC said today.

    The country had shipped about 0.7 million tonnes of corn, also known as maize,

    last year, the US Grains Council (USGC) said quoting a traders' report.

    According to the government's second advance estimate, corn output is expected to

    touch a record 20.03 million tonnes in 2010-11, higher than the demand of 17-18

    million tonnes.

    "Traders expect corn exports to be 2.5 million tonnes in the 2010-11 marketingyear (October-September) because of a record crop output and firm global price

    trend," USGC India representative Amit Sachdev said.

    Presently, global corn prices in Chicago have firmed up due to tight supply in the

    US and likely crop damage in Argentina due to La Nina weather pattern, he said.

    The supply-demand gap of corn in the world is about two million tonnes this year,

    he added.

    Last week, the US government projected its closing corn stock at 17.14 million

    tonnes, the lowest in around 15 years, as record quantity of the crop is used to

    make ethanol.


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    Argentina's corn output is expected to be down by 17 per cent at 19.5 million

    tonnes this year, a trade report said. The US and Argentina are the world's two corn

    exporters. On the Chicago Board of Trade, May-delivery corn was up at $7.046 a

    bushel (Rs 9,620 per tonne) today.

    Besides global market, domestic prices have also been on a rise because of higher

    domestic and export demand.

    At present, corn prices are ruling firm at Rs 10,650 per tonne in Nizamabad in

    Andhra Pradesh, the country's largest wholesale corn market.

    India aims to raise wheat output to 90 mn tn by 2020

    India, which aims to achieve 90 million tonnes of wheat production by 2020, is

    looking at newer technologies and agricultural practices adopted in other growing

    countries including Australia, a government research body said.

    "Despite Australia being a small country with an annual wheat production of 12-13

    million tonnes, it has developed farm practices in wheat that Indian farmers can

    learn and adopt here," Directorate of Wheat Research (DWR) Project Director S SSingh told reporters here.

    India, the world's second biggest wheat producer after China, is heading towards

    harvesting a record 81.47 million tonnes of the produce in the 2010-11 crop year.

    "The country aims to enhance wheat output to 90 million tonnes by 2020 and is

    keeping its eyes open to new technologies and efficient agri-practices around the

    world," Singh said at the closing ceremony of the two-day India-Australia

    Programme on wheat.

    During the two-day programme, farm scientists from Australia and India

    exchanged ideas and ways for enhancing wheat production in their respective

    countries. Australian scientists visited wheat fields in Haryana and interacted with



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    Terming India-Australian partnership in wheat research as of great significance,

    DWR's Singh said "the world has to come together not only for wheat research but

    for other crops too."

    India has been impressed by Australian wheat breeding exercise, efficientcultivation techniques in waterlogging situation and work related to rust, he said,

    adding that the two countries have been working since 2007 to improve wheat


    Leading a dozen Australian farm scientists, Research Programme Manager for

    Crop Improvement, Paul Fox said, "The two countries share common bio-physical

    conditions with similarities in soil and climate, which help in jointly planning for

    enhancing wheat yields".

    He spoke of how India's rice experience helped Australia improve yields from one

    tonne per hectare to two tonnes. "Also, the rainfed wheat farming in peninsular

    India has been a good learning point for Australia, which has over 85 per cent of

    the wheat area under rainfed," he added.

    Farm scientist from India and Australia have identified a new stem rust resistance

    SR22 gene in wheat crop and are working jointly to develop new varieties which

    have potential to resist global warming, the DWR said.

    Restricting FDI in pharma will be retrograde step: OPPI

    The Organisation of Pharmaceutical Producers of India (OPPI) today said any

    move to contain FDI in the pharma sector will be a "retrograde step".

    Asserting that acquisition of domestic firms by global counterparts will not result

    in increased drug prices, the OPPI noted that Indian companies have also been

    making overseas acquisitions. "Any move to contain FDI in the pharma industry

    will be a retrograde step," OPPI President Ranjit Shahani told PTI.

    He, however, welcomed the recent statement by Commerce and Industry Minister

    Anand Sharma that 100 per cent FDI in new projects would continue to be allowed

    through the automatic route.


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    "Business will gravitate to where there is value and the stance of the Indian

    government for 100 per cent FDI in greenfield projects is a welcome move," he


    Allaying fears that acquisition of domestic pharma companies by MNCs will leadto drug price escalation, Shahani said: "We have a very strong price control

    authority, the NPPA, who closely monitors the prices of every single drug,

    effectively acting as a deterrent on any runaway pricing."

    Domestic pharma companies, spearheaded by the Indian Drug Manufacturers

    Association (IDMA) and Indian Pharmaceutical Alliance (IPA), had raised

    concerns that the takeover of Indian companies by foreign firms could lead to a

    situation of over-pricing of drugs and marginalisation of homegrown firms. This

    view was also endorsed by the health ministry.

    In 2008, Japan's Daiichi Sankyo acquired a majority stake in Ranbaxy Laboratories

    , while Abbott Laboratories acquired Piramal Healthcare's domestic formulations

    business last year.

    Shahani, however, said it has not been a one-way traffic. "Indian firms, according

    to an E&Y report, accounted for acquisitions valued at more than USD 68 billion

    in 2010 alone. Clearly, this is a two-way street."

    On the issue of limiting the cap on FDI in Indian firms that have benefited from

    state-funding for R&D activities, Shahani said: "One needs to look at this

    statement in the context of how much do Indian companies spend on research as a

    percentage of turnover, whether through direct funding or through state funding."

    The Department of Industrial Policy and Promotion (DIPP), a nodal agency

    responsible for FDI-related matters, had also raised concerns over the growing

    dominance of multinationals in the sector.

    In a discussion paper release last August, the DIPP had said the acquisitions of

    Indian companies by foreign multinational companies in the recent past has led to

    articulation of public concern on its impact on the availability of low-cost