Trade barrier or a chance to improve

Exports worth Rs 100 crore are likely to be affected by the EU decision. While the ban will come into effect on August 15, the Government has reportedly asked for some more time to implement EU’s quality norms. Commerce Minister B B Ramaiah has even asked the EU to allow exports from the 18 units which already meet the requirements.

EU imposed the ban after it received reports from its food and veterinary inspectors in India that the condition under which the marine products were being processed were unclean and unhealthy. Not one to take chances the EU promptly imposed the ban. But it has indicated that the ban would be reviewed in November this year, to see whether the marine products companies have improved their quality. While some see this as an attempt by the EU to put non-tariff barriers on Indian exports, others see in this an opportunity to improve the quality of marine exports. The problem with most companies is that they either do not have the money or do not want to put in the money required for processing marine products. Refrigerated buildings and uniformed workers are used by only few of the 160 approved exporters.All marine exports would not be affected though. Exports to China, Japan and Thailand would remain unaffected. But if all the exporters can raise their standards to EU levels, they will have better success in Asian countries, say industry experts.

Preferred Money

Yet another facility was provided to the companies for raising funds from abroad. The Finance Ministry has said that companies can raise foreign funds by issuing preference shares. This investment would be treated as share capital and not debt. These investments will also fall outside the purview of external commercial borrowing rules.

This means that companies can bring foreign capital under the automatic approval route of the Reserve Bank of India. The companies can also opt for the FIPB route depending upon the amount involved. The foreign investment will be treated as foreign direct equity in the company for purposes of sectoral caps if they have a conversion option. There are reports that one company Torrent has already asked the Government permission to issue Rs 400 crore preference shares to foreign investors. The company has recently taken over the Ahmedabad Electricity Company.

Car failure

While many car joint ventures are surging ahead and dazzling the market with new products, the one between Eicher Group and Skoda has fallen through. Differences in the structure of the joint venture has been cited as the main reason for the falling out. While Eicher wanted to have only 26 per cent stake, Skoda wanted Eicher to pick up 49 per cent of the joint venture. Initially, Eicher explored the possibility of bringing in Volkswagens models in India. But when none was found suitable, the attention was diverted to its subsidiary Skoda. But even this did not work out. The excess capacity built up in the car market also affected the fate of the venture.