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China is preparing to give swift regulatory approvals to India-manufactured drugs, the head of an Indian export promotion group said, as Beijing looks for new commercial partners ahead of what could be a protracted trade war with the United States

Indian firms are looking to fill gaps in Chinese demand for generic drugs, software, sugar and some varieties of rice, trade officials in New Delhi said.

"We do feel that China is receptive at this time and it's all about making prices competitive," said a government official involved in the effort to promote trade with China. The official declined to be identified since he is not authorised to speak to the media.

No concrete deals have been signed but the outlook for pharmaceutical sales from India is positive, according to officials from both nations.

India dominates the world's generic drugs market, exporting $17.3 billion worth of drugs in the 2017/18 (April-March) year, including to the United States and the EU. But only one percent of that went to China, the world's second-largest market for pharmaceuticals, industry data showed.

Dinesh Dua, chairman of the Pharmaceuticals Export Promotion Council (Pharmexcil), which falls under India's trade ministry, told Reuters in an interview that Indian firms could expect to win licences to export to China within six months of application.

"We understand internally that Chinese authorities have issued instructions that EU-approved Indian suppliers should be granted the industrial drug licence in an expeditious manner so they can enter the Chinese market within six months," Dua said.

Many Indian drug-makers are already selling to the European Union. The EU is already one of India's key export markets for medicines, and accounted for about 15 percent of overall drug exports in 2016/17, according to Pharmexcil.

Swift regulatory approvals in China, the world's second-largest drug market, would allow Indian companies to boost revenue at a time when pricing scrutiny and regulatory troubles have hurt US sales.

Some of India's largest drugmakers, Sun Pharmaceutical Industries and Lupin Ltd as well as Aurobindo Pharma Ltd have been trying for years to expand in the massive Chinese market, which is second only to the United States.

Details of Chinese moves to open up its heavily regulated pharmaceuticals sector have not been previously reported.

The CFDA did not respond to a Reuters' request for comment.

But Chinese Foreign Ministry spokesperson Hua Chunying said this week that China was moving forward on giving greater market access to Indian drug makers.

"China and India are witnessing a growth in pharmaceutical trade, and the two sides are in sound communication on opening the Chinese market to drugs from India and conducting dialogue and cooperation between the two sides' pharmaceutical industries," Hua told a regular news conference on Monday.

"The relevant departments have formulated specific measures on promoting China-India pharmaceutical trade cooperation and granting greater access to drugs from India. We believe that stronger pharmaceutical trade cooperation will contribute to the well being of the people in our two countries."

PENDING CLEARANCE

In May, China exempted import tariffs on 28 drugs, including all cancer drugs, a move that would help India reduce its trade imbalance with China, Luo Zhaohui, the Chinese ambassador to India said.

About 250 product applications from Indian drug firms are pending before the China Food and Drug Administration (CFDA), some of them for years, an Indian trade ministry official said.

Bilateral trade between the two Asian nations touched $89.6 billion in 2017/18 with the trade deficit widening to $62.9 billion in China's favour, an over nine-fold increase over the last decade.

The two sides are discussing ways to increase Indian sales of farm products, including sugar and some varieties of rice, to China.

India is also trying to persuade China to give access to its cost-competitive software service firms that have dominated global markets. Some of these firms are pitching for 'smart' manufacturing projects in the central city of Wuhan and two other provinces in the healthcare and automotive sector.

But it is in the drugs sector that India is hoping to make the first dent, according to officials and a government document.

China has agreed to train Indian pharmaceutical executives to help them gain a swifter entry into the Chinese market, a government document seen by Reuters on efforts to improve trade with China showed. The training is planned for next month.

India's Pharmexcil and the China Chamber of Commerce for Import and Export of Medicines and Health Products will shortly sign an agreement to ease clearance processes and help Indian companies find Chinese partners, according to the document.

Dua and the Indian trade ministry official said China will soon open a desk at its embassy in New Delhi to facilitate Indian drug makers.

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The Centre and the Reserve Bank of India (RBI) are planning to set up a database or a 'search engine' to track  all non-cash financial transactions in the country, the Times of India reported.

The move is aimed at widening the government's crackdown on black money and will help RBI establish a money trail to investigate money laundering cases and operations of shell companies.

The new platform will allow RBI to record all non-cash transactions and share them on a need-to-know basis, a senior government officer told the newspaper.

"It is not going to be available on tap but will be shared based on a specific request," the officer was quoted as saying.

The RBI has reportedly held preliminary discussions on the matter after the finance ministry, income tax department and some investigating agencies deliberated on it in order to widen their scope of cracking down on shell companies and money laundering.

It is not clear whether the proposed tool will be sufficient to help investigating agencies track transactions meant to siphon off money. Tracking all transactions related to an entity and its key functionaries may be difficult in the current setup, officials told the paper.

Also read — What are shell companies? All you need to know

The government feels that a trail of transactions is crucial to get rid of shell companies. Theoretically, shell companies are companies without active business operations or significant assets. They can be set up by business people for both legitimate and illegitimate purposes.

These entities may route funds through a maze of companies and earn a commission for it.

As of now, the Financial Intelligence Unit tracks suspicious transactions and all cash transactions of over Rs 10 lakh.

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China's exports to the United States in June rose 3.8 percent from a year earlier in yuan terms, 23.8 percentage points lower than the growth rate seen a year earlier, the country's customs agency said late on Monday.

For the first half of this year, customs said China's exports to the United States rose 5.4 percent from a year earlier compared with 19.3 percent for same period in 2017.

The customs agency did not provide exact values for June and January-June exports or say how exports to the U S fared in dollar-denominated terms.

Beijing and Washington are set to impose imports tariffs against each other on July 6 amid an escalating trade dispute that has spooked investors and has driven Chinese stocks and the yuan lower.

China is due to publish preliminary June trade data on July 13.

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Consumer durables companies took a hit in May 2017 when it was announced that Goods and Services Tax would be levied on almost 80,000 products. GST for white goods, including refrigerators, washing machines and air conditioners was set at 28 percent, the highest among the four tax slabs for goods and services.

The sector received another blow when it was announced that there will no extension to the implementation of the tax and that it would come into effect on July 1.

At the time, dealers started making frantic calls to company representatives to understand what GST was all about. The entire inventory had to be re-labelled, systems had to be reconfigured and discounts (if any) had to be immediately passed on.

The situation was tricky as 28 percent tax on goods had a direct impact on production costs. Moreover, a sudden increase in prices would lead customers to postpone their buying decisions. Unsold inventory also would have to be priced differently as compared to fresh stocks.

“The first three to four weeks were a nightmare. Customers wanted discounts because they presumed we were being offered a lower rate of tax, dealers threatened to shut down sales if we didn’t help with the technology upgradation. All prior sales targets had to literally thrown into the bin because we didn’t know what penalties we could face,” the national sales head for a global appliances major said.

As the GST Council had just started to meet, manufacturers had a unanimous request that taxation should be brought down to 18 percent instead of 28 percent. However, the demand has not been met since.

Sales take a hit

In the initial months, when the processes were unclear, sales of consumers durables declined. Customers were not making purchases and dealers refused to stock more than a few thousand goods.

In the second quarter, sales data of most companies saw a clear dip and firms had anticipated the decline.

Vivek Saran, Head of Sales, Mirc Electronics said that there was some impact on sales during the July to September quarter in FY18 as trade (dealers) restricted buying for some time and wanted things to be streamlined. Sales normalised from the following quarter.

“Since traders were liquidating their old stocks at huge discounts till June 30 to reduce their inventories, consumers also preponed their festive purchases,” he added.

Sales of key players sees drop

Another dealer from South Mumbai who stocked all domestic appliances said that for certain products like LED televisions, they ran out of stock during the last few days before GST was implemented.

“We had never faced a situation like this. We had angry customers wanting to buy products and there was nothing we could do because we were running out of inventory. Discounts ranged from 25 percent to as high as 35 percent but stocks were limited,” he added.

Mathew Job , CEO, Crompton Greaves Consumer Electricals said that during the implementation of GST, there was some impact on sales due to destocking in the channel. Things have slowly returned to normal over the course of time.

“We helped our trade partners by conducting training sessions and seminars explaining the impact of GST as well as ensuring their preparedness. We also supported them by reimbursing them for the losses that they suffered on the transitional stock,” he added.

Puzzled customers vent out

On one hand, the government announced that there would be heavy penalties for any profiteering move by companies. This meant that even if there was a marginal relief for some companies due to the input tax credit on closing stocks, it had to be passed on.

Customers presumed that white goods would get cheaper. On the other hand, prices for most products either remained same or were increased marginally. This led to the confusion among buyers.

The Central Board of Excise and Customs (CBEC) had constituted a toll-free helpline where customers started to file complaints.

Abhishek Saraoge, a 35 year software engineer from Bengaluru said, “A double-door refrigerator that we were planning to buy saw a price increase of Rs 6,000 in two days. We had to drop the plan of purchasing it and waited for three months before finally buying it online.”

Social media was also abuzz with customers venting out their frustration over non-availability of products as well as price tweaks being made.

Normalcy settles in

Kamal Nandi, Business Head and Executive Vice President, Godrej Appliances said that the new GST regime did bring about some ease of doing businesses.

“The elimination of the state boundaries for transporting goods have facilitated direct deliveries from the plant to the trade partners. This also gave manufacturers the option of consolidating warehouses, optimizing logistic cost,” he added.

He explained that post implementation, GST improved supply chain efficiencies for the industry. GST has brought ‘borderless delivery’ by enabling companies to deliver directly from manufacturing plant to the dealer. In pre-GST era the material would go from the plant to our local warehouse and then to the dealer warehouse. Direct delivery helps in improving response time for markets. Now, there is an opportunity for warehouse space optimization as well.

This year, Godrej is planning to do 20 percent of their deliveries directly from the plant to dealers.

Players wait for tax reduction

Nandi said that with increased commodity prices and repo rate coupled with the strengthening of the dollar the input cost for appliances increased leading to a price hike of 2-3 percent, making appliances unaffordable.

“Any reduction in the tax slab will help offset this hike, which would be beneficial to the customers and lead to a spur in demand, thereby augmenting economic growth in the manufacturing sector,” he added.

Consumer durables companies have met the GST Council time and again to press for the 18 percent tax slab demand. While an immediate revision in the tax rate is not on the anvil, the GST Council could consider the request in the next few months.

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Responding to Prime Minister Narendra Modi's description of Emergency as the Congress's sin, senior leader of the opposition party Ahmed Patel today said the fear of defeat in the 2019 Lok Sabha polls was haunting the BJP. An "undeclared emergency" was prevailing in the country for the past four years, Patel told reporters here.

"After four years, the fear of losing the 2019 election is haunting the government and hence, they (BJP) are trying to take refuge in the events of the 1975 Emergency," he said.

"The fact is that after 1977, Indira Gandhi had apologised, corrected her mistakes and the people of India had voted her back to power," Patel added.

"Will the BJP apologise for the undeclared emergency of the last four years? People are being lynched and threatened, government agencies are being misused and economic and civil liberties are being curtailed," the Congress leader said.

"They (BJP) fear that the Congress is coming back to power once again," he added.

Dalits, tribals, OBCs and other marginalised sections of the society were facing the worst kind of suppression in the BJP-ruled states, Patel alleged.

Modi targeted the Gandhi family earlier today, saying the Emergency was a "sin" of the Congress party.

"Emergency was a black spot on democracy. Marking its anniversary as black day (today) is not just to criticise the Congress for its sin of imposing Emergency, but also to make the present and future generations aware of what had transpired and to learn lessons to protect the Constitution and democracy," the prime minister said.

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Indian economy can clock double-digit growth before the current financial year 2018-19 comes to an end, interim Finance Minister Piyush Goyal said today at an event in Delhi.

“I can actually see it happening before fourth quarter (January-March) of this year. It's not impossible. There is a demand uptick in the economy. There is a mood in the nation and aspirational billions of fantastic marketplace we have,” Goyal said at an industry event organised by the Confederation of Indian Industry (CII).

“I think the efforts this government is doing for making easier to do business every with a caveat… let me correct myself. Easier to do honest business. And when this country becomes a nation of honest business, then 10 percent plus growth is doable,” he further said.

Meanwhile, Finance Minister Arun Jaitley separately said in a blog that India has established itself as a fastest growing global economy after recording 7.7 percent Gross Domestic Product (GDP) growth in the last quarter of 2017-18.

“This trend, according to experts, is likely to continue for the next few years. With structural reforms like demonetisation, the implementation of the Goods and Services Tax and the enforcement of the Insolvency and Bankruptcy Code, we had two challenging quarters... The future looks much brighter than the past. This trend is likely to continue for some years,” Jaitley said.

Jaitley is recovering from a recent kidney transplant and is working in a restricted environment from home.

On current macroeconomic developments, Goyal said that the government will meet the fiscal deficit target, ahead of the elections in 2019.

“Fiscal digit this year will be down to 3.3 percent and I can assure you we are monitoring and working to ensure that fiscal deficit will be contained at 3.3 percent despite this being an election year,” Goyal said.

The government pegged the fiscal deficit target at 3.3 percent of GDP for the financial year 2018-19.

Regarding the recent volatility in oil prices, he said that the government has factored in the increase in international crude oil prices in the Budget 2018.

“Some of it we have now planned and with alternate sources of resources so that without a cut in expenditure, we will be able to meet the fiscal deficit…,” he said.

On a query on whether petroleum products will be included under the ambit of GST, Goyal said that while the decision will be taken by the GST Council, its inclusion can be discussed in the next meeting.

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The Jammu and Kashmir Police late night released two pictures of three bike-borne men who are suspected to have killed Rising Kashmir editor Shujaat Bukhari, and sought the public's help in identifying them. The three militants were caught on a CCTV camera, the police said.

The two pictures showed the three men riding a motorcycle. The attackers had their faces covered.

The police released the pictures late night and asked the public to help them identify the attackers.

"In connection with today's terror attack at Srinagar, police requests general public to identify the suspects for the purpose of the police investigation," a statement read.

The name of the person providing any clue or information regarding the suspects will be kept confidential, it said.

Shujaat Bukhari and his two personal security officers (PSOs) were shot dead by terrorists outside the newspaper's office in the heart of Jammu and Kashmir's summer capital today, police officials said.

Fifty-three-year-old Bukhari, who had worked as the state correspondent for national daily 'The Hindu' for several years, was shot dead soon after he boarded his car from his office located at Press Enclave in the heart of the city centre -- Lal Chowk.

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The central government’s two-year old crop insurance scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY) has seen 47.5 million hectares of gross cropped area being covered in 2017-18. Even as the Centre plans to increase coverage to 50 per cent of crop area in FY19, some gaps need to be filled to ensure timely release of claims to the end beneficiary, the farmer.

The agriculture ministry’s data showed PMFBY had a sum insured amount of Rs. 1.9 lakh crore and a premium volume of Rs 24,351 crore in FY18. This was lower than 2016-17 when over 57 million hectares of gross cropped area was covered for a sum insured of Rs 2.05 lakh crore and premiums of Rs 21,500 crore.

This made it the third largest line of insurance in the country after motor and health. Incidentally, India also ranks as the third largest crop insurance market globally, behind United States of America and China.

The Scheme

PMFBY compensates farmers if any of the notified crops fail due to natural calamities, pests and diseases. The scheme seeks not just to just to insulate farmers from income shocks, but also encourage then to adopt modern agricultural practices.

Unlike previous schemes, PMFBY is open for both farmers who have taken loans as well as those who have not. It covers food crops (cereals, millets and pulses), oilseeds as well as horticultural crops.

“Earlier, only claims for certain crops were paid and that too limits were imposed. All those have been removed, even though the government bears a heavy subsidy burden,” said the head of crop insurance segment at a large public sector insurer.

It has a uniform premium of two percent to be paid by farmers for all Kharif crops and 1.5 per cent for all Rabi crops. For commercial and horticultural crops, the farmers’ premium is five percent. The rest of the premium is paid equally by the Centre and state government.

The scheme also mandates use of new technology include remote sensing and drones to measure crop yields. A total of 18 insurance companies, private and public sector have been empanelled for the scheme.

PMFBY benefits

The insurance scheme says that each state has to conduct a certain number of crop cutting experiments (CCEs) to get basic estimates about crop yields in each area. This data is then submitted to the insurance company within a time limit. This information is crucial, because it gives the insurance company an idea of how much crop is estimated to be produced in each region for the Kharif and Rabi seasons.

The earlier crop insurance schemes had a limit on the government subsidy that was payable. However, PMFBY has done away with it. In this, even if the balance premium is 90 per cent, it will be borne by the government. So, the farmers will get claim against the full insurance amount that they have taken.

The loss assessment for crop losses due to climatic conditions is done for each area. If there is a situation where majority of crops in one area could not be planted due to bad weather, farmers can claim 25 per cent of sum assured. However losses due to localised perils (like hailstorm, landslide & inundation) and post-harvest losses due to specified perils (cyclone, unseasonal rains) will be assessed at the affected field of the farmer, who had taken the insurance cover.

Challenges

Delay in claims has been one of the key concerns under PMFBY. A committee appointed by the agriculture ministry has said that with substantial claims payable in Chhattisgarh, Haryana, Madhya Pradesh, Maharashtra, Odisha, the Kharif 2017 claim ratio is expected to be upwards of 90 percent.

The report, “Strategy for Doubling Farmers' Income by 2022”, by the  Committee on Doubling of Farmers' Income, Ministry of Agriculture said that states should promote availing of crop insurance facility without waiting for completion of sowing.

The head of underwriting of a mid-size private general insurance company said while drones and GPS were to be used, the usage has been minimal so far. “Since the claims are paid based on crop yield, technology is critical to minimise fraudulent claims,” he added.

On one hand while claims settlement has been growing at healthy pace, the government panel report said that the states have to make sure that the tender process for selection of insurance companies and premiums should be done before the crop season starts. During 2016 and 2017, the last tender for Kharif went into August, depriving the non-loanee farmers an opportunity to enroll.

The report also added that by 2018-19, potentially there could be coverage of over Rs 3.5 lakh crore of sum insured, requiring over Rs 30,000 crore premium subsidy.

“This is best realised if the transparency, reliability and sustainability issues are taken care of in administering the programme. Also, with huge premium subsidy bill, the government needs to sense that there is a value for the funds,” the report released on April 28 said.

Due to heavy claims in the Kharif season, insurers including ICICI Lombard General Insurance have reported an underwriting loss in their crop portfolio. This meant that there was a gap between premiums collected and claims paid out. To ensure that the business is viable, further tweaks in the premiums during the upcoming tender processes may have to be considered.

Way forward

The centre has also allowed states to set up their own specialised insurance companies for the implementation of the PMFBY. A PTI report had said that the agriculture ministry has allowed this, subject to participation in bidding process.

Further, as more players enter this process, not only will the pricing be improved, claims will also be settled in a timely manner.

Also, as the government panel suggested, deployment of technology, that can remove human biases and generate accurate and real time data in an efficient manner will be beneficial. As additional crop area and number of farmers covered is increased this financial year, the emphasis will be on how much time is taken to settle the claims and if there is a need to increase premiums.

Subsidies under various crop insurance schemes by government

Note: All figures in Rs crore * Against approved claims of Rs. 14433.36 crore, an amount of Rs. 12948.98 crore has already been paid **Tentative Source: Government reply to Rajya Sabha question on March 9, 2018

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Private life insurance company IDBI Federal Life Insurance reported a 94 percent growth in net profit for FY18, at Rs 101 crore, at a time when one of its promoter IDBI Bank is looking to sell stake in the venture. In an interaction with Moneycontrol, Vighnesh Shahane, CEO, IDBI Federal Life Insurance spoke of growth in the business and their strategy for the current financial year.

Excerpts:

Q. The company has posted a 94 percent rise in net profit. What led to the jump?

A. IDBI Federal Life posted a 94 percent growth in FY18 net profit at Rs 101 crore. For the last four to give years, we have been focused on the bottom-line, improving persistency as well as controlling costs. This has reflected in our numbers for the last financial year. Due to this, we have been posting profits for five years in a row and this is the sixth consecutive year of profits.

Q. Your persistency (rate of renewals) has improved for the 13th month, but there has been a dip for the 61st month. What is the reason?

A. Yes, the 61st month persistency has dropped slightly. However, about 12-15 months back we have taken a lot of interventions. This includes increasing ticket sizes, withdrawing products with low persistency and making standing instructions mandatory.

The 13th month persistency has gone up to 81 percent in FY18 from 79 percent in the previous year. However, we expect to see further improvement in due course. But, apart from Life Insurance Corporation of India (LIC), we are the only insurance company to retain more than 50 percent business on the book even beyond the sixth year of the policy being in force.

Q. Has there been a rise in the unit-linked insurance (Ulips) share?

A. In the first half of the financial year, traditional products dominated the portfolio. However, in the second half of the year, falling interest rates and booming stock markets led to the mix shifting towards Ulips. In the second half (H2) of FY18, the mix was 40 percent Ulips, 28 percent non-participating insurance products while the rest was participating products.

Q. Although you have IDBI Bank and Federal Bank as your bancassurance partners, is there a plan to add niche banks?

A. Bancassurance will always be a big area for us. However, we are going in a calibrated manner in the agency business. While for us, IDBI Bank and Federal Bank are big banks, we are in talks with newer banks as well for possible partnerships.

Q. While IDBI Bank is a large bank partner, they are planning to sell its stake in the company. Is that a cause of concern?

A. This is a value-discovery process that shareholders are undertaking. The shareholders will do what it right for them and the investors.

Q. What is the quantum of growth that you are targeting for the current financial year? What segments will the focus be on?

A. In terms of segments, protection as a business is profitable and we will continue to look at that business. However, health and pension two areas where non-life/health companies as well as National Pension Scheme (NPS) offer superior products than life insurers.

In FY19, we are hoping to cross Rs 1000 crore in terms of new business collections for the individual segment.

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India may boycott its second SAARC Summit in a row, slated to be held in Islamabad, reiterating its stand that Pakistan is yet to rein in terrorist activities targeting India, according to a report by news agency ANI.

The 19th meeting of the heads of state or government of the member countries of South Asian Association for Regional Cooperation (SAARC) was scheduled to be hosted by Pakistan in November 2016. However, India pulled out of the event in the wake of militant attacks in Pathankot and Uri. Subsequently, all SAARC members boycotted the summit.

The 20th meeting is going to be held this year and Pakistan is aggressively seeking support from smaller South Asian nations to host the event in Islamabad. It has already received the backing of Sri Lanka and Nepal.

The report comes days after the issue of organising the SAARC Summit came up for discussion during a meeting between Prime Minister Narendra Modi and his Nepalese counterpart KP Sharma Oli, who was in India on a three-day visit.

After the talks, India said it would be difficult to proceed with the SAARC meet.

“The prime minister (Modi) mentioned that he very enthusiastically participated in the Kathmandu (SAARC) Summit, but given the current state of play where there is cross-border terrorism - and this is a disruptive force in the region. It is difficult in such circumstances to proceed with such initiatives," foreign secretary Vijay Gokhale had told reporters.

SAARC Summits are usually held biennially, hosted by a member state in alphabetical order. The member state hosting the event assumes the Chair of the Association. The previous edition of the SAARC summit was held in Kathmandu in 2014, which was attended by PM Modi.