With the negotiators of the Regional Comprehensive Economic Partnership (RCEP) set to meet later this week, aluminium and copper industry associations have raised related concerns like the likely rise in trade deficit with China due to an alarming spike in imports and a potential threat to Make in India, reports Economic Times.

While the aluminium industry wants aluminium products in the negative list or the exceptions to products they want to open up for imports under RCEP, the copper association has sought zero duty on copper ore and concentrate on preventing inverted duty structure.

The Aluminium Association of India (AAI) believes, “The presence of China in RCEP is the biggest threat for Indian aluminium industry.”

The inter-sessional meeting to be held on 24 May 2019 will witness senior trade officials and representatives from 16 nations including the 10 Asean countries coming together in a bid to deliberate over and conclude the mega trade agreement this year.

So far, the talks on seven of the total 16 chapters have already been completed, several other critical areas of goods, services and investment are still being negotiated.

For the first time in eight years, car sales in India declined 16 per cent in April. Sales of two-wheelers also slipped by a similar margin in April. The 16 per cent fall in car sales comes on the heels of a meagre 2.4 per cent growth in sales during 2018-19 fiscal. Two-wheeler sales were 4.8 per cent in the previous fiscal.

The Society of Indian Automobile Manufacturers (SIAM) has said that this performance is the worst after the 2013-14 fiscal when sales slumped 6 per cent. The drop in sales is a cause for concern, though SIAM has projected a single-digit growth in sales of vehicles this financial year.

In April, SIAM predicted sales of passenger vehicles to grow between 3 and 5 per cent. Sales growth has been affected due to rise in prices of commodities like steel and aluminium, Parliament elections, a prolonged dry period affecting agriculture and a cut in repo rate by the Reserve Bank of India (RBI) in April.

In a presentation on its fourth quarter performance, Maruti Suzuki, India’s largest car company by sales, said its financials were affected by adverse impact of rising commodity prices and foreign exchange movement besides expenses towards higher depreciation and sales promotion.

R C Bhargava, Maruti Suzuki chairman, said that sales drop in the run-up to elections and then rise significantly in the election year. He pointed out at the 20 per cent growth during 2009-10 soon after the election and the 12 per cent growth soon after the 2014 elections.

The Maruti Suzuki official said that for no apparent reason, people don’t buy cars before elections and hoped the pattern witnessed in 2009 and 2014 will follow this year too. Bhargava has predicted 4-8 per cent growth in car sales this year.

Analysts feel car manufacturers’ strategy of rejigging the models slows down sales. In addition, automobiles will have to conform to the BS-VI emission norms from 1 April next year. They also have to comply with new mandatory safety norms like airbags, anti-locking brake system, parking sensors, seat belt reminders and speed warning alerts.

By 1 October, all automobiles will have to meet new crash test standards resulting in the manufacturers themselves scaling down production. In turn, buyers have chosen to put off their purchases.

Then, Maruti Suzuki’s announcement to discontinue diesel cars from April next year has come at a wrong time. Probably, it has more to do with the change in registration norms in the national capital region of Delhi, where diesel cars will be registered for 10 years only. This, to some extent, has affected sales of diesel vehicles. Probably, buyers expect some change in policies from the new government and that could have also contributed to sagging sales.

Analysts feel liquidity crunch crops up during elections and this affects both urban and rural buyers. In general, even sales of white goods like washing machines and refrigerators are also down as buyers are more concerned about the outcome of elections. Once they are confident about the new government, then purchases follow.

There is a fifth reason why automobile sales have dropped. Indications that automobile sales would be affected were available in October 2018.

Non-banking finance companies (NBFCs), which play a major role in financing the purchase of automobiles, particularly two-wheelers, have been facing liquidity squeeze for quite sometime now. NBFCs accounted for financing over 60 per cent of two-wheeler sales in 2017-18 fiscal. Their share in car sales was 17 per cent.

According to the Finance Industry Development Council (FIDC), NBFCs are facing many challenges in view of the liquidity crunch and new regulations imposed by the RBI.

The woes of NBFCs, which rely on banks for funding, began after IL&FS fiasco as banks became reluctant to provide funds. This has affected funding of auto dealerships by NBFCs, whose disbursements of automobile loans dropped 25 per cent during October-December 2018.

Things turned worse from 1 April this year since the RBI stipulated that 40 per cent of the funds extended by NBFCs should be in the form of working capital loans, leading to credit crunch. These companies face a stiffer challenge as the share of working capital loans will be 60 per cent from October.

Leasing can be one way by which sales can be improved. But it hasn’t taken off due to problems like higher goods and services tax and tax on lease rentals.

SIAM and FIDC have taken up their issues with the government. Hopefully, the new government will look into their grievances. It will be the key to better economic development since the automobile sector is an important segment of the manufacturing industry.

One of the problems that India suffers in agriculture is post-harvest losses. In India, post-harvest losses in foodgrains is estimated at 20 per cent annually.

The losses occur due to rodents eating the grains, pilferage, wastage during transportation and weather-related problems, especially rains that cause damage to stored grains.

The problem in India, particularly with Food Corporation of India (FCI), is that foodgrains are still stored using the age-old traditional godowns and covered and plinth (CAP) storage. Such storage leads to leakage of foodgrains.

According to the Ministry of Food and Public Distribution, state agencies like FCI, Central and State Warehousing Corporations have a capacity to store 85.15 million tonnes (mt) foodgrains. Of this, covered godowns make up 72.45 mt and CAP storage the rest.

There is an additional problem in such storages. Such storage doesn’t guarantee the “first-in first-out” of foodgrains. This means, grains that had come to the godowns do not necessarily go out first. This leads to old stocks piling at the bottom and getting spoilt.

Though FCI has taken steps to overcome this problem, this is no guarantee that there is 100 per cent compliance to ensure foodgrains that come into a godown first leaves first. Thus, all these problems had led to the government deciding to modernise its storage system.

A pilot project was initiated during the National Democratic Alliance (NDA) regime led by Atal Bihari Vajpayee to set up steel silos to store 5.5 lakh tonnes of wheat in select parts of the country — Punjab, Haryana, Karnataka, Maharashtra and West Bengal. The silos were to be set up by private agencies, which also got permission to directly procure from farmers in the case of the silo that was set up in Punjab.

The United Progressive Alliance (UPA) government ran the pilot project but failed to act beyond that. After the NDA returned to power in 2014, the Centre decided to go ahead with foodgrain storage modernisation and included a project to set up silos for rice too.

The NDA government decided to have the silos set up on build, own, operate (BOO) and build, own, transfer (BOT) basis under private-public partnership programme.

Under BOT, state governments were to provide land and the private sector would bring in the technical expertise. Under BOO, the private sector was to set up everything from the scratch.

The Department of Economic Affairs, on its part, came up with two types of viability gap funding (VGF) for the BOO projects. One type of VGF was to provide technical aide like equipment and computers, while the other type was for buying land.

The silos not just help improve storage but also save costs. They can save loading and unloading labour costs incurred at mandis, warehouses and user end. They can even save mandi tax that are over 10 per cent in states like Haryana and Punjab.

In the 2014 rabi marketing season that began on 1 April, the government saved nearly 25 per cent of its procurement costs when it bought 400,000 tonnes of wheat in bulk for storage in silos.

The current government came up with a revised action plan in January 2016 and decided to increase the capacity of storage in silos by another 10 mt. The plan to select the silos operator and set them up was to be executed in three phases until 2020.

In the first phase that began in 2016-17, operators that can store 3.625 mt in silos were to be selected while 500,000 tonnes additional storage capacity was to be completed. In the 2017-18 fiscal, operators to set up silos to store 2.9 mt were to be selected, while silos having capacity to store 1.5 mt were to be completed.

In 2018-19, operators who would set up silos to store 3.475 mt would be selected, while silos that will have an additional capacity to store 3 mt would be completed. During the current fiscal, the remaining silos that have a capacity to store another 5 mt would be completed.

A status paper of FCI says that in the first phase operators to set up silos to store 3.625 mt were selected against a target of 3.75 mt. At the same time, capacity of silos was increased by 450,000 tonnes against a target of 500,000 tonnes.

The progress of the second and third phases have been tardy. In the second phase, operators that can store only 500,000 tonnes in silos have been identified against the target of 2.9 mt, while the third phase is at a standstill. In terms of completing additional storage in silos, only 175,000 tonne storage capacity has been completed out the targeted 1.5 mt.

This means, as of now, operators who can store nearly 4.2 mt only have been identified, while meeting the target to add capacity to silos storage could prolong. FCI said in its status paper that operators to build silos to store 2.875 mt would be completed by March this year but not much has been heard on the subject.

On the other hand, Punjab has exceeded its target for construction of silos and it is likely to add 1.55 mt additional capacity. Other states, however, are lagging in adding silo storage capacity.

Compared to developed countries, where silos or elevators as they are called there help farmers to sell their produce easily with some of then set up near growing areas, India has a long way to go. The new government should accord priority to modernise foodgrain storage, and it could include fiscal incentives since the country stands to gain overall in terms of saving costs and wastage