Nirmala Sitharaman Weighs In on Current Commodity Markets
The latest commodity market news is that volatility rules the day. Most investors are nervous because of China’s current economic difficulties, including predictions of a further devaluation of the yuan. Money Bhaskar has the most up-to-date news about commodities, which will hopefully guide investors to making sound decisions about where to concentrate their focus.
Nirmala Sitharaman Offers Her Take on Current Volatility
Nirmala Sitharaman, who is the head of India’s Ministry of Commerce and Industry, offered her opinions about the present state of the markets, particularly the decline in exports. China, in particular, is not buying as many of India’s goods and that has got many people worried.
Sitharaman spoke at the first meeting of 2016 of the Council of Trade Development and Promotion, and told those in attendance: "Fall of exports is because of commodity prices, currency fluctuation, not because your competency is down [...] Currency volatility all over the world is a matter of worry, it is a cause for concern because your exports in terms of quantity in many sectors are remaining the same... but you are not earning out of it because of the volatility in the currency," she said.
Her statement comes on the heels of comments made by commerce secretary Rita Teaotia, who is reported to have said India's exports in 2016 might not exceed $270 billion, 13 percent less than last year's figure of $310 billion, focusing on the dismal export scenario on which India’s government commented that "there is no crisis in India on the export front and while there is a need for caution, there is no need for alarm."
Not All Exports Experiencing Poor Performance
Sitharaman was emphatic about emphasizing the fact that not all exports are in bad shape. She did, however, stress that her ministry needs to continue to offer support to some states that might be in need of subsidies or other forms of assistance to help them get through current tough times.
Recently, some subsidies and incentives were withdrawn, but might need to be re-instated in order to shore up lagging numbers. Things like transportation and other logistics subsidies, along with things like packaging, labeling, and certification services could be valuable in getting things going in the right direction.
China’s Current Economic Situation is a Worry
Sitharaman voiced her concern about China’s continued devaluation of the yuan, which pressured regional currencies and sent global stock markets tumbling. "The depreciation of the Yuan is definitely going to make imported goods (from China) cheaper... the fact is my deficit with China will (also) grow," she said.
Image Source: The Atlantic
In 2014-15, the bilateral trade between India and China stood at $72.3 billion with the trade gap at $49 billion. While the government would not rush into any action, it had discussed steps it could take to counter an expected flood of cheap steel imports with domestic producers and the finance ministry, she added.
Cheap steel imports from China, coupled with a glut in the supply chain have rendered India’s steel companies uncompetitive. Many have petitioned the government to set a minimum import price to stop cheap imports from undercutting them. "We have done ground work but are not rushing into it," Sitharaman said when asked if India would impose a minimum import price for steel.
It remains to be seen how China’s continued economic downturn will continue to influence India’s commodities.
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