It's a wish list that India Inc. will give an arm and a leg to see fulfilled. It's also a wish list that will involve hard negotiations, backroom deals and, probably, some arm-twisting. Indian industry wants easier access for its goods, services and personnel into developed markets. The platform: the WTO (World Trade Organization) Ministerial Negotiations in Hong Kong this December.

Agriculture remains the biggest stumbling block in the talks between the developed and developing countries. India wants access for its farm products and cuts in subsidies that the West gives its farmers. But progress on the talks is slow.

The services sector is praying hard for some commitment from the developed world on Mode IV, which allows professionals to move freely across countries, unfettered by things like H1B visas. "Professionals wanting to travel abroad for work need to be treated differently from general immigration," says Sunil Mehta, Vice President, NASSCOM.

Indian industry also wants the issue of non-tariff barriers, a.k.a. sanitary and phytosanitary (SPS), sorted out. The chemicals and food processing industries and the agricultural sector, in particular, are demanding amendments, or at least authorised interpretations, of the SPS Agreement so that individual countries can't set arbitrary standards. The demand is much the same in textiles: lower tariff barriers and greater market access.

Rafeeq Ahmed, former President, FIEO, says Indian businesses are willing to accept ASEAN tariff levels of 10 per cent on finished goods and 5 per cent on raw materials in return for concessions on non-tariff barriers. But will the West cede ground? Watch this space.

-Ashish Gupta

TEXTILES

» Negotiate to see that rules of origin are not changed to stop Indian exports
» No preferential treatment for countries within various regional trade blocs
» Easier customs and administrative clearances at various ports and airports
» Delink exports from labour and environmental issues
» Stop EU from imposing anti-dumping and anti-subsidy duties on Indian linen

CHEMICALS

» Ensure uniformity in regulatory norms and risk assessment requirements
» Fight unilateral SPS conditions imposed by the developed countries
» Negotiate against unjustifiably high standards of EU chemical regulations
» Fight questionable standards on quarantine restrictions
» Fight unnecessary restrictions on the use of certain chemicals

FOOD PROCESSING

» Prevent unilateral imposition of standards that restrict market access
» Delink condition of workers and other social issues from exports
» Ensure exports of eggs, meat and meat products to the European Union
» Ensure exports of fruits and vegetables to China and Japan
» Amend the SPS Agreement to prevent its misuse as a non-tariff barrier

AUTOMOBILES & COMPONENTS

» Ensure homogeneity on emission, noise and safety standards all over the world
» Ensure transparent customs norms in countries such as Chile and Argentina
» Ensure protection of intellectual property rights in China
» Remove investment and customs restrictions in China and Malaysia
» Ban imports of re-manufactured and used vehicles and components

A New Drug Order
Capping drug prices may not be the best thing to do.

The rough ride continues for the Indian pharmaceutical industry. Close on the heels of the MRP-linked excise duties and the implementation of value-added tax in some states, comes another big air pocket in the form of the recommendations of the Pronab Sen Task Force on Drug Pricing.

The task force wants 246 new drugs, including those under patents, to be added to the list of 39 currently under price control. Interpretation: the reference point for patented drug prices will either be their international prices or the price of their therapeutic equivalents in India. The rationale: affordability. The flip side: corporate margins will be hit.

The draft also talks of a time-bound process to de-brand "select'' drugs. These drugs, henceforth, will only carry the API (active pharmaceutical ingredient) and the name of the manufacturer. And doctors will be asked to prescribe generic drugs rather than brands so that the man on the street is not forced to fork out huge premiums that companies charge for certain brands. There's also a proposal to give the government greater control over the pricing and monitoring of drugs.

The proposed Settlement Commission, however, is expected to lead to a quicker disposal of price-related disputes between the government and industry.

The industry is expected to give its views on the draft in the second week of September. It will be implemented only after suitable amendments are incorporated.

-Ashish Gupta

Championing Consolidation
The Finance Minister wants more mergers among public sector banks,
but RBI is dragging its feet.

Keeping mum: FM Chidambaram (left) and RBI Governor Y.V. Reddy

Finance minister P. Chidambaram is keen to push through consolidation in the banking sector. He said as much at the annual general meeting of the Indian Banks' Association in Mumbai in the last week of August. And with good reason!

Basel II norms will be introduced in the country next year. Banks will then have to set aside capital not only for credit and market risks, but also for risks arising out of internal deficiencies. The tab, according to Ashvin Parekh, National Leader (Financial Services), Ernst & Young, will be Rs 25,000 crore. "Basel II will be highly capital intensive and the Indian banking industry will need Rs 25,000 crore between 2007 and 2010,'' he says. As public sector banks still dominate the Indian banking industry-they make up more than 80 per cent of it-Chidambaram could be forced to cough up around Rs 20,000 crore to meet the new norms.

It won't be easy to find so much money, not unless there is consolidation in the public sector banking industry. The logic is simple: larger banks can be expected to have stronger balance sheets, making it easier for them to raise funds from private investors. Also, the merger of weaker banks with the stronger ones will obviate the need for the government to bail them out, should they get into trouble.

But the Rs 20,000-crore question is: will consolidation happen? Despite Chidambaram's enthusiasm, the proposal to merge Union Bank of India and the Bank of India has been hanging fire for a year. His ministry has not sought parliamentary approval, a mandatory requirement for the merger of public sector banks, for the same. The Reserve Bank of India, too, has yet to announce any guidelines on such mergers.

Meanwhile, the Basel II deadline nears.

-Ashish Gupta