Inquiry from Embassy of India, Budapest for Herbal Extract Immortelle

Suggestions on All Industry rates of Duty Drawback under GST Framework

Operationalisation of International North-South Transport Corridor (INSTC) for CIS Trade

Harmonised MEIS as per ITC(HS) 2017

Export Data Processing and Monitoring System (EDPMS) – Regarding additional modules for caution listing of exporters, reporting of advance remittance for exports and migration of old XOS data

India-Peru Trade Agreement:- Preparation of Indian Wish List

Migration to GST of existing Central Excise / Service Tax Assesses- GST MIGRATION SEVA KENDRAS

India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA) - reg.

Industry Consultations in Kolkata on 11/05/2017- Regarding Proposed FTA between India and Eurasian Economic Union (EAEU)

Industry Consultations in Bengaluru on 26/04/2017 regarding Proposed FTA between India and Eurasian Economic Union (EAEU)

Procedure for dealing with “shipping bill copies” consequent to doing away of “Exchange Control Copy” and “Export Promotion Copy” of shipping bill vide Board Circular No 55/ 2016-Cus, dated 23rd November, 2016

Mr. R. Viswanathan, also known as Rengaraj Viswanathan, is a retired Indian diplomat, writer and speaker specializing in Latin American politics, markets, and culture.

Many Latin Americans assume that India is less important for their exports than their traditional European partners such as Germany and France. Wake up..amigos. India was the third largest destination for Latin America's exports in 2014. The region exported 29 billion dollars of goods to India, while its exports to Japan and Spain were 21 billion dollars each, Germany-17 bn, Italy and UK-11 billion each and France-8 bn.

In 2015, India was Latin America's sixth important export destination with 18.8 billion dollars. This was more than the export to Japan, Germany, Italy, UK and France. The reason for the fall in exports to India in 2015 was the sharp drop in the price of crude oil.

India is the number one destination of Latin America's vegetable oil exports, with a share of 26.6% ( 2.57bn dollars) in 2015. China, the second largest importer, bought just 0.73 billion dollars from the region.

In 2014, India was the second largest importer of Latin American crude oil exports with 20.9 billion dollars, ahead of China's 17.6 bn. In 2015, India was the third largest, accounting for 9.65 billion dollars.

India ranks third for the region's exports of copper and fourth for gold.

India, as a major export market, is not a wonder of one or two years. India has emerged as a large and growing market for Latin American goods in recent years and is set to continue its ranking in the years to come. India has already overtaken China in GDP growth rate and will surpass China in population too.

Petroleum crude, copper, gold and vegetable oil are among the top global Latin American exports and coincidentally these are the major imports of India from the world. India has to increase its imports of these items in the future both globally and from Latin America in view of the of the growing gap between domestic demand and production. The increasing Indian population (15 million a year) and consumption power of the new middle class as well as the need for fuelling the high growth of the economy will continue to drive the rise in imports. This Indian need to import more is complemented by Latin America's potential to export more with its ample resources.

Crude oil

India's crude imports have doubled in the last decade from 99 million tons in 2005-6 to 202 mt in 2015-16 ( April-March, the financial year used by India). According to a 2015 report of International Energy Agency, imports are projected to reach 358 million tons by 2040. While India's crude imports are relentlessly increasing, Latin America is blessed with huge reserves, production capacity and surplus for exports. At the same time, the US which is the principal market for Latin American crude, has drastically reduced imports after the shale revolution. Although the middle eastern suppliers are nearer, India will continue its purchase of about 15 percent of its global imports from Latin America as part of its strategic energy security policy to avoid over dependence on the politically unstable gulf countries.

Agroproducts

In the case of vegetable oil, India's imports have jumped from 0.1 million tons in 1992-93 to 8.8 mt in 2009-10 reaching 14.6 million tons in 2014-15 ( November-October used as financial year by the Indian vegetable oil industry) and is estimated to touch 15.75 mt in 2015-16. Consumption has doubled from 10.1 million tons in 2001-2 to 20.08 mt in 2014-15 and is projected to reach 26.8 mt by 2025.

South America has started exporting small quantities of pulses to India which is the largest importer in the world. India's imports have reached 4.5 million tons in 2015-16 from just 0.56 mt in 1998-99 and 2.79 mt in 2007-8.

India's production of oil seeds and pulses is unable to cope with the increasing demand due to a number of issues, although the country is self-sufficient in cereals.

Chile, Peru and Argentina have started supplying fruits and vegetables to India. These are not considered as competition to domestic production but seen as complementary since they come during India's off-season from South America which is in the southern hemisphere.

Wines of Chile and Argentina as well as Tequila and Corona of Mexico are popular in India and their sales are growing.

Indian agriculture faces daunting challenges caused by the diversion of agricultural land for other purposes, shortage of water and low productivity due to inadequate investment by most farmers whose land sizes are small. On the other hand, South America has vast tracts of fertile land, abundant water, technologies and best practices with which the region has emerged as a global agricultural powerhouse.

Minerals

Gold is one of the major imports of India, which is the third largest importer after Switzerland and Hongkong/China. In 2015, India's imports were 35 billion dollars. India's imports have had a fourfold increase from 245 tons in 1997-98 to 957 tons in 2015-16.

India has been importing gold mostly from non-producing third countries such as Switzerland and UAE. It is only in the last few years that India has started direct imports from Latin American producers such as Colombia, Peru, Bolivia, Ecuador, Dominican Republic and Brazil. The imports from the region will go up in the coming years.

India's import of copper and other minerals are also set to rise, given the rapid industrialization, boosted by the 'Make in India' campaign. Imports of copper concentrates have seen an increase of twenty times from 0.08 million tons in 2000-1 to 1.8 million tons in 2015-16.

Beyond commodities..

Some critics complain that Latin America's exports to India are mostly commodities and raw materials. But they should be realistic and recognize the fact these are the main exports of the region except for the manufactured goods exported my Mexico to NAFTA partners. The number one item of exports of the region is crude oil, which stood at 115 billion dollars in 2015. This complements the number one item of India's import which is also crude oil. India's imports were 105 billion dollars in 2015-16.

Latin America has started exporting finished goods to India, although the figures are not that high. In 2015-16 the exports of electrical and electronic equipments were 401 million dollars, iron and steel items- 364 million, machinery and boilers- 196 million, organic chemicals- 195 million and even pharmaceuticals worth 58 million dollars. Embraer has sold planes to India and is set to increase its share in the fast growing aviation sector of India. Brazilian Marcopolo buses, made in joint venture with Tatas, are ubiquitous in Indian roads. 'Perto' from Brazil has supplied ATMs to Indian banks.

The 'retail revolution' of India has opened an unprecedented opportunity for Latin America to export processed foods and other consumables to fill the supermarket shelves. The new Indian middle class has developed taste for typical Latin American products such as quinoa, stevia, tequila, Corona beer, Argentine Malbec and Chilean wines. A Brazilian company 'Surya Brasil' imports henna ingredients from India and exports branded Henna products to many countries including India. A Peruvian firm 'Aje' has set up a plant in India to bottle and market its Big Cola drinks. Cinepolis from Mexico has become the fourth largest operator of multiplexes in India. A dozen other Latin American companies in sectors such as steel, auto parts and electrical motors have manufacturing units in India. There are a few Latin American software companies which provide services to Indian clients.

Uruguayan architect Carlos Ott has designed the largest office complex in India for TCS in Chennai. Another Uruguayan executive rose to the level of executive vice president of TCS for emerging markets, a reward for his success in establishing the company's operations across Latin America. Indian language institutes need more spanish teachers to cope with the growing popularity of Spanish which has replaced French as the most preferred foreign language even in schools. There is also scope for teachers of salsa dance, which has caught the fancy of the young Indians.

Latin American firms are yet to explore the opportunities offered by the huge investment India is making in infrastructure including highways, airports, ports, power and renewable energy. Some companies such as IMPSA of Argentina and Odebrecht and Andres Gutierrez of Brazil made some tentative attempts but did not sustain them seriously.

Entertainment and sports business

Mexican actress Barbara Mori and half a dozen Brazilians starlets have acted in Bollywood films. The famous Argentine music director Gustavo Santaolalla composed music for an Indian film Dhobi Ghat in 2010. There are a number of models from South America active in the Indian advertisement and fashion business. A Uruguayan model Carolina has married an Indian male model and settled in Mumbai as Carolina Grewal.

Colombian soap operas such as the Ugly Betty were shown in Indian TV, after adaptation. Mexican ' Kidzania' has set up edutainment theme parks in Mumbai and Delhi in collaboration with the famous actor Shahrukh Khan. Latino music is regular fare in Indian discos and gyms. Shakira from Colombia had successful live music shows in India 2007. Other pop stars and bands could follow. The Latin Americans can explore further opportunities in the Indian entertainment business which is seeking out the exotic.

There are over twenty Latin American football players and coaches in the clubs of India where football's popularity is soaring. Tata Motors has contracted Messi as their global brand ambassador. Cuban coaches have been training Indian athletes for olympics.

India as a base for regional and global business

The Latin American business could use India as a base for the Asian and global markets. Techint, a renowned Argentine steel firm has an outsourcing centre in Mumbai to service their engineering projects in West Asia. Three Latin American IT firms have acquired Indian software companies for their global delivery operations. The Argentine cofounder (along with Fabrice Grinda of France) of the online classified advertisement firm OLX launched the services not in Argentina or France but first in India where it remains as the largest in classified services. After its Indian success, the founders took it to other countries and now the firm has become one of the largest global players.

'Focus India' strategy

Most of the large- volume Latin American commodity deals are done either by multinational corporations operating out of US, Switzerland, Singapore and Hong Kong or Indian buying companies such as Reliance. There is therefore need for the Latin American governments to encourage their local companies, especially the small and medium ones, to explore the business opportunities in the Indian market. There should be more participation in Indian trade fairs, visits of business delegations and market studies. The Latin Americans could follow the example of the successful entry of Chilean fruits and vegetables in India after the commendable export promotion work done by the Chileans. If Latin Americans do a serious and sustained 'Focus India' strategy similar to the successful 'Focus Latin America and Caribbean' programme of India in the last two decades, there is tremendous scope to increase their share in the imports of India, which promises to be a large long term bet for Latin America.

	Mr. R. Viswanathan, also known as Rengaraj Viswanathan, is a retired Indian diplomat, writer and speaker specializing in Latin American politics, markets, and culture.
Caught between the bullying Donald Trump, an indifferent Europe and the suspect Chinese, Latin America is looking more seriously at India, attracted by its huge and growing market, and its vibrant and diverse democracy.

‘So far from God…but so close to Trump,’ is the cry of the Mexicans these days to their patron saint, Virgin of Guadalupe, affronted by US President Donald Trump‘s racist comments and accusation of Mexican immigrants being “criminals,” “rapists” and “drug dealers”. They also feel insulted by Trump’s demand that Mexico pay for the wall his administration plans to build on the US-Mexico border. Not since the US-Mexico war in the 19th century and the annexation of Mexican territories have the Mexicans been as outraged with the US. Trump has called NAFTA the “worst trade deal in human history” and has suggested imposing tariffs on imports from Mexico, which depends on the US for 81% of exports and close to 50% of its imports; in 2016, Mexico’s exports to the US were $294 billion and imports $231 billion. Traumatised by Trump, Mexico has started pursuing a diversification in its trade partnerships, focussing on large markets like India.

Like Mexico, Central American countries also fear increased deportations of large numbers of their citizens from the US and consequently a loss of remittances. Cuba, which saw a normalisation of ties with the US, is back to the wall again with the Trump administration’s planned reversal of some Obama era policies. Colombia, Chile, Peru, Dominican Republic and the five Central American countries that have signed free trade agreements with the US are apprehensive, expecting the worst from Trump. The Latin Americans cannot believe that the US, which preached and forced Latin American governments to open up their markets and liberalise imports under the ‘Washington Consensus,’ is doing exactly the opposite by resorting to protectionism.

During the annual CELAC (Community of Latin American and Caribbean States) summit in January this year, the region’s leaders were unanimous in their condemnation of the border wall and expressed solidarity with Mexico. Ernesto Samper, the outgoing secretary general of UNASUR (South American Community), had said, “US President Donald Trump’s migration policy and trade protectionism are threats to South America and the region must take a stand against them instead of appeasing him”. Mario Vargas Llosa, the celebrated Peruvian writer and Nobel Prize winner, has called Trump an “uncouth, populistic and nationalistic demagogue dangerous for Latin America”. The Latin Americans, who have suffered in the past under dictatorships, are shocked that the caudillo (a typical Latino authoritarian strong man) has reappeared in North America in the form of Trump, reviving their bad old memories of the ‘arrogant Yankee’.

While Trump is alienating the Latin Americans, the Chinese have steadily expanded their presence in the region. China has overtaken the US to become the largest export destination for Brazil, Chile and Peru, among others. It has replaced the EU as the second largest trade partner of the region. The Chinese target is $500 billion of trade and $250 billion investment by 2025. China has given a credit of $21 billion to Latin America in 2016 alone, with a cumulative credit at an impressive $141 billion since 2005. They have captured the imagination of Latin Americans with the announcement of mega infrastructure projects such as the Bi-Oceanic Railway between the ports of Santos in Brazil and Callao in Peru and the Nicaragua Canal project. But the Latin Americans have become conscious of the risks and perils of over-dependence on China, which has used its leverage to bully some countries in the region. In any case, the Latin Americans, given their recent history with dictatorships, are uncomfortable with the Chinese communist dictatorship and its non-transparent policies and intentions. Not surprisingly, US think tanks and NGOs are stoking the fires of distrust of China by maligning Chinese projects and exaggerating the damage to the region’s industry and environment by the flooding of cheap Chinese products and extractive ventures.

The Latin Americans are equally disillusioned with Europe, with its rising nationalism, anti-immigrant agenda and trade barriers.

Caught between the bullying Trump, an indifferent Europe and the suspect Chinese, the Latin Americans have started looking more seriously at India, attracted by its huge and growing market as well as its vibrant and diverse democracy. They have taken note that India has already overtaken China in growth rate and the Indian population is set to exceed that of the Chinese in the coming years. They do not feel threatened by Indian exports or investment. Indian IT and pharma companies are perceived as having contributed positively to the region. India has already become the second largest market (after the US) for crude oil, Latin America’s largest export. Since the US is reducing imports of crude oil (thanks to the shale discoveries), India will become an even more important a market for Latin American crude exports. In 2014, India was the third largest destination for Latin American exports. The region had exported more to India than to Germany, France, UK, Italy, Spain and Japan.

Trump’s withdrawal from Trans Pacific Partnership (TPP) is good for India. The TPP had extra protection for patents (pushed by multinational corporations), which would have caused problems for India’s pharmaceutical exports to Mexico, Colombia and Chile, the Latin American members of the TPP. If the TPP had become successful, it would have inspired more such second generation trade agreements, adversely impacting some Indian exports.

The Latin American economy has recovered from the recession of the last two years and has resumed growth in 2017. Except for Venezuela, the macroeconomic fundamentals of the region are generally stronger and growth prospects better. The region offers a large market of 614 million people with a combined GDP of $5.2 trillion and per capita income of $8500. The region’s imports are close to a trillion dollars.

Distance is no longer a deterrent. Fresh fruits from Chile, Peru and Argentina are available in Indian markets. India exports more to the distant Guatemala than to the nearby Cambodia. India’s exports to Brazil in 2014-15 were more than its exports to Japan, Korea, Malaysia, Indonesia, Thailand, France, Italy and Spain. India’s exports to Mexico exceeded its exports to Russia, Canada and Australia.

Latin America is the largest destination for India’s car and motorcycle exports. Indian pharmaceutical exports to the region are around a billion dollars. Over twenty Indian IT and BPO companies have established operations in the region, employing more than 25,000 local staff. Latin America, with a 15-20% share of India’s crude oil imports, has come to stay as an important contributor to India’s energy security, helping India’s strategic policy of diversification and reduction of over-dependence on West Asia. Besides the large reserves of oil, the region is well-endowed with minerals and agricultural potential, which are useful for ‘Make in India’ and food security. India-Latin America trade, which was $30 billion in 2015-16, has the potential to reach $100 in the near future.

This is, therefore, the right time and an unmissable opportunity for India to intensify its win-win economic partnership with Latin America. One of the immediate measures to take is to increase credit to the region to facilitate trade and investment. The cumulative Indian credit to the region is much below $100 million, while Chinese credit stands at $141 billion. Negotiations for widening and deepening the preferential trade agreement with Mercosur (which has been going on indifferently for the last ten years) needs to be concluded without further delay. Trade agreements could be signed with Mexico (the largest destination of Indian exports in the region for the last two years) as well as with Colombia and Peru, the other major markets. Prime Minister Narendra Modi should undertake annual visits to the region, like the Chinese president does. India’s commerce and external affairs ministers need to engage their Latin American counterparts with a new message of serious partnership. The annual India-Latin America and Caribbean Conclave needs to be organised at a larger scale with more funds and high-level participation. Opportunities for Indian exporters and businesses in the region need to be disseminated regularly with the latest information on the economies and markets through trade and industry bodies and export promotion councils.

Introduction

Textile dyes and pigments used for coloring fabrics, yarns and fibers represent a vital chemical feedstock in textile production. Dyes and pigments, although perceived to be similar, have different applications due to key differences in their size and solubility. Dyes are soluble, whereas, pigments form a suspension. Dyes can be classified into azo dyes, disperse dyes, ingrain dyes, acid direct dyes, solvent and reactive dyes. Reactive dyes occupy the largest share in the market, followed by disperse dyes. On the other hand, pigments occur in two broad categories: organic and inorganic pigments.

Global Dyes Market: Highly Dependent on Textile and Clothing Sector

Textiles and leather processing industries consume over 80% of the total global dyes and pigments manufactured worldwide. The industry is benefitting from a large consumer market, trade competitiveness and advancements in technology; however, it is highly fragmented across the market with intense competition. Textile and clothing nominal sales ceded by 4% in 2015 and were crippled by unusually low commodity prices (cotton -15%, wool -7%, and manmade fibers 1%) and multiple currency depreciations worldwide, particularly so in emerging markets. As the latter produce about 80% of global output, poor economic prospects in Brazil and Russia, and China’s shift towards services are expected to continue to weigh down on the sector. However, the financial shape of major textile manufacturing industries has improved in the last five years.

The skin care market, the largest in the cosmetics industry, has been witnessing dazzling trends over the past year. Beauty and personal care is one of the most active sectors on internet. Every day, the internet is flooded with numerous searches for beauty products, thousands of “how-to” beauty guides on YouTube and millions of peer reviews on social media. All these influence the purchasing decision of consumers across the globe. The rise in average income and inclination towards grooming and appearance drives a large section of the society, the middle-class, toward beauty and personal care products.

What are cosmetics?

Cosmetics products are used to enhance the appearance of one’s body without affecting its structure. Lipsticks, eyeshadow, foundation, rouge, mascara, skin cleansers and skin lotions, shampoo, gel, hair spray, etc. are some of the most-used cosmetic products.

Why Cosmetics?

Varying climatic conditions and seasonal shifts demands a careful skin care regimen. Protection from UV rays, removing dirt, dark spots, acne, dead skin and curing oily skin are essential for sensitive skin types. Makeup enhances the contrast of the human face, allowing for faster recognition of gender.

How E-commerce affects cosmetics market in China?

Shopping couldn't have been more helpful than at a click of a button, with the start of e-commerce period. Customers over the globe are progressively switching to the web to purchase things they need and e-commerce has positively changed the habits of people in a big way. Generally, online stores offer lower prices than physical stores. Online stores continually fulfill the needs of customers at lower prices, and customers keep waiting for fascinating deals for purchase.

At present, North America has the biggest cosmetic ingredients market. By 2017, however, China is expected to become the world's biggest business sector for cosmetics. Development rates of this market in North America, Western Europe and Japan are expected to grow from 0.5% to 2%, while the business sector in China is poised to develop at a normal yearly rate of 8% during 2015–20.

The Chinese cosmetics industry is going to be the most encouraging fields of business in China for the near future. Online cosmetics shopping has seen quick development and some mainland buyers are starting to purchase beauty care products and skin care items on the web. As per research, 70% of the female respondents and 66% of the male respondents purchase skincare items and beauty care products from online stores in China. Online offers of cosmetic represented 37.8% in the aggregate retail offers of cosmetics in China in 2015. It is expected that the offer will surpass 40.8% in 2018.

The following statistics show that online transaction value of cosmetics in China is increasing every year from 2011 to 2015 and is expected to continue the same during the period 2016-2020.

Online transactions value of cosmetics from 2011 to 2015

Overview of the Chemical Industry

Global production of chemicals (excluding pharmaceuticals) has seen a growth of 3.4% in 2016, which is slightly slower than in 2015 (+3.6%). The global growth rate of the chemical market is typically determined by developments in China, which accounts for more than one-third of worldwide production.

Major categories include organic chemicals and inorganic chemicals, including alkali, pesticides, dyestuffs, and specialty chemicals. Among the most diversified industrial sectors, basic chemicals cover an array of over 70,000 commercial products.

In India, base chemicals account for 74% of the chemical industry, followed by pharmaceuticals and biotechnology. India's chemical industry is the twelfth largest in the world and it has diverse advantages, such as its sizeable manufacturing base, strategic location close to key consuming Asian and Middle East markets, and a highly skilled workforce. Moreover, the country is slowly beefing up its credentials in the R&D space.

India’s global chemical exports have been rising over the years. Total exports of chemicals grew from $3.5 billion in FY03 to $19.2 billion in FY15 at a CAGR of 16.9%. Of the $19.2 billion exports in FY15, organic chemical exports were valued at $12.02 billion (approximately 62%), followed by inorganic chemicals at $1.36 billion (approximately 7%). The United States, Netherlands, and China are the leading export destinations for Indian inorganic, organic, and agro-chemicals.

Despite this impressive growth in export, India remains a net importer of chemicals, where the total imports of chemicals was approximately $27.3 billion in FY15.

Indian Chemical Sector

The chemical sector in India primarily consists of three segments, namely Specialty Chemicals, Agro Chemicals, and Colorant Chemicals. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian chemical sector was valued at $144 billion in 2015. India stands 12th worldwide in terms of volume contribution toward global chemical sector. The chemical sector accounts for about 14% in overall Index of Industrial Production (IIP).

Some of the major goods exported to China are cotton yarn, refined copper and copper alloys, construction chemicals, and vegetable oils, accounting for 30% of total global exports.

Chinese Chemical Market

The chemical industry is the third largest in China, after textiles and machinery, and accounts for 10% of the country’s GDP. The Chinese chemical industry accounts for 52.1% of the Asia-Pacific chemical manufacturing sector’s value, making China the largest consumer of basic chemical products in Asia and the second largest globally after the United States.

China's chemical industry has grown dramatically in the past 30 years, in line with the country's overall growth and the fundamentals of key customer industries. China's share of the global chemicals market is projected to rise to 29% by 2020. Strong growth in chemicals comes in large part from growth in customer industries.

The bilateral trade of chemicals between India and China has seen a fall off from $1.3 billion in FY14 to $1.07 billion in FY15 due to the devaluation of Chinese yuan and fluctuations in rupee value.

A R T I C L E

A G l o b a l G r o w t h P a r t n e r s h i p C o m p a n y

Exports from India to China

Chemical exports of India comprise several product groups such as inorganic and organic chemicals, plastics and petrochemicals, drugs and pharmaceuticals, dyes and pigments, pesticides and agrochemicals, fine and specialty chemicals, and fertilizers.

Globally, organic chemicals and pharmaceuticals are the major exports of India in the chemicals category earning India $12.1 billion and $11.7 billion, respectively, in 2015 however, exports of organic chemicals to China were only about $600 million, accounting for about 5% of India’s global exports.

India maintained a good rate of export growth to China between 2004 and 2007, but the global recession adversely affected India’s exports to China, making India’s export growth almost negligible since 2008. A majority of the fluctuation in export value since 2008 has typically been linked to exchange rate fluctuations rather than overall growth in export volumes. However, this trend is slowly changing since FY13, where export volumes are gradually beginning to increase for India as a whole.

Exhibit 1: Year-wise India Export Performance of Organic Chemicals

Exhibit 2: Year-wise India Import Performance of Organic Chemicals

Dear All

This has reference to the recent Public Notice No. 51 (2015-20) – New Delhi dated 30.12.2016. According to the said PN, The DGFT inserts a new sub para 9 c), under Para 2.104 (GSP) of FTP 2015-20. Effect of this PN is “Registered Exporters

System as of 01.01.2017 for the EU Generalized System of preferences (GSP) is notified.

Since this REX is notified from 01.01.2017, to understand the system, rules, regulations and the procedure mentioned in Annexure 1 to Appendix 2C, it is essential to understand the GSP scheme in brief and then it will be easy for us to understand the newly developed scheme (REX) in detail.

What is GSP in nutshell:

The Generalized System of Preferences (GSP) is a EU trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.

In short it is a scheme whereby a wide range of industrial and agricultural products originating in certain developing countries are given preferential access to the markets of the European Union.

Preferential treatment is given in the form of reduced or zero rates of customs duties.

Certain products on importation into the EU are eligible for reduced or zero rates of customs duties provided that they:

• are eligible for preference under the GSP scheme

• qualify as originating products under the rules of origin set down in the Community Customs Code Implementing Provisions

• transported directly from the GSP country to the EU (commonly referred to as the Direct Transport Rule)

• are accompanied by a valid Certificate of Origin Form A or, if the value of the consignment is less than €6,000 are accompanied by an Invoice Declaration made out by the exporter on an invoice or other commercial document

• GSP Forms A and Invoice Declarations issued in a GSP Beneficiary country have a period of validity of 10 months from their date of issue, and they must be presented in support of a claim to preference within that period.

The Registered exporters would provide a summary of the “statement on origin” to the Local Users for Registration. This summary would contain the following details:

• HS Code
• Description
• Document No/ date on which Statement on Origin is made out
• FOB value of exports (in $)
• destination port
• Destination of export
• Origin Criteria, W/P HS four digit

The “statement on origin” is made out by the registered exporter in the country of export to the EU as soon as the exportation has taken place or is ensured, if the goods can be considered as originating in the beneficiary country concerned.

The exporters must provide the statement on origin to their customer(s) in the EU. It must contain the details specified in Annexure “1D". A “statement on origin” may be made out in English or any other language approved in the EU regulations on any commercial document allowing the exporter, consignee and the goods involved to be identified.

Sadhana Kasture

Director

Exim Institute

Disclaimer:

This note is prepared specifically to understand the GSP scheme and REX scheme in brief only as understood by us. This should not be used as legal document or rules and regulation in the court of law. For more detail, please refer Public Notice No. 51 dated 30.12.2017 issued by DGFT, along with Annexure 1 to Appendix 2C, which is available on DGFT‟s website.

The International North–South Transport Corridor (INSTC) is the multi-modal connectivity (ship, rail, and road route) for moving freight between India, Russia, Iran, Europe and Central Asia.

INSTC was established in Sept 2000 in St. Petersburg, by Iran, Russia and India for the purpose of promoting transportation cooperation among the Member States.

Later on, INSTC was expanded to include eleven new members, namely: Republic of Azerbaijan, Republic of Armenia, Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Turkey, Republic of Ukraine, Republic of Belarus, Oman, Syria and Bulgaria (Observer).

Current Status

The International North South Transport Corridor (INSTC) linking India to Central Asia and Russia via Iran is likely to get operationalized shortly and it would offer a shorter and cost effective trade route for India's bilateral trade with Russia and other CIS countries.

The Dry Run carried out by the Federation of Freight Forwarders Associations of India (FFFAI) in 2014 and transportation of 5 containers from Bengaluru to Moscow via INSTC route in October, 2016has clearly demonstrated that compared to the traditional route from Mumbai via St.

Petersburg which takes about 41 days, the INSTC routes take only about 20 to 25 days. Efforts are underway to further reduce the transportation time to 19 days.

At this stage, there are two operational INSTC routes:

• Mumbai — Bandar Abbas — Astara — Samur — Moscow
• Mumbai — Bandar Abbas — Amirabad — Astrakhan — Moscow

• Asian and European countries could make their cargo transportation through North-South Corridor with double speed compared to Suez channel,
• Carriage time reduced from 40-60 days to 25-30 days i.e. 40% shorter.
• Carriage cost is 30% less,
• The most suitable route for transit traffic between Asia and Europe
• A few countries exist along the route therefore (less border crossings and easier for the countries to reach agreements),
• It is recommended by international organizations like UN, UIC and ECO.

Global consulting firm Frost & Sullivan has carried out a study to revamp the Directorate General of Foreign Trade (DGFT) with a view to making it a vibrant body for promoting trade.

DGFT under the Commerce Ministry deals with matters related to exports and imports.

“The agency has submitted its report and we are looking at that. The revamping is important against the backdrop of changing global trade scenario and implementation of the Goods and Services Tax (GST)," an official said.

The move assumes significance as India is aiming to increase its share in the global trade to 3.5 per cent from the current 2 per cent by 2020. According to experts, the country needs a vibrant organisation to promote its trade interests.

"We need a vibrant and independent export promotion organisation whose job is to do hand-holding to traders particularly in the small and medium sector," said BiswajitDhar, professor at the Jawaharlal Nehru University.

He cited examples of some South East Asian countries with such bodies and suggested India can take cues from them.

Prior to 1991, the DGFT was known as the Chief Controller of Imports and Exports. Till 1991, it has been involved in the regulation and promotion of foreign trade.

DGFT is responsible for formulating and implementing the foreign trade policy with the main objective of promoting India's exports. It also issues scrips/authorisation to exporters and monitors their corresponding obligations through a network of 36 regional offices. India's annual merchandise trade stood at around $750 billion.

(Ref. http://www.business-standard.com/article/economy-policy/commin-studying-report-of-frost-sullivan-for-revamping-dgft-117031200189_1.html dated 12.03.2017)

NEW DELHI, MARCH 16:

With the expected July 1 rollout of the Goods and Services Tax (GST) regime drawing closer, the GST Council, led by Finance Minister Arun Jaitley, will meet on Thursday to finalise two Bills — the State and the Union Territory GST Bills.

If these are firmed up, Jaitley will be able to table all four enabling legislations for the tax in Parliament in the ongoing Session. These comprise of the Central, Integrated and UT GST Bills as well as the proposed legislation for compensation to States for any revenue losses.

Sources said that once cleared by the GST Council, the Centre is keen to take it to the Cabinet latest by next week and then table it in Parliament. The Session adjourns on April 12 and passage of the Bills in the current Session is essential for implementation of GST from July 1.

States may want changes

But, with Assembly elections in key States completed and the process of government formation going on, it is unclear how far the discussions will proceed.

“Ideally, there should be Ministers from all States present at the meeting, as it will take up the crucial draft SGST Bill,” noted a State Finance Minister.

Some States seem keen to reopen discussions on at least some provisions of the Centre and Integrated GST Bills, which were approved by the Council at its last meeting on March 4.

The Council is also likely to review the process of migration of existing businesses and assessees to the GST Network (GSTN). Officials from the GSTN and the Finance Ministry are likely to make a presentation on the state of preparedness. The draft laws have called for a transitional period of about six months to carry forward tax credit.

According to official data, enrolment of existing taxpayers under GST is still going on with different States at varying stages in the registration process. Training of officials for the new tax regime is also almost complete.

(Ref. http://www.thehindubusinessline.com/economy/gst-council-to-take-up-state-and-ut-bills-today/article9585842.ece dated 16.3.2017).

With all five draft laws now being given the green signal by the Council, they will next be sent to the Cabinet for approval and subsequently to Parliament, which is currently in session, for the final nod.

The Goods and Services Tax (GST) Council, headed by Finance Minister Arun Jaitley, on Thursday approved the remaining two crucial supplementary bills — State GST (SGST) and Union Territory GST (UTGST) - moving the proposed July 1 implementation of the country's biggest tax reform closer to reality.

"The Council has granted formal approval to all five legislations," said Finance Minister Arun Jaitley after the Council's 12th meeting on Monday.

Final drafts of the three other bills — Integrated GST (IGST), Central GST (CGST) and Compensation bill — had been cleared by the Council in its previous meetings.

With all five draft laws now being given the green signal by the Council, they will next be sent to the Cabinet for approval and subsequently to Parliament, which is currently in session, for the final nod.

Consent from both Lok Sabha and Rajya Sabha would conclude the legislative requirement for the rollout of the new indirect tax regime.

Once the laws are passed, Jaitley said, two important acts remain. The first pertains to formulation of rules - five of which have already been approved. He said the Council would get the final draft of the other four rules by next week and discuss them at the GST Council's next meeting on March 31.

Jaitley said that the next step after that would be the fitment of various commodities into tax slabs. "After that [fitment], we will be ready for GST implementation," said the Finance Minister.

The industry has been particularly looking as to how items would be categorised under various slabs as they need at least two-three months to prepare themselves to adjust to the shift in tax regime.

The Council has agreed on a four-slab structure — 5, 12, 18 and 28 percent — along with a cess on luxury and "sin" goods such as tobacco. Jaitley said on Thursday that the cess has been capped at 15 percent for the four to five commodities including luxury cars and aerated drinks that fall in this category.

Under the GST, the states and the Centre will collect identical rates of taxes on goods and services. For instance, if 18 percent is the GST rate on a product, both the states and the Centre will get 9 percent each called the CGST and SGST rates.

The Centre will also levy and collect the IGST on all inter-state supply of goods and services. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one state to another.

(Ref. http://www.moneycontrol.com/news/business/economy/gst-closer-to-reality-as-council-clears-final-two-bills-2241491.html dated 16.03.217)

NEW DELHI: Exporters will continue to get certain duty refunds as incentives after the Goods and Services Tax is implemented. The GST Council has framed the draft laws to ensure that the export sector doesn’t suffer when the new regime is rolled out, likely from July 1.

The GST legislation approved by the cabinet and the GST Council has a provision enabling duty drawback in relation to goods manufactured in the country and exported. It’s been defined as rebate of duty or tax chargeable on imported and domestic inputs or input services used in the manufacture of these goods.

This would be an optional window that would aid sectors such as handicrafts, where artisans are not registered with the tax department. It will especially help exporters who have paid tax on inputs to make products that have no tax against which these duties could have been adjusted. The drawbacks are offered as incentives to ensure Indian goods do not become uncompetitive in foreign markets. Exporters had been worried about the transition to the GST regime, which allows minimal upfront exemptions. The commerce department had represented to the Council as well as the Union finance ministry that the benefits enjoyed by exporters should be continued.

“This is a very positive move and benefits all those that do not claim input tax credit,” said Ajay Sahai, director general of the Federation of Indian Export Organisations in New Delhi.

Many exporters in the small and medium enterprises sector will benefit.

“Drawback is one of the most popular export incentive schemes wherein the exporters typically get a percentage of exports as refund from the government, without too much of paperwork,” said Pratik Jain, indirect tax leader at PwC India.

“Under GST, drawback for basic customs duty was expected to continue in any case but now it seems that it might include GST as well. If it does, as an optional scheme of refund, industry will welcome it.”

India’s merchandise exports registered double-digit growth in February 2017 for the first time since the Narendra Modi government took office in May 2014. The surge was led by a 47% rise in engineering goods on the back of improved global demand.

India today prohibited exports and imports of several products, including defence related goods, aviation fuel and coal, relating to North Korea.

"Direct or indirect export and import of certain items whether or not originating in Democratic People's Republic of Korea (DPRK), to/from DPRK is prohibited," the Directorate General of Foreign Trade (DGFT) said in a notification.

The items include battle tanks, combat vehicles, combat aircraft, attack helicopters, missiles and light weapons.

The goods that are banned for exports include luxury goods and aviation fuel.

The country also prohibited imports of certain minerals such as coal, iron, iron ore, gold, titanium, rare earth metals, copper, nickle, silver and zinc.

"This notification seeks to update the Foreign Trade Policy 2015-20 to account for current UN Security Council Resolutions concerning DPRK... of November 20, 2016," it said.

(Ref. http://www.dnaindia.com/money/report-india-bars-trade-of-certain-goods-with-north-korea-2362495 dated 21.03.2017)

The Commerce & Industry Minister, Smt. Nirmala Sitharaman outlined the relevance of facilitating trade in services as has been done in the case of trade in goods. Inaugurating the Workshop facilitating trade in services in New Delhi today she emphasized need for efficient and fair flow of services to promote international trade in services. The Minister said market access is not facilitation but an issue .She said knowledge has become a factor of production and it is important to know how to handle it.

The World Bank Group in partnership with the Department of Commerce, Ministry of Commerce and Industry, Government of India is organizing a two day workshop on issues which need to be addressed to facilitate Trade in Services .

With a view to promote& facilitate international trade in services, India has taken the initiative of floating a draft Legal Text for an Agreement on Trade Facilitation in Services (TFS) at the WTO in February 2017, which proposes a way forward on comprehensively addressing the numerous border and behind-the-border barriers, across all modes of supply, which are experienced as impediments by the industry to the realization of the full potential of services trade. Preceding the legal text, India tabled a 'Concept Note for an Initiative on Trade Facilitation in Services' in October 2016 followed by an Elements Paper proposing the possible elements of the TFS Agreement in November 2016.

The proposals by India have generated a lot of interest, both within and outside the WTO. Many Members have welcomed the novel idea and approach of India in bringing forth this proposal. Some members have also raised concerns on certain issues. India looks forward to engaging in constructive discussion with all stakeholders to take this initiative forward.

It was recognised that this workshop is being held at a very opportune time, when we are increasingly hearing protectionist voices from across the globe. In such critical times, institutions like the World Bank have a special role to play in identifying and propagating fair and equitable practices for promoting free and fair trade.

In this regard, the workshop organized in partnership with the World Bank Group provides an excellent platform in creating awareness as well as brainstorming on the various issues relating to both content and approaches on how to address facilitation of services trade among global experts, academics, private sector, government officials, and industry representatives. The valuable insights received through deliberations in various services over the next two days will be extremely useful in carrying forward the agenda of facilitating trade in services.

(Ref. http://www.business-standard.com/article/government-press-release/commerce-industry-minister-emphasises-the-need-for-efficient-and-fair-flow-117032300913_1.html dated 23.03.2017)

A trade facilitation agreement aims at liberalising rules for movement of professionals and other steps to reduce transaction costs to boost growth of the services sector.

NEW DELHI: A large number of WTO member countries are supporting in principle India's proposal for negotiating a trade facilitation agreement (TFA) in services, a senior government official said today.

Additional Secretary in the Commerce Ministry AnupWadhawan also said that India is pursuing this proposal in the WTO in a serious manner. Without specifying the names of these countries, he said: "large number of countries have supported it in-principle".

He was briefing the media after the conclusion of two-day workshop on TFS. On the lines of the trade facilitation pact in goods, India has submitted a detailed proposal to the World Trade Organization (WTO) to negotiate a trade facilitation pact in services.

It aims at liberalising rules for movement of professionals and other steps to reduce transaction costs to boost growth of the services sector.

Wadhawan said that like trade facilitation pact in goods would help in reducing barriers, TFS too would cut hurdles in promoting global trade in services.

India's Ambassador Designate to the WTO, J S Deepak said that the workshop was useful as several experts shared their views and suggestions on ways to take the proposal forward.

World Bank supported the commerce ministry in organising this seminar.

When asked whether the proposal will become part of the forthcoming ministerial meeting in December at Argentina, Wadhawan said that the agenda has not been worked out yet.

On this, Deepak said that proposals are introduced in different fora and it will be discussed in the special session of the committee on trade and services in Geneva.

(Ref. http://economictimes.indiatimes.com/news/economy/foreign-trade/large-number-of-countries-support-tfs-proposal/articleshow/57816405.cms?from=mdr dated 24.03.2017)

The Indian chemical industry is expected to surge to USD 226 billion by 2020, up by nearly 35 percent from USD 147 billion in 2015, Commerce Minister Nirmala Sitharaman said in Mumbai on Friday.

Though exports have declined to 7.8 percent from USD 12.66 billion in 2014-2015 to USD 11.67 billion in 2015-2016 in value terms, in terms of volumes, they notched a remarkable growth of 7.51 percent from 52.9 lakh tonnes in 2014-2015 to 56.9 lakh tonnes in 2015-2016, she said at the CHEMEXCIL export awards function here.

"In the current year, April 2016-January 2017, exports have grown by 1.5 percent in value and 7.59 percent in volume. The Indian chemicals industry, the third-largest producer in Asia and 12th in the world, is most resilient in exports. The impact of measures initiated by the government will be visible from the current financial onwards," she said.

Sitharaman said that the domestic chemical industry, which employs around two million people, is a key constituent of the Indian economy and the country is the fourth largest producer of agrochemicals.

The top export awards for 2015-2016 were bagged by Reliance Industries for chemicals, Ambuja Intermediates for Dyes and Dye Intermediates, IsheduAgrochem for Castor Oil and Speciality Chemicals, and VVF India for Cosmetics and Toiletries.

Amit Pthalo Pigments' Shankerbhai Patel and Emmessar Biotech & Nutrition's Ashok Manilal Kadakia were conferred with the Life Time Achievement Awards and 55 awards were given away in different categories.

CHEMEXCIL Chairman Satish Wagh said that the winning formula of government's policy support to exporters' determination to grow is bound to increase their share in the world market, since India already has talent, technology and infrastructure.

"The reduction in corporate tax for MSME by five percent, introduction of Trade Infrastructure Export Scheme will help Indian exporters reduce transaction costs to become globally competitive, and other initiatives like CBEC's single window interface for facilitating trade (SWIFT), Make In India, certain norms relaxed for environmental issues and upcoming GST rollout would spur the sector's growth further," he said.

(Ref. http://www.smetimes.in/smetimes/news/industry/2017/Mar/25/indian-chemical-industry-to-surge-to-226-bn-in-3-years1634456.html dated 25.03.2017)

As per a national business news portal, the Ministry of Commerce and Industry, Government of India, is planning to form a separate logistics department to deal with the issues such as rising costs in the sector which impacts global competitiveness of exporters.

As per a national business news portal, the Ministry of Commerce and Industry, Government of India, is planning to form a separate logistics department to deal with the issues such as rising costs in the sector which impacts global competitiveness of exporters.

Currently there is no single department or ministry in India that would look at all the aspects related to various modes of shipment such as railways, roads and sea.

Exporters in the country have demanded for addressing the problems faced by the logistics sector. Commerce Ministry has also suggested to the Railways Ministry that it needs to distinguish between its freight rates for the various categories like, imports, exports and general category.

Currently, Indian goods are less competitive in the world markets as logistics costs of exports are very high in the country. India aims to raise its share in world trade from 2.52% at present to 3.5% by 2020.

Disclaimer: The contents herein is specifically prepared by ‘Dalal Street Investment Journal’, and is for your information & personal consumption only. India Infoline Limited or Dalal Street Investment Journal do not guarantee the accuracy, correctness, completeness or reliability of information contained herein and shall not be held responsible.

(Ref. http://www.indiainfoline.com/article/news-top-story/ministry-of-commerce-ministry-of-commerce-to-set-up-separate-unit-for-logistics-117032700179_1.html dated 27.03.2017)

CHINA CHEMICAL INDUSTRY:

The chemical industry is the thirdlargest in China, after textiles andmachinery, and accounts for 10percent of the country’s GDP. Itaccounts for 52.1 percent of theAsia-Pacific chemical manufacturing sector’s value, making China thesecond largest consumer of basicchemical products after the United States.

Barring 2009, the local industryexperienced double-digit growth up to2010, when it clocked a 16.5 percenthike. This trend is forecasted to continue in the years to come.

According to the China Petrochemicaland Chemical Industry Federation(CPCIF), the industry’s output value for 2010 was CNY 5.23 trillion, 32.6 percent above the previous year. For the first time, this figure exceeds that of the United States (USD 734 billion, or approximately CNY 4.7 trillion). Total output dwarfed that of Japan (USD 314.9 billion) and India (USD 89.1 billion). This indicates how the market rebounded strongly from the financial crisis of 2008–2009, which was felt less acutely than elsewhere. The figures also tell a story of continuous growth by a remarkably dynamic industry, made up of over 33,000 enterprises, with total revenue surging at 20.2 percent CAGR for the period spanning 2006–2010. This compares to 1.4 percent in Japan and 12.2 percent in India over the same period.

Future growth in China continues to be supported by remarkable rates of investment in fixed assets, with a total of CNY 1.15 trillion in 2010 alone, according to CPCIF. Specialty and fine chemicals represent an increasing share in economic growth and are important ingredients in China’s efforts to upgrade its industrial value chains. This chemicals segment contributed revenue of USD 189.3 billion in 2010.5 On the other side of the spectrum, agrochemicals enjoyed a more modest performance. The crop protection industry in China is a USD 2.9 billion market, growing by 6 percent in 2010, but for the moment it remains focussed on lower value generics. Themarket is highly fragmented, althoughmultinational companies have a totalmarket share of approximately 25 percent. The fertiliser market is morevolatile — after a near collapse in 2009(which followed a remarkable surge inthe preceding years) it is yet to find aroad to recovery.Heavy investment in basic chemicals in China has largely resulted from adrive to secure self-sufficiency in the supply of critical commodities. At the current stage, China does not produce enough chemicals to meet its demand and remains a significant importer.

ECONOMY:-

Since the late 1970s, China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role; in 2010, China became the world's largest exporter. Reforms began with the phaseout of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, growth of the private sector, development of stock markets and a modern banking system, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors considered important to "economic security," explicitly looking to foster globally competitive industries. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2015 stood as the largest economy in the world, surpassing the US in 2014 for the first time in modern history. Still, China's per capita income is below the world average.

After keeping its currency tightly linked to the US dollar for years, China in July 2005 moved to an exchange rate system that references a basket of currencies. From mid-2005 to late 2008, cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. In 2015, the People’s Bank of China announced it would continue to carefully push for full convertibility of the renminbi after the currency was accepted as part of the IMF’s special drawing rights basket.

The Chinese Government faces numerous economic challenges including: (a) reducing its high domestic savings rate and correspondingly low domestic consumption; (b) facilitating higher-wage job opportunities for the aspiring middle class, including rural migrants and increasing numbers of college graduates; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2014 more than 274 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of population control policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development.

Several factors are converging to slow China's growth, including debt overhang from its credit-fueled stimulus program, industrial overcapacity, inefficient allocation of capital by state-owned banks, and the slow recovery of China's trading partners. The government's 13th Five-Year Plan, unveiled in November 2015, emphasizes continued economic reforms and the need to increase innovation and domestic consumption in order to make the economy less dependent in the future on fixed investments, exports, and heavy industry. However, China has made only marginal progress toward these rebalancing goals. The new government of President XI Jinping has signaled a greater willingness to undertake reforms that focus on China's long-term economic health, including giving the market a more decisive role in allocating resources. In 2014, China agreed to begin limiting carbon dioxide emissions by 2030.

MARKET CHALLENGES

China’s rise as a consumer economy has long been suspected, but recent figures have confirmed that the once export-orientated powerhouse is now much more internally focussed, creating ample opportunities for companies looking to expand abroad.

Official figures recently revealed that China had been pushed into deficit in the month of March 2013, although there was still a surplus of near US$270bn for the year. The results confirmed what many analysts had long hoped for; that the country’s future growth would be less dependant on exports and that the new leaders are focused on delivering sustainable, quality growth, which is a welcome change from the growth-at-all-costs approach of the past.

The effect of increased wealth and consumer spend in China is already being felt around the world, with recent tourism numbers showing that visitors from the country spend more than any other country in the world with a record $102 billion shelled out on the road. For growing companies with overseas aspirations, China seems like the perfect destination for expansion. But with lengthy bureaucratic procedures and an unfamiliar consumer environment awaiting those who try, having local advisors on hand to help navigate the complex market is crucial.

As the economy continues to grow (expected to expand by 8.2% this year), we assess some of the main difficulties encountered by overseas firms doing business in China.

1. Market access
   
   Local distribution networks, buying habits of local consumers and regulatory requirements can make China a very difficult market to access. What’s more, the market environment is completely detached from most other economies in the world, making it difficult to take the first steps. It is estimated that 37% of products that pass for the US market fail in the China market.
2. Consumer preference
   
   There has been a sizeable class shift in China over the past few decades, and the consumer environment is far more diverse than it once was. It is also completely detached from markets elsewhere in the world, and many companies have sunk in China because they failed to take into account consumer preference.
3. Bureaucracy
   
   Overseas firms often struggle with laws and regulations in China, with 31% of 338 respondents in a recent business survey listing bureaucracy as their number one concern when expanding into the country. Most common complaints revolve around obtaining the required licenses and permits, with many respondents bemoaning the laborious processes.
4. Governmental challenges
   
   Transparency of government procedure and corruption are chief concerns of companies moving into China, although as the new leadership is ushered in, this is likely to change. The citizens of China need to believe the government’s decisions serve their interests, and there is a growing risk that the Party leaders increasingly are viewed as clinging to power in order to enrich themselves. Standards and conformity assessment Rules stating how products are designed, manufactured, sold, used and disposed of exist in China which all products must comply with before entering the market. This can be a very foreign procedure to many companies, and can impact the appeal of the country.
5. Intellectual property
   
   Intellectual property rights is an area that has been notoriously difficult in China, although recent reports suggest this is an area that is improving the most. Gary Locke, America's ambassador to China, recently said that “for every foreign company calling for stronger IP protection, there are more Chinese companies calling for the same,” suggesting that progress is occurring.
6. Competition
   
   Many Chinese companies are looking to improve the quality of their products and services so they can sell them abroad, which has increased competition as a result. Additionally, consumers can, in some cases, give preference to native companies over those from abroad. The government can also give preference to domestic firms, which makes disrupting the market rather difficult.
7. Labour
   
   The US-China Business Council recently published a report that showed 62% of respondents said that they had increased wages by 5% to 10%. Eight percent of respondents had hiked them more than 15%. This was the area that concerned respondents the most on the whole survey.
8. Human resources
   
   Human resources remains a number one task for Chinese companies, with the demand for trained, professional labour still outstriping supply. Companies therefore find it hard to keep hold of their best staff, as some job changes can mean salary increases of up to 30%.
9. Administration
   
   Administration, licensing, product approvals and many more laborious operating task can leave managerial desks flooded in paperwork. For many firms, overcoming the bureaucratic hassle is the biggest task to successfully breaking the Chinese market.

1. China-Australia FTA
2. China-Korea FTA
3. China-Switzerland FTA
4. China-Iceland FTA
5. China-Costa Rica FTA
6. China-Peru FTA
7. China-Singapore FTA
8. China-New Zealand FTA
9. China-Chile FTA
10. China-Pakistan FTA
11. China-ASEAN FTA
12. Mainland and Hong Kong Closer Economic and Partnership Arrangement
13. Mainland and Macau Closer Economic and Partnership Arrangement

1. Free Trade Agreements under Negotiation
2. Regional Comprehensive Economic Partnership, RCEP
3. China-GCC(Gulf Cooperation Council) FTA
4. China-Japan-Korea FTA
5. China-Sri Lanka FTA
6. China-Pakistan FTA second phase
7. China-Maldives FTA
8. China-Georgia FTAChina-Israel FTA
9. China-Norway FTAFree Trade Agreements under Consideration
10. China-India Regional Trade Arrangement Joint Feasibility Study
11. China-Columbia FTA Joint Feasibility Study
12. China-Moldova FTA Joint Feasibility Study
13. China-Fiji FTA Joint Feasibility Study
14. China-NePal FTA Joint Feasibility Study
15. China-Mauritius FTA Joint Feasibility Study

1. Value-added tax
2. Consumption tax
3. Customs duties

• Most-favored-nation duty (MFN) rates;
• Conventional duty rates;
• Special preferential duty rates;
• General duty rates;
• Tariff rate quota (TRQ) duty rates; and,
• Temporary duty rates

• Goods imported to China from WTO member countries;
• Goods originating from countries or territories which have concluded bilateral trade agreements containing provisions on MFN treatment with China; and,
• Goods that originated from China.