Exports
India needs to pay close attention to Myanmar trade

China is breathing down our necks in Myanmar, all because we have so far neglected to take serious interest in this country


We are neighbours, and have a 1,640 kms long border with Myanmar along with our Eastern states, with Mizoram being the closest to them. As against this, Pakistan and India share a 1,800 km border!

 

Our relations with Myanmar have had their ups and downs and presently, the atmosphere is improving, thankfully, for the better. China, on the other hand, is fully entrenched in Myanmar, and has booming trade relations with them. We need to make our presence felt in as many areas as possible, and our current trade with Myanmar is about $1.87 billion. This can be increased!

 

In the recent times, not long ago in December, unilaterally, Myanmar closed its land border at International Gate Nos I & II with India and there was an organized rally where local people claimed that India was not honouring its international boundary. As usual, it had to be handled with care by the Union Home Minister.

 

Our trade and related project developments in Myanmar have been slow but this could have been increased manifold, if only our government had regularly sponsored trade delegations and had held India International trade fairs in that country! Indians would rather take a holiday to other parts in the near east, but shudder to think of Yangoon to visit!

 

Trade development can take place when we have regular ships sailing between the two countries. At present, only when there are ship loads available, an exporter can ship to Yangoon. Myanmar has three ports and these can handle 800,000 TEUs (twenty feet equivalent units) annually. But we do not have a regular container vessel to carry our cargo!

 

After a lot of efforts, it appears now, that the Shipping Corporation of India (SCI), a Government undertaking, has volunteered to make available a vessel that can carry 1500 TEUs provided the Union government can give them a subsidy of Rs30 crore annually! If there are regular sailings, there is no doubt that this can increase to 36,000 TEUs over a period of time. Shipping Corp’s container vessel, if made available, under this condition, can cover Chennai, Yangoon and Colombo; and if there is adequate cargo, they can berth at Krishnapatnam also.

 

The point at stake is, should the government accede to their demand and give them an annual subsidy of Rs30 crore? SCI has made this demand, as they are already a loss making concern, and if regular cargo was not available to the above ports, their loss will only mount! Our stake in Myanmar is too important and large; the government must not dilly-dally on this issue, and confirm their willingness to subsidise the sailings to Yangoon and back. In fact, they could include other ports such as Sittwe also, which is under expansion, if Myanmar has no objection!

 

Right now, Essar Projects Ltd, a construction contractor from India, is executing the "port-cum-inland waterway" and is building the Sittwe port and a jetty at Paletwa, besides being involved in dredging the 158 kms of the river Kalandan, between these two points, to make it more navigable than it is today. Essar hopes to complete this project by June this year, and will

also supply six cargo vessels.

 

What is important is to note that from the jetty at Paletwa, our Mizoram border is only 109.2 kms away, though another 250 kms-highway would be needed to connect it to Aizwal, the capital. It is imperative that no time is lost in calling for tenders to build this. No purpose will be really achieved if there is no road communication, of international standard, to transport the goods either way! Many of the Myanmar highways have been built by the Chinese!

 

Myanmar, Bangladesh and Sri Lanka are important and close friends for India, who have to be handled with care. There can be great trade among all the three. As we now discuss the issues with Myanmar, which has other natural resources to offer, we must move seriously in our public relations campaigns in all the three countries; and promote our trade by conducting fairs that can display our products and services.

 

We must remember that China is breathing down our necks in Myanmar, all because we have so far neglected to take serious interest in this country.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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COMMENTS

Dr Anantha K Ramdas

3 years ago

Thank you Mr Kohli for your comments on Myanmar.I visited
Rangoon (as it was at that time) way back in 1983 and had to secure my visa from Hong Kong. Our company did regular business and supplied various products that were via tender.

Staying in the Strand, on the banks of Irrawady and meeting people on the road and talking to them was a plesant and memorable experience.

The government is now becoming more friendly. What we need is for the Commerce Minister to visit that Country on a trade mission and carry a airbus load of industrialists and manufacturers to spend a few days marketing our wares. If a serious attempt is made, our exports can go up by a few billion dollars and which can be even trucked/railed to them, besides shipping from both Kolkata and other eastern ports.
We should offer them a 2/3 year credit; by which time, they would be able to offer natural gas, which, presently taken by China. We need to investigate what we can import from them, so as to make the trade even.

The point that I wish to make is
that we are actually neglecting Myanmar. We need to encourage our Tourism office to open their centre in Yangoon, since Myanmarese are very religious minded and would love to visit India, the land of Buddha.

But if our bureaucrats and politicians are keen to go exotic far east and migration-oriented west, regretably, this may not happen. It will be my Utopian dream.

Harish Kohli

3 years ago

Your article hits the nail on the head.
My wife and I returned a few days ago after a beautiful 11 day holiday in Myanmar (Yangon-Bagan-Inle). The open spaces, lush greenery, their numerous waterways, well maintained monuments (no hearts/arrows scratched on the walls), wide roads and disciplined drivers were a pleasing sight. The very hospitable people take great pride in their Buddhist religion.
The only trace of India were the migrants settled since generations and the PAAN which is as popular as it was in India a decade ago but no stains visible. No Indian goods in sight at all except one Tata Nano.
We saw very few Indian tourists (mostly NRI/PIOs). As a tourist, due to the shortage of hotels and flights, Myanmar is expensive and, I believe, will continue to be for some time. The Govt. realises this and is pushing. We were told that on the Inle Lake shore 29 new hotels will be coming up and were pleasantly surprised to meet and Indian who is setting up one there. We also met an Indian telecom expert who is an advisor to a Myanmar company. Another friend is hoping to take up projects there. Our guide was humming Indian music but no signs of any Indian movies. As you rightly suggest, unless the Indian Government gives a big push, things will not change.

Harish Kohli

Share trading not covered under Consumer Act

Regular sale and purchase of shares is a purely commercial activity and the only motive is to earn profits. Therefore, this activity is not covered under the provisions of the Consumer Act, the National Consumer Forum ruled

The National Consumer Dispute Redressal Commission (NCDRC), while dismissing a revision petition, has clarified that a person regularly trading in share market does not fall under the definition of 'consumer' as per the Consumer Protection Act, 1986.

 

In an order issued on 3rd January, the apex consumer forum said, "Since, respondents are trading regularly in the share business, which is commercial activity, under these circumstances, respondents would not fall under the definition of ‘consumer’ as per the Act. Moreover, regular trading in the sale and purchase of shares is a purely commercial activity and the only motive is to earn profits. Therefore, this activity being purely commercial one, is not covered under the provisions of the Act."

 

"Accordingly, we hold that since respondents are not the ‘consumers’ as per provisions of the Act, the State Commission committed grave error in allowing their complaint. Consequently, we allow the present revision petition and set aside the impugned order passed by the State Commission and restore the order of the District Forum. With the result, the complaint filed by the respondents before the District Forum shall stand dismissed," the NCDRC said.

 

The case relates with Hyderabad-based GP Ramesh and his wife Padma G who alleged that their broker Steel City Securities Ltd sold shares worth Rs11.76 lakh and Rs1.78 lakh despite their instructions about not to use their stolen depository participant slip (DPID) books.

 

Ramesh said, the depository participant slip books belonging to him and his wife were stolen from his scooter on 24 January 2008. He informed Steel City Securities about the theft and requested the broker not to allow any transactions on the said depository participant slips.

 

Steel City Securities advised Ramesh to lodge a police complaint and enclose the same along with his representation for their record purpose. The broker also assured him that they will not allow any transaction on the said depository participant slips which were lost.

 

Following the advice, Ramesh filed a complaint on the same day before the SR Nagar police station. On 30 January 2008, police issued an investigation certificate stating that efforts were made to trace the above slips but all are in vain.

 

Ramesh wrote a letter to Steel City Securities on 30 January 2008 along with the copy of the police complaint, and requested the broker to issue new DPID books.

 

However, there was no response. Later on, Ramesh came to know that the broker sold the shares worth Rs11,768 on 29 January 2008 and Rs1.78 lakh, respectively, belonging to his wife. In spite of the assurance that Steel City Securities will not transact till new books are issued, the broker sold the shares which was unfair and hence it is bound to reimburse the same, Ramesh said in his petition before the District Consumer Forum.

 

Since there was no response, he sought reimbursement of Rs1.78 lakh and Rs11,768 with an interest @18% per annum from 29 January 2008 till date of payment to his wife. Further he asked the broker to issue new DPID books in favour of both the husband and wife, besides Rs30,000 each towards compensation and Rs10,000 as costs of the complaint.

 

In its reply, Steel City Securities denied the allegations and also that it had advised Ramesh to lodge a police complaint. The District Forum, held that the complaint was not maintainable as there was agreement between them that in case of dispute, they shall approach the Arbitrator. "The respondents (Ramesh and his wife) have failed to show any deficiency of service/unfair trade practice. Lastly, the respondents are not ‘consumers’ since the transactions are commercial in nature," the Forum said. It then dismissed the petition.

 

Ramesh then filed an appeal before the State Commission, which while allowing it set aside the order passed by the District Forum. The State Commission also directed Steel City Securities to reimburse Rs1.78 lakh and Rs11,768 to Ramesh and his wife. 

 

Steel City Securities then filed a revision petition before the NCDRC. During the hearing, the apex consumer forum said, "It is an admitted fact that respondents had been indulging in trading of the shares as respondents in their complaint have stated that they are regularly transacting the transactions through the petitioner. Thus, the short question which arise for consideration in the present case is as to whether respondents are ‘consumers’ or not as per Section 2(1)(d) of the Act."

 

Expression ‘consumer’ has been defined in Section 2 (1) (d) of the Act, which reads as under;

 

“d    “Consumer” means any person who,---

 

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or 

 

(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose;

 

Explanation------ For the purpose of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment”.

 

The NCDRC said, both the Rameshs have nowhere pleaded in their complaint that they are doing the share trading business for self-employment nor it has been pleaded that the services provided by Steel City Securities are being availed exclusively for the purpose of earning their livelihood by means of self-employment. "It is well settled that the dispute between the parties relating to commercial purposes are excluded under the Act," the Commission said.

 

It said NCDRC in Vijay Kumar Vs. Indusind Bank, II (2012) CPJ 181 (NC) has held;

 

“Since, petitioner has been trading regularly in the shares which is a commercial transaction and for which he has also availed the “over draft facility” from the respondent, as such he would not be a consumer as per Section 2 (1) (d) (ii) of the Act. Moreover, regular trading in the purchase and sale of the shares is a commercial transaction and the only motive is to earn profit. Thus, this activity is purely commercial one and is not covered under the Act”.

 

"Since, both the Rameshs are trading regularly in the share business which is commercial activity, under these circumstances, respondents would not fall under the definition of ‘consumer’ as per the Act. Accordingly, we hold that since respondents are not the ‘consumers’ as per provisions of the Act, the State Commission committed grave error in allowing their complaint. Consequently, we allow the present revision petition and set aside the impugned order passed by the State Commission and restore the order of the District Forum. With the result, the complaint filed by the respondents before the District Forum shall stand dismissed," the NCDRC said in its order.

 

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

 

REVISION PETITION NO.3060 OF 2011

 

(Against the order dated 25.5.2011 in Appeal No.603 of 2009 of the State Commission, Andhra Pradesh)

 

Steel City Securities Ltd.

VI Floor, Sanous Manohar Complex,

Opp Dinmy Pen Shop Sindhi Colony

PG Road, Secunderabad, AP

Rep. by its Manager                                …. Petitioner

 

             Versus
 

1. Shri GP Ramesh

    Madhuranagar

    SR Nagar, Hyderabad

    AP

2. Smt Padma G

    Madhuranagar

    SR Nagar, Hyderabad

    AP                                                          …Respondents

 

Click to see the order issued by NCRDC

 

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Common demat account: Issues and challenges
Common demat account would be very useful for investors and needs to be pushed by the finance ministry 
 
Finance Minister has spoken about the need for a common demat account across financial assets. Chairing the Financial Stability and Development Council meeting, attended by all financial regulators, Chidambaram has asked regulators to expeditiously introduce a common demat account for financial assets and work together so that inter-regulatory issues should be resolved in a time bound manner by the FSDC Sub-Committee. Highlighting the need for a common demat account Mr. Chidambaram said, “Priority should be accorded to the steps like common demat account for financial assets which will add considerable benefits to the consumers.”This seems to be a great idea. While the modalities of operations of common demat account will take time, the fact remains that the common demat account will help investors hold different asset classes such as equity, bonds, commodities, insurance etc. together in one demat account, without any need to open multiple demat accounts. While there is no doubt that this will reduce the complications and paper work involved for the investors, the fact remains that there will be some challenges on this front as well.  Here are some of the challenges that will be faced while offering the common demat account to the investors:
 
Common KYC is required across asset classes: Before starting common demat account, it will be important to ensure that there is a common KYC (Know Your Customer) process across all types of financial institutions. Today an investor has to undergo multiple rounds of KYC depending upon where he or she opens an account. There are operational issues as well. While an account with a bank can be opened without a PAN number, it is not possible to open a demat account for shares without a PAN. So what will be the process if a common demat account is opened for different asset classes offered by different types of financial institutions?  All financial institutions need to come together to work on modalities of common demat account. Apart from standardisation of KYC documents, the modalities of money laundering procedures across asset classes also need to be created.
 
Nomination process related issues: There are some issues related to nomination process that also needs to be worked on. For instance, nomination process in shares and insurance is not one and the same. A person who is nominee in the shares becomes account holder post the death of the person holding shares, while in case of insurance a nominee is just the recipient of the benefits and does not de facto become an owner. Under Section 109A of the Companies Act, if the nomination is made under procedure prescribed by law, the nominee will be entitled to become the rightful owner of shares. And, such right shall exclusively favour the nominee and exclude all other persons.
 
In comparison, Section 39 of the Insurance Act says the appointed nominee will be paid, though he/she may not be the legal heir. The nominee, in turn, is supposed to hold the proceeds in trust and the legal heir can claim the money. How will this dilemma be solved? Though dematerialisation of insurance is yet to gain popularity, this argument is considering long term view of financial markets. Similarly, Reserve Bank of India (RBI) guidelines specifies the deceased’s nominee would receive the money in the capacity of a trustee of the legal heirs. This applies to other financial transactions like provident fund, mutual funds and so on.
 
While this can be resolved at the operational level, an investor needs to be communicated about the same to avoid any confusion in future. Also nomination formalities need to be worked out separately for different asset classes.
 
Operational issues in inducting asset classes for dematerialisation: Common demat account will have to undergo, various operational process issues related challenges. This was experienced when National Savings Certificate (NSC) was inducted in the process of dematerialistion. Any asset class which is included in the demat account has to undergo a clear cut process definition to avoid any complexity. Since multiple financial institutions and asset classes will be involved in the common demat account process, it will be challenging task to integrate everything. Also rematerialisation process also needs to be framed for all asset classes. 
 
Issues related to system integration: There will be need for system level integration across different service providers. In current context of demat of shares, depository, depository participants, clearing house of the stock exchanges and register and share transfer agent operate through a common system.  Post implementation of common demat account across asset classes, the number of intermediaries will increase which will mean more and more players to be integrated into a common system. Integrating systems that manage different asset classes such as insurance, commodity, equity, debt and other asset classes will be a humongous task. Also, a basic question like making demat facility available across country including in the remote areas where post offices and banks are currently operating from will be challenging. 
 
While these challenges can definitely be overcome, more important is the fact that investors will benefit from a single demat account. If an investor is given access to common demat account with nominal charge and complete portability it will go a long way in enhancing strength of financial system in India.
 

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COMMENTS

Usha Pillai

3 years ago

My limited experience with having a common demat account for my equity holdings and MF units has been pathetic. I converted all my MF units to demat form and then discovered that the Mutual fund houses would not send me statements anymore, showing activity for the financial year, including dividend declarations. They say that the demat custodian is responsible whereas the custodian denies it. I am still fighting a losing battle.

DEEPAK KHEMANI

3 years ago

What is the need of another class of demat account? why cant the existing account be upgraded/modified to become an account which can hold all financial assets?
Imagine the plight of a person having an existing demat account for shares and bonds another for Insurance policies and now a common demat account. When will this and the KYC madness end?

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