Opinion
Chinese curbs dent metal needs
17 Aug 2011 |
Ms Arpita Khanna
| The Hindu Business Line
India can counter China's export restrictions on strategic metals by strengthening ties with resource-rich nations.
The global metals market is characterised by various dynamics that may affect security of supply of these materials to India. One of the factors with serious security implications for India is the proliferation of trade-distorting measures by emerging economies such as China.
RISING DEMAND FOR METALS
China, in recent years, has become a major consumer of metals owing to the robust growth in its economy. According to a World Bank report, between 2002 and 2008, Chinese consumption of key metals grew at an average 16.1 per cent per annum compared with less than 1 per cent demand outside China.
China's growing appetite for metals has resulted in the formulation of various policies and strategies, which include application of trade-distorting measures such as quantitative export restrictions (quotas), export taxes, reduction/cancellation of value-added tax rebates, mandatory minimum export prices, stringent export licensing requirements, and so on, by the government.
These measures have been applied on a number of metals such as copper, aluminum, nickel, molybdenum, manganese, magnesium, rare earths, tungsten, indium, and so on.
Environmental protection, promotion of downstream industries and preservation of resources for future use are among the most frequently cited policy objectives of these restrictions by China. The proliferation of export restrictions by China has resulted in growing concerns across the world, as China is the major supplier of many of these metals. In fact, many countries have even challenged Chinese protectionist measures using the available mechanism and instruments, including WTO.
RELYING ON CHEAP IMPORTS
India relies on the import of many of the metals, for which China is the major supplier. For instance, China's share in the total world production of tungsten, gallium, and antimony is 75 per cent, 83 per cent, and 79 per cent respectively. China is the main producer of rare earths. The dominance of China in the world production of most metals is owing to the policies adopted in past years. Realising its competitive advantage in the production of metals, China flooded the international market with low-priced products in the 1990s.
This resulted in the curtailment of production of these metals in other countries. In India, for instance, there is no/little indigenous production of metals such as tungsten, cobalt, molybdenum, and rare earths.
No attempts have been made to initiate the production of these metals as it was possible to import them from China at a low cost. However, in view of the restrictive measures adopted by China, it is clear that the international market cannot be relied on for the sustainable and affordable supply of these materials.
In fact, export restrictions by China is anticipated to increase, given the increase in domestic consumption of metals, thus aggravating the shortages in the international market and the resultant price increase.
It is, thus, imperative for India to initiate policy measures to secure the supply of these strategic materials, as any interruption in their supply will affect not only national security but also the economic stability and technological competitiveness.
DOMESTIC SUPPLIES
The supply from domestic sources should be augmented through increased scientific and exploration activities and development of mining and processing technologies. Recycling and re-use of metals should be encouraged to supplement the limited virgin resources for metals.
The augmentation of domestic sources of supply should be accompanied by robust strategic investments in resource-rich countries. Indian companies have already initiated acquisition of resources abroad. However, their efforts are slow and facing intense competition from countries such as China.
The Indian Government should support such initiatives by increasing economic engagement and strengthening strategic relations with resource-rich nations. Bilateral and multilateral trade agreements could be used as an instrument to secure and improve our access to metals.
India needs to come up with a strategic planning framework that addresses the various issues that may undermine the supply of metals for India.
Given that the metals sector is intricately linked to international developments, devising policy strategies to mitigate or reduce the effect of the supply restrictions has to be resource-specific and highly responsive to the changing global dynamics.
Integrating the relevant perspectives on issues, challenges, factors and comprehending the international scenario and its domestic implications would help address metals security in India.
Getting our act together: India's growing challenges need to be addressed with a more enlightened approach
14 Aug 2011 |
Dr R K Pachauri
| The Financial Express
We need a new strategy and approach by which the country achieves high rates of economic growth while using our natural resources efficiently and on a sustainable basis.
A Blueprint, and A Civil Society
13 Aug 2011 |
Dr R K Pachauri
| Business World
A harmony between development and environmental protection is imperative. Civil society groups and citizens at large need to work towards an environmental roadmap for the future.
Smart mini-grid for reliable power
08 Aug 2011 |
| The Financial Express
TERI's Smart Mini-Grid system, the first of its kind, shows the way in power generation from renewable resources and intelligent distribution of load through smarter controls.
Beyond lighting -- Solar technology furthering the UN MDGs
05 Aug 2011 |
Ms Smita Rakesh
,Ms Jigyasa Jyotika
| India Carbon Outlook
Over a century and a half after the invention of electricity, billions are still waiting for the power grid to reach their village. Solar lanterns, under the Lighting a Billion Lives campaign, are spreading the light and changing lives in these remote areas.
A victim of poor governance: Energy security
25 Jul 2011 |
Dr Leena Srivastava
| The Financial Express
The crisis in coal supply has created a scare with several power plants running extremely low on coal stocks and new projects at the risk of being stranded. The oil sector has been run down on account of abysmally poor pricing decisions that could not be addressed, despite the obviously declining health of the oil companies. Reforms in the electricity sector came to a stand-still after a mis-handled distribution privatisation exercise and the consistent and seemingly conscious erosion of the institution of independent regulators. The promise of the natural gas sector, which led us to believe that India was floating on gas, is disappearing. And yet we continue to believe that India is an emerging power that is going to witness close to 10% annual rates of economic growth over the next several years!
The increase in prices of LPG, kerosene and diesel witnessed in the last few days will have its political fall-out. Teri and similar organisations have, for at least two decades, been suggesting ways for more effectively targetting and delivering subsidies-while highlighting the nearly 40% leakage of subsidies and the fact that nearly two-thirds of the remaining subsidy reaches undeserving sections. If 80% of the subsidy burden annually could have been avoided, we wouldn't have been in this situation.
The current price increase along with the fall in international oil prices due to the release of stockpiles by the International Energy Agency will ease the financial pressure on oil companies and the subsidy pressure on the government. But the reduction in various taxes announced by the state governments to mitigate the adverse impact of this price increase would only mean a transfer of finances from some pockets of the government into others. Also, the long-term issues would still need to be addressed when oil prices go up again. Apart from looking at the UID scheme for changing the subsidy delivery system, the government urgently needs to see how it can encourage energy savings that would reduce the ever-growing demand for oil and its products.
The problem with regulatory commissions is they think their only objective is to keep electricity tariffs down. Sustainable development is widely understood to have three pillars - economic, environmental and social. Long-term sustainability considerations in the power sector are no different. The regulatory commissions can still pull back the power sector from a disastrous future by (i) communicating openly their long term vision for sustainable development of the sector, with clear performance benchmarks specified, (ii) recognising the separation of responsibilities they have of tariff setting vis-a-vis the government's responsibility of covering any subsidies (iii) designing and implementing incentive schemes to promote energy efficiency, and (iv) building credibility and confidence in their capabilities. Realising the 25-30% efficiency improvement potential in consuming sectors would reduce the shortages in the system and go a long way in easing the pressure on coal.
The grim coal shortage situation highlights the complete inefficacy of planning in the industry and government. Trying to address this by placing pressure on the ministry of environment and forests to allow coal mining in eco-fragile areas will only ensure that the mis-governance extends from the energy sector into the environment and forestry sector.
A common refrain today is that governments have to be more responsible. They also need to be more accountable to the public. In the context of the energy sector, a large part of this accountability would come from making available reliable data on the performance of each sector which could be subjected to a social audit.
Moving towards a sustainable transit system
30 Jun 2011 |
Ms Akshima Tejas Ghate
| Mint
Urban transport has emerged as a key challenge for city planners. Private vehicles rule the road and cyclists and pedestrians are on the decline. We need to develop a planned and integrated public transport system.
Private participation - A feasibility check
27 Jun 2011 |
Ms Arpita Khanna
,Ms Aastha Mehta
| The Financial Express
With the state-controlled coal sector unable to meet the demand-supply gap, the decade old privatisation proposal is being looked into again. To draw private investors, the government needs to facilitate enabling policies and transparent procedures.
Government needs to bolster green buildings movement
23 Jun 2011 |
Ms Mili Majumdar
| Mint
The government's move to give priority to green buildings is the environmental impact assessment process is a welcome step. But there’s more to be done to sustain the green buildings movement.
Solid waste, the funding fixation
15 Jun 2011 |
| Planet Earth
Positives have been noticed in the handling and disposal of solid waste in India. Yet, the sector finds itself deficit in financial support, says Dr Shilpi Kapur, Associate Fellow, Resources, Regulations & Global Security.