Saturday, June 23, 2007

Answers to some shout-box queries -4

18 Jun 07, 09:30

vinod: Sir..what is the difference in the working of SHCIL and SEBI?

There is a lot of difference. SEBI is a regulator while SHCIL is not. The latter is just a custodian of stocks in demat form. SHCIL can’t regulate the markets in any way. It is a mere custodian. SEBI lays down the rules and regulations governing the market. Its regulations have an impact on the business and/or conduct of the various market participants. SHCIL’s work resembling any regulatory work can at best have an impact on a single market participating entity – not a class.

19 Jun 07, 22:36

vinod: How open is the Indian Agriculture to imports and exports?

Nobody talks of ‘openness’ of exports as an issue at all. India also wants to export its agriculture products. The government has so far not found any reason to levy any export duty on agriculture exports. You might remember the export duty that is levied on iron ore exports recently. If it finds that export of agriculture is happening to the detriment of the Indian needs, it would surely levy an export duty. The fact that it has not, shows that there is very little of unwated export happening.

Coming to imports, ‘Openness’ of our imports is a relative term. What is felt ‘Open’ by one may not appear to be so for another. However, it would suffice to know that India being predominantly subsistence agriculture oriented country, can ill afford to have cheap agriculture products flooding its markets to the detriment of its own farmers. So it has always kept the duty structure on imports at a very high level. Being a developing country, it is allowed to do so also by the international trading regime. It would interesting to know that while the average import tariff India applies on farm products is around 38 per cent today, the average "bound" tariff is around 115 per cent. Bound tariff is the tariff level that India reserves the right to increase duties up to. Take a look at this excellent article that appeared in It will give a very good insight into the issue.