Uzbekistan Second largest producer of cotton

Uzbekistan

Uzbekistan is the universe ‘s 2nd largest manufacturer of cotton, is rich in oil, gas and minerals and achieved economic growing of 8.1 per cent in 2007. Although there are good chances for inward investing, Uzbekistan ‘s 28 million population is mostly unskilled and rural and its authorities has a repute for increasing its control over concern instead than cut downing it. This of import new book considers the chances for FDI and looks at the possible barriers to entry and the regulations of concern battle with Uzbekistan. Subscribers include: Grata Law Firm.

Biography

Alica combines several old ages ‘ experience in international development and analysis with a specialisation in the former Soviet Union. She spent several old ages in Kyiv with the International Finance Corporation and the non-profit US-Ukraine Foundation working on denationalization, economic development and authorities reform. In add-on, she has worked in Belarus and Tajikistan. She earned her BA in Russian Studies from Bryn Mawr College, PA, an MSc in Development Studies from the School of Oriental and African Studies, University of London and a Post-Graduate Diploma in Legal Practice from BPP Law School, London.

ECONOMY – Overview:

Uzbekistan is a dry, landlocked state of which 11 % consists of intensely cultivated, irrigated river vale. More than 60 % of its population lives in dumbly populated rural communities. Uzbekistan is now the universe ‘s second-largest cotton exporter and fifth largest manufacturer ; it relies to a great extent on cotton production as the major beginning of export net incomes and has come under increasing international unfavorable judgment for the usage of kid labor in its one-year cotton crop. Other major export earners include gold, natural gas, and oil. Following independency in September 1991, the authorities sought to shore up up its Soviet-style bid economic system with subsidies and tight controls on production and monetary values. While aware of the demand to better the investing clime, the authorities still sponsors steps that frequently increase, non diminish, its control over concern determinations. A crisp addition in the inequality of income distribution has hurt the lower ranks of society since independency. In 2003, the authorities accepted Article VIII duties under the IMF, supplying for full currency convertibility. However, rigorous currency controls and tightening of boundary lines have lessened the effects of convertibility and have besides led to some deficits that have farther stifled economic activity. The Central Bank frequently delays or restricts convertibility, particularly for consumer goods. Potential investing by Russia and China in Uzbekistan ‘s gas and oil industry, every bit good as increased cooperation with South Korea in the kingdom of civil air power, may hike growing chances. In November 2005, Russian President Vladimir PUTIN and Uzbekistan President KARIMOV signed an “ confederation, ” which included commissariats for economic and concern cooperation. Russian concerns have shown increased involvement in Uzbekistan, particularly in excavation, telecom, and oil and gas. In 2006, Uzbekistan took stairss to rejoin the Collective Security Treaty Organization ( CSTO ) and the Eurasiatic Economic Community ( EurASEC ) , which it later left in 2008, both organisations dominated by Russia. Uzbek governments have accused US and other foreign companies runing in Uzbekistan of go againsting Uzbek revenue enhancement Torahs and have frozen their assets.

Main Macroeconomic Indicators of Economic Development of Uzbekistan:

Main indexs of economic growing of Uzbekistan for January-June 2009 are as follows:

  • GDP: 8.2 %
  • Industrial end product: 9.1 %
  • Agricultural end product: 4.6 %
  • Production of consumer goods: 12.5 %
  • Construction work: 32.5 %
  • External Trade: 5.0 %
  • Exports: 2.8 %
  • Imports: 8.2 %
  • Inflation ( av. monthly degree ) : 0.6 %

INDIA ‘S INVESTMENT INTERESTS/RELATED EVENTS:

A ) Energy:

  • Uzbekistan restored gas supplies to Tajikistan: Uzbekistan restored natural gas supplies to Tajikistan after Tajiks repaid most of its debt. Uzbekistan halted supplies on 1stSeptember, 2009 demanding that Tajikistan settle $ 18 million debt. Tajiktransgas repaid $ 10 million and the two states had agreed it would refund another $ 7.5 million by providing electricity to Uzbekistan. In the first hebdomad of September, 2009 Uzbekistan reduced gas supplies to Kyrgyzstan over unpaid debts.
  • Uzbekistan to auction 7 U sedimentations: Uzbeg governments plan to keep unfastened auctions for the development of seven uranium sedimentations located in the state. Tenders will likely be ready by March 2010. Relevant sections are now fixing all necessary paperss for the auction. Tenders will be unfastened and any international company will be able to offer.

2. B ) INDIA

Reverse purchaser Seller Meet at GOA: Six purchasers from Uzbekistan participated in the Reverse Buyer Seller Meet on publication, printing, paper and paper merchandises organized by the CAPEXCIL from 28thto 29thSeptember,2009 in Goa.

C ) Central Asia International Textile Machinery Exhibition ( CAITME 2009 ) :ITE Uzbekistan organized the 5thCentral Asia International Textile Machinery Exhibition “ CATME-TEXTILE Machinery Uzbekistan 2009 ” co-occuring with 6th Cardinal Asiatic International Exhibition “ Textile Expo Uzbekistan 2009 ” in Tashkent from 15thto 17thSeptember, 2009. 16 Indian companies through EEPC India and Indian Textile Accessories & A ; Machinery Manufacturers ‘ Association ( ITAMMA ) participated in this exhibition to exhibit their merchandises in fabric sector. Many other states like Austria, Belgium, Belarus, UK, Germany, India, Italy, China, Holland, Poland, South Korea, Russia, USA, Turkey, Uzbekistan, France and Switzerland besides participated in the exhibition. The exhibition displayed production of new natural stuff processing operations ; parts and constituents, dyes and chemicals ; hardware ; finished fabric.

INDIA ‘S Trade WITH UZBEKISTAN COMMODITY-WISE:

As per trade statistics, major points of India ‘s exports to Uzbekistan include drugs, pharmaceuticals, machinery & A ; instruments, metal merchandises, paper & A ; wood merchandises, meat & A ; readyings. Non-ferrous metals constitute the largest point of Indian imports from Uzbekistan, but of late, export of non-ferrous metals to India have decreased. Other chief points of import are natural cotton, crude oil, petroleum & A ; merchandises, pulsations, natural silk and services ( which reflect remittals of Uzbek Airways from India of its gross from both riders and cargo services ) .

India ‘s top five points of export to Uzbekistan in 2007-2008:

  1. Drugs, pharmaceuticals and all right chemicals
  2. Machinery and Instruments
  3. Metallic element merchandises
  4. Paper and wood merchandises
  5. Meat & A ; readyings

Top five import points from Uzbekistan to India in 2007-2008:

  1. Non-ferrous metals
  2. Raw cotton
  3. Petroleum, petroleum & A ; merchandises
  4. Pulsations
  5. Raw silk

TRANSANATIONAL ISSUES

Disputes – international:

prolonged drouth and cotton monoculture in Uzbekistan and Turkmenistan creates water-sharing troubles for Amu Darya river provinces ; field limit of the boundaries with Kazakhstan commenced in 2004 ; border boundary line of 130 kilometers of boundary line with Kyrgyzstan is hampered by serious differences around enclaves and other countries

Refugees and internally displaced individuals:

refugees ( state of beginning ) : 39,202 ( Tajikistan ) ; 1,060 ( Afghanistan ) IDPs: 3,400 ( forced population transportations by authorities from small towns near Tajikistan boundary line ) ( 2007 )

Trafficing in individuals:

current state of affairs: Uzbekistan is a beginning state for adult females and misss trafficked to Kazakhstan, Russia, Middle East, and Asia for the intent of commercial sexual development ; work forces are trafficked to Kazakhstan and Russia for intents of forced labour in the building, cotton, and baccy industries ; work forces and adult females are besides trafficked internally for the intents of domestic servitude, forced labour in the agricultural and building industries, and for commercial sexual development grade evaluation: Tier 2 Watch List – Uzbekistan is on the Tier 2 Watch List for its failure to supply grounds of increasing attempts to battle terrible signifiers of trafficking in 2007 ; the authorities did non amend its condemnable codification to increase punishments for convicted sellers ; in March 2008, Uzbekistan adopted ILO Conventions on minimal age of employment and on the riddance of the worst signifiers of child labour and is working with the ILO on execution ; the authorities besides demonstrated its increasing committedness to battle trafficking in March 2008 by following a comprehensive anti-trafficking jurisprudence ; Uzbekistan has non ratified the 2000 UN TIP Protocol ( 2008 )

Illicit drugs:

theodolite state for Afghan narcotics edge for Russian and, to a lesser extent, Western European markets ; limited illicit cultivation of hemp and little sums of opium poppy for domestic ingestion ; poppy cultivation about wiped out by authorities harvest obliteration plan ; transit point for diacetylmorphine precursor chemicals bound for Afghanistan

MODERN ECONOMIC RELATIONS BETWEEN THE TWO COUNTRIES:

Cooperation between the two friendly states spans many countries such as economic and commercial ; cultural ; instruction and proficient preparation in diverse subjects ; information engineering ; scientific discipline and engineering ; agribusiness and civil air power ; and etc. There are 42 understandings to advance cooperation in many diverse Fieldss. Since 1993, Uzbekistan and India have signed three recognition understandings, harmonizing to which India has granted Uzbekistan three recognition lines of 10 million US $ each, for a period of 10 old ages. The representative office of “ Uzbekistan Havo Yullari ” National Airways Company was opened in Delhi in 1992, and bureau understandings with Indian houses on the realisation of air transit were signed. Now, the national air hose makes regular rider and lading flights to Delhi and Amritsar.

In the field of Science and Agriculture, we have ongoing bilateral plans of cooperation, which involve the exchange of visits by scientists and joint research undertakings. Uzbekistan imports medical specialties, pharmacies, jewelry and rug merchandises, machines and tools, cosmetics, glass ceramics, chemicals, electronics, tea, and many other merchandises from India. India in bend imports cotton and its byproducts, metal merchandises and nonferrous metals, inorganic chemical merchandises, silk, and wool from Uzbekistan. Indian companies are set uping joint ventures in fabrics, silk, touristry, garment trade, pharmaceuticals, car parts, etc. and this will ensue in betterments in both trade and investing. There is considerable range for cooperation in excavation, as Uzbekistan is really rich in minerals. The Gas Authority of India Limited has been discoursing some possible investing thoughts in both the upstream and downstream sectors in energy with Uzbek Company Uzbekneftegaz. Uzbekistan has been successfully using the coal gasification engineerings and some of Indian major companies have shown an involvement in purchasing this engineering.

But the long-run economic interaction between our states has non attained the coveted degree. It does n’t reflect the possible created by our turning economic systems. Uzbekistan considers India non merely as one of the biggest provinces on the Asiatic continent but besides as a state with political, economic, human and other potency which can and should play a important function in the resolution of jobs in universe political relations and economic system.

DOING BUSINESS IN UZBEKISTAN

Since its Independence in 1991, Uzbekistan has made a slow passage to an unfastened market economic system that supports private endeavor. Uzbekistan has been more cautious reforming but has been the most successful of all Soviet replacement provinces in footings of end product public presentation. The Uzbekistan economic system has been good managed in footings of its substructure, revenue enhancement policies, educational outgos and societal security.

The two chief exports of Uzbekistan are cotton and gold. Uzbekistan has a stable physical substructure. The domestic conveyance web and the irrigation canals are of import to the cotton economic system. At the present clip in the states of Central Asia, the legal footing of ordinance of entrepreneurship activity every bit good as other signifiers of concerns has been formed. The authoritiess of the provinces create the policy on liberalisation of economic policy for development of concern projects and other concern enterprises. Uzbekistan has created legal conditions for attractive force and usage of foreign investings. The Government has adopted more than 40 Torahs modulating procedures of denationalization and attractive force of investings.

Uzbekistan appears to be easy nearing a full unfastened economic system. It would be a good state to see as a location for new endeavor development. It has a strong physical substructure, educational support, and a moderately sized population of 27 million. One of the chief drawbacks is the province owned banking system. Like many emerging states, Uzbekistan ‘s authorities is taking an active function in advancing concern in that state. There is an particularly large push for entrepreneurship. The President has signed a just figure of Torahs and directives aimed and fostering entrepreneurship, and the State Property Committee seems dedicated to back uping entrepreneurship.

However, the state of affairs is non without jobs. Modern Uzbekistan ‘s babyhood has created an environment of misgiving of the immature authorities for some citizens. Some criticize the disposal, claiming a deficiency of true support for entrepreneurship. Many, particularly the neo-socialists, are condemning the authorities as a whole, particularly the president. In malice of his pro-entrepreneurship policy, he is gaining a repute as a bloody autocrat. Clearly Uzbekistan has a ways to travel yet, necessitating to construct the proper political and economic environment to further entrepreneurship. The desire surely exists to go a formidable participant in the planetary market.

Few snapshots of the India GDP statistics –

  • The growing rate of Indian GDP fell from 7.35 % in 2008-09 to 5.36 % till the terminal of 3rd one-fourth of the 2009-10.
  • The cumulative FDI Equity influxs ( from August 1991 – August 2009 ) stood at Rs. 5,20,589 crore.
  • Budgetary support for National Highway Development Programme ( NHDP ) has gone by 23 % on y-o-y footing for 2009-10.
  • Expenses for the Commonwealth Games 2010, went up from Rs.2,112 crore in Interim Budget to Rs.3,472 crore for 2009-10 financial.
  • Allotment to railroads have gone up from Rs.10,800 crore in interim budget toRs.15,800 crore for FY 2009-10.
  • Allocation under National Rural Health Mission ( NRHM ) has gone up by Rs.2,057 crore over Interim Budget estimation in 2009-10 of Rs.12,070 crore.
  • Rs.2,113 crore has been allocated for IITs and NITs, comprising of a proviso of Rs.450 crore for new approaching IITs and NITs.
  • Minimum Alternate Tax ( MAT ) to travel up to 15 % from 10 % .

Investing Policy in India

FDI

The process for FDI in India has been simplified through the automatic path. All items/activities come under the horizon of automatic path, except the undermentioned. Any proposal that requires an Industrial licence. An Industrial licence is required if

  • The said industry is covered by the Industries act 1951.
  • The proportion of foreign equity is more than 24 per cent of the equity capital of units fabricating merchandises set aside for little graduated table industries.
  • All applications, wherein the foreign confederate has a old concern tie up in India ( except IT sector ) .
  • All ventures to get portions by a foreign investor in an bing Indian company.

Any investing in public sector units, Export Oriented Units ( EOUs ) , units in Export Processing Zones ( EPZs ) , Particular Economic Zones ( SEZ ) , Software Technology Parks ( STPs ) and Electronics Hardware Technology Parks ( EHTPs ) come within the horizon of automatic path.

GOVERNMENT INITIATIVES TO PROMOTE TRADE IN INDIA

Export-Import Bank of India ( Exim Bank ) operates a comprehensive scope of funding, advisory and support programmes to advance and ease India ‘s trade and investing with the CIS states.

Exim Bank extends Lines of Credit ( LOCs ) to abroad authoritiess, fiscal establishments, regional Bankss and other abroad entities, to finance India ‘s exports to those states. Exim Bank ‘s LOC is a riskless, non-recourse export financing option available to Indian exporters for advancing their exports. Under this agreement, abroad importers are required to pay beforehand payment to Indian exporters, which is normally 10 % of the contract value. Exim Bank pays the balance sum, which is usually 90 % of the contract value, to Indian exporters through negociating Bankss in India, upon cargo of goods. Exim Bank besides operates LOCs, announced by the Government of India, to the state ‘s trading spouses.

Presently, 4 LOCs of Exim Bank are operative in the CIS part:

  1. LOC of USD 25 manganese to Vneshtorgbank, Russia
  2. LOC of USD 10 manganese to Vnesheconombank, Russia ;
  3. LOC of USD 10 manganese to Bank TuranAlem, Kazakhstan, and
  4. LOC of USD 10 manganese to Absolut Bank, Russia

The bank is farther researching LOCs to other states in the CIS part.

Exim Bank provides a scope of funded and non-funded installations, warrants, information and advisory services to back up undertaking exports from India. In the CIS part, Exim Bank has supported a figure of Indian undertaking exporters to procure contracts in assorted sectors including excavation, energy, and transit. Exim Bank besides offers a scope of information, advisory and support services to Indian companies to efficaciously take part in undertakings funded by many-sided support bureaus such as the World Bank, Asian Development Bank, European Bank for Reconstruction and Development ( EBRD ) .

With a position to assisting Indian companies in their internationalisation attempts, Exim Bank provides term loans both for equity investing in their ventures overseas every bit good as for loaning intents. In the CIS part, Exim Bank has supported Indian companies to put up joint ventures as for case in Kazakhstan, Ukraine and Uzbekistan in pharmaceuticals sector.

To make an enabling environment for heightening bipartisan flow of trade, investing and engineering, the bank has forged alliances/linkages with several establishments in the CIS part, including UZBEKINVEST-National Export-Import Insurance Company, Uzbekistan ; Export-Import Bank of the Russian Federation, Russia and Vnesheconombank, Russia, Belvensheconombank, Belarus ; and National Bank for Foreign Economic Activity, Uzbekistan.

It supports New Media Communication Pvt.Ltd. in conveying out a quarterly, bilingual ( English and Russian ) publication “ Indo-CIS Business ” , with a position to advancing active exchange of trade and investing related information.

COMPARING ECONOMIC INDICATORS OF INDIA AND UZBEKISTAN

From the above given informations we can easy compare the difference of Business chances between India and UZBEKISTAN and the from the ranks which are assigned to these two states we can easy analyse that every bit comparison to India, Uzbekistan has lesser Business chances and unfavourable concern environment. The state is holding a GDP of 8.2 % and is come oning quickly. It is importing a immense sum of its entire imports from India while the portion of its exports to India is rather less.

Equally far as India is concerned it is developing at a fast gait. The state has come out of the planetary meltdown more quickly than any other state. The state had a GDP of 7.3 % in the twelvemonth stoping 2008 and 5.3 % for the twelvemonth 2009. This diminution can be attributed to the planetary lag and diminution in international trade. India is holding immense figure of natural resources and first-class chances for growing and investing and the sectors are being opened up for pulling more and more foreign investing. India which is an agricultural economic system has more part of services into its GDP these yearss. The state is holding ample chances for growing and development.

BILATERAL Trade AGREEMENTS BETWEEN INDIA AND UZBEKISTAN

India marks Cooperation Protocol with Uzbekistan

India and Uzbekistan have consensus agreed that the economic conditions and untapped concern potency of both states could take towards bolstering the bilateral trading and investing sector in both states market places. Here in the 8th session of the inter-government committee on Trade, Economic, Scientific and Technological Cooperation, it has been figured out that the bilateral trade turnover during the Ist half of the twelvemonth 2008 has touched to the grade of $ 40 million. Held from September 16-17, 2008 in New Delhi, from India the committee was chaired by Mr. Jairam Ramesh, Union Minister of State for Commerce and Power and Mr. Batyr Khodjaev, Minister of Economy of Uzbekistan. As per an estimation, the trading between both states have increased by 8 per cent in old twelvemonth i.e, 2007 at US $ 64.4 million with India ‘s import to Uzbekistan at $ 9.5 million and $ 54.9 million exports from India.

Naming attending to the Memorandum of Understanding ( MoU ) signed in April 2006 by both states ; India has reiterated its committedness for set uping Uzbek-Indian Entrepreneurs Development Center in Tashkent and welcome enterprises taken from the Uzbek side to fix the procedure of acquiring clearance for the undertaking. The committee envisaged on the demands of taking investing cooperation stairss in processed nutrient and agricultural merchandises, information engineering, petrochemicals, fertilisers, ferric & amp ; non-ferrous metals and both states have agreed for researching out the trading chances and leting investing in the aforementioned sectors with the common audiences. The committee has besides made out the assorted possibilities refering to the puting up of the assorted joint ventures in the gas-based petrochemicals and fertilisers countries of the Uzbekistan.

Leading Investors in Uzbekistan

Mr. Jairam Ramesh has been rather clear and positive about the India ‘s public presentation as many Indian companies have been emerged out as the beyond doubt victor in the Uzbekistan ‘s economic sector. These companies have been characterized as the major investor and have been counted in the 5 top non-oil sectors. Honestly throwing visible radiation on the Indian companies public presentation, Mr. Ramesh said that the Minda, an Indian company, has do an investing of $ 25 million towards fabrication of automotive constituents, sourcing these constituents from Uzbekistan. With $ 80 million, the Spandex Textiles has been characterized as the largest cotton narration exporter to Europe. It has employed more than 5000 Uzbek employees. Adani Group is besides bordering its programs of set uping nutrient processing works by doing out use of abundant measure of fruits available in the Uzbekistan. More such cooperation programs are in grapevine and BHEL, largest technology and fabrication sector of India, could assist Uzbekistan in upgrading and overhauling its different power workss. The ready made garments makers and exporters of Uzbekistan could run into their demands of cloth, jean and narration by sourcing them from India. The Uzbek has entered 5 MoUs with the Indian concern endeavor of fabric and leather industry. They have agreed upon in leting the set up of joint ventures for bring forthing fabric merchandises, silk processing and other finished merchandises, in both states.

Decision:

There are healthy trade dealingss between the two states. In the twelvemonth 2008 the entire imports by Uzbekistan stood at $ 51.4 m while imports from India were merely $ 6.8 m which is a little per centum of the entire imports. The Government of India has taken a figure of enterprises to increase the trade between the two states as there is immense potency for growing. So, the future chances of trade and investings between these two states is really good there is no uncertainty that there will be boost in the trade relationship between these two states with the authorities taking up figure of enterprises for this intent. The healthy dealingss between the two states will assist to increase the trade further.

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