A GLOBAL / COUNTRY STUDY AND REPORT ON “Microanalysis of Different Industries of ” Submitted to Gujarat Technological University IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF Faculty Guide (Meetali Saxena) Submitted by Batch: 2011-13 L.J.Institute of Computer Applications MBA SEMESTER IV MBA PROGRAMME Gujarat Technological University Ahmedabad May, 2013 Students’ Declaration

We, Students of L.J.Institute of Computer Application, Section : D , hereby declare that the report for Global/Country Study Report entitled “ Microanalysis Of Different Industries in kuwait is a result of our own work and our indebtedness to other work publications, references, if any, have been duly acknowledged.

Place: Ahmedabad (Signature)

Akash Tiwari Date : (Class Representative)

Institute’s Certificate

“Certified that this Global /Country Study and Report Titled “Microanalysis of Industries Of Kuwait” is the bonafide work of Students of L.J.Institute of Computer Application, who carried out the research under my supervision. I also certify further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director Faculty Guide

2 (Dr. P. K. Mehta) (Meetali Saxena)

Place: Ahmedabad Date :

Executive summary

3 This report describes the findings and outlook of the business volume, products, and investment analysis of Kuwait. Kuwait is in Middle East, bordering the Arabian Gulf, between and . Climate of Kuwait Dry desert; short, cool winters; intensely hot summers. The economy of Kuwait is a small, comparatively open economy with proven crude oil reserves of about 96 billion barrels, i.e. about 10% of world reserves. accounts for almost half of GDP, 90% of export revenues, and 95% of government income. Currency of Kuwait is (KWD) is home to Kuwait's parliament, the headquarters and most governmental offices, of most Kuwaiti banks and corporations. It is the political, economic and cultural centre of the emirate. Booming economy of Kuwait has allowed many international hotel chains to enter agreements to open hotels in the country. The financial organization of the world’s fourth-largest oil bourgeois has given the loosely regulated investment corporations 2 years to befits more durable leverage rules once risk management at several was found lamentably lacking within the money crisis. Kuwait’s various commercialism and holding firms called investment homes were laborious hit by the meltdown, that prompted a government economic rescue package price KUWAIT DINAR one.5 billion ($5.15 billion) last year. The financial organization demanded in its new directives to any or all investment firms that their debts not exceed double the dimensions of their capital. money and money equivalents ought to cowl a minimum of 100 percent of liabilities, and a company’s investments or contracts outside the country were now not allowed to account for over 50percent of its capital ,the regulator aforementioned. In Associate in Nursing interview with native daily al-Rai revealed on fifteenth Gregorian calendar month, financial organization governor, swayer Salem Abdul-Aziz al-Sabah, aforementioned forty nine of the one hundred investment firms already befits all of those laws.

The business volume of Kuwait increased from 2005 to 2012 constantly. In 2005 it was

4 11827.3 and in 2012 it is 25995.3. so we can say that it increased around 120 percent. Business volume includes trading, construction, agriculture and fishing, non-bank financial institution, consumer loans, installment loans, real estate, crude oil and gas and public services. There are a total of 100 investment companies operating in Kuwait with 54 operating within the confines of the Islamic Sharia provisions and the rest operating as conventional investment companies. Additional, 51 of these companies are listed on the KSE. Kuwait's economy in general recovered at a slower pace than expected in the first half of 2010, after reduction 21% in nominal terms in 2009 due to the economic crisis and depressed oil prices. The government intervened with a stimulus package of Kuwait Dinar 1.5 billion to help stabilize the financial sector. Nevertheless, there still remain obstacles for the general economy to reverse the downtrend. At present the investment sector is in the process of going under a key renovated by the regulatory agencies due to the numerous defaults and regulatory breaches by the various companies that were affected by the financial crisis. This could assist with improving transparency and prevent excessive leverage in the system reducing the overall systematic risk. One of the repercussions of the financial crisis on Kuwait was that the investment sector - consisting of listed companies - lost approximately a cumulative KUWAIT DINAR 864 million in 2009, which followed the losses of KUWAIT DINAR 927 million in 2008, and record profits of KUWAIT DINAR 903 million in 2007. Moreover, the 2009 losses were marginally lower than 2008 which in effect signaled the very slow pace of recovery in the investment sector in Kuwait. Kuwait's investment sector witnessed strong growth from 2003 until 2007. Nevertheless most of this growth was attributed to the availability of cheap credit as opposed to fundamental growth in the economy. The investment and real estate sectors contributed positively to the overall economy and helped with the development of a more dynamic capital market which encouraged the private sector to vigorously increase their contributions in various funds operating both on a local and international scale leading to a subsequent surge in prices across all asset classes. The Kuwaiti investment sector continued to witness significant losses in comparison to the other Gulf countries. As of 2Q 2010, the total losses in Kuwait amounted to Kuwait Dinar 422.7 million. Although Kuwait is the largest investment sector in GCC, the significant losses are mainly attributed to the relatively risky business model of the companies in Kuwait. Reasons

5 for the reduced performance and liquidity problems of Kuwaiti Investment Companies like Excessive short term debt, which created asset-liability difference, Aggressive expansionary policies during the boom economy duration, Insufficiency of risk management etc. To handle the money crisis, variety of investment firms resorted for rescheduling of debt obligations and/or merger activities. firms like international Investment House and Investment Dar that had sweet-faced giant debt compensation issues had to resort to restructuring their debt payment schedules and implement varied steps like quality sell-offs, cut and reducing their exposure to risky assets that that they had accumulated throughout the pre-crisis period. From analysis of CSR on the “Restructuring Debt Obligations – Kuwait” It had been ascertained that largely firms within the investment sector had to structure debt from short term to medium term. On the opposite hand, merger agreements ar virtually at the ultimate stages for Gulf Investment House – initial nondepository financial institution The total debt of the full investment sector peaked in 2008 with associate degree accumulated figure of Kuwait Dinar of eight,853 million. Total debt grew at a CAGR of twenty fifth from 2003 until 2008. This was owing to a budget credit accessible in previous years and therefore the aggressive expansionary policies undertaken by these firms. Since 2009, the full debt within the sector has been showing a declining trend. As of Q3-2010 the full debt amounted to Kuwait Dinar of seven,416 million. Assets grew steadily from 2003 till 2008 for both conventional and Sharia compliant investment companies. Nevertheless, this growth was attributed to the liquidity available and the composition of the assets which were significantly impaired during the crisis. The large impairments resulted in defaults by investment companies across the GCC and Kuwait. The inability of these companies to refinance their debts was mainly due to the high asset encumbrance and the act of more leveraging the assets during the pre-crisis duration. The ultimate deliberating process resulted in triggering defaults across a spectrum of both conventional and Islamic investment companies. The country aims to become a money centre within the next four years, a part of a development decide to diversify its state-dominated economy and shift weight to the personal sector. Sfakianakis believes competitory against Bahrain, Dubai, Associate in Nursingd Asian nation are an “enormous” challenge as a result of those markets “have been higher regulated,

6 additional capital adequate, additional clear, larger in size, less risky, additional international and diversified”. As per the Kuwaiti Ministry of Interior, there are about 6 lacs Indians, who constitute the largest expatriate community in Kuwait. The Indian community is regarded as the community of first preference among the expatriates in Kuwait. is viewed by Kuwait as a fast growing economy and a source of highly qualified professional and technical personnel. A large proportion of the Indian expatriates are unskilled and semi-skilled workers. Professionals like engineers, doctors, scientists, chartered accountants, software experts, architects, management consultants; skilled workers like technicians and nurses; semi-skilled workers; retail traders and businessmen are also present in the Indian community. Kuwait and India continue to enjoy traditional friendly relations. Historical trade links, Geographical proximity, cultural affinities and presence of a large number of Indian expatriates have all continued to sustain and nurture the longstanding relationship over the years. India has been a natural trading partner and a destination for higher learning. Until 1961, the Indian rupee was legal tender in Kuwait. India and Kuwait have cooperation in the field of Science and Technology and the two apex bodies in the field of Technology and Science i.e. Kuwait Institute of Scientific Research and Indian Council for Industrial and Scientific Research have been exchanging views and have been cooperating in conducting superior researches. A number of Indian scientists & researchers are working with the Kuwait Institute of Scientific Research and other such organizations. They have a protocol for cooperation which was signed in 1995 and has been continuing. They have a joint committee which identifies various areas for technical cooperation such as energy optimization and oil refining industry, in refining and refrigeration industries, duration cal seminars, symposia etc.

Cultural Exchange Programmed between India and Kuwait is in the final stages and is likely to be signed in the near future which will give more boosts to India-Kuwait Cultural relations. There are about a dozen Indian schools in Kuwait affiliated to the Central Board of Secondary Education, New Delhi. They are all well established and cater to the needs of the large Indian community residing in Kuwait. There are about 4.52 lacs Indians staying and

7 working in Kuwait whose presence, in itself, plays a positive role in nurturing Kuwait-India relations. Amongst them are old established families of Indian businessmen who have flourishing trade relations with Kuwait.

Banking sector

8 Micro analysis of banking sector in Kuwait

Kuwaiti banking system is one of the strongest in the MENA(Middle East and North Africa) region benefiting from a robust financial profile, strong sustain mechanism and limited competition from foreign banks. There are total of 10 local banks and 9 international banks currently operating in the country. The Banks in Kuwait have sky-scraping credit exposures to two sectors viz. Real Estate and outlay companies which is highly volatile given the limited diversification of the economy. Concentration hazard remains a real issue in provisos of loans and deposits. Kuwaiti banks’ balance sheets imitate a lofty concentration of lending to the real estate sector and to private banking activities. Apart from this the preference for Islamic banking is growing in Kuwait. The structure of the banking sector is fairly concentrated. The National Bank of Kuwait (NBK) is more than twice the size of the next largest, the Gulf Bank, in terms of assets and deposits. Together, they own around fifty percent of the assets of conventional banks and allot around the same proportion of total banking credit. The banking industry in Kuwait is highly cosseted, given that the founder of a bank is essential to be a publicly traded company, and the paid-up money should be at least KWD75mn. The founder is also obligated to obtain a license from the Kuwaiti government and the Central Bank–which is extremely difficult. The CBK law 32/1968

9 prohibits the ownership of one person or legal entity of over 5% of the bank’s capital. In addition, the Central Bank reserves the right to modify any of those requirements at any time. Given the difficulty of the process and the legal restrictions that limit ownership percentages; the small number of banks in Kuwait is understandable.

Another salient feature of Kuwaiti banks is the mixed nature of their ownership. Except for NBK, which is almost entirely owned by the private sector, the government is a shareholder in the rest of the banks.

Kuwait offers a robust banking system regulated closely by the . The CBK is responsible for supervising Kuwait's commercial (conventional and Islamic) and specialized banks, as well as the foreign bank branches. As many as 17 banks dominate the banking scene (Source: CBK) CBK was established by virtue of the Law No. (32) of 1968 concerning Currency, the Central Bank of Kuwait and the Organization of Banking Business. It replaced the Kuwaiti Currency Board, which had been established by virtue of the Amiri Decree No. 41 of 1960. The establishment of CBK was to administer the role of the monetary and financial policy in the pursuit of social and economic development in the country.

Rules regarding Capital and Reserves of the Central Bank are given in section 3. According to article 16, The Capital of the Central Bank shall be five million Kuwaiti Dinars and shall be fully paid by the Government. The Capital of the Bank may be increased by decree, and such increase shall be taken from the General Reserve of the Bank.

And according to article 17, The Central Bank shall establish a General Reserve Fund. At the end of each financial year, net profit shall be the profits realized by the Bank, after deducting the expenses of operations and making the provisions necessary

10 to meet bad or doubtful debts, depreciation in assets, contributions to the Pension Fund and such other contingency expenses usually provided for by banks.

In Article 54 to 58 there are rules for organizing banking business. Without prejudice to the provisions of the Law of Commerce, wherever they are not in conflict with the provisions of this Law, banking business may only be practiced by institutions set up in the form of joint-stock companies, the shares of which are placed for public subscription.

Banks founded or co-founded by the Government, and branches of foreign banks licensed to operate in the State of Kuwait, may be exempted from the provisions of the preceding Paragraph by a decision of the Council of Ministers. Funds allocated for opening a foreign bank’s branch in the State of Kuwait, shall not be less than fifteen million Dinars. This amount may be increased by decision of the Board of Directors of the Central Bank. The Board of Directors of the Central Bank lays down the bases, rules and regulations to be complied with in regard to the operation of branches of foreign banks in the State of Kuwait. A foreign bank’s branch shall be deemed as one bank in the application of the provisions of this Law.

No institutions other than those registered in the Register of Banks are allowed to practice and help the banking sector to get back on track through an expansion in credit driven by the private sector. However the government stimulus has fallen short of its expected target, but however a turnaround is expected in the expansion of bank credit by middle of 2012. Banks in Kuwait: No. Local Bank Foreign Bank 1 National Bank of Kuwait (NBK) The BNP Paribas Bank 2 Commercial Bank of Kuwait (CBoK) The National Bank of Abu Dhabi 3 Gulf Bank (GB) National Bank 4 Al-Ahli Bank of Kuwait (ABK) The Bank of Bahrain & Kuwait 5 The Bank of Kuwait & the Middle East (BKME) The Bank of HSBC Middle East 6 Burgan Bank (BB) Citibank of New York

11 No. Islamic Bank Specialized Banks 1 Kuwait Finance House Kuwait Real Estate Bank (KREB) 2 Boubyan Bank Industrial Bank of Kuwait 3 International Bank of Kuwait

The banking sector in Kuwait is characterized by high single party & industry exposures as well as concentrated funding structure. The credit growth in the market is subdued due to the aftermath of the global economic crisis which impacted most of the investment as well as real estate companies, coupled with a lack of government spending on projects. The government spending is essential to provide stimulus to the economy

Credit conditions weakened post the global economic crisis in Kuwait during 2009 and 2010. The banking industry suffered due to the decline in the stock markets and the value of investments and also falling property prices. This is because the total credit extended to the Non Banking financial institutions and the Real Estate & construction segment which stood at 11% and 25% respectively, registered substantial impairment losses. Though the government took initiatives through the implementation of the financial stability program, this only made a limited impact. The current political uprising in many countries in the MENA region is also expected to have an impact on the asset quality as well as the profitability of the banks over the next few quarters especially the ones which have operations or investment exposures in these lower rated sovereigns. The profitability of the banks are also expected to remain low due to lower provisioning and narrowing interest margins.

The current funding structure though high with a loan to deposit ratio of 106.28% is expected to decline with the CBK’s regulatory loans/deposit ratio limit of 85%. The short term liquidity though an issue is offset by a strong support from the sovereign and

12 most local banks having raised more capital encouraged by the Central Bank of Kuwait (CBK). The capital adequacy ratios have improved over the period 2009 to 2010 with the central bank directive to most banks to increase their share capital.

The Islamic financial services industry has come a long way over the last three decades. Today, it is an established industry with a broad array of services and products, operating in nearly 75 countries, managing a global portfolio estimated at more than US$ 250 billion, and still expanding into new geographic areas. As an example of this outstanding growth, the Islamic financial services industry in Kuwait has witnessed swift growth. At end of the year 2000, there were 10 investment companies operating according to Shari’a principles, with about US$ 1.4 billion in total assets. Currently, the number of these companies has reached 14 and their total assets have more than tripled to over US$ 5 billion, all in a short four-year period.

The Kuwaiti financial system is sizeable and well developed. It includes a growing number of financial companies and investment funds, as well as an active stock exchange. The insurance sector is growing quickly.

Kuwait has embarked on an ambitious economic development plan involving an estimated spending of about KD31 billion (US$108 billion), which aims to make Kuwait a regional trade and financial hub through sustaining economic development, economic diversification and GDP growth. The plan is driven by government spending coupled with increased private sector participation, and offers opportunities for UK banks, law firms and other financial services firms.

In 2010 Kuwait announced a £90 billion 4 year (since increased to £100 bn over 5 years) package for infrastructure development. In addition, the oil sector is set to see a further £60 billion investment programme including a new 615,000 bpd oil refinery and increased oil production capacity raised to 4 million barrels per day.

13 In its strategy to promote and support increased private sector participation in infrastructure development, the has established a Public Private Partnership programme providing significant investment and financing opportunities for the private sector. The healthcare and education infrastructure schemes in particular will be developed using UK models. Great potential also exists, therefore, for the UK financial services industry to provide advisory services and expertise on PPP/PFI infrastructure development in Kuwait.

To facilitate the activities of UK businesses in the PPP programme, in 2011 the UK and Kuwaiti governments signed an MOU on Trade and Technical Co-operation which covers the area of provision of advisory and consultancy services allied to Kuwait’s rolling cycle of 5 year development programmes.

14 Cement industry

Summary of cement industry The cement industry in Kuwait is also one of largest industry in the country. Kuwait Cement Co. (KCC) is a listed public shareholding company engaged primarily in the production, supply, and transportation of cement, as well as the investment and construction of cement manufacturing factories and laboratories. Kuwait has a dynamic construction sector that has seen significant expansion with the new millennium. Currently, there are over 200 planned construction projects with a total value exceeding $155 billion. Kuwait is estimated to spend more than $63 billion over the next three years alone, with a significant focus on the development of educational facilities, commercial and residential buildings, infrastructure, as well as power and water plants. Agriculture activity is very limited due to lack of water and arable land. Agriculture contributes only 2% to GDP. With 100 billion barrels of oil in reserve the country’s

15 industry is based on oil exploitation. Income from this sector represents more than half of GDP and more than 90% of exports, i.e. more than 95% of the country's income. By 2030, Kuwait is also planning to invest more than USD 87 billion in the oil sector, especially in creating new oil refineries. Kuwait is a rich country with a high per capita income of about 30,000 USD. Its GDP has experienced a growth rate of more than 20% during the past five years. The country has 9% of the world oil reserves. Kuwait is trying to position itself as the entrance gate for investment in the area. The public sector dominates the economy and concentrates three quarters of the country's wealth. It represents three fourths of GDP. The government is currently trying to transfer the 95% of Kuwaitis who work for the government from the public sector to the private sector. Kuwait's government, with the goal of attracting foreign investments to the country, issued a law in 2001, renewed in 2003, regulating Foreign Direct Investments. The new law allows foreign investors to own majority capital holdings up to 100% equity if their business activities are in the sectors that the government wants to develop, such as the projects of new infrastructures. It applies also to some investing companies such as insurance, information technologies, hospitals, hotels, construction of housing zones, freight transportation, etc. This new law provides the enterprises with tax exemptions that can last up to ten years. Kuwait has a dynamic construction sector that has seen significant expansion with the latest millennium. Presently, here be above 200 planned construction projects with a total value exceeding $155 billion. Kuwait is estimated to spend more than $63 billion over the next 3 year only, through a important focal point on the development of educational facilities, commercial and residential buildings, infrastructure, as well as power and water plants. In February 2010, Kuwait revealed a $108 billion infrastructure growth chart, which has been support via the making of a new body at the finance department into 2009. The innovative stiff, call the partnership Technical Bureau (PTB), has a mandate to promote Build-Operate-Transfer (BOT) and public-private-partnership (PPP) schemes. The PTB identifies priority projects and boosts private sector involvement in

16 infrastructure projects. Through 2010, the PTB has had a catalytic effect on construction activity, providing greater momentum to projects by speeding up the bidding process.

Cement Industry – Kuwait Economic Link of the Industry

Cement is the preferred building material in any country which is used both directly and indirectly as building material (in manufacturing non-reinforced blocks, reinforced systems, etc.). It is used extensively in household and industrial construction. Cement sector is a significant sector of the national economy due to its unique linkages with the construction sector and the real estate development (to a lesser extent). Since the statistics are not adequate to study the impact of cement sector on the domestic economy, we have used the construction sector as the surrogate for the cement sector to understand the impact of cement sector on the economy. Broadly, the construction sector can be categorized into demand for household construction (homes, offices, etc.) and infrastructure creation (ports, roads, power plants, etc.). The real driver of cement demand is creation of infrastructure, which mainly is a function of the state of the economy of the country hence cement demand in emerging economies is much higher than developed countries where its demand has reached a plateau. The real estate and the construction sectors are considered a major component of the development and economic activity of a nation and spending in this sector induces growth in other sectors of the market. In the way of drive this position home, three indicators are of main significance, viz. cost additional by building & actual estate within GDP, public expenditure on construction activities and the share of construction and real estate sector in the domestic cash credit facilities utilized. In spite of its importance, the contribution of the construction sector in Kuwait’s GDP (at purchaser’s prices) constitutes mere 2.0% for the 2000, though as percentage of non-oil is being 7.5%.

17 The parts have stay during the series of 2.5-3.2% between 1995 to 2000. The construction sector value has stayed in the range ofKD229-243mn. While GDP declined by 15.25% in 1998 to KD7.7bn, the construction sector activity had held its own but it subsequently declined to KD 0.23 bn (-3.4%)while the GDP grew by 17.0% in 1999 which was mainly on account of the reduction in the government expenditure because of low oil prices while actually the oil prices increased during the year leading to increase in GDP (mining & quarrying including crude petroleum & natural gas increased by 41.5% while the petroleum refineries recorded a growth of 28 % in the year 2000 compared to 1999). Even though the construction sector returned to positive growth during the year 2000 contributing 5% of private zone increase, its giving in the direction of the Gross Domestic Product actually declined to nearly 2%. The growth in this sector augurs well for the cement sector as this sector has seen nearly five consecutive years of negative growth between 1995 and 2000.

Threat of New Entrants (Entry Barriers)

Economies of Scale: Kuwait currently has only one cement plant which has an economic size, but looking at the current demand of cement in Kuwait, we can safely assume that the factory will not be operating at 100% capacity in the absence of export markets. But the factory would have to overcome some operational problems as the main raw material for cement production i.e, limestone has to be imported, since Kuwait does not have limestone mines. Most of the plants in the UAE, Saudi Arabia and Oman (only one plant belonging to Oman Cement Company) have capacities additional 1mtpa, except nobody of these manufacturer have the power to control the market. Therefore they usually collude with each other to maintain the prices in the region and their profitability.

18 Proprietary Product: Cement being a commodity, there are no proprietary products in it. But there are plants in the region which manufacture specialty cement products. Brand Identity: The brand names of all the three cement companies in Kuwait are well known in the industry circles and some of them also have good trade personality. However extends this variety of Products identity ahead of the limits of Kuwait has not happened. Any new player trying to enter the market has to make some marketing efforts but in a commodity product like cement brand identity does not make much difference.

Government Policy: Government policies have not been very favorable towards the local cement companies in Kuwait and they have not done enough to stop the dumping of cement products by cement companies from Saudi Arabia. On the positive side, this has helped the cement companies to formulate their future strategies which are based on the competitive forces.

Bargaining Power of Suppliers:

Differentiation of Inputs: It is advantageous in Kuwait to have suppliers who can supply the cement (raw material) to the local marketing companies at a cheaper price. All the three local cement companies in Kuwait have their logistics worked out and they have substantial experience in importing cement from manufacturers all over the world (from wherever they get it the cheapest after accounting for the transportation costs). switch cost of supplier as well as firm inside the business: It is not a concern for the local cement companies as cement is a freely available commodity and the excess capacity in the region helps the local cement companies to

19 negotiate and acquire quality cement from a number of manufacturers in the region. In many instances, the local cement companies have acquired cement from the cement manufacturers in the gulf region; therefore we can conclude that there are no switching costs of suppliers and firms inside the business. It is also true because of the fact that two cement companies HCC & KPCC have very low operating leverage though it is a different story for KCC because of their high fixed costs.

Firms in the Industry: One of the local cement companies Kuwait Cement company has set up its own cement manufacturing plant (backward integration), though "Global" believes that this plant might face various logistics problems. As explained earlier foreign (regional) cement companies can set up their own distribution network in Kuwait, but they may face a problem in terms of renting a storage space at the Ports in Kuwait.

Bargaining Power of Buyers:

Buyer Concentration: There is a concentration of buyers in Kuwait as it is mostly the construction companies which make bulk purchases and bulk purchases account for almost 60-70% of cement sales in Kuwait while the rest are accounted for by the retail customers. But the buyers do not have much leverage in dictating the pricing as Kuwaiti market is mostly an oligopolistic market and pricing is fixed by the three local cement companies. This comparative advantage was recently somewhat diluted as a result of the dumping by the Saudi Arabian manufacturers.

20 Buyer Information: There is a complete transparency in the pricing market for cement in Kuwait and most of the bulk buyers have also the complete information on the prices of cement in the region. But it does not affect the pricing of cement to a very large extent due to the lack of storage facilities and transportation costs involved.

Ability to Backward Integrate: Even if relatively a small number of the structure company in Kuwait have the ability and the resources to integrate backwards because of their large sizes yet they would not venture into it because most of these companies have close associations/ stakes in the three local companies (either directly or indirectly).

Brand Identity: All the three cement companies in Kuwait are very well recognized in the local market. But now there is a need for these brands to make a regional identity for themselves so as to expand their operations beyond the boundaries of Kuwait which would improve their growth and add stability to their operations

Threat from substitute goods: Cement does not include some substitute to might substitute into different construction works.

Intensity of Rivalry: The demand for cement in Kuwait has recorded phenomenal growth rate in the last 13 years. Since 1987, the industry has recorded an compounded annual growth rate (CAGR) of approx. 7.5% till the year 2001. The future looks bright for the Kuwait’s cement industry especially with the oil prices in the medium run not being projected to go its low levels of early 1999. The cement industry is mainly being dependent on the construction industry, which in Kuwait to a large extent directly or indirectly depends on

21 governmental expenditure on housing and infrastructure projects. With the oil prices being projected in the range of US$18-20 in the medium run, we expect the government expenditure to be increased / maintained at the current levels.

Trade of cement: The government awarded a license for the one-off export of 20,000t of cement in February 2005. This may have been for exports into Iraq.Kuwait have to import the majority of its raw materials from the UAE and . In addition, there are increasing levels of imports coming in to feed the strong demand for cement as the government funds a series of major infrastructure projects. Imports come from local neighboring Arab countries, an area that has plans to more than double its capacity over the next four years from 19.2Mta to 39.7Mta. In addition, there will be imports available from Kuwait-Jordan’s new 1.8Mta joint venture plant, albeit higher transport costs may rule this source out. The importing facilities have been subject of a major upgrading, each unit by up to 300 per cent, over the last few years so there is ample capacity to handle to forecast levels of imports. With no indigenous raw materials, there is little pressure to reduce clinker imports other than those being traded by non Kuwaiti registered companies.

Prices The government control prices where bulk cement prices are reported as US$55/t ex works, locally US$65/t. In practice, the government sells to Kuwaiti nationals at US$50/t by covering the cost between this price and the local free market price of more near to US$75/t.

Cement Industry in India: Trade Perspectives

22 Introduction: Cement is the glue that holds the concrete together, and is therefore critical for meeting society's needs of housing and basic infrastructure such as bridges, roads, water treatment facilities, schools and hospitals. Concrete is the second1most consumed material after water, with nearly three tones used annually for each person on the planet.

Being one of the basic elements for setting up strong and healthy infrastructure, Cement plays a crucial role in economic development of any country. Having more than a hundred and fifty years history, it has been used extensively in construction of anything, from a small building to a mammoth multipurpose project.

The manufacturing process of cement consists of mixing, drying and grinding of limestone, clay and silica into a composite mass. The mixture is then heated and burnt in a pre-heater and kiln to be cooled in an air-cooling system to form clinker, which is the semi-finished form. This clinker is cooled by air and subsequently ground with gypsum to form cement.

There are three types of processes to form cement - the wet, semi-dry and dry processes. In the wet/semi-dry process, raw material is produced by mixing limestone and water (called slurry) and blending it with soft clay. In the dry process technology, crushed limestone and raw materials are ground and mixed together without the addition of water.

The dry and semi-wet processes are more fuel-efficient. The wet process requires 0.28 tons of coal and 110 kWh of power to manufacture one tone of World Business Council for Sustainable Development (WBCSD) 2002 cement, whereas the dry process requires only 0.18tonnes of coal and 100 kWh of power.

23 There are different varieties of cement based on different compositions according to specific end uses, namely, Ordinary Portland Cement, Portland Pozzolana Cement, White Cement, Portland Blast Furnace Slag Cement and Specialized Cement. The basic difference lies in the percentage of clinker used.

Ordinary Portland cement (OPC): OPC, popularly known as grey cement, has 95 per cent clinker and 5 per cent gypsum and other materials. It accounts for 70 per cent of the total consumption. Portland Pozzolana Cement (PPC): PPC has 80 per cent clinker, 15 per cent Pozzolana and 5 per cent gypsum and accounts for 18 per cent of the total cement consumption. It is manufactured because it uses fly ash/burnt clay/coal waste as the main ingredient

White Cement: White cement is basically OPC - clinker using fuel oil (instead of coal) with an iron oxide content below 0.4 per cent to ensure whiteness. A special cooling technique is used in its production. It is used to enhance aesthetic value in tiles and flooring. White cement is much more expensive than grey cement.

Portland Blast Furnace Slag Cement (PBFSC): PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5 per cent gypsum and accounts for 10 per cent of the total cement consumed. It has a heat of hydration even lower than PPC and is generally used in the construction of dams and similar massive constructions.

Specialized Cement: Oil Well Cement is made from clinker with special additives to prevent any porosity.

Rapid Hardening Portland cement:

24 Rapid Hardening Portland Cement is similar to OPC, except that it is ground much finer, so that on casting, the compressible strength increases rapidly.

Water Proof Cement: Water Proof Cement is similar to OPC, with a small portion of calcium stearate or non- saponifibale oil to impart waterproofing properties.

Analysis of cement industry in India

The Indian cement industry is the 2nd largest market after accounting for about 7-8% of the total global production. It had a total capacity of about 330 m tons (MT) as of financial year ended 2011-12. Cement is a cyclical commodity with a high correlation with GDP, growing at around 1.2x of GDP growth rate. The housing sector is the biggest demand driver of cement, accounting for about 64% of the total consumption. The other major consumers of cement include infrastructure (17%), commercial & institutional (13%) and industrial segment (6%).

• Despite the fact that the Indian cement industry has grown at a commendable rate in the last decade, registering a compounded growth of about 8%, the per capita consumption still remains substantially poor when compared with the world average. This underlines the tremendous scope for growth in the Indian cement industry in the long term.

• Cement, being a bulk commodity, is a freight intensive industry and transporting it over long distances can prove to be not econoicaml.It has resulted in cement being largely a regional play with the industry divided into five main regions i.e. north, south, west, east and the central region. The Southern region of India has the highest installed capacity.

25 • Given the high potential for growth, quite a few foreign transnational companies have entered into the Indian markets. Already, while companies have made a couple of acquisitions, Holmic has raised its stake in domestic companies Ambuja Cements and ACC to over 50% to gain cont overall control. Compromise has taken place with the top two cement groups controlling nearly one-third of the total household capacity. Still, the remaining capacity still remains quite fragmented.

• During the financial year 2011-12 (FY12), India’s cement production grew by 6.2% year-on-year. The muted growth was mainly attributable to slowdown in construction, extended monsoon, and delay in projects of infrastructure and the overall downturn in the economic condition. Also, the capacity utilization levels stood lower at 73.7%.

26 Chemical Industry

Kuwait Chemical Market

The chemical industry in Kuwait is made up of two main categories: basic chemicals and chemicals used in synthesis. Chemicals are divided into many sub- classes, including bulk chemicals, which are used to produce other chemical products and manufactured goods; raw materials, which contain of base materials for the production of gas and oil; basic chemicals (resins and plastics), which used in industrial processes; and feedstock, which is made from raw materials and used in processing plants.

Given the potential health and environmental hazards involved in the emission of chemicals into the atmosphere, the Org. of Economic Co-operation and Development in Kuwait has identified branches of the chemical industry with the most pressing need for Emission Scenario Documents (ESDs). The purpose of ESDs is to detail the production of chemicals from source to final use to measure the amount of waste generated by

27 chemical, and thereby quantify risk involved. Current industry priorities contain base pharmaceuticals, plastics, synthetic gum, and perfumes.

For many other industries Kuwait has to depend upon the chemicals (organic and inorganic) so as to have better outputs. There are many major players that are there in Kuwait’s chemical market (the major company being DOW chemicals ltd.) to support their industries. The land in Kuwait doesn’t provide the country with the adequate amount of resources that they require as raw materials to form chemicals. Country lacks water resources as well and thus they highly depend upon some major players who have the monopoly to manufacture certain chemicals that are used by many local and government firms that do the purification work.

The market in Kuwait has shown recognizable growth in chemical industry in recent past. Also the government and economy is well open for the bilateral trade. So the scope for investing in the industry is there. There is also need of establishing some well organized chemical organizations so as to stabilize the chemical industry in the country.

Kuwait chemical industry forecasts

According to the chemical industry forecasts for Kuwait, it is expected to grow by 11% from the year 2013 to 2018. Here our prime focus is on the growth of inorganic chemical industry which contains aluminum hydroxide, which is highly used in the industries in Kuwait. So the growth expected in the inorganic sector of Kuwait is 0.4% to 9.0% till the year 2018. This shows that there are ample of scope for the chemical sector of India to develop and grow the trade relations in this sector.

28 India Chemical Industry

Chemical industry is one of the oldest industries in India. It is assessed that the size of Indian chemical industry is around US $30 billions. Volume of production in chemical industry positions India as third largest producer in Asia and twelfth largest in the world. The industry, comprising both small and large units (including MNCs) produces several thousands of products and byproduct, ranging from plastics and petro- chemicals to cosmetics. A significant share (around one-third) of production by chemical industry is consumed by itself. The chemical industry accounts for 13%share in the manufacturing output and around 5% in total exports of the country. The chemical business contributes around 20% of national revenue by way of various taxes and levies. The Indian chemical industry has been receiving significant investment intentions, including foreign direct investment (FDI). Since August 1991,and till November 2006, chemical industry has received investment proposals worth Rs.274486 corers , a share of 11.3% in total investment proposals received during this period. FDI, which is very essential for modern manufacturing of chemicals, has also been flowing into the chemical sector significantly. During the period August 1991 to October 2006,

29 FDI involves into the chemicals sector amounted to US$ 2.2 billion, a share of around6% in total FDI inflows into the country.

Uses of aluminum hydroxide and chlorine dioxide in Kuwait

Aluminum Hydroxide Uses

The major uses of aluminum hydroxide are as a feedstock for the manufacture of other aluminum compounds: specialty calcinealuminas, aluminum sulfate, polyaluminium chloride, aluminum chloride, sodium aluminate, activated alumina, aluminum nitrate.

Fire retardant

Aluminum hydroxide also finds use as fire retardant filler for polymer applications in a similar way to magnesium hydroxide and mixtures of huntite and hydromagnesiteIt decomposes at around 180 °C, absorbing a considerable amount of heat in the process and giving off water vapor. In addition to behaving as fire retardant, it is very active as a smoke suppressant in a wide range of polymers, most specifically in polyesters, acrylics, ethylene vinyl acetate, PVC and rubber.

30 Pharmaceutical

This compound is used as an antacid under names like Alu-Cap, Aludrox or Pepsamar. The hydroxide reacts with excess acid in the stomach, decreasing its acidity. This decrease of acidity of the contents of the stomach may in turn help to relieve the symptoms of ulcers, heartburn or dyspepsia.

Chlorine dioxide uses

Bleaching

Chlorine dioxide is sometimes used for bleaching of wood pulp in combination with chlorine, but it is used alone in ECF (elemental chlorine-free) bleaching sequences. It is used at moderately acidic pH (3.5 to 6). The use of chlorine dioxide minimizes the amount of organochlorine compounds produced Water chlorination

Chlorine dioxide was introduced as a drinking water disinfectant on a large scale in the year 1956, when Brussels, Belgium, changed from chlorine to chlorine dioxide. It’s very common use in water treatment is as a pre-oxidant prior to chlorination of drinking water to destroy natural water impurities that produce trihalomethanes on exposure to free chlorine. Trihalomethanes is suspect carcinogenic disinfection by-productsassociated with chlorination of naturally occurring organics in the raw water.

31 Storage procedure and safety measures

Chlorine dioxide storage

Chlorine dioxide should be stored in a cool, dry, well-ventilated area in sealed containers that are labeled in accordance with OSHA's Hazard Communication Standard [29 CFR 1910-1200]. Containers of chlorine dioxide should be protected from physical loss, ignition sources, and light.

Chlorine dioxide safety measures If chlorine dioxide touches the skin, workers should immediately wash the affected areas with soap and water. Clothing contaminated with chlorine dioxide should be removed instantly, and provisions should be made for the safe removal of the chemical from the dress.

Aluminum Hydroxide Storage

Store in a well closed and airtight container,

Store it at the temperature bellow 40°C

Protect it from direct sunlight, moisture and heat.

Store in a cool, dry, well-ventilated area away from incompatible substances

Aluminum Hydroxide Handling

32 Wash thoroughly after handling. Remove contaminated clothing and wash before reuse. Use with sufficient ventilation. Minimize dust generation and accumulation. Evade contact with skin and eyes. Avoid intake and inhalation.

Export Supply Chain

Manufacturer Agent Exporter Logistics

Distribution of revenue

Manufacturers are the one who develops the chemicals and make them ready to get exported. They bare all the major costs. They will sell their products in a price which comprises of base price plus profit margin. Similarly all the other members of supply chain add to the cost of the product and thus the final price of product is decided. This formulation is shown in the table below.

Specifications Aluminium Hydroxide Chlorine dioxide Base price US $ 210/ton US $ 300/ton Manufacturer profit margin 10% 12%

33 Agent remuneration 10% 10% Logistics remunerations 6% 7% Exporter 8% 10%

the above table specifies the amount which each of the member of the supply chain will earn from this export.

Education industry

34 Education industry in Kuwait

The adult literacy rate in 2008 was 93.90 %. KUWAIT directing its attention towards Inclusive Education, which ultimately provides opportunity to all children and irrespective of their social class including children with special needs. KUWAIT education system was marked by several achievements in recent years. As of 2005/06 KUWAIT allocates 13.00 % of all public expenditure to education which is comparable to the allocation of public funds to education in many OECD countries but also lower than other Arab countries. For the same years the public expenditure on education as a %age of GDP was 3.90% in 2005 which is well below the %age of GDP spent by OECD countries on education. KUWAIT is facing challenges in improving the quality of educational system at all levels and to build capacities of students' from a young age. The MINISTRY OF EDUCATION OF KUWAIT is also making efforts to incorporate women into the educated workforce through various programs like for instance the 1989 initiative to establish daytime literacy clinics for women. The government of KUWAIT also offers scholarships to students accepted in universities in [US], [UK] and other foreign institutes. According to the Web metrics Ranking Of World universities, the top-ranking universities in the country are KUWAIT UNIVERSITY [2499th worldwide], the COLLEGE OF TECHNOLOGICAL STUDIES [3769th] and ARAB OPEN UNIVERSITY KUWAIT[6725th].

35 The State of KUWAIT supports an education policy that seeks to provide opportunity to all children irrespective of their social class, including children which have special needs. KUWAIT was ranked at 63rd on the HUMAN DEVELOPMENT INDEX[HDI] report for 2011 by UNDP placing KUWAIT above the regional average. The educational system in KUWAIT has celebrated several achievements in the year of 2006. 13% of all public expenditure was given to education, compare to many OECD countries, although lower than other Arab nations. As a %age of GDP, at 3.90%, it remains well below the OECD average. In 2005, the literacy rate of KUWAIT was just over 93 %. KUWAIT is striving to improve the quality of its education at all levels and for all ages of its citizens. The Ministry of Education of KUWAIT is also making efforts to incorporate women into the educated workforce through various programs like , the 1989 initiative to establish daytime literacy clinics for women. KUWAITi government offers scholarships to students who are accepted in universities in the US, the UK and other foreign academic institutions.

Levels in education system

School education The general education system contains of four levels: kindergarten, or nursery[lasting for 2 years], primary [lasting for 5 years], intermediate [lasting for 4 years] and secondary[lasting for 3 years]. Schooling at primary and intermediate level is compulsory for all students aged 6 between14. All the levels of state education including higher education, are totally free. There are two main ministry involved in the development of the education sector: The Ministry of Education.

36 The Ministry of Higher of Education. There are about 1145 schools in KUWAIT, at all stages from playschool to secondary. Out of this total 664 are public and 481 are private schools. There are 6 areas in KUWAIT and the highest number of schools are in the AI- Ahmedi district, which has 152 schools (representing 23 % of all public schools), while AI- Jahra has 85 schools (representing 12 % of all public schools), which is the lowest number of schools by any district. The private schools are split equally between Arabic medium schools, which follow KUWAIT’s national syllabus, and overseas language schools, which follow other syllabus [e.g., American, British, French and Indian etc.]. There are currently 5,91,359 students enrolled in KUWAIT's schools which makes up approximately 20 % of the entire population. A large proportion of public school teachers are KUWAITiwomen, mostly at the key level. Only 4 % of women teachers are older than 45 years as compared to 35 % of non-KUWAITi males.

Nursery and primary education In KUWAIT, schooling usually begins at age 6. Pre-school or nursery education is also available to children from 4 to 6 years old. Under a new system, primary education will begin at age of5 years. There is the option of attending one private schools, which have foreign sponsorship and mostly offer co-education, whereas the KUWAITi public schools are segregated by gender starting at the primary level. Examples of private overseas schools in KUWAIT are the Bayan Bilingual School, the American School of KUWAIT, the New English School [KUWAIT], the

37 American International School of KUWAIT, the KUWAIT English School, the French School and the Canadian School of KUWAIT [CSK]. Most of the private schools were subsidized by the national. In year 2007, the primary gross enrollment rate was 98.5 %. The gender parity index, which is the ratio of female enrollment in compared to male admission, was 0.98%. This shows parity in gender for the enrolled at primary level. The %age of KUWAITis studying in private schools in kindergarten is 20.00%. The Government of KUWAIT puts about 5.6 million KD per annum into private educational facilities and in addition to allocating land for school construction and paying for the distributing of books. The government ofKUWAIT ensuring that each school is equipped with a public library. The government has concentrated on expanding the collection of books from 2,30,000 to 3 million today.

Intermediate and secondary education Students are required to spend 4 years in the INTERMEDIATE level, up to std9th, after they move on to the SECONDRY level. Secondary education is for 3 years i.e. 10th,11th and 12th, after which students can adopt the higher education by entering into university or getting admission into a vocational college to study for technical or vocational qualification. Now the focus of the Ministry of Education of KUWAIT will be on improving the quality of the educational system. Girls outperform boys in each and every subject of the 12th standard examinations, particularly intopic of philosophy, English, Arab languages, chemistry, physics, mathematics and biology. The Ministry of Education in KUWAITis also trying to grow the use of information technology in schools by including e-learningsystem in the curriculum. For 14 -year-

38 olds in 2006 and there were 13 students per computer on average in KUWAIT's public schools. This is very similar to the OECD average, back in year 2000, for fifteen year olds. Despite the availability of computers in schools and at family, there is no assurance that computers will be used only for education, however, and the management may essential to rethink the strategy of making technology accessible to a large number of students, whilst developing a syllabus that includes e-learning in most of the subjects. The Ministry of Education in KUWAIT is making efforts to provide equal educational opportunities by opening special needs institutes. Total there are 44 special needs schools available of which, 33 are municipal schools and, 11 are reserved schools. Some of the special wantskids are also registered in special needs classes offered in general schools.

Vocational, post-secondary and tertiary education Post-secondary education includespractical and professional courses offered by the Public Authority for Applied Education and Training (PAAET), a state institution, and degree programs offered by KUWAIT University, and a small number of private universities. The Government of KUWAIT is encouraging its citizens to opt for vocational training programs to fulfill the demand for aexpertstaff. Students enrolling for vocational training at PAAET can join programs after primary, middle or secondary school, though the popular of students, about 70.00%, are enrolled having completed secondary level education.

Higher education There are 4 state-supported higher education institutions in KUWAIT. • KUWAITUniversity • The Basic Education college in PAAET

39 • Higher Institute for Theater Arts • Higher Institute of Music Arts In the academic year 2005-06, the total enrollment within these institutions reached 27,308, an increase of 7.00% from the last year. The percentage of females in the undergraduate studies is 70.00%.

KUWAIT University KUWAIT University was recognized in 1966. It is a co-education institution and comprises five campuses in KUWAIT city. Since its beginning, the number of students has increased considerably, from 400 at its beginning to 19,711 in 2005-06. It offers a widespread range of academic courses.

Public Authority for Applied Education and Training The Public Authority for Applied Education and Training (PAATE)was established in 1982 to fill the need for a vocational and technical training institution. PAAET has two missions: 1)PAAET is responsible for providing and rising the skills of the state labor force and to meet the demands of a developing nation, and it provides exercise to students to have careers beyond the oil industry. 2)The College of Basic Education in PAAET , with an enrollment of 7,132, enjoyed an increase of 26.00% from the previous year. Higher Institutes for Theatre Arts and Music Arts With a total enrollment of 465 in 2005-06, this represents a decrease of 25.00%.

40 Today's Education in KUWAIT Today, KUWAIT’s education system is larger than ever. There are three basic levels of education in KUWAIT i.e. elementary, intermediate, and secondary. Each level involves four years study, and schooling usually begins at age of 6. Pre-school is available to 4 year to 6 year olds, and students who complete their basic education can continue on to higher education. Schooling is compulsory for all children ages 6 to 14 [elementary and intermediate levels] and all stages of state schooling, comprising higher education, are allowed. Pupils in all KUWAITi schools study English beginning in the second grade. Many Kuwaitis choose not to send their children to management schools but, somewhat, join them in private schools. There are severalreserved schools in KUWAIT, many of which have overseas sponsors and are co-ed. The Bayan Bilingual School, the American School of KUWAIT, the American International School, the British School of KUWAIT, and the French School are several of the many prestigious private schools available to the KUWAITi population. Private education is not wholly funded by the government, although it is kindlysupported. The KUWAITi government pours more than KD 5.6 million per year into reserved education facilities in addition to allotting land for school construction and distributing textbooks. Women are granted the same rights to education as men and the Ministry of Education has worked to further the education of women through various programs such as a 1989 initiative to establish daytime literacy clinics for women. The KUWAITi government guarantees that each new school contains a library and has expanded the collection of books in existing school libraries from 2,30,000 [before the Iraqi invasion] to more than 30,00,000 today.

41 Fishery industry

The trade between two countries

The two-way trade among India and Kuwait has shown important growth in recent years. In fact, it has more than doubled in the last five years from US$ 8385.79 million in 2007-08 to US$ 17556.78 million in 2011-12. India’s export to Kuwait has grown almost 75% from about US$ 681.54 million in 2007-08 to US$ 1181.41 million in 2011-12. Kuwait’s export to India in these years have register an raise of more than two times from US$ 7704.25 million in 2007-08 reaching US$ 16375.37 million in 2011-12. The trade stability continues to be in Kuwait’s support, although India’s exports are also

42 rising as well. Total non-oil two-sided trade between India and Kuwait drop by 21.5% from US$2,397.84 million in 2010-11 to US$ 1,882.92 million in 2011-12.

Trade in the current year

During the present economic year i.e. April-Sep, 2012-13, exports are to the tune of US$ 762.23 million whereas the imports from Kuwait are to the tune of US $ 12581.33 million. The entire trade is US $ 13343.66 million.

India’s Exports to Kuwait

India’s export to Kuwait has developed almost 75% from about US$ 681.54 million in 2007-08 to US$ 1181.41 million in 2011-12. A pie-chart viewing the share of top 5 items of exports from India through the year 2011-12 were cereal; articles of iron and steel; pressure vessels reactors, columns/towers or chemical storage tanks and industrial valves; electrical machinery and equipments, sound recorders and reproducers, television image; and meat & edible meat offal.

India’s Imports from Kuwait

India’s import from Kuwait has register an raise of more than two times in last 5 years from US$ 7704.25 million in 2007-08 accomplishment US$ 16375.37 million in 2011-12. India’s imports from Kuwait (excluding POL) were US$ 708.26 million in 2011- 12. Kuwait fish market is a status for having some of the best fish in the GCC, a short appointment to the local fish marketplace in Sharq will fast prove that people here take their seafood very acutely indeed. the Fish Market eating place on Gulf Road near the

43 Kuwait Towers present diners with a brilliantly-executed idea that allow them to choose closely what they want to eat from a massive variety of fish, seafood, fresh vegetables and fruit. stay true to the 'market' idea, all the clean ingredient are on show in the restaurant, allowing for diners. the 16 food preparation style available at this restaurant offer somewhat for everyone. Flavor choice vary from Asian favorites such as Malay Spicy Curry Sauce, Traditional Chinese Sweet and Sour Sauce or Peppered Lime and Garlic Sauce to more simple European style like Lemon and Butter Sauce, Cheese and Butter Sauce and Crispy blond Fried.

Marine fisheries • Fishing is a part of the traditional inheritance of Kuwait and, apart from the industrialized shrimp fishery, leftovers basically artisanal in nature. The artisanal task force lands about 90% of the finfish landings of around 3 700t and 45% of the shrimp landing. The shrimp fishery is an main part of the fishing segment with 35 industrial trawlers and 33 impassive dhows being certified to take shrimp. • Kuwait's fishing task force targeting finfish species is collected of two types of fishing vessel, namely, wooden dhows, and speedboat. These vessels are certified to use only one type of gear which can be semi- circular wire traps (gargoor), flow gill nets or fixed gill nets of a range of mesh sizes. The register finfish fleet consists of 120 dhows, using gargoor (94 boats) and gillnets (26 boats), and 748 speedboats (7 m) using gargoor (28 boats) and gillnets (720 boats). Currently, finfish making in Kuwait meets only about 25% of national order and is abating rapidly as demand increase while manufacture from the wild stock decrease. As a result, aquaculture is being confident as a method of greater than ever local production. fish feed making facilities are on hand within the company, and therefore, the sea bream fingerlings are import from Greece, Cyprus and , while sobaity are imported from Bahrain or are complete by the Kuwait Institute for Scientific Research (KISR). Fish feed

44 is imported from Holland or Saudi Arabia; there is no feed formulation and manufacture in Kuwait.Research is currently being undertake on the commercialization of pomfret (Pampus argenteus) culture.

Gujarat fisheries • The longest coast of 1600 kms puts Gujarat in to one of the separate places in the country, where not only delivery or logistics industry is seen prosper but fishing activities too are careful as grave business with large reserves pouring in. • The coast of Gujarat is out of order by several bays, inlets, estuaries and wet lands giving ample chance for explosion of sea-food industry here. The area on hand for fishing on the coast of the State extend from Lakhpat in the northern beach of the state in Kutchh district to Umbergaon in Valsad district – a place in the full of meaning south of the State. total fish creation in the Gujarat State has been approximate at 7.66 lakh tonnes worth Rs.3063.23 crore. The maritime fish creation constitutes about 89.16% of total fish manufacture of the State. During the year 2008- 09 the state earned Rs.1064.50 crore (provisional) from export of 112800 tonnes of fish and fish goods. • Meanwhile the temporary figures from the state fisheries section depict that through the year, 2009-10 the total fish production has been approximate at 2.23 lakh tonnes worth of Rs.889.97 crore. The exports of fish and fish goods, is approximate at 38816 tonnes, worth Rs.370 crore, at the end of September – 2009. In Gujarat, some of the important fish variety are found that includes: pomfet, jew fish, Bombay duck, shrimp, lobster, squid, cuttle fish, silver bar, hilsa.

Cold storage

45 • The state has 13 cold storages, and 4 shark liver oil extract centres. Bulk of the production is handle through 69 co-operative society and is sent to urban cities like Delhi, Kolkata and Mumbai or exported to nearest countries like Sri Lanka, Mauritius, Myanmar and Singapore. • It provides food to about 2.6 lakh persons who utilise 10,517 fishing boats (200 mechanised boats) in fishing operation. Important fish varieties include Bombay duck, white pomfret, black pomfret, jew fish, Indian salmon, tummies, grey mullet, mackerel, eel, sardine, ribbon fish, shrimp etc. The purpose of cold storage

• The spoilage of fish flesh resultant from the action of enzymes and bacteria can be slow down by lower the temperature; when fresh raw material is correctly frozen and then kept at a adequately low temperature, spoilage can be almost completely stopped. Some worsening of the frozen product takes place through cold storage, but the change are so small under the right situation that to the ordinary consumer the thawed product is identical from fresh after many months in store.

Factors limiting storage life • Protein changes: Fish proteins become eternally changed during freezing and cold storage. The speed at which this denaturation occurs depends very largely upon temperature. At temperatures not very far below cold point, 28°F for example, serious changes occur rapidly; even at 15°F the changes are so rapid that an primarily good quality product can be spoilt inside a few weeks.When smoked, such lesser fish sag and gape and have an unpleasant, matt surface. Smoked products made from correctly stored frozen fish obtain an attractive glossy face because the brine dissolve some of the protein and this solution then dries on the cut surface of the fish; denatured protein is mysterious in brine, so that the surface of badly stored fish leftovers dull after smoking. • Fat changes:

46 The fat of fish may become horribly altered during cold storage. Fish oils readily combine with oxygen, and some of the enzymes usually present in fish muscle, mainly those in the red strip of muscle just under the skin of fatty fish, assist this response. • Dehydration changes: Frozen fish that have suffer severe drying in cold amass have a white, toughened, dry and wrinkly appearance on the surface that is feature of the circumstance known as freezer burn. The skin of the thaw fish may have a correspondingly dry, wrinkled look, and if drying has been remarkably severe, the flesh beneath can become soft and as light as balsa wood.

. Some food and pharmaceutical product may require a health or clean certificate for

Documentation and Export procedure

Export processes describe the documents necessary for exporting from India. Special documents may be required depending on the type of produce or destination. Certain export goods may require a quality control inspection certificate from the Export examination Agencyexport. Usually the transport Bill is of four types and the major difference lies with regard to the goods being topic to certain conditions which are mention below: • Export duty/ cess • Free of duty/ cess • Entitlement of duty drawback • Entitlement of credit of duty under DEPB Scheme • Re-export of imported goods Documents compulsory for Post Parcel Customs Clearance

47 In case of Post Parcel, no Shipping Bill is necessary. The applicable documents are mentioned below:

• Customs Declaration Form - It is arranged by the Universal Postal Union (UPU) and worldwide apex body coordinating activities of nationwide postal management. It is known by the code number cp2- cp3 and to be ready in quadruplicate, signed by the sender. • Prescriptions about the least and most sizes of the parcel with its greatest weight : least size: Total surface area not less than 140 mm X 90 mm. Maximum size: Lengthwise not over 1.05 m. Measurement of any other side of circumference 0.9 m./ 2.00 m. Maximum weight: 10 kg usually, 20 kg for some destinations. • Export duty for all the fishes is 33% (basic + education CESS) • Cold storage cost for 1 year Rs. 1750 per 1000 Kg.

Food industry

48 History of Spices

Spices have been curiously sought and highly valued since ancient times. The desire for spices has been one of the driving forces in human development and has changed the route of history and geography. Spices have played an important part in the civilization of China and India along with Babylon, Greece, Rome and Egypt. Spices having the greatest international importance originated in the Asiatic tropics and was among the first stuff of commerce between the East and the West countries. The Arabs were the first traders of spices, bringing their products from southern India and their Islands by caravan to Arabia and from Arabia to . This trade later spread to other countries as well.

Spices have been used in many ways such as to season insipid foods and give zest to monotonous diet as well to serve as preservatives. Their aromatic qualities of spices are useful in overcoming unpleasant odors of spoiled food. The spies were used in beverages, medicine and even in the place of currency. But then its use somewhat diminished in modern times, especially as means of the food preservation were deployed. Still the practice of importing the different aromatic materials in a crude state and then converting them into powered or ground form is followed. Spices are not usually classified as foods for they contain minute nutritive value. However they do give a pleasant flavor and aroma to food and greatly boost the pleasure of eating. They arouse the appetite and increase the flow of gastric juices. Therefore spices are often

49 called food accessories or adjuncts. Their value is owing to the presence of the essential oils and rarely to other aromatic entities.

The Value Chain for Spice Production and Distribution

The process starts with the growers, including commercial farms & plantations. Small growers sell directly to local traders or coops, which distribute to processing organizations or process the herbs and spices themselves. Local traders, as middlemen, sell the product to the processors. Production begins with washing, threshing and sifting of the plants, followed by the drying process, then cleaning /storing and grading. These processes vary according to the particular spice and the preferred technique. Techniques often depend on where the spice is produced existing climates/conditions, the machinery available, whether the plants have been grown in greenhouses or in the open space. Techniques vary between developed and developing countries and can result in different end products, which make the next step in the process, quality assurance testing, particularly important, Health departments and other agricultural departments/institutions. This process is critical because of the market access barriers that developed nation markets impose.

The methods used for cutting or grinding of the product, include formulating mixtures and combinations, as well as sterilization and packaging, have a major impact on the exporting process. Export potential decreases if these steps are not performed according to international standards. Quality assurance testing is conducted according to country or industry standards by standards bodies of industry associations. While many spices can be exported whole, most are processed, usually by grinding them into powders. Often spices imported by developed nations from developing countries are re- exported after significant value has been added in the form of packaging and blending.

50 CUMIN

Cumin, which was called as “Sugandhan” means good smell. In ancient times its popularity spread from Africa to Latin & all over Asia. They have a very distinctive bitter, warm flavor yet aromatic smell and limpid and pale yellow in color. It is one of the broadly used spices in our Day-to-day consumption life. They have worldwide applications in sectors other than food like beverages, liquors, medicines, toiletries as well perfumery. Indian cumin has good demand in international market and it is exported both forms seed as well as powder. Cumin is grown as a Rabi reap in the country. It is planted during October to mid-December and it is harvested during February and March.

In India, Cumin is also known as “Jeera”. The two major types of cumin seeds found in the Indian market. They are white cumin seeds and the black cumin seeds. The

51 white cumin seeds are the most generally found seeds that are used in cuisines. Yet, the black cumin seeds are smaller in shape than the white seed and also have a sweet aroma. Cumin seeds are 4-5 mm long.

If we talk about its plant description, Cumin herb 35-40 cm tall on the long, thin, small leaves such as branching. For the plantation purpose climatic conditions play an important role. It is a tropical plant and grown in cooler regions which is best suited for suited for sandy soil. It requires a lesser amount of water and more cold for its better growth which ideal temperature of 25 to 30 degree. It has high humidity during flowering and fruit set, cause fungal disease in this crop.

Cumin Crop Cycle

Country Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec India Syria

Plantation Harvesting

Indian Scenario India is the largest producer and consumer of Cumin seed contributing 73% to the global production. India is likely to produce 35 lakh bags (each of 60 kg) during the year 2011-2012. Major exporters of cumin are Syria and Turkey but their production comes late in June-July. Considering overall prospects of cumin sowing in the state, expected production, traders’ opinions and government policies, it has export potential in countries like Kuwait.In India, large scale production facilities exist in Rajasthan and Gujarat, contributing approximately 90% to country’s total production.

52 State wise Scenario State 2004-05 2005-06 2006-07 Area (InProduction (InArea (InProduction (InArea (InProduction (In '000' HA) Lakh Tons) '000' HA) Lakh Tons) '000' HA) Lakh Tons) Rajasthan 159.54 0.69 135.11 0.52 149.82 0.24 Gujarat 208.14 1.07 267.92 1.48 259.22 1.53 Total 367.68 1.76 403.03 2.00 409.03 1.77 (Source: Spice Board)

Cumin seed is produced in Gujarat and Rajasthan only. Gujarat is the biggest producer of Cumin seed in India, with 86.5% market share as per Spice Board of India’s data of 2006-07.

Edge of Gujarat over Rajasthan

As the data shown in the diagram, Its shown the reduced production of cumin in Rajasthan from 61% to 12% during 2000-01 to 2006-07. On the other side the cumin production is continuously rise in Gujarat from 35% to 59% during the above time period. During the time period 2008-09 the production of Gujarat is 155000 tons which is reduced compare to previous year. But again in 2009-10 the production is 165000 tons.

53 Gujarat Profile

Gujarat is producing 130 thousand tons of cumin seed on an average every year. Though cumin seeds are grown in several districts of Gujarat but the prominent districts are Surendranagar, Porbandar, Banaskata&Mehsana. The biggest cumin seed Mandi is located in Mehsana district of Gujarat. There areon average 10 thousand tons arrivals on a monthly basis in this Mandi. The price of cumin seed in Mandies of Gujarat is higher therefore farmers of Rajasthan also carry their production for selling in Gujarat Mandies. There are about 40 to 50 percent of the crop produced are brought to the local Mandies. Rajasthan was largest producer of cumin seed till 2004-05 but pushed to second place in terms of the production. Rajasthan is producing on an average 20-23 thousand tons of cumin seed every year.

Market & Growth Drivers

Raw spices, ground spices & blended spices are the part of the FMCG products. The trade statistics of sauces, dressing and condiments which includes raw spices, ground spices & blended spices are part of condiment reached INR 20.75 Billions in the year 2009 from INR 13.92 Billion in 2003. Processed spices demand is directly associated with its consumption in food processing industry and this is set to grow in Kuwait with growth of population and fast changing food habits and increase in spending power of middle and upper class in India as well.

54 In India, Gujarat is the second largest producer of Cumin and there are 10 districts in Gujarat producing cumin. The Production of spice is likely to increase in the coming years with irrigation facilities made accessible through Narmada Canal System, in spices rising area of Central and North Gujarat.

As there are several spices processing units already operating, Gujarat is having ready accessibility of technical and commercial manpower. Entrepreneurs in Gujarat are readily adopting newer technologies and processes, used in food process industry in general and spices processing in particular as a part of their constant efforts to make bigger their business in domestic as well international export markets.

Raw materials Gujarat is one of the foremost states in spices production and processing in India. Spices Area and production trend in Gujarat is summarized in following table:

Area and Production – Cumin Particulars Year Area(’00 Production (’00 Hectares) MT) 1 2000-01 1074 436 2 2001-02 1757.90 859.62 3 2002-03 2000.49 642.75 4 2003-04 2030.11 819.99 5 2004-05 2081.41 1069.75 6 2005-06 2679.20 1476.15

(Source: Department of Agriculture Statistics, Gandhinagar, Government of Gujarat)

Unjha Market of Cumin

Unjha Market Yard is one of the biggest synchronized market. It is well known commercial centre in all over India for its trade of Cumin, fennel, and Mustard Seeds. The crops of Cumin, fennel, and Mustard are only possible in Gujarat, Rajasthan and in

55 some flatten area. The crop of Cumin mostly of North Gujarat is better-quality and hence there is great demand from all over India and foreign countries.

Cumin is natural assembling and exporting centre for Agricultural supplies of North Gujarat. There are around 800 large business firms in this town which exports cumin, fennel, Oil Seeds, pulses to almost 1500 centers of India & foreign countries every year. This market is also significant for crushing and grinding of oilseeds, pulses, mustard, coriander seeds and kalingada-bij etc. There are 6 oil mills, 5 Pulse mills, 4 mustard factories, 27 cleaning factories for cumin & fennel and other spices, 6 Kalingada-bij factories & 5 Coriander seeds factories in Unjha.

Trend in India’s Spice Exports

Board has formulated & implemented a three tier quality certification program conforming to Hazard Analysis critical control point. Award of Spice House certificate for good manufacturing practices as well award of logo for quality of the product and accreditation under ISO 9000 for international acceptance are three certification system adopted by the Board. Another area of activity centered upon by the board is value addition. India can boast as the monopoly supplier of spice oils the world over. In case of curry powders, spice powder, spice mixtures & spices in consumer packs. The consistent effort of the board during the last decade has improved the share of the value added products in the export basket to more than 55%. TOP EXPORTERS (2009-10) CUMIN SEEDS Rank Exporter Name 1 JABS INTERNATIONAL PVT. LTD 2 ITC LIMITED AGRI BUSINESS DIVISION 3 KANAIYA EXPORTS PVT.LTD

56 4 MAYFAIR IMPEX 5 NHC INDUSTRIES PVT. LTD

57 Oil industry

Introduction to Kuwait oil industry

Oil is a fungible, international commodity whose ownership and ultimate destination is determined by market forces once it leaves the producing country. No

58 country can successfully isolate itself from changes elsewhere in the market, nor is it possible that any nation can take actions that do not indirectly affect other nations.

When most people hear the name Kuwait, ‘oil’ is possibly the first thing that comes to mind. Although it is clichéd, that association is quite relevant: more than 75 years after the discovery of oil, it still represents for 95% of all exports and therefore remains central to Kuwait’s economy and wealth It has estimated crude oil reserves of 100 billion barrels or 8-10% of world reserves. Kuwait oil revenues compose the main source of income and amount to approximately 95% of its revenues. Kuwait has record budget

Surplus of KD 13.2 billion ($ 47 billion) during fiscal year 2011-12 for the 13th following year higher KD 9.33 during 2007-08. Its GDP per capita was $38,778.39 in 2010. The climate in Kuwait is not suitable for agriculture; resultantly, it depends on imports from other countries for all its food requirements. To meet its need for potable water, Kuwait depends on either desalination or import.

exports and consumption

Kuwait has the world's 6th largest oil reserves and is one of the ten largest exporters of total oil products. Kuwaiti exports of total oil amounted to around 1.8 million bbl/d, of which 1.7 million bbl/d was crude oil. Most Kuwaiti crude oil is sold on term agreement. Kuwait’s crude exports are all a single blend of all its crude types.

59 With the majority of its export volumes headed to Asian markets, the most important standard for Kuwaiti exports is the Oman-Dubai, to which it sells at a minor discount. As of the commencement of 2010, the price of Kuwaiti crude oil for American customers was tied to the Argus Sour Crude Index (ASCI), a weighted average of various North American standard, sour crudes. European buyers purchase from a standard linked between a Brent weighted-average and Saudi Arab Medium. Kuwait consumes only a small part of its total petroleum production. The country consumed a total of 325,000 bbl/d in 2010, leaving the vast majority of its production available for exports. While national consumption has been progressively increasing, partly as a result of increased petroleum-fired electricity consumption, about 87 percent was slate for exports last year and forecasts indicate that this trend will continue in the near term

Oil sector organization

The government of Kuwait owns and controls all development of the oil sector. The Supreme Petroleum Council (SPC) oversees Kuwait's oil sector and lay down oil policy. The Kuwait Petroleum Corporation (KPC) manages domestic and foreign oil investments. (KOC), the upstream secondary of KPC, was taken over by the Kuwaiti government in 1975 and manages all upstream development in the oil and gas sectors. The Partitioned Neutral Zone (PNZ) has its own managing companies, split by onshore and offshore activities. The onshore division was developed by American Independent Oil Company (Aminoil), which was nationalized in 1977

60 Introduction to oil sector of India

After the Indian independence, the oil industry in India was very small one in size and oil was produced mainly from Assam and the total amount of oil production was not more than 250,000 tonnes per year.

Oil exploration and production in India is done by companies like NOC or nation Oil Corporation, ONGC or oil and natural gas Corporation and OIL who are actually the oil companies in India that are owned by the government under the industrial policy regulation. The National Oil Corporation during the 1970 used to produce and supply more than 70% of the domestic need for the petroleum but by the end of this amount go down to near about 35%. This was because the demand on the one hand increasing at a good rate and the production was failing at a stable rate.

The oil that is produced by the oil industry in India provides more than 35% of the energy that is mainly consumed by the people of India. This amount is expected to raise further with both economic and overall growth in terms of production as well as percentage. The demand for oil is forecast to go higher and higher with every passing decade and is expected to reach an amount of nearly 250 million metric ton by the year 2024.

India produced approximately 950 thousand barrels per day (bbl/d) of total liquids in 2010, of which 750 bbl/d was crude oil. The country consumed 3.2 million barrels per day (bbl/d) in 2010.

The combination of rising oil consumption and relatively flat production has left India increasingly dependent on imports to meet its petroleum demand. In 2010, India was the world’s 5th largest importer of oil, importing approximately 2.2 million bbl/d,

61 or about 70 % of consumption. A majority of India’s crude oil imports come from the Middle East, with Saudi Arabia and Iran supplying the major shares. Iranian oil’s part of Indian imports has decreased in recent years, largely due to problem with processing payments.

Kuwait import export

Kuwaiti exports played an important role in developing the country to transform it into a modern one. Exports in Kuwait may be broadly classified into two categories: oil exports and non-oil exports. Oil exports contain oil and natural gas, while non-oil exports consist of exports of national origin and re-exported goods. Ratio of Oil and Non-Oil Exports to Total Exports

Source: International Monetary Fund (IMF)

Import export policy of India

Import Policy

The economic needs of the country, efficient use of foreign exchange and industrial as well as consumer needs are the basic factors which influence India's import policy. On the import part the policy has three objectives: to make necessary imported

62 goods more easily available, including important capital goods for modernizing and advance technology; to simplify and update procedures for import licensing; to promote efficient import substitution and self-reliance.

Imports are approved free of duty for export production under a duty release scheme. Input-output norms have been specified for more than 4200 items. These norms specify the amount of duty-free import of inputs allowed for specified products to be exported.

There are no quantitative bands on imports of capital goods and intermediates. Import of second-hand capital goods is permitted provided they have a minimum remaining life of five years. There is an Export Promotion Capital Goods (EPCG) Scheme under which exporters are approved to import capital goods (including computer systems) at concessionary customs duty, subject to completion of specified export duty. Service industries enjoy the feature of zero import duty under the EPCG Scheme. Likewise, hospitals, hotels and other tourism-related industries. Software units can use data communiqué network to export their products.

Export Policy Exports are the major focal point of India's trade policy and a thrust area is exports involving higher value additions. Many items can be liberally exported from India. A few items are subject to export control in order to avoid shortages in the domestic market, to conserve national resources and to protect the environment. Export profits are exempt from income tax. Higher royalty payments of 8% (net of taxes) are permitted on export sales as compared to 5% on domestic sales. Export commissions up to 10% are also permissible. Inputs required to be imported for export production are exempted from the basic customs duty. Export Oriented Units (EOUs) and Export Processing Zones (EPZs) enjoy

63 special incentives such as duty free import of capital goods and raw materials for the purpose of export production.

Important policy measures

Import & export Tariffs Kuwait does not apply any customs duties on food, agricultural items, or essential end user goods, or on imports of some machinery, most spare parts, and all raw materials. Standards Kuwait maintains high restrictive standards, which hinder the marketing of U.S. exports. For example, shelf life requirements for processed foods are far lower than necessary to preserve freshness in Kuwait than they are abroad.

Import Licenses

Importers must obtain an annual import license from the Ministry of Commerce and Industry. The license authorizes the import of any amount of goods from any country on a multi-entry basis, during its one-year term. . To obtain this license, an importing company must fulfil the following requirements:

1) It must be registered in the Commercial Register at the Ministry of Commerce and Industry, and with the Kuwait Chamber of Commerce and Industry. 2) The Kuwait share holding in the capital of the company must be at least 51%. A special import license is required to import certain kinds of goods, such as firearms, explosives, drugs, and wild animals.

Export Controls

64 Only a few items being exported from Kuwait require export licenses,and generally there are no export restrictions on Kuwaiti products. No duties are levied on goods exported from Kuwait.

Import/Export Documentation Imports to Kuwait from the U.S. require three certified and legalized copies of the commercial invoice, three copies of the bill of lading (air waybill), and a certificate of origin.

The certificate of origin should: be duly certified by a U.S. Chamber of Commerce or the National U.S.-Arab Chamber of Commerce. Legalization is done by the Kuwait Consulate in New York City, or by the Kuwait Embassy in Washington, D.C.

65 Pharmaceutical industry

Introduction

Pharmaceutical market within the Gulf Cooperation Council (GCC)/ Kuwait has witnessed goodly progress over the years as a result of favorable demographic and economic factors, and hard government support for attention. in spite of the progress, the pharmaceutical sector within the Gulf remains in associate rising part, and drug producing is at a comparatively emergent stage as a result of variety of obstacles. an enormous majority of prescribed drugs consumed within the region ar branded and foreign. However, the govt.s are attempting to extend native drug producing and cut back reliance on imports by encouraging joint ventures and licensing deals with international pharmaceutical firms. Use of generic medicine is additionally being promoted to lower the overly high drug costs and attention burden on the general public sector.

66 Structure and Business activities

KPA Kuwait Pharmaceutical Association (KPA) was established, on the twenty seventh, Oct. 1974 within the State of Kuwait, as an expert association for the pharmacists work, each in Kuwait and within the subsidiary authorities of the regime. home base is found in national capital permissible to own alternative branches in Kuwait. Arabic is that the Association formal language. alternative languages ar often utilized in scientific lectures, researches and in mutual correspondences to alternative foreign associations.

Kuwait's Pharmaceutical Market to succeed in a worth of Us$550.6mn by 2012

The Kuwait prescribed drugs and attention Report provides freelance forecasts and competitive intelligence on Kuwait prescribed drugs and attention trade.

Kuwait's pharmaceutical market was calculable to be price US$332.8mn in 2007 and will grow at around 100 percent year-on-year (y-o-y ) to succeed in a worth of US$550.6mn by 2012. Market growth, as in alternative Gulf Co-operation Council (GCC) states, ought to be underpinned by associate increasing population associated an medicine shift towards chronic non-communicable diseases. Kuwait's oil reserves ought to still underpin economic process through the forecast amount, making certain per capita incomes still grow.

As in alternative gulf states, a trend for a lot of cost-conscious government health policy is rising that will serve to dampen pharmaceutical growth, notably within the proprietary drug sector. However, the personal sector, that has full-grown in strength over the past few years, ought to take a a lot of outstanding role in its place.

67 Government policy, combined with redoubled awareness of the bioequivalence of generics ought to permit the generics market to grow powerfully over the forecast amount, beating the drug market growth trend to account for eighteen of the overall market by 2012. This growth ought to give a chance for the country's little domestic producing sector, that consists of state-owned Kepis co. However, as a result of ever increasing GCC integration, BMI expects imports to account for most new sales. The GCC world organization ought to permit gulf drug makers in particular to require advantage. In BMI's updated Business setting Ratings, Kuwait received a score of fifty two, down 3 points from Q108. The lower score resulted in an exceedingly fall of 2 places within the Mideast and Africa (MEA) rankings table to fifth position out of fourteen markets surveyed. Our assessment was downgraded when new information that instructed that Kuwait's pharmaceutical market had full-grown less quickly than expected in recent years. In terms of market risk, our assessment of Kuwait's business setting remains unchanged. attention is provided mostly freed from charge to Kuwaiti voters. However, associate aging population with a big chronic malady burden is anticipated to force the govt. to avail itself of a number of the money responsibilities.

Current Position of Kuwait prescribed drugs

 A booming oil and gas trade and restricted diversification into alternative sectors have considerably forced the producing activities in Kuwait. As a result,domestic production of medicines within the country is low. quite simple fraction of the prescribed drugs consumed ar foreign, as well as branded and generic medicine. Kuwait had solely 2 firms active in drug creating in 2010, principally within the generics section. they will conjointly carry production below licensing arrangements with supposed international firms. the foremost outstanding drug maker is that the Kuwait Saudi Pharmaceutical Industries Company, that presently operates below a venture between Kuwaiti and Saudi partners, because the company’s name suggests.

68  Widespread prevalence of chronic diseases (see “High Prevalence of Lifestyle- Related Ailments” below Section 3), growing population, high per capita financial gain, and restricted native producing capabilities have bestowed variety of growth opportunities for international and regional pharmaceutical firms. In line with the final trend ascertained within the GCC, Kuwaiti population is additionally extremely inclined towards branded medicine. The country’s pharmaceutical market was valued at US$ 781 million in 2012, having full-grown by half dozen.0% y-o-y . At US$ 206, pharmaceutical sales per capita was loosely in line with the GCC average. Kuwait’s pharmaceutical trade is 0.5 the scale of the UAE market. However, high public disbursement on attention and a freed from value provision of medical services for the locals have supported demand for prescribed drugs within the country.

 Due to a general rise in health awareness among the population over the years, the Kuwaiti pharmaceutical trade has knowledgeable about associate increasing demand for over-the-counter medication and pseudo-pharmaceuticals like vitamins and supplements, weight loss formulations, and smoking surcease aids. over-the-counter medicine are often purchased from multiple locations like pharmacies, supermarkets, specialist shops, and convenience stores.

 Although the trade is closely monitored by the govt., drugs costs in Kuwait ar high. In 2010, the health ministry proclaimed its intention of cutting costs of five,000 essential medicine by five-hitter and reviewing costs across the market each six months. Doctors and patients typically like branded merchandise, that has stretched the govt. funding system. As a result, the government, that is that the single largest vendee of prescribed drugs, is keen to extend domestic production of generic medicines through participation of the personal sector and foreign firms. Government hospitals and clinics ar being more and more urged to use generic medicine.

 More than 70% of the prescribed drugs consumed in Kuwait are foreign drugs.

69  Kuwait’s pharmaceutical market swollen by 6.0% y-o-y to US$ 781 million in 2012.

Industry Trends

Although completeed prescribed drugs can still dominate the market within the predictable future as a result of high brand preference of the customers, generics are expected to slim the degree gap.

Government measures to spice up native drug producing and penetration of health insurance ar forecast to extend the extent of privatization within the GCC pharmaceutical sector.

Government efforts to attain unification of pharmaceutical costs, which have gained momentum over the recent months, ar doubtless to prove effective in control inconsistencies within the future.

The global money crisis and regional debt issues evoked European drug manufacturers to specialize in the comparatively rising Gulf market. As a result, between 2008 and 2011, pharmaceutical imports from the eu Union (EU) into the GCC swollen at a CAGR of eighteen.3%.

A number of Gulf countries are seeking investments from Indian pharmaceutical companies to learn from their expertise within the generics section. Signing of the impending trade agreement between the GCC and Bharat can any open up the marketplace for Indian firms.

The biotechnology parks and free zones established within the GCC play a serious role in conveyance the much-needed foreign investments and technology needed to create native capabilities for producing of proprietary pharmaceutical merchandise.

70 The GCC countries united to adopt the Common Technical Document (CTD) framework in 2009 and have since progressivly emotional towards its implementation.

The GCC pharmaceutical market is projected to expand at a CAGR of 6%-8% between 2010 and 2020, with the pace of trade growth in Qatar and Bahrain projected to outmatch the regional growth. redoubled domestic production, foreign investments, and consumption of generics ar doubtless to support the market’s evolution. • The company trade typically grows at concerning one.5-1.6 times the Gross Domestic Product growth • Globally, Bharat ranks third in terms of producing company merchandise by volume • The Indian pharmaceutical trade is anticipated to grow at a rate of nine.9 is until 2010 and then nine.5 is until 2015 • In 2007-08, Bharat exported medicine price US$7.2 billion in to the North American nation and Europe followed by Central and jap Europe, Africa and geographic region • The Indian immunogen market that was price US$665 million in 2007-08 is growing at a rate of quite two hundredth • The retail pharmaceutical market in Bharat is anticipated to cross US$ 12-13 billion by 2012 • The Indian drug and prescribed drugs section received foreign direct investment to the tune of US$ one.43 billion from Apr 2000 to Gregorian calendar month 2008 Challenges in Kuwait:

Obstacles within the Growth of native Manufacturing:

Setting up a pharmaceutical producing unit is extremely capital intensive and generally involves an extended payback amount. Further, lack of specialize in the event of a producing sector within the GCC till many years back, little domestic market size, issue in raising adequate funds, and lack of information and complete men ar a number of the key factors that restricted flow of investments into the pharmaceutical producing

71 sector. This has restricted the capabilities of native drug manufacturers primarily to the manufacture of generics in an exceedingly market wherever demand for branded medicine is predominant.

High Drug costs and Regional Disparities:

Drug costs within the GCC ar considerably on top of the planet average as a result of high preference for branded medicine, that ar mostly foreign. little size of the end-market, low talks power, and high per capita financial gain ar alternative factors causative to elevated costs of medicines within the region. though this inflates the scale of the pharmaceutical market, they encourage be an enormous strain on government finances and individual expenses. Excessive worth levels in any trade don't encourage be causative for the progress and growth in real terms within the long run. with the exception of being high, drug costs vary considerably among the region reckoning on specific market characteristics of every constituent country.

Substantial Reliance on foreign merchandise

The GCC countries are extremely addicted to imports of apparatus, raw materials, and medicines for finish use.

Outbound Medical touristy

A significant portion of residents within the region conjointly opt to request treatment for serious ailments abroad.

Shortage of skilled labour

72 Gulf pharmaceutical firms are forced to use a mostly expatriate men, that entails higher prices associated creates an unstable men.

Government Initiatives in Kuwait:

The GCC governments ar providing variety of incentives to spice up domestic pharmaceutical production so as to cut back the reliance on imports. firms desirous to found out producing units will avail incentives like free property leases, interest-free loans, low tax rates, and quicker drug registrations. The governments conjointly allow 100 percent foreign possession in native pharmaceutical producing firms and supply support for fitting analysis and development capabilities. Through these constructive measures, the regional governments ar making a good setting for the domestic personal sector and international firms to allot contemporary investments to the pharmaceutical trade.

Public funding into the world, particularly in making a good back-end infrastructure and providing a straightforward access to attention facilities and medicines to the folks, conjointly continues to flow in at a healthy pace. several GCC countries have found out free zones dedicated to attention and life sciences firms. These free zones give world- category infrastructure and tax incentives, so attracting variety of domestic and international firms. metropolis Biotechnology and analysis Park (DuBiotech), launched in Feb 2005, is one such example. the power presently homes variety of biotechnology, pharmaceutical, and analysis firms as well as international

73 players like Pfizer, Merck Serono, Amgen, and Genzyme. DuBiotech issued forty business licenses in 2012, nearly double the previous year’s figure of twenty one, taking the overall range of firms having a base within the life sciences park to 126.  Incentives provided to spice up domestic production embrace free property leases, interest-free loans, low tax rates, and quicker drug registrations.  Many GCC countries have found out free zones dedicated to attention and life sciences firms.  Compulsory medical insurance schemes for locals and expatriates have either been enacted or are within the method of being launched across the GCC.  Medical insurance makes attention cheaper and fosters a property development of the world.

The Gulf cooperation council (GCC) region is taken into account as “” for pharmaceutical export and bilateral trade. The understanding of the regulative necessities of this region are often useful for pharmaceutical export. Some incidents of the year 2008-09, like recession or economic holdup in extremely well-off and controlled market of the EU and North American nation, raised the demand for alternate destinations for business. The rules of Gulf countries ar encouraging the import of quality generic merchandise, which might be excellent news to the Indian drug makers.

Centralized registration procedure 1. the chief workplace of GCC-DR assumes the receipt of registration files when making certain the fulfillment of registration necessities and upon punctually filling the subsequent forms: • The drug companies’ registration type. • A pharmaceutical chemical entity/ preparation registration type. 2. Eight complete files for every chemical entity and seventeen samples ought to be submitted to the chief workplace and 2 samples shall be sent to every country beside registration file.

74 3. each country shall study the registration files forwarded thereto and so come back those files with its recommendation to the committee. The procedure is shown in elements of written record. 4. the corporate must give the laboratory for the analysis of ordinary materials, ways etc. 5. the chief workplace dispatches the samples of chemical entity to reference- accredited laboratory for the analysis. 6. When approving the registration of company andor chemical entity centrally, the remaining authentication and documentation, fees ar finalized on country basis, as per their prescribed and established policies. The fees for centralized procedure is shown in 7. The businesses reserve their rights to lodge their grievances to the chief workplace among a amount of 2 months effective from the date of notification concerning the registration by GCC-DR.

Export opportunities for India

Based on responses from 215 representatives of leading pharmaceutical makers in Bharat and people registered within the six GCC countries, the FICCI study found an amazing keenness to faucet the GCC market.

According to a FICCI survey report “There could be a goodly scope for increasing our exports of medicine and pharmaceutical merchandise to GCC countries, particularly Saudi Arabia, Kuwait, Bahrain, Qatar, and state of Muscat and Oman

75 Agriculture Industry

Kuwait Rice Market

Kuwait has leased rice fields in Cambodia and plans to import food from the Asian country, a government official said in remarks published yesterday. Soaring food prices are a key driver of in Kuwait, hitting 11 percent in April and May. Kuwait imports most of its food and has said it wants to invest in chicken and other farms as part of a national food plan. Daily Awan quoted Foreign Minister Undersecretary Khaled Al-Jarallah, who is with Prime Minister Sheikh Nasser Al-Mohammad Al-Sabah on an Asian tour, as saying the rice fields would meet the Gulf Arab state’s food demand.

76 With the anticipated production of 85 million tons and of fruits 160 million tons of vegetables, it is estimated that there will be excess to the tune of approx 3-4 million tons of fruits and approximately 7-8 million tons of vegetables at the end of 2012-13.

Thailand, India and U.S.A. are the only countries making parboiled rice and exporting it. Thailand, Vietnam and India are also exporting 100% broken rice. Data in respect of parboiled and broken rice exports separately from India are not available. Hence, export of rice from India has been divided in to two categories i.e., basmati rice and non-basmati rice. The leading aromatic fine quality ricers in world trade popularly known as Basmati rice is fetching good export price in the international markets for its three district quality features viz.-pleasant aroma, superfine grains and extreme grain elongation. About two third of basmati rice produced in India is exported. Basmati rice is exported to various countries in the world from India.

Kuwait Forecast

The Department of Agriculture has scaled down its 2011 rice production forecast by 4.3 percent to 16.68 million metric tons (MT) after typhoons that hit the country in the second half of the year pulled down the country’s rice harvests. The DA-Bureau of Agricultural Statistics (DA-BAS) said national paddy yield could reach P16.68 million MT in 2011, 5.7 percent higher than the 2010 output of 15.77 million MT. However, the projected rice production was 700,000 MT less than the 17.4 million MT target set by the DA at the start of the year as part of its goal to make the country rice self-sufficient.

Agriculture Secretary Proceso Alcala said the momentum enjoyed by the farm sector in the first half of the year due to favorable weather was tempered by the typhoons in the second semester.

77 “The first three quarters were above-average. But the typhoons hit us; that is the reality,” Alcala told reporters. He noted that the country’s total farm output for 2011 could grow by only between 3-3.5 percent, well below his five percent growth target envisioned at the start of the year. Rice is the main staple of the . Along with corn, which was seen to top at 6.99 million MT, 9.6 percent above the 2010 output of 6.38 million MT, the commodity accounts for half of the national agriculture value. BAS said the storms that pummeled Luzon in the second half of 2011 took its toll on rice paddies. From July-December, BAS said it expects rice output to decline by .6 percent to 9.10 million MT. In the last quarter of 2011, which saw two destructive typhoons, Pedring and Quiel, enter the country, production forecast based on standing crops pointed to a decrease of 8.8 percent from last year’s level of 6.50 million MT. BAS said rice output could total 5.93 million MT in the last quarter.

INDIA Rice Industry

India is one of the world's largest producers of white rice, accounting for 20% of all world rice production. Rice is India's preeminent crop, and is the staple food of the people of the eastern and southern parts of the country.[1] Production increased from 53.6 million tons in FY 1980 to 74.6 million tons in FY 1990, a 39 percent increase over the decade. By FY 1992, rice production had reached 111 million tons, second in the world only to China with its 182 million tons.[1] Since 1950 the increase has been more than 350 percent. Most of this increase was the result of an increase in yields; the number of hectares increased only 40 percent during this period. Yields increased from 1,336 kilograms per hectare in FY 1980 to 1,751 kilograms per hectare in FY 1990. The per-hectare yield increased more than 262 percent between 1950 and 1992.[1] The country's rice production declined to 89.13 million tons in 2009-10 crop years (July–June) from record 99.18 million tons in the previous year due to severe drought that affected almost half of the country. India could achieve a record rice production of 100 million tons in 2010-11 crop year on the back of better monsoon this year. The India's rice production reached to a record high of 104.32 million tons in 2011-2012 crop year(July–June. Rice is one of the chief grains of India. Moreover, this country has the biggest area under rice cultivation, as it is one of the principal food crops. It is in fact the dominant crop of the country. India is one of the leading producers of this crop. Rice is

78 the basic food crop and being a tropical plant, it flourishes comfortably in hot and humid climate. Rice is mainly grown in rain fed areas that receive heavy annual rainfall. That is why it is fundamentally a kharif crop in India. It demands temperature of around 25 degree Celsius and above and rainfall of more than 100 cm. Rice is also grown through irrigation in those areas that receives comparatively less rainfall. Rice is the staple food of eastern and southern parts of India. In 2009-10, total rice production in India amounted to 89.13 million tons, which was much less than production of previous year, 99.18 million tons. Rice can be cultivated by different methods based on the type of region. But in India, the traditional methods are still in use for harvesting rice. The fields are initially ploughed and then fertilizer is applied which typically consists of cow dung and then the field is smoothed. The seeds are transplanted by hand and then through proper irrigation, the seeds are cultivated. Rice grows on a variety of soils like silts, loams and gravels. It can also tolerate alkaline as well as acid soils. However, clayey loam is well suited to the raising of this crop. Actually the clayey soil can be easily converted into mud in which rice seedlings can be transplanted easily. Proper care has to be taken as this crop thrives if the soil remains wet and is under water during its growing years. Rice fields should be level and should have low mud walls for retaining water. In the plain areas, excess rainwater is allowed to inundate the rice fields and flow slowly. Rice raised in the well watered lowland areas is known as lowland or wet rice. In the hilly areas, slopes are cut into terraces for the cultivation of rice. Thus, the rice grown in the hilly areas is known as dry or upland rice.

Exports of Rice from INDIA

Rice is exported from India to many countries in the world. In fact, India is facing stiff competition in the international markets for the export of rice. Thailand is the world's largest rice exporting country. Vietnam is another large exporter of rice, but currently the demand for Vietnamese rice has steeply declined in the international market due to which India is likely to become world's second largest exporter of rice. Thailand, India and U.S.A. are the only countries making parboiled rice and exporting it. Thailand, Vietnam and India are also exporting 100% broken rice. Data in respect of parboiled and broken rice exports separately from India are not available. Hence, export of rice from India has been divided in to two categories i.e., basmati rice and non-basmati rice. The leading aromatic fine quality ricers in world trade popularly known as Basmati rice is fetching good export price in the international markets for its three district quality features viz.-pleasant aroma, superfine grains and extreme grain elongation. About two third of basmati rice produced in India is exported. Basmati rice is exported to various countries in the world from India. The exports of basmati rice during 1998-99 to 2000- 2001 are discussed below:-

79 During 1998-99 Saudi Arabia was the major importer of basmati rice from India followed by U.K., Kuwait and U.A.E. and percentage shares of these countries of total exports from India were 74.11%, 7.66%, 5.25% and 3.34% respectively. Thus, more than 90 per cent quantity of basmati rice was exported to Saudi Arabia, U.K., Kuwait and UAE during 1998-99 and remaining quantity was exported to other countries in the world. A total quantity of 5, 97,756 mts of basmati rice was exported from India during 1998-99. During 1999-2000, these four countries remained as major basmati rice importers from India and their percentage shares of total quantity of basmati rice exported from India was 62.14 per cent, 8.32 per cent, 7.42 per cent and 5.06 per cent respectively. The export to Saudi Arabia declined during 1999-2000 as compared to previous year. In fact, the export to U.K., Kuwait, UAE and U.S.A. increased as compared to 1998-99. The percentage share of four countries comprising of Saudi Arab, U.K., Kuwait and U.A.E. were 82.94 per cent of total quantity of basmati rice exported from India during 1999-2000 as against 90.36 per cent during 2002-04. The export of basmati rice almost remained the same as it was during 1998-99 with slight fluctuation. A total quantity of 6, 38,380 mts of basmati rice was exported from India during 1999-2000, which was 6.80 per cent higher than the export of previous year. The export of basmati rice to Saudi Arabia increased to 4, 78,124 mts during 2005-06 as against 3, 96,676 mts in the previous year. The percentage share of Saudi Arabia of total quantity of basmati rice exported from India during 2000-01 was 56.14 per cent as against 62.14 per cent in the previous year. In fact, total quantity exported to Saudi Arabia increased during 2000-01, but the percentage share of Saudi Arab of total quantity exported from India decreased due to increase in the percentage share of other importing countries. Other major importing countries of basmati rice from India were U.K., U.A.E., Kuwait and U.S.A. during 2005-06..

Major producers of Rice in INDIA

The top basmati rice brands in India are primarily local companies. However, there are some international companies operating over here as well. As per the Seeds Act 1966, more than ten different types of basmati are grown in India. They may be enumerated as below: • Basmati 386 • Pusa Basmati – 1 • Basmati 217 • Pusa Basmati 1121 • Ranbir Basmati • Punjab Basmati – 1 • Karnal Local or Taraori Basmati • Haryana Basmati – 1 • Basmati 370

80 • Kasturi and Mahi Sugandha • Type 3 or Dehradooni Basmati The following regions are the major producers of basmati rice in India: • Jammu and Kashmir • Delhi • Himachal Pradesh • Uttarakhand • Punjab • Western parts of Uttar Pradesh • Haryana • Rajasthan In 2011-12 India exported basmati rice worth INR 15,449.61 crores thus making it the biggest global exporter of this product. The aggregate area being used for cultivating basmati rice is approximately 776 thousand hectares. Haryana presently accounts for almost 60 percent of the area being used for cultivating basmati rice. Karnal district, which is often referred to as the rice bowl of India produces the finest quality of basmati rice. Apart from Karnal, Panipat, Kurukshetra, Kaithal, and Ambala are the major rice growing districts in the northern state.

Punjab and Uttar Pradesh are the next big names when it comes to basmati rice cultivation.

India Basmati Rice Industry Competition

The exporters of basmati rice in India are expected to face a lot of competition from their counterparts in Philippines during 2013.The Philippines is looking to improve its best rice variety so that exports can be started from 2013. At present the Agricultural Department in the Southeast Asian country is making attempts to cultivate the basmati rice. India, at present, is the biggest exporter of basmati rice in the world. It produces nearly 7.5 million tons and exports approximately 2.5 million tons. Philippines, on the other hand, is fairly self sufficient as far as rice production goes. Reports state that a 6000 hectare area has been identified in Compostela Valley by the Philippine government. It is being considered perfect for production of basmati rice. It is aiming to target the Middle East as a potential client base. Right now, India is the most prominent exporter of basmati rice to these countries as well as Iran.

81 Top Basmati Rice Brands in India

Following are the leading basmati rice brands available in India:

Lal Qilla Lal Qilla basmati rice is a product of S Amar Singh whose business started as a small establishment about 6 decades ago. Since then the company has emerged to become one of the top names in this market. It is also one of the leading rice manufacturing companies in the country. Following are the major brands of the organization in addition to Lal Qilla: • Qilla • Shahjahan • Golden Qilla • Amar • President

Double Diamond Double Diamond basmati rice is manufactured by Golden Foods, which is one of the biggest distributors and wholesalers of Indian and Pakistani food and non food products in the Scandinavian region. Apart from rice it also offers other products such as oil, juices, flour, beans, spices, and lentils. Following are its main basmati products apart from Double Diamond: • Double Zebra Basmati • Kalra Sella Basmati Rice • Blue Diamond Sella Basmati • Sultan Basmati Rice • Kalra Super Kernel Raw Basmati

Hanuman Hanuman basmati rice is a product of RS Rice Mills that was set up during 1976 at Amritsar, Punjab. After establishing its position in India it has also explored the export option and has been transacting in the following countries: • The UK • • •

82 • • • Belgium • Kuwait In addition to Hanuman, following are its major brands: • Double Diamond • RST • Satkar

Tilda Tilda, based in the UK, is one of the companies that introduced basmati in the west more than 4 decades back and since then has gained prominence as a global food brand with presence in at least 50 countries such as France, Middle East, Germany, and the US apart from being a preferred brand of British Asians. It primarily deals in dry basmati rice and steamed basmati rice products.

Pari Pari basmati rice is marketed in India by Pari India, which was earlier referred to as Sachdeva and Sons. The company has been in this business for a minimum of 200 years and has been one of the leading processors, distributors, marketers, and exporters of Indian rice. It has customers in various parts of the world including the following regions: • Middle East • Africa • Europe • South East Asia • North America • Australia Apart from Pari, it also offers brands such as Royal and Trust and other forms of rice such as the following: • Sharbati • Matta • Long grain • Ponni • Sona masuri • Smoked • Idli

Adora Adora basmati rice is a product of Tilda. It is primarily available in packs of 10 pounds and costs around 14.99 dollars per pack.

83 Daawat Daawat basmati rice is a product of LT Foods Limited. The company’s head offices are at Gurgaon and it has approximately 900 workers. In 2011 its net sales amounted to INR 1281 crore. Daawat, the flagship brand was introduced during the 1980s and is presently one of the top names in the industry.

Its products are available in three ranges that may be mentioned as below: • Premium Range • Food Service • Consumer Range

Kohinoor Kohinoor basmati rice is manufactured and marketed by Kohinoor Foods Limited. Apart from basmati rice, Kohinoor offers ready to eat products, spices, cooking sauces, seasonings, cooking pastes, and frozen food. Its products are available in Europe as well as the following locations: • US • • UK • Australia • Dubai • Singapore • Canada Blue Label and Lal Haveli

Blue Label and Lal Haveli are two of the three brands of basmati rice being manufactured and sold by TriStar Overseas. The organization was incorporated by Lala Kanta Prasad during 1975. Following are its various products: • Royal Malai Basmati Rice • Sadabahar Basmati Rice • Khushbu Basmati Rice • Pearl Basmati Rice • Manpasand Basmati Rice • Punjabi Sella Basmati Rice

Doon Doon basmati rice is a product of KRBL Limited, which was incorporated during 1889 and in its 120 years of existence it has become one of the leading exporters of basmati rice in the world. It is also regarded as one of the biggest rice millers in the world. In the Doon brand following are the main variants: • Basmati rice premium • Mini dubar • Basmati rice dubar • Mogra

84 • Basmati rice Tibar • Mini Mogra Following are the other major basmati brands in India: • Amira • Neesa • Dunar • Himalayan Crown • India Salaam • Indian Star • Saffola Arise Comparative position of agriculture sector with India & Gujarat

In India, after the poor performance in 2009–10 due to widespread scarcity and inconsistent monsoon rains in 2009, India’s agriculture sector boomed back between 2010–2012, with record production of most major crops such as rice, wheat, pulses and oilseeds. Agriculture has been the strength of India’s economy since India’s independence. In 2010, India ranked among the world’s five largest manufacturers of many cash crops such as coffee and cotton. As of 2011, it is also one of the world’s five largest producers of livestock and poultry meat, with one of the fastest growth rates. Improvements in agriculture technology has provided India the motivation to increase its food production, but the impact of the agriculture sector on the total national export has dropped since 2004 from 12.7% to 10.23% in 2009. Gujarat has been able to hold its comparative advantage in agriculture beyond those of its peer states. The reasons are possibly many including pricing of water, availability of electricity, transport infrastructure etc, but unfortunately it we could not properly found the role of these excepting to a limited extent. Indian agricultural commodities have come to occupy a best position in the global market over the years.

Today, India is a major supplier of several agricultural commodities like tea, coffee, rice, spices, cashew, oil meals, fresh fruits, fresh vegetables, meat and its arrangements and marine products to the international market. However, the country faces brutal competition from other major players in the arena, both the existing and new entrants in the fight.

Unluckily, the main challenge is from within Asia itself where countries like China, Malaysia, Philippines, Thailand, Singapore and Indonesia among others stance a big threat to Indian agricultural products.

Exports of various agricultural commodities from India have replied differently in terms of comparative advantage during the post-reforms period. India has liked a comparative advantage in tea exports but has showed a declining trend over the years.

85 However, Sri Lanka has shown a faraway well advantage in comparison to India and other countries like China and Indonesia. A similar pattern has been observed in coffee exports also, where India has been found behind its comparative advantage to other coffee exporters like Vietnam and Indonesia.

An uneven pattern of comparative advantage has been observed in case of rice exports with erratic ups and downs in the status. A slow decline in India’s comparative advantage has been showed for exports of spices and cashew also. Vietnam has avoided India in the later years in terms of comparative advantage in cashew exports.

As opposite to other commodities, India has maintained its position in the global markets in exports of oil meals. But as far as the exports of fresh fruits and fresh vegetables are worried, India cannot claim to have a comparative advantage. While Philippines andTurkey have dominated in fresh fruits exports, Israelhas been dominant in the exports of fresh vegetables.

India’s status in exports of meat and its arrangementsand marine products has not been very comfortable. Although marine products control India’s agricultural exports, it cannot be credited to India’s comparative advantage in the global markets. It is expected to be more due to a growing demand for these products among the international consumers.

In nut shell, India’s comparative advantage in most of the important agricultural exports has been found to be corroding and losing out to other Asian competitors in certain commodities during the period after economic improvements.

Present position and trends of business exporting with India and Gujarat during past 3 to 5 years

Kuwait is a small, comparatively open, petroleum based economy with heavy requirement on foreign manpower. It has always offered an open, greatly competitive and rich market for capital and consumer goods and for project exports. While Indian companies did well until the 80s in terms of project exports, there has not been any important breakthrough on the investment visible since the 90s. The bilateral trade between India and Kuwait has, however, increased steadily in the post liberty period.

India-Kuwait relations have always had a pro trade-bias, and bilateral trade has, increased steadily since 1991. India-Kuwait trade was US$ 10.4 billion in 2008-2009, of which nonoil trade accounted for approximately $1.2 billion while petroleum exports

86 from Kuwait to India were around $9.1 billion. India has constantly been among the top ten trading partners of Kuwait.

USA is the largest importer of agricultural and associated products from India, which along with Bangladesh, Japan, Saudi Arabia, UAE, U.K., Malaysia, China, Indonesia and Netherlands constitute more than 53 percent of total agricultural and associated products exports from India.

The growth in export of all products from India to the world during this period (10.42%) is almost double the growth rate in export of agricultural and associated products. For most of the countries, India's share of agriculture and associated products in total products has decreased over the years except for countries like Bangladesh, China, Belgium, , North Korea, Somalia and Senegal.

Present trade barriers for exports of rice in Kuwait Introduction With few exceptions and with varying degrees of comprehensiveness and success, all countries intervene in their rice markets. This intervention can create imbalances in world rice supply and demand, shift world rice trade patterns, and distort world rice prices. Available evidence suggests that the global competitiveness of the KUWAIT rice industry has been severely weakened by the protectionistic policies of its rice trading partners and competitors. An important part of KUWAIT strategic response to this problem has been to negotiate trade barrier reductions with other rice producing and consuming countries. The policies impinging on Kuwait rice markets can be categorized as either trade restrictions or trade incentives. Both types of trade policies tend to distort Kuwait rice trade and price levels away from what they would be under free trade.

Trade restrictions Both importing and exporting countries impose restrictions on Kuwait rice trade. The consequences for world markets, however, are fundamentally different. If an importing country restricts the inflow of foreign rice, the consequence is lower world trade and lower world prices of rice but higher domestic prices and increased domestic rice production in the import-restricting country. Lower world trade is also a consequence if an exporting country restricts exports. However, rice prices will be higher in importing countries and export-competing countries with just the opposite the case in the export- restricting country. In either case, world rice markets tend to become more volatile.

87 Import restricting policies include import tariffs or undervaluation of the country's currency vice-a-versa the currency of major exporting countries as well as non-tariff barriers to imports such as import quotas, variable levies, government-controlled import monopolies, and other more subtle forms of import controls. Such policies include export taxes or overvaluation of the country's currency vis-a-vis the currency of major importing countries, export quotas, government-controlled export monopolies, and other more subtle forms of export controls.

Trade incentives Present trade can be distorted not only by policies that restrict trade but also by those that increase trade. Policies of exporting in Kuwait, that attempt to capture a larger share of world markets for their producers may increase the volume of world trade but will also shift world trade patterns. Importing countries may choose to increase the proportion of domestic supplies of a commodity that come from foreign sources for a variety of reasons. Again, however, the consequence can be a shift in world trade patterns as well as an increase in world trade volume. If an importing country provides an incentive for a larger inflow of foreign rice, for example, the consequence is an increase in world rice trade and price but lower domestic prices and domestic rice production in the import-enhancing country. Increased world trade may also be a consequence if an exporting country provides an incentive for greater exports. However, rice prices will be in importing countries and exportcompeting countries with just the opposite the case in the export-enhancing country. Importing country policies that stimulate imports are of less concern to exporting countries than those that restrict imports. The incidence of such policies, however, is by far much less common than that of import restricting measures. The goverhments of most rice exporting countries operate some type of policies that lead to higher exports of rice than would be the case in the absence of those policies. Such policies include export subsidies of various forms, undervaluation of the country's currency visa-vis the currency of major importing countries, or other more subtle means to stimulate exports. ImplicatioDs (or KUWAIT Access to ForeigD Rice Markets A country-by-country and policy-by-policy review of world rice market distortions suggests strongly that trade-restricting rather than trade-expanding interventions have tended to dominate in world rice markets. The likely consequence of these policies has been a reduction in world and KUWAIT rice trade. Recent research to determine the magnitude and direction of impact of world rice market interventions provides evidence to support this conclusion. One recent study concludes that world rice trade is 48% lower as a result of rice policy distortions than would be the case under free trade (Cramer, .a.llJ. The study estimates that policy interventions have reduced world exports of high quality indica rice by 15%, low-quality indica by 39%, and japonica by 83%. The study alsoconcludes that the prices of high-quality and low-quality indica rices and of japonica rice are 25%,5%, and 61%, respectively, lower than would occur under free trade. As a

88 consequence, gross revenues from KUWAIT japonica and indica rice exports are 80% and 15%, respectively, lower than would be the case under free trade. Together with other trade enhancing measures, the KUWAIT marketing loan program enacted int he 1985 Farm Bill allowed KUWAIT market prices of rice to fall below producer support levels, boosted he competitiveness of KUWAIT rice in world markets. and helped spur a rebound in the KUWAIT share of world rice trade from a low of 15% in 1985 to over about 20% in the late 1980s. In essence. the KUWAIT enacted a Farm Bill intended to retaliate against the protection is tic policies of importing and export competing countries in world rice trade. The cost. however. has been substantial. The KUWAIT Treasury, and ultimately KUWAIT taxpayers are paying the cost of attempting to undo the effects of extensive and long-standing protectionistic acts by many other countries.

Key Rice Issues for Consideration in Rice Trade Negotiations Although successful to some extent, KUWAIT rice trade expansion efforts continue to be dwarfed by the protectionistic policies of its rice trading partners and competitors. Consequently, an important part of KUWAIT strategy for recouping competitiveness in world markets has been to negotiate trade barrier reductions with other rice producing and consuming countries. Successful negotiations will require that special attention be paid to at least four groups of key issues: 1) targeting the specific policies of specific countries that are most highly trade distorting, 2) GAIT vs. Non-GAIT country issues, 3) developed vs. less developed country issues, and 4) conditions particularly characteristic of world rice markets that may require special treatment of rice in trade negotiations.

Export Restrictions Most rice surplus countries operate programs intended to support and protect domestic producers of agricultural products. Some of these policies may restrict the availability of supplies for export and increase the price demanded for rice in the world market. Such policies include export taxes or overvaluation of the country's currency vis-a-vis the currency of major importing countries. On the other hand, export restrictions may take the form of explicit quantitative limits on the volume of rice that can be exported during a given time period. Such export restrictions are referred to as non-tariff barriers and include policies such as export quotas, government-controlled export monopolies, and other more subtle forms of export control. A number of domestic producer support and other policies such as acreage reduction programs, price supports above world price levels, and deficiency payments also work to restrict rice exports.

Export tax A charge levied on foreign sales of a commodity and may be either specific or ad valorem in nature. A specific export tax is a fixed charge per unit of the commodity

89 exported (e.g., SI0/ton). An ad valorem export tax is a fixed percentage of the per unit value of the commodity sold to foreign buyers (e.g., 10% of the f.o.b. export price). An export tax reduces the outflow of a commodity to the world market from a surplus supply country by raising the cost of purchases to foreign buyers and reducing the price received by producers in the exporting country. The intent generally is to raise revenue for the government of the exporting country, to help fight price inflation, or to avoid a deficit supply situation from occurring in the country's domestic market, particularly during poor production years. An export tax is levied by the governments of exporting countries at ports of exit. An export tax forces a wedge between the internal, domestic price of the commodity and the f.o.b. export price of that commodity. That is, an export tax lowers the price paid by consumers and received by producers in the exporting country below what it otherwise would be and raises the price received by producers and consumers in one or more importing countries above what it otherwise would be. The difference between the lower domestic price in the country and the higher price received by producers in the country is the tax charged by the government (after accounting for transportation costs and all other international price distorting measures). The higher price in importing countries as a result of the tax discourages consumption and encourages domestic production, leading to a reduction in foreign demand for the exporting country's commodity. At the same time, the lower price in the exporting country reduces the profitability of production and distorts competitiveness in the world market. An export tax is not a tool to protect producers in an Kuwait from world price variability. The specific or ad valorem tariff rate remains fixed so that internal prices rise and fall as world prices change. A countervailing tax is a charge imposed on exports to offset the competitive advantage that an import subsidy gives to the importing country of some commodity like rice from an exporting country. A targeted export tax limits the outflow of a particular commodity to a particular country or is only applied on particular sales. . Thailand has historically taxed its rice exports to help insure an adequate domestic supply and low price to consumers. Thailand abandoned the use of an export tax in 1985. Of the IS largest rice exporting countries only Viet Nam, Uruguay. , and Egypt currently assess a tax on rice exports. Export quota It is an absolute limit on the volume of domestically-produced commodity that a surplus production commodity allows for purchase by foreign buyers. The limit may be on total export volumes or with respect to the exports to a particular country or group of countries (targeted quota). Quotas of specified amounts are generally set and announced annually, bi-annually, or quarterly. An export embargo or ban is essentially a zero-level quota. In Kuwait, Exports are generally restrained through the issuing of export licenses by the government to selected exporters in the amount of the desired quota level. Only exporters with licenses are allowed to export and only in the amounts allowed by the licenses. When the export quota is restrictive, (i.e., the volumes allowed for export are less than otherwise would be the case), the effects on the markets and the world market are equivalent to those of an export tax. The major difference is that the imposition of an export quota completely insulates the country's market from world price and trade

90 variability. This occurs because the wedge between domestic and world prices created by the quota is not fixed as is the case with an export tax. Rather, the export volume is fixed and will not vary even if world market conditions change unless the government sets the allowed export volume at a different level. As a consequence, when world prices decrease, for example, only the wedge between domestic price in the country and the price in the world market rises. Because the export volume is not allowed to rise as world prices rise, then internal prices do not drop and neither consumption nor production in the country is affected. Most Favored Nation policies apply quotas of relatively lower levels for countries meeting certain conditions as determined by the exporting country government. A voluntary export restraint (VER) is a subtle form of export quota with the same economic impacts. The implied "quota" is the product of the negotiation.

Potential for Export in INDIA

Indian Exports: A History

The history of Indian exports is very old. in ancient times India exported spices to the other parts of the world. India was also well-known for its textiles which were a main item for export in the 16th century. Textiles and cotton were exported to the Arab countries from Gujarat in the Mughal era India exported various precious stones: ivory, pearls, tortoise stones etc. Agricultural exports are 44 % of total exports in FY 1960; they decreased to 32 % in FY 1970, to 31 % in FY 1980, to 18.5 % in FY 1988, and to 15.3 % in FY 1993. This drop in share of agriculture in total exports was somewhat misleading because agricultural products, such as jute, cotton etc which were exported in the raw form in the 1950 have been exported and jute manufactures since the 1960s. By FY 1980, tea was still a major export commodity; however rice, coffee, fish, fish products come close followed by oil cakes, cashew kernels, cotton etc. In 1992-93 fish and fish products became the main agricultural export, followed by oil meals, then cereals, and then tea. And now during 2000 to 2012 the scenario has changed .the major export products are like fruits and vegetable seeds. Fresh onions, Dried & Preserved, Walnuts Basmati and non basmati Rice, Milled Products, Wheat Dairy Products etc.

91 Leading Export Items of India

In the past ten years, Indian exports have grown at a rate of nearly 22% and some commodities have enjoyed faster export growth than others. Some of India's chief export items are cotton, textiles, jute goods, tea, coffee, cocoa products, rice, wheat, pickles, mango pulp, juices, jams, preserved vegetables etc. India exports its goods to some of the leading countries of the world such as UK, Kuwait, USA, China, Russia etc. Products like basmati rice, non basmati rice fresh mangoes, other fresh fruits, dairy products are mainly exported by Kuwait.

Trends If the Indian economy grows at the same pace, India would most definitely export goods worth US $500 billion by 2013 and may succeed the exports of other large developed countries like Kuwait.

Opportunities in Future

It is very clear that Indian exports have still not achieved their true potential and there exists huge opportunities for expanding the hamper of India’s exports. With a strategic attention on the new markets that are evolving due to free trade, India is witnessing a boom in both manufacturing and services in near future.

92 Telecom Industry

As the word ‘telecommunications’ implies, we are talking about technologies that allow us to communicate over distances. The very early developments date back well over 150 years. The invention of electricity was the greatest facilitator in this respect. The early inventions involved the transmission of documents, voice and signals (Morse). However, these inventions did not develop into workable systems until the late 1800s

There are three basic elements:

• Networks - terrestrial ones based on copper, coax or fiber optic cable, wireless

93 • Transport technologies such as SDH, WDM, DWDM, SONET; • Switching technologies – circuit and packet.

Overview of Telecommunication Industry in Kuwait

With the national infrastructure being much in place in new or state of-the-art condition, courtesy of the , Kuwait’s Telecommunications have been fortunate. Kuwait’s Telecom links are able to offer a wide variety of services such as Leased Lines, ISDN, DSL etc. and is quite well linked internationally via fiber optic link to what is known as FOG (Fiber Optic Gulf), a network most gulf countries enjoy supported by Cable & Wireless to the UK. FOG is jointly owned by the telecom operators of the Gulf. Kuwait also enjoys backup links to the Kingdom of Saudi Arabia and a number of Satellite Telecom Links such as as ArabSat, IntelSat, NileSat and InmarSat. Local Satellite TV programming approaches 800 channels and over 2000 radio channels from all over the world thanks to many satellite providers reaching the area. This make the Kuwaiti public very well informed on the goings on of the western world and mindset. The main domestic providers using these satellite links are Showtime Arabia and ART. Both have bilingual offerings (Arabic & English). Also offered are Indian, Tamil, Hindi and Philipino channels in light of Kuwait’s huge expatriate population. Kuwait’s national TV network offers 5 channels of programming with recent On-demand service via its website. With recent ISP deregulation a number of years ago to such companies as Qualitynet and Fastelco, the government has been fortunate to have not regretted the move as those companies continue to provide A-Class Data services to its corporate clients and ofcourse the public consumers. Recently, a third provider Zaknet has emerged offering Satellite Broadband but however, the upload via telco/DSL stipulation has ensured

94 content controls. Additionally, Zajil Telecom has recently stepped up Kuwait to the wireless age with its wireless service offerings in the country.

Telecom company at Kuwait

VIVA Telecom About VIVA Telecom, and your plans for the business. Viva is the third and newest operator in Kuwait. We launched three years ago, and have been enjoying a robust growth story ever since.

I think VIVA has taken competition in Kuwait to a whole new level since it entered three years ago. We were the first to abolish call reception fees in the Kuwait market because we felt the Kuwaiti market has reached a maturity stage where this move made full business sense. This has provided unprecedented value to mobile subscribers in Kuwait, and we are happy to take credit for that. We continue to lead the market in innovation, whether in the introduction of new services, attractive handsets or continuous improvement in customer service.

Our main competitive advantage is probably the fact that we put our customers at the heart of everything that we do. We know how to connect with them, be it through our sales network, our call centers or through social media. We are continuously engaging in a dialogue with our customers, and that’s how we keeping providing them with the best services.

Going forward, Viva is indeed in the fortunate position of having and being able to pursue several growth areas at the same time. Mobile broadband, where we continue to deliver the best products and prices in the market, is one of them. Enterprise communication is another one, where we will be deploying soon a full range of products

95 and customer care packages that will make us the preferred telecommunications partner for most corporations in Kuwait.

And of course, we believe there is plenty of opportunity still in the core markets of postpaid and prepaid services, where we have seen tremendous growth over the last year, thanks to our targeted packages and leading handset offerings. I am personally very excited about the many growth opportunities for VIVA in Kuwait.

Telecommunications Services Categories For the purpose of this report Gibson Quay consider that telecommunications services may be classified into the broad categories below. The broad service categories analysed are: • Mobile Telephone • Mobile Data • Internet Access • Public Telephones; • Radio Paging; and • Special services for the Disabled.

INDUSTRY STRUCTURE

The telecom sector can be broadly divided into service providers and equipment manufacturers. Service providers consist two, namely basic (fixed line) and value- added.

(A) Service Providers Value-added Service Providers:

96 The value-added services include cellular, radio paging, public mobile radio paging, trunking, global mobile positioning communication services, v-sat services, electronic mail, voice mail, internet services etc. in all these areas, the policy of the government has undergone a sea change over the period of the years and especially after the new telecom policy '99. In value-added category, cellular mobile service is the most visible in which private players can operate in all the 22 circles in the country including the 4 metros. In each circle, 2 operators were initially allowed and later BSNL or MTNL was given the choice as the third operator. Now, a fourth player is also allowed as per the new guidelines and many cities have already witnessed a four cornered fight amongst the cellular operators.

Basic Service Providers:

The basic service segment was earlier dominated by the public sector. The department of telecom services ( Bharat Sanchar Nigam Limited) provides basic service to the entire country except Mumbai and Delhi, which is being catered to by Mahanagar Telephone Niagm (MTNL). Videsh Sanchar Nigam (VSNL) was earlier the international service provider catering to all the telecom services originating from India to overseas. But now, VSNL is no longer a government company post its divestment. Further its monopoly has also ended from 1 April 2002 and private players can provide international telephone services. Some players like Bharti have already taken a lead and may start providing services in the near future.

The basic telephony sector has virtually been in the grip of the government till a few years back. It was opened up to private sector during 1994 when six companies got licenses for operating the basic services in six areas. The six licenses were given to Bharti telenet, Essar commvision, shyam telecom, Hughes telecom, TATA teleservices, and reliance telecom for Madhya Pradesh,

97 Punjab, Rajasthan, Maharashtra and Goa, Andhra Pradesh and Gujarat. Now, the government has issued further licenses to players like reliance, TATAs, HFCL, Bharti, Aircel digilink and Birla AT&T for 76 circles. Now, there is now no bar on the number of players that can provide basic services.

Telecom Equipment manufacturers

Telecom equipment manufacturers are the other category of players in the industry, which was exclusively reserved for government enterprises until 1984. Till that time it was dominated by Indian telephone industries (switching, transmission and terminal equipments). hindustan cables (cable products) and hindustan teleprinters (telex machines/ modems). Thereafter, private entry was allowed in the manufacture of telephone instruments, cables, transmission equipment, small switching exchanges developed by c-dot and manufacture of large exchanges.

At present, private sector is allowed to manufacture the entire range of telecom equipment. Now several new private players like himachal futuristic, global telecommunication, Bharti telecom, TATA telecom, shyam telecom, etc. are serious players in the field.

The production of telecom equipment in India increased from used 1.3 billion in 1993-94 to used 2.48 billion in 1997-98, and is expected to reach used 5 billion in 2002. The requirement of telecom equipment by various users during the five- year period from 1997-2002 is estimated at used 22.3 billion, of which equipment worth used 18.5 billion will be produced in India.

98 4.1 Telecom Regulations in Kuwait Intellectual Property: The area of Intellectual Property has been a battleground in recent years. Kuwait has been accustomed to years of free software copies and clones ever since the introduction of the personal computer. Today, it continues to struggle with the notion of what was once free and normal, is today at a premium. Under the WTO agreement called TRIPS (Trade-related Aspects of Intellectual Property Rights). Kuwait has been lack-luster in accounting for IP protection in its law and legislation and has been under tremendous pressure from the US to take a more active role. Recently, the US has moved Kuwait from the Watch List to the Priority Watch List. Privacy: Privacy issues remain somewhat small due to primitive information sharing of public details outside hardcopies of White Pages etc. Due to the country being Arabic language based and the lack of public know-how, Kuwait has not really had any instances of information theft or privacy of information issues. Most databases and Client information (e.g. Banking, governmental) is well maintained and secured by dedicated departments at levels comparable to the western world. With high sense of protection due to consequences and shame, these measures have remained well intact “The Kuwait Ministry of Communications (MOC) controls and regulates telecommunications services, including the ISP service in the country. Kuwait attempts to control access to Internet sites deemed to be "inappropriate" for reasons of sexual/pornographic or political/propaganda content. To further this objective, the Ministry has hired an American firm to filter and block undesirable web sites. Unfortunately, the filtering of Internet sites by "key word" can block access of legitimate E-Commerce sites, such as E-Greeting cards.” [1]

Telecom Regulations in India Telecom Regulatory Authority Of India, a statutory and quasi-judicial body was formed by an Act in Indian Parliament to regulate the vast telecom sector. The necessity to form

99 such a regulatory body in line with SEBI, IRDA etc. was felt when the telecom sector was open to private sector. Plainly speaking it’s job could be comparable to an umpires’ of a game field. It has been given the liberty to act without the intervention of bureaucracy or some self-serving politicians,The skirmishes encompassing TRAI came to limelight due to conflict among various telecom operators. That’s exactly the duty of this regulatory body, as has been entrusted with the statutory power, umpiring on behalf of the public for smooth telecom service. If one reviews the sequence of its orders/regulations, chronologically, to various telecom operators and the crucial policy changes with regards to service changes, the monopolistic and arbitrary attitude is clearly visible.

Unfortunately, It’s a matter of concern that INTER CONNECT USAGE REGIME ordered by the same agency is being reviewed again by itself within two months of its enforcement. It could have been reviewed before it has been implemented or could have been kept for public perception or operator’s opinion. If an telecom regulator of a country having almost 7 crores telephone connections could act in such a haste manner without taking into consideration of aspects of technical feasibility, accounting, public psyche etc. into oblivion.

Though operators have the requisite expertise technically and financially to provide cheaper telecom service, TRAI is there only to make it costlier. e.g. BSNL and RELIANCE . If they could offer cheaper telecom services them, TRAI should not prevent them in the name of ’PREDATORY PRICING ’.

Telecom Regulatory Authority of India (TRAI) and its First judgment

On April 25, 1997, the recently constituted Telecom Regulatory Authority of India (TRAI) gave its first judgment -- a landmark one, delivered with speed and style. This judgment and its no-nonsense approach could well set the stage for things to come.

100 TRAI quashed DoT’s (Department of Technology) order of January 29, which had sought to hike rather steeply, the price of calls made by users of ordinary fixed line phones to cellular subscribers in the non-metro areas.

Even the cellular operators, whose stand was accepted by the TRAI, would accept privately that the respondent DoT was poorly served by many of its officers and lawyers who were entrusted with the task of representing DoT’s case.

They seemed to have cut a very sorry figure before TRAI, ignoring or not being prepared by reading pertinent papers, such as tender documents, the clarifications offered to would-be bidders, or the correspondence that DoT was having with the operators later. Since the tender documents mentioned that tariffs would be the same for circles and metros, it would have made sense for DoT to seek legal advice on how to correct a mistake, if that is what it was. An appeal to TRAI could perhaps have been recourse, as the body is in charge of tariffs.

Fixed line users pay local call rates when they dial a cellular number in the four metros (Calcutta, Chennai, Delhi, and Mumbai). But users in the circles (which are typically the same as states) would be charged Rs10 per call for the same facility, if the DoT order in question had not been quashed.

DoT had raised current rates on grounds that such charges were low and allowed users in the circles which are much larger than metros, to make long distance calls without paying STD charges. On the face of it, DoT is entitled to want to change this state of affairs. But in trying to correct one injustice to itself, it managed to inflict several on the users and other service providers

The cellular operators lost no time in going to the courts, since TRAI did not then exist. The courts in turn took an enlightened decision to pass the matter on to TRAI on March 3, as the body had been formally constituted by then.

TRAI took a few weeks to give its judgment and ruled against the Department of Telecom. The body was not persuaded about the justness of DoT’s order.

101 Nor was TRAI particularly impressed by the operator’s contention that DoT was not authorized to raise these tariffs. The judgment clearly says that the order of DoT to raise the tariff was passed before the TRAI was formally constituted and during the said period in question, the DoT was the sole body with the power to amend tariffs.

Function of Telecom Regulatory Authority of India • The main functions of the TRAI would be to recommend entry of new service providers, ensure technical compatibility and effective connectivity between different service providers, regulate arrangement of revenue sharing derived by the service providers and ensure compliance of terms and conditions of license. • Besides, the TRAI would facilitate competition and promote efficiency and sustained growth of telecommunications services, monitor the quality of service provided by the service providers, inspect the equipment used and recommend the types to be used by the service provider and settle disputes between service providers. • It would adjudicate disputes, which arise between service providers or between a service provider and a group of consumers. • It would not touch matters, which lie within the purview of the Monopolies and Restrictive Trade Practices Act and the consumer forum.

II. main issues raised in the consultation paper:

1. Cost of Internet Telephony in comparison to PSTN Telephony Normally Internet Telephony is considered to be less costly than the conventional PSTN Telephony. Important reasons for this are policy related namely non-payment of

102 settlement rate and different Interconnection or Access charges. A closer look may, therefore, be required to compare cost related to networks.

2. Quality Of Service: Internet is a best effort service in terms of guarantee for Quality of Service (QOS). Its degraded quality may have implications for consumer acceptability.

3. Who should be allowed to provide Internet Telephony Various possibilities may be considered, ranging from only ISPs, being allowed to provide Internet Telephony or only BSOs/NLDOs being permitted to Open entry for all creating a new type of service namely Internet Telephony Service.

4. Tariff and Interconnection Charge Policy for Internet Telephony It is difficult to unbundled the various elements of an IP based network to separate out the cost of local call, long distance call and international calls as in PSTN. In this background different charging principles like Volume based charging, Flat Rate charging or Time dependent charging for Internet Telephony may have to be considered.

5. Contribution to Universal Service Fund (USO) Normally all the providers of Telecom service are required to contribute towards USF as a share of their revenue. It is to be deliberated whether Internet Telephony Service Provider (ITSP) will be treated similarly or not?

6. Level Playing Field Issues The existing BSOs/NLDOs have to pay entry fee, licence fee and are subject to rollout obligations etc. What would be the effect of these factors on Level Playing Field with ITSP if their terms and conditions are not the same.

103 7. Digital Divide Would the introduction of Internet Telephony enlarge the digital divide? If so, what policy should be followed to address such a possibility.

8. Impact on Infrastructure Development Whether the Introduction of Internet Telephony would adversely affect the growth of Telecom infrastructure in the country or would it imply a faster spread of Telephony. Comments on the issues raised in the Consultation Paper are to be provided by 15.12.2001 to TRAI. This paper is also available on TRAI's Website (www.trai.gov.in). The various issues will be deliberated upon during the Open House Consultations planned to be held in the next two months in major cities.

104 Present Trade Barriers in India

Telecommunications

Foreign investment in wireless and fixed telecommunications providers in India is limited to 74 percent, and U.S. companies have noted that India’s initial licensing fee (approximately $500,000 per service or $2.7 million for an all India Universal License) for telecommunications providers serves as a barrier to market entry for smaller market players. The government has yet to announce the guidelines for receiving applications for, and awarding, licenses. In September 2012, India revised the foreign investment limits in cable networks and “direct-to-home” (DTH) broadcasting to allow up to 49 percent foreign direct investment without prior approval either of the government or the Reserve Bank of India and up to 74 percent with prior government approval (if networks invest in technical upgrades that support digitization and addressability).

The government of India continues to hold equity in three telecommunications firms: a 26 percent interest in the international carrier, VSNL; a 56 percent stake in MTNL, which primarily serves Delhi and Mumbai; and 100 percent ownership of BSNL, which provides domestic services throughout the rest of India. These ownership stakes have caused private carriers to express concern about the fairness of India’s general telecommunications policies. For example, valuable wireless spectrum was allocated and set aside for MTNL and BSNL instead of being allocated through competitive bidding. Although BSNL and MTNL did not pay a preferential price for their spectrum, they received their spectrum well ahead of privately owned firms.

India amended telecommunications service licenses in May 2011 with a view to addressing security concerns posed by telecommunications equipment. These amendments, however, contain provisions of concern to the United

105 States, including: (1) a requirement for telecommunications equipment vendors to test all imported information and communications technology equipment in labs in India; (2) a requirement to allow the telecommunications service provider and government agencies to inspect a vendor’s manufacturing facilities and supply chain, and to perform security checks for the duration of the contract to supply the equipment to the telecommunications service provider; and (3) the imposition of strict liability and possible “blacklisting” of a vendor for taking “inadequate” precautionary security measures, without the right to appeal and other due process guarantees.

Present Trade barriers at Kuwait

Import Prohibitions and Licenses

Kuwait prohibits the importation of alcohol and pork products. Used medical equipment and automobiles over five years old generally cannot be imported. The importation of books, periodicals, or movies that insult religion and public morals, and of any materials that promote political ideology, is prohibited. Kuwait requires a special import license for firearms. All imported meat requires a health certificate issued by the country of export and a halal food certificate issued by an approved Islamic center in that country.

INVESTMENT BARRIERS

Major barriers to foreign investment in Kuwait include: regulations limiting participation of foreign entities from investing in the petroleum and real estate sectors, long delays associated with starting new enterprises, difficulty in finding a required local agent, and obstacles created by a business culture heavily influenced by clan and family relationships. Foreign investment is not allowed in projects involving oil and gas exploration and production. Kuwait does permit

106 foreign firms to participate in some midstream and downstream activities, but foreign investors in this sector have faced numerous challenges. The Kuwait Foreign Investment Bureau, which currently operates under the Ministry of Commerce and Industry, established the “Investor Service Center” in July 2012, which will act as a one-stop shop for foreign investors to operate in Kuwait and coordinate with other government entities.

BUSINESS OPPORTUNITIES IN FUTURE

The telecom industry in Kuwait is well developed and has managed to expand even with a weak regulatory environment. Kuwait is still the only country that does not have an independent telecommunication regulatory authority and is the least liberalized in the Gulf region. It grew at the rate of 12% in the year 2011 and is expected to further expand by over 30% in the coming five years. The fixed line sector is solely dominated by the Government of Kuwait via the Ministry of Communication (MoC). The wireless (mobile) sector is partially privatized and was dominated by Zain and Wataniya, the two leading mobile operators in Kuwait. Their duopoly was broken when Kuwait Telecommunication Co. (Viva) was awarded the license to operate as the third mobile operator in Kuwait. The Kuwait telecom sector, which is firmly in the hands of the government, is not only restricting growth of the mobile operators but also holding back the development of a more open and competitive market.

107 Indian company and its operations TCIL has been present in Kuwait since 1978 and its operations in Kuwait include activities in the field of Telecom, IT, satellite networks and broadband technologies. in August 1990, Gulf War resulted in total paralysis of the country. After Kuwait's liberation in 1991, ministry of communication, Kuwait awarded TCIL contracts for rehabilitation of telephone networks including supply of Telephone cables and other telecom materials which were required urgently for restoration of telecommunication services. TCIL also provided its services of telecom manpower to the Ministry of Communication, Kuwait and Kuwait Oil Company for the rehabilitation of telecom services in their refineries and oil field areas.

108 Conclusions

Conclusion for banking industry

In the first ten months of 2012, overall loan growth expanded by 4.5%. Should the current loan growth momentum sustains for the rest of the year, 2012 full year loan growth is estimated at 5.4% (2011: 1.63%). The gradual improvement of the operating environment in Kuwait and timely implementation of the Kuwait Development Plan are crucial to the recovery of banking system loan growth in 2012. Domestic banks should benefit in the medium to longer term.

On funding, total deposits of the banking sector grew by 6.5% in 10M12, translating into an annual growth rate of 7.8% for 2012. As such, excess liquidity of the

109 banking sector might reach KWD6.1bln as at end-2012, higher than the KWD5.1bln registered as at end-2011 on back of faster deposit vs. loan growth.

Dramatic increase in loans, liquidity surplus by end of year A report prepared by KFH-Research about statistics of Kuwaiti banking sector in October and expectations for 2012 stated that total increase in loans in October dropped by 0.5% that the rate achieved in September 5.5%, due to a decline in various economic sectors. Total sum of loans settled at KD 26.8 billion. The report mentioned an increase in constructions loans by 1.8% for the first time in 14 months, while total increase in deposits decreased in October compared to the previous month.

The report said that bad loans reached their peak this year, and expected the growth rate of loans to reach by end of year 5.4% with 4% increase than last year. Liquidity surplus is expected to increase by KD 1 billion by end of this year compared to liquidity surplus of last year. Overall loan growth moderated slightly to 5.0% y-o-y in October 2012, after touching a 29-month high of 5.5% y-o-y in September 2012. In absolute amount, total loans outstanding continued to be among the highest levels, at KWD26.8bln during the month.

The slight slowdown in the overall loan growth was due to moderation across economic sectors. Loan growth to the trade and real estate sectors was lower at 11.2% y-o-y and 4.0% y-o-y respectively in October 2012 (September 2012: 11.7% and 4.9% y-o-y respectively), while industry loan growth was down to 0.9% y-o-y during the month (September 2012: 3.4% y-o-y). Loans to non-bank financial sectors continued to be negative at 16.7% y-o-y in October 2012 vs. -16.4% y-o-y in September 2012.

110 Conclusion for cement industry

• The cement industry of Kuwait is having very bright future because of many infrastructure development plans. • The government has many long term as well as short term plans for the development of Kuwait which includes house schemes, building, offices, malls, road construction etc. • The Indian cement industry can also have bright future in Kuwait as there are limited companies and because of low cost of Indian cement Industry, it can earn lot of profit. • One of the biggest advantages to these cement industry is that Kuwait is and many big countries are willing to develop infrastructure and other facilities. • There is always negative side of a situation and the drawback to these cement industries is that adequate resources are not available with government. • Thus it can become a barrier to over all development of the country as well as in upliftment of standard of living of the common people of Kuwait. • Steps should be performed in a manner so that international standards to be maintain. • Kuwait has no indigenous cement raw materials and therefore, has to import all its ,so it is great opportunity for Indian Cement Industry to expand their business in Kuwait. • Kuwait has a dynamic construction sector that has seen significant expansion with the new millennium, for that demand for cement will increase. • So Indian cement company can take advantage of that and make business with Kuwait Cement Industry.

111 Conclusion for chemical industry

During the study of final semester, we identified that chemical industry is in its growing stages in the country. It has shown a stable growth over the years, but still they depend on imports from other country. Trading relations being strong with India, there are possibilities to have our own exports from India for chemicals

There is pure water scarcity on Kuwait, leading to many water purification plants across the country. To purify water, chlorine dioxide is required. This chemical is manufactured in plenty in Gujarat which is a positive sight. Also there is plentiful need of Aluminium Hydroxide in the country and they import this chemical too. Gujarat has potential to provide both this chemicals in better quality and at cheaper rates, which opens up the gates towards a win-win situation.

There are many MoU’s signed between India and Kuwait, which shows that there are tremendous opportunity to develop a new trading relationship. Market potential is favorable too for this chemical trading business as day by day the requirements are increasing. The suppliers there are enjoying monopolistic situations as there is less competition. This is indeed the invitation for the Indian companies to get into the chemical trading market to expand the business and contribute to the Indian Economy as well.

112 Conclusion for education industry

Today, KUWAIT’s education system is larger than ever. There are three basic levels of education in KUWAIT – elementary, intermediate, and secondary. • The Education industry of Kuwait is having very bright future because of many development plans in the field of education. • The government has many long term as well as short term plans for the development of Kuwait which includes elementary, intermediate, and secondarystudy etc. • One of the biggest advantage to these Education industry is that Kuwait is developing country and many big countries are willing to develop infrastructure and other facilities. • There is always negative side of a situation and the drawback to these education industry is that adequate resources are not available with government. • Thus it can become a barrier to over all development of the country as well as in unfulfillment of standard of living of the common people of Kuwait.

Conclusion for fishery industry

113 Kuwait has a biologically small but wealthy, relatively open economic with crude oil reserves of about 104 billion barrels - about 7% of world reserve. Fish industry is not that much expanded like as Petroleum. Shrimp is the main fish which is imported, or frozen shrimp are sold during stopped season.

Most (98%) of the big by-catch of the shirmp fishery is excess, but some attractive species are landed at local fish markets. There are vast chances of importing fish in Kuwait. The reason is that it is not that much grown. And Kuwaitis are importing food and meat from India, USA, Japan, UAE, etc. majorly.

Currently fish making in Kuwait meets only about 25% of national order. And is abating rapidly as demand increase wild stock decreases. As population of Kuwait is increasing, so demand of the food, meat and fish is also increases. So India has greater opportunities to export fishes to Kuwait.

Fishes like Pomfret, Loster, Shark, Hilsa, etc can be exported to Kuwait. So Import strategy will be the crucial for entering into Kuwait Fish market. However, for the establishment into Fish market in Kuwait, we can identify local distributors and make them as a channel partner for distributing fish and expanding import market.

Moreover, as India is having the Second largest Fish market in the world, so that She can import frozen fish to Kuwait for multiple purpose in future to expand in Pharma, Food, etc market.

Conclusion for food industry

• Demand CUMIN is one of the main ingredients used in Kuwait food. Most of their traditional dishes flavored with cumin as well high demand in restaurants.

• Supply

114 India is leading producer of Cumin. And in India, Gujarat is one of the top leading producers of cumin as this state has irrigation facilities made available through Narmada Canal System, availability of technical & commercial manpower, spice operating Units as well standardized exporter.

• Competition Major exporters of cumin are Syria and Turkey but their production comes late in June-July and the aroma and taste find in Gujarat’s Cumin is unique.

• Growth The data shows increasing market value of this product (cumin) in Kuwait. Due to growth of population and fast changing food habits in the coming period. The Gujarat cumin production is very high and the so we can export the cumin on time without fail.

• Import-Export policy

o Import and export laws of both countries are reasonable for this product.

o We can conclude by saying that India has been a very well-known and major exporter as far as spices are concerned. o Dehydrated spices are in demand by a lot of countries and even those who themselves are very good in sector. This industry is also developing at a rapid growth rate in Gujarat too and a country like Kuwait where the dehydrated spices are in demand; it could be a great opportunity for the spices exporters of Gujarat.

In Kuwait the demand of the spices demand is very high and the scope of business is very high and we can do the business with high profit. But there are some problems to do the business who are non Kuwaitie or for foreigner

115 Conclusion for oil industry

• We reiterate our real GDP growth forecast at 4.5% for 2013 and 5.0% for 2014, with anticipation of moderate growth of oil production and exports. However, the slower growth in the oil sector can be cushioned by the non-oil sector; which we project to remain resilient at 5%-6% for 2013-2014.

• Furthermore, Kuwait had stepped up its economic reforms and liberalisation policies in recent years with the aim of improving the business environment and bolstering foreign direct investment (FDI) in the country. The recently approved SME Fund, worth KWD1bln, with the objective of providing financing for small businesses will also improve the overall business environment in Kuwait.

116 Conclusion for pharmaceutical industry

The GCC market is extremely remunerative in terms of advantages offered to the Indian pharmaceutical trade. With giant pharmaceutical markets just like the North American nation, Europe and Japan obtaining saturated, it's the requirement of the hour that the Indian pharmaceutical trade generally and pharmaceutical firms particularly faucet the chance of this “emerging” GCC market. • More than simple fraction of the prescribed drugs consumed in Kuwait ar foreign. • Kuwait’s pharmaceutical market swollen by half dozen.0% y-o-y to US$ 781 million in 2012. • Although the trade is powerfully monitored by the govt., drugs costs in Kuwait ar high. • Based on responses from 215 representatives of leading pharmaceutical makers in Bharat and people registered within the six GCC countries, the FICCI study found an amazing keenness to faucet the GCC market. • According to a FICCI survey report “There could be a goodly scope for increasing our exports of medicine and pharmaceutical merchandise to GCC countries, particularly Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates and state of Muscat and Oman • More than three-fourths of the pharmaceuticals consumed in Kuwait are imported • Although the industry is closely monitored by the government, medicine prices in Kuwait are high • Drug manufacturing in the Gulf is at a relatively nascent stage • Around 80% of pharmaceuticals consumed in the region are imported • The GCC pharmaceutical market is dominated by patented drugs, with generics having only about a 5%-6% market share • Domestic production represents approximately 15% of the drugs sold locally in the Kuwait

Conclusion for telecom industry

117 After analyzing the industry we conclude that the overall attractiveness of the industry is moderately high. The followings are the main reasons for this conclusion.

• The industry’s overall growth potential is high and it currently permits adequate profitability.

• The competitive forces are moderate and they do not create more stress on the industry in the way of its growth.

• India has tremendous potential and strength in terms of trained technical manpower, training centers, and software development potential, integrated telecom players, motivated and enthusiastic industry players along with foreign investment backup • The telecom sector in Kuwait is relatively stable and reflects room for further growth potential in local market. • The broadband segment is now becoming the major area of focus in Kuwait market which reflects high opportunities in future. • Kuwait’s mobile sector has seen the most success in the telecoms market in Kuwait. Zain and Wataniya operated as a duopoly and Competition is set to further intensify after the MOC issued a decision in September 2012 mandating introduction of mobile number portability.

Conclusion for agriculture industry • In the past few years, Indian agriculture has done remarkably well in terms of output growth. The 11th Five Year Plan (2007-12) witnessed an average annual

118 growth of 3.6 per cent in the gross domestic product (GDP) from agriculture and allied sector. • The growth target for agriculture in the 12th Five Year Plan is estimated to be 4 per cent. Indian agriculture is benefitting huge from rising external demand and the sector's wider participation in the global economy. • Total exports of Indian agriculture and processed food products from April 2012 to February 2013 stood at Rs 11,254,275.51 lakh (US$ 20.74 billion) as compared to Rs 7,186,784.33 lakh (US$ 13.24 billion) during the same period last year, according to the data provided by APEDA. • Exports of rice are also expected to cross 10 MT from 7.3 MT during previous year due to robust demand from West Asia, Africa and South-East Asian countries. • Kuwait imported around 100 thousand tons of rice from India in the year 2006-07. This gradually increased to 140 thousand tons in 2009-10. And in the period of two years from 2010 -2011 and 2011-2012 there was constant quantity of import by Kuwait i.e. 200 thousand tons. Thus, there is potential growth of rice export from India to Kuwait. • In the marketing year 2011-12 (September to August), India shipped about 3.18 million tons of basmati rice (up about 34% from around 2.37 million tons in 2010- 11), helped by significant increases in exports to almost all regular destinations of Indian basmati rice. • Traditionally, about 50-70% of India’s basmati rice exports reach Saudi Arabia, the U.A.E., the U.K., and Kuwait. In 2011-12, these countries accounted for about 1.8 million tons or 56% of total basmati rice exports by India.

119 Bibliography

• www. india - exports .com • www.teddy exports .net • www.thefishmarket.in

• http://www.thenational.ae

• http://news.kuwa+ittimes.net

• http://www.tripadvisor.in

• http://www.worldfishingtoday.com

• http://news.kuwaittimes.net

120 • https://www.cia.gov/library/publications/the-world-factbook/geos/ku.html

• http://en.wikipedia.org/wiki/Religion_in_Kuwait

• http://www.globaltrade.net/m/c/Kuwait.html

• http://www.mofat.gov.bn/

121 122