State Bank of Pakistan raises policy rate by 100bps

On Tuesday, the Monetary Policy Committee (MPC) of State Bank of Pakistan (SBP) decided to raise the policy rate by 100 basis points to 9.75%. The goal of this decision is to counter inflationary pressures and ensure sustainable growth.

Since the last meeting on November 19, 2021, indicators of activity have remained robust, while inflation and the trade deficit have risen further due to both high global prices and domestic economic growth. In November, headline inflation increased to 11.5%YoY.

Core inflation in urban and rural areas also rose to 7.6 and 8.2 percent, respectively, reflecting domestic demand growth. On the external side, despite record exports, high global commodity prices contributed to a significant increase in the import bill. As a result, November trade deficit rose to US$5 billion.

The MPC noted that recent data releases confirm that the emphasis of monetary policy on moderating inflation and the current account deficit remains appropriate. Following Tuesday’s rate increase and given the current outlook for the economy, and in particular for inflation and the current account, the MPC felt that the end goal of mildly positive real interest rates on a forward-looking basis was now close to being achieved. Looking ahead, the MPC expects monetary policy settings to remain broadly unchanged in the near-term. The MPC key trends and prospects in the real, external and fiscal sectors and the resulting outlook for monetary conditions and inflation continue to upset.

Real sector

High-frequency indicators of domestic demand released since the last meeting, including electricity generation, cement dispatches, and sales of fast-moving consumer goods and petroleum products, and continued strength in imports and tax revenues suggest that economic growth remains robust. The outlook for agriculture continues to be strong, supported by better seed availability and an expected increase in the area under wheat cultivation. Meanwhile, robust growth in sales tax on services also suggests that the tertiary sector is recovering well. While some activity indicators are moderating on a sequential basis, partly as a result of recent policy actions to restrain domestic demand, growth this fiscal year is expected to be close to the upper end of the forecast range of 4 to 5 percent. The emergence of the new Coronavirus variant, Omicron, poses some concerns, but at this stage there is limited information about its severity. The MPC noted that Pakistan had successfully coped with multiple waves of the virus, which supported a positive outlook for the economy.

External sector

Despite strong exports and remittances, the current account deficit has increased sharply this year due to a rise in imports, and recent outturns have been higher than expected. Imports rose to US$32.9 billion during July-November period of FY22 as compared to US$19.5 billion during the same period last year. Around 70% of this increase in imports stems from the sharp rise in global commodity prices, while the rest is attributable to stronger domestic demand. Due to the higher recent outturns, the current account deficit is projected at around 4% of GDP, somewhat higher than earlier projected. In the near term, monthly current account and trade deficit figures are likely to remain high, but expected to gradually moderate in the second half of FY22 as global prices normalize with the easing of supply disruptions and tightening of monetary policy by major central banks. In addition, recent policy actions to moderate domestic demand―including policy rate hikes and curbs on consumer finance―and proposed fiscal measures should help moderate growth in import volumes through the rest of the year.

The MPC emphasized that the monetary policy response to arrest the deterioration in the current account deficit has been timely. Together with the natural moderating influence of the flexible and market-determined exchange rate, the MPC felt that the response would help achieve the goal of a sustainable current account deficit this fiscal year. Moreover, the MPC noted that the current account deficit is expected to be fully financed from external inflows. As a result, foreign exchange reserves should remain at adequate levels through the rest of the fiscal year and resume their growth trajectory as global commodity prices ease and import demand moderates.

Fiscal sector

During July-November FY22 period, revenue growth has been strong, driven by a broad-based and above-target increase in FBR tax collections. However, lower petroleum development levy (PDL) collection led to a decline in non-tax revenues. On the expenditure side, development spending and subsidies and grants have increased significantly during this period. The government intends to introduce legislation to increase revenues through elimination of certain tax exemptions and reduce current and development expenditures. These measures would help moderate domestic demand, improve the current account outlook, and complement recent monetary policy actions.

Monetary and inflation outlook

Since the last meeting, despite a moderation in consumer loans, overall credit growth has remained supportive of growth. Meanwhile, across all tenors, secondary market yields, benchmark rates and cut-off rates in the government’s auctions have risen significantly. The MPC noted that this increase appeared unwarranted.

The momentum in inflation has continued since the last MPC meeting, as reflected in a significant increase in both headline and core inflation in November. Due to recent higher than expected outturns, SBP expects inflation to average 9 – 11 percent this fiscal year. The pick-up in inflation has been broad-based, with electricity charges, motor fuel, house rent, milk and vegetable ghee among the largest contributors. On a sequential basis, inflation rose 3 percent (MoM) in November. Looking ahead, based on this momentum and the expected path of energy tariffs, inflation is likely to remain within the revised forecast range for the remainder of the fiscal year. Subsequently, as global commodity prices retrench, administered price increases dissipate, and the impact of demand-moderating policies materializes, inflation is expected to decline toward the medium-term target range of 5 to 7 percent during FY23. The MPC will continue to carefully monitor developments affecting medium-term prospects for inflation, financial stability and growth.

 

No punishment for those involved in fatal Kabul drone strike

No military personnel involved in a botched drone strike that killed 10 civilians in Kabul, Afghanistan, earlier this year will face punishment, the Pentagon said Monday.

Defense Secretary Lloyd Austin approved recommendations from US Central Command head Gen. Kenneth McKenzie and US Special Operations Command leader Gen. Richard Clarke not to take any administrative action against those involved in the August 29 strike, press secretary John Kirby told reporters.  

Kirby said that when McKenzie and Clarke listed their recommendations to Austin “there was no recommendation by either of them about accountability.”

“The recommendations were more about procedure and process and the secretary reviewed them and has accepted them,” Kirby told reporters. “And again, most of them are of a classified nature. ... but there was no overt recommendation made by either specific to accountability or any punishment for anyone.”

The Defense Department admitted in September that the drone strike — which came in the final days of the chaotic US withdrawal from Afghanistan — was a “tragic mistake” that killed the civilians, including seven children. Prior to that, Pentagon officials had said the strike was necessary to prevent “an imminent ISIS-K threat” to US forces evacuating people at Kabul’s airport.

The Pentagon, which initially defended the targeting as a “righteous strike,” carried out the bombing after commanders errantly thought the driver of a white Toyota Corolla — 37-year-old Zemerai Ahmadi, a longtime aid worker for a US-based group — was an ISIS-K operative with explosives.

After a high-level Pentagon review into the incident, no violation of the laws of war were found but it was discovered there were “execution errors” in the lead-up to the strike. 

The investigation, revealed last month, concluded that the errors were not caused by misconduct or negligence and doesn't recommend disciplinary action, but gave commanders the power to decide on what accountability, if any, there would be.

But both McKenzie and Clarke found no grounds for punishing any of the military personnel involved, a Pentagon official told the Times.

In a statement, Kirby said the department takes seriously “our obligation to avoid civilian harm in the execution of our operations, and as the secretary made clear, we will not be afraid to make necessary changes to our processes and procedures to that end.” 

The US military has killed hundreds, possibly thousands, of civilians by accident in war zones in places including Afghanistan, Iraq, Syria and Somalia in the past 20 years but has rarely held specific individuals accountable. 

Public outcry has grown over such killings, including a recently revealed US airstrike in Syria in 2019 that killed dozens of women and children, which military officials tried to conceal. 

 

Israeli Defense Minister presents Iran attack timeline to US officials

Israeli Defense Minister Benny Gantz updated the US officials that he has set a deadline for when the IDF will need to complete preparations for an attack against Iran.

The Americans did not voice opposition to the Israeli preparations when presented with the date by Gantz on Thursday, a senior diplomatic source said the following day.

The IDF has intensified planning for an attack against its arch enemy. Last week, American sources revealed that Austin and Gantz were expected to discuss joint military preparations and a report on Kan said that the IDF was planning a massive mock strike aerial drill for this summer.

Gantz met with Defense Secretary Lloyd Austin and Secretary of State Antony Blinken on Thursday. The conversations focused mainly on Iran and its continued pursuit of nuclear capability, but some of the US officials also brought up Israeli settlement activity and their concern that building in the West Bank will block a future two-state solution.

Jerusalem consulted with Washington on two previous strikes on Iran, one in June against a facility producing centrifuges in Karaj, and another on a missile production site outside Tehran, The New York Times reported.

US President Joe Biden asked his National Security Adviser Jake Sullivan two months ago to review plans to attack Iran if diplomatic efforts fail, as well as the possibilities for increasing sanctions.

That leak comes as the US and Israel are increasingly at odds in their evaluation of the Iranian threat. Israeli officials continue to be deeply concerned that in the recently resumed negotiations in Vienna, Washington will seek an interim deal lifting sanctions on Tehran while insufficiently restricting its nuclear program.

According to the State Department, Blinken spoke with Foreign Minister Yair Lapid on Friday. They discussed topics “including the enduring importance of the US-Israel bilateral relationship, Israeli-Palestinian issues, and regional developments, such as our shared conviction that Iran must not be allowed to acquire a nuclear weapon.”

According to the Foreign Ministry, Lapid told Blinken, “Even if there is a return to negotiations, sanctions on Iran must not be lifted. The money the Iranians will receive will reach our doorstep in the form of terrorism and missiles.”

The conversation was “warm, productive and open,” Israel’s MFA said in a readout, and included topics such as “joint efforts to stop Iran from becoming a nuclear threshold state, Minister Lapid’s visit to Cairo, the arrival of new US Ambassador to Israel Tom Nides, and expanding the circle of peace.”

State Department Spokesperson Ned Price commented on Thursday on US-Israel discussions of alternative ways to counter the Iranian nuclear threat if negotiations in Vienna collapse.

“I wouldn’t want to speak to what we might be contemplating if the path to diplomacy toward a mutual return to compliance isn’t viable in the near term,” Price said. “But we are discussing those alternatives. We are discussing those options with our close partners, with our close allies, and that includes with the Israelis. We have already had good discussions with the Israelis about the path forward, and how we can work together to ensure that Iran is never able to acquire a nuclear weapon.”

Gantz addressed the Israel American Council summit in Miami on Friday, saying that Iran is a great threat to Israel but first and foremost to the world.

“This is why the international community, with US leadership, must stand together and act forcefully against Iran’s hegemonic aspirations and nuclear program and restore stability for the sake of global peace,” he said.

The consultations in Washington were “excellent,” the defense minister said, and they included ways to ensure Israel’s qualitative military edge in the Middle East.

Gantz said he spoke with the Americans about how to keep the pressure on Iran with the aim of keeping them away from a nuclear capability, and to take advantage of Iranian vulnerabilities – particularly economic – that could be used to persuade them to suspend nuclear activity.

His impression from the meetings in Washington was that the fate of the negotiations in Vienna would be determined in the near future. “I think that in the coming weeks we will know where we stand,” Gantz said.

Iran capable of exchanging electricity with six neighbors

According to an IRNA report quoting Iranian Energy Minister Ali-Akbar Mehrabian reported the country is currently able to exchange electricity with Afghanistan, Iraq, Azerbaijan, Turkmenistan, Armenia and Turkey.

As reported, developing energy diplomacy and exchange of electricity with the neighboring countries has been among the top priorities of the energy minister. Mehrabian has underlined the synchronization of the country’s electricity network with that of Russia as well as joining the power grid with the Persian Gulf Arab nations among the plans during his tenure.

Speaking in a gathering with the representatives of the Foreign Affairs Ministry on Saturday, Mehrabian said Iran has great potential for exporting electricity and power equipment to the countries in the region and the energy ministry has had good success in this area over the years.

Referring to the country's ability to produce F-class turbines, Mehrabian said, “The Islamic Republic of Iran is one of the few countries in the world that produces electrical equipment, turbines, generators etc. at the highest level of technology. Iran is capable of producing a variety of turbines, especially class F turbines, which have the highest efficiency in the power plant industry.”

According to the energy minister, significant power projects, especially hydropower plants, have been implemented in Iraq, Syria, Sri Lanka, Tajikistan, Russia and other countries.

“Iran has a very good position in the world in the field of water projects, including water systems, dams, and hydropower plants,” Mehrabian said.

According to Mehrabian, currently, 100% of the country’s urban population has access to the electricity network, while 99.5% of the rural population is also connected to the national power grid.

“Over the past few years, investment in this sector has declined and the supply and demand balance became negative, which resulted in some restrictions and blackouts, but with a precise plan to compensate we are solving problems,” said Mehrabian.

The official noted that the energy ministry is planning to add 30,000 megawatts to the country’s electricity generation capacity over the next four years.

He stated that one of the energy ministry’s concerns is to pass the next summer’s peak consumption period. He said, “We must be able to work in such a way that people see fewer restrictions and if we can use hydropower plants to some extent, hopefully, we will not experience blackouts.”

Mehrabian further noted that currently 6,000 megawatts capacity of power plants are under different phases and will come on stream by the next summer peak consumption period

“For the summer peak of 1401 (the next Iranian calendar year) it is planned to add 6,000 MW to the country's electricity generation capacity, which will be a record,” he said.

Of the mentioned capacity, so far four power plant units have joined the country’s power network and the rest will be constructed by the mentioned date.

Is China getting ahead of United States in weapons technology?

The stunned silence that descended on Washington after the Financial Times recently reported that China had successfully tested a nuclear-capable hypersonic glider shows how dangerously inept the US policy establishment has become at preempting China's technological breakthroughs.

Predictions about China overtaking the United States often use existing technological processes as their yardstick. Yet, they overlook another increasingly likely scenario that China has successfully applied entirely new substance materials to these technologies, bringing unprecedented breakthroughs in performance.

Beijing is currently experimenting with radically different substances in three key strategic domains -- nuclear weapons, semiconductors and energy.

Breakthroughs here will break American dominance and radically alter the power balance between the two superpowers. The US must both check its blind spots for more incoming "Sputnik moments” from China and engage in more disruptive research of its own if it is to stay ahead.

Somewhere in the Gobi desert, the world's first new thorium-powered nuclear reactor in over half a century is starting up. The uranium-233 isotope it aims to produce could take China's rapidly expanding nuclear arsenal to a whole new level.

China is building on Cold War-era research by the Manhattan Project team at Oak Ridge National Laboratory in Tennessee in the U.S. Though the U.S. later abandoned uranium-233 in favor of the naturally occurring uranium-235, declassified documents from 1966 show researchers at the time judged uranium-233 to have superior functions to other materials, but only if kept chemically pure.

Thanks to the co-presence of the element protactinium in the uranium-233 they generate, thorium reactors were believed to be "proliferation resistant" for many years. Yet, a variety of reprocessing methods that separate the protactinium isotopes from the rest of the nuclear fuel have been developed in recent decades, clearing a pathway for its use as a high-performance weapons-grade material.

Uranium-233 emits stronger radiation than other isotopes, producing 15% more neutrons per thermal fission than either uranium-235 or plutonium-239. It also has a lower critical mass, meaning more weapons can be made from less material.

This could enable Beijing to not just scale up the number of weapons in its arsenal but potentially increase each missile's destructive power, and, having the second-largest reserves of thorium in the world, the surplus of nuclear energy could drive China's conventional platforms, including nuclear-powered warships and drones.

Advances in silicon chips will reach their physical limits by 2025, as dictated by Moore's Law. This seems like a bad thing for China, which still trails semiconductor leaders Taiwan, South Korea and the US by two wafer generations.

Yet China is gearing up for what its leaders call the post Moore's Law-era -- the dawn of carbon-based chips. A recent paper published in the journal Science by Peking University researchers claimed that they had tested carbon nanotubes up to three times faster and four times more energy-efficient than silicon chips. Beijing has allocated a high priority to this field of research. It is now part of the scientific innovation strategy for China's fourth five year plan.

Revolutionizing chip material could also bust through China's biggest bottleneck further downstream – chip making itself. Due to US export sanctions, China lacks the lithography machines to make cutting-edge chips. Yet, a state-directed 02 Special Project to develop an integrated domestic lithography machine supply chain is making progress.

If these machines are designed to manufacture carbon-based chips, such dual innovations could create the technological foundation for a whole new foundry ecosystem that would all belong to China. Its chipmakers could leapfrog incumbents and China would dominate the strategic information and communications technology hardware of the future.

Though currently the world's biggest energy importer, China is positioned to become the largest energy exporter if it can pull off its moonshot project to mine Helium-3 on the moon.

Already, over a dozen Chinese institutes are working to extract Helium-3 from moon rock samples from last year's Chang'e 5 mission. The isotope holds more energy than Earth-based minerals with just 40 tons capable of powering the entire US for a whole year. It is estimated there are at least a million tons of Helium-3 on the moon.

Though, one US company is planning a mining expedition to the moon in the early 2030s, China is already streaming ahead with a permanent mega-base on the moon to be built by around the same time. The US Central Intelligence Agency space analysts warn that breakthrough dominance in this powerful and carbon clean resource would make China the 21st century's energy powerhouse.

If China achieves dominance in any of these three domains, it will likely displace the US as a global hegemon. There are two key ways the US can work to prevent this.

Firstly, the US intelligence agencies must better track China's disruptive research, map out potential pathways for leapfrog maneuvers and take action to preempt and prevent technological breakthroughs.

Secondly, the US must take advantage of the lead it currently has and take on unconventional experiments that are yet another step beyond what China itself is doing.

Voices on Capitol Hill calling for the US government to utilize its leftover uranium-233 reserves show that some lawmakers are taking notice. Yet, it is not nearly enough. Drawing on innovations from yesteryear may buy Washington some time, but if delayed rear-guard actions are all it can muster to counter Beijing's multipronged leapfrog, the result of this great power competition is a foregone conclusion.

Israel mounts pressure on United States not to join JOCPA

US Defense Secretary, Lloyd Austin met with his Israeli counterpart on Thursday to discuss concerns over Iran and ways to prevent the country from obtaining a nuclear weapon, the Pentagon confirmed. 

During the meeting at the Pentagon with Israeli Defense Minister Benjamin Gantz, Austin “confirmed US resolve to prevent Iran from obtaining a nuclear weapon,” the Defense Department (DOD) said in a statement.

Austin and Gantz also “discussed shared concerns regarding Iran’s nuclear provocations, support for terrorism, and missile program” and “reiterated US commitment to Israel’s security and qualitative military edge,” according to the statement.

While the DOD confirmed the meeting, a spokesman declined to address a Reuters report that said the two defense leaders would also touch on possible Iran-focused military exercises.

“I know there’s interest in a certain Reuters report,” Pentagon press secretary John Kirby told reporters on Thursday prior to the meeting. 

“I will tell you this, we routinely conduct exercises and training with our Israeli counterparts and I have nothing to announce to or speak to or point to or speculate about today.”

Kirby would only say that Austin and Gantz would discuss Iran and its continued destabilizing activities.

Gantz had tweeted Wednesday to say he and Austin would “discuss possible modes of action to ensure the cessation of Iran's attempt to enter the nuclear sphere and broaden its activity in the region.”

Reuters reported that the two defense chiefs were expected to talk about possible military exercises meant to prepare for a worst-case scenario to destroy Iran's nuclear facilities should the United States and Iran not be able to revive a 2015 nuclear deal abandoned by then-President Trump.

 A senior US official told Reuters that on October 25 Pentagon leaders briefed White House national security adviser Jake Sullivan on military options available to prevent Iran from producing a nuclear weapon.

The two meetings come as indirect talks on restarting a nuclear deal with Tehran have hit a snag, with very little progress being made during negotiations in Vienna.

Iran has already restarted production of enriching uranium, amassing a small stockpile of the material of at least 60% purity. Uranium needs to be enriched to 90% purity for nuclear weapons development.

Further signaling that the Biden administration is preparing for possible fallout, the US is considering sending a delegation to the United Arab Emirates, a close trading partner of Iran, to discuss possible economic sanctions, The Wall Street Journal reported Thursday.

Iran, meanwhile, has denied it is seeking to develop nuclear weapons and only wants to master the technology.

Nuclear negotiations were expected to resume on Thursday, and the US special envoy for Iran, Robert Malley, is set to join them over the weekend.

 

US Department of Justice announces forfeiture of Iranian missiles and oil

The US Department of Justice (DoJ) confirmed in an announcement on Wednesday that it has successfully forfeited approximately 1.1 million barrels of oil and hundreds of missiles seized by the US Navy from several Iranian vessels in the Arabian Sea late in 2019 and early 2020. 

These represent the largest-ever US forfeitures of Iranian fuel and weapons. Forfeiture of property – penalizing the owner for wrongdoing – allows the US government to take possession of and sell it.

The Islamic Revolutionary Guard Corps, which is alleged to have orchestrated the shipments, is designated as a foreign terrorist organization by the DoJ, which allowed for the seizures and forfeitures. 

“The actions of the United States in these two cases strike a resounding blow to the Government of Iran and to the criminal networks supporting Iran’s Islamic Revolutionary Guard Corps,” said Assistant Attorney-General Matthew G. Olsen of the Justice Department’s National Security Division. “The Department of Justice will continue to use all available tools to combat the threats posed by terrorist organizations and all those who seek to harm the United States and its allies.”

The two weapons caches of eight surface-to-air missiles, 171 anti-tank missiles and thermal optics – as well as components for naval surface-to-surface cruise missiles, anti-ship cruise missiles, drones, and other missiles – were alleged by the DoJ to have belonged to the IRGC and were destined for Houthi militants in Yemen. The two flagless vessels, dhow sailboats, were raided on November 25, 2019, and February 9, 2020.

The DOJ announcement contains contradictions about the number of different types of missiles seized, in the opening sentence of the press release listing 171 surface-to-air missiles and eight anti-tank missiles.

“The illegal transfer of Iranian-made weapons poses a significant and immediate threat to our national security,” according to Kelly P. Mayo, Director of the Defense Department's Defense Criminal Investigative Service. “The judgment announced today is an important step in our efforts to identify, disrupt and bring to justice those who imperil resources vital to our safety.”

Around July 2020, petroleum seizures of approximately 1.1 million barrels of petroleum products from four foreign-flagged vessels were also conducted in the vicinity of the Arabian Sea. The shipments were allegedly destined for Venezuela aboard the Liberia-flagged Bella, Bering, Pandi and Luna.

The US government sold the confiscated petroleum products for over US$26 million, with part of the sales being directed to the US Victims of State Sponsored Terrorism Fund, which compensates the US citizens who have been victims of international terrorism.

“These two cases demonstrate that not only can we disrupt the Islamic Revolutionary Guard Corps’ ability to finance its operations through petroleum sales, but we can also thwart its ability to use the proceeds of such sales to arm its terrorist proxies and export terrorism abroad,” said US Attorney Matthew M. Graves for the District of Columbia.

“Given our expertise and special statutory authority, the US Attorney’s Office for the District of Columbia is uniquely positioned to support its law enforcement partners in such terrorism cases," he said. "We are deeply committed to this mission.”

The surface-to-air missiles were Iranian-made Type 358, which according to Jane's were previously unknown until these seizures. According to court documents filed in August, all 171 anti-tank missiles were the Iranian-made Dehlaviehs. According to the Islamic Republic News Agency, they were indigenously produced and first introduced into service in the Iranian Army in 2015. The Ten Rayan Roshd Afzar RU60G thermal weapons optics is also Iranian-produced. 

The US has imposed sanctions on oil exports of both Iran and Venezuela. Tehran has made several attempts to transfer oil to the country in South America's northern region. US sanctions on Iran are a key element of the negotiations for the Iranian nuclear deal that the Biden administration is attempting to reimplement.

 

Bangladesh oceangoing ships now at record high

According to a report by The Daily Star, Bangladesh now has a fleet of 80 oceangoing vessels, a record high since the country’s independence. 

Till October 2019, there were only 43 Bangladeshi flagged oceangoing vessels and it almost doubled in the last two years at a time when most business sectors were badly hit by the pandemic.

Some policy support from the government as well as a global price fall of second-hand ships in the early stages of the pandemic encouraged local entrepreneurs to make investments and seize the opportunity.

Several leading industrialists and commodity importers went on to buy their own ships to reduce transport costs. A total of 37 vessels got permanent or provisional registration in the last two years till November this year which is the highest in the span of such periods, according to Mercantile Marine Department (MMD).

In 2020, a total of 14 vessels got permanent registration whereas a total of 18 vessels got permanent and provisional registration till date this year, according to data from the MMD.

The National Board of Revenue (NBR) has eased age rules for ships to make it easy to qualify for VAT exemptions during imports and also cut advance income tax. The NBR brought down the advance income tax (AIT) on vessel imports to one percent for fiscal 2021-22 from 2 percent in fiscal 2020-21. It also relaxed restrictions, allowing sale of vessels of over 5,000 deadweight tonnage (DWT) after three years. Previously they had to be kept for five years.

Chittagong Chamber of Commerce and Industry President Mahbubul Alam said it was really a positive sign for the country’s economy. The country’s imports and exports are mostly depended on foreign vessels and the local businesses have to spend huge foreign exchange annually as freight charges for foreign trade, he said. If the number of Bangladeshi flagged vessel increases, the local vessel owners can tap into a good amount of the foreign trade, he added.

Bangladesh Ocean Going Ship Owners’ Association President Azam Chowdhury said the growing number of registrations was for some local industrialists and commodity importers purchasing vessels to reduce cargo transport costs. Besides, government policy supports like the VAT and AIT exemptions also encouraged entrepreneurs to go for making investments in the sector, he said.

Echoing the same, Meherul Karim, Chief Executive Officer (CEO) of the country’s largest ocean-going vessel owning company, SR Shipping, said many companies wanted to take opportunity of the price drop of second-hand, medium sized Supramax vessels in the wake of the pandemic last year.

Most of the Bangladeshi-flagged bulk carriers, which have all been bought, are Supramax vessels of 50,000 DWT to 60,000 DWT and these are 15 years to 20 years old, he said.

Previously price of such vessels ranged between US$10 million and US$12 million, which came down to US$6 million to US$7 million last year, said Karim, adding that his company bought two ships in 2020. SR Shipping currently own 23 oceangoing vessels.

Overall, the 80 oceangoing vessels are owned by 15 Bangladeshi companies. Most are bulk carriers, while there are oil tankers and six container vessels.

Karnaphuli Limited, country’s lone container vessel owning company, purchased six container vessels since June last year. The group last month also placed an order with a Chinese shipbuilder to construct four new container vessels.

Karnaphuli Limited Director Hamdan Hossain Chowdhury told The Daily Star that the government has created the right enabling environment and this has facilitated unprecedented expansion of the country’s merchant fleet. “We are a maritime nation and this sector has good potential,” he said.

Currently 3,000 Bangladeshi mariners are employed in these 80 Bangladeshi-flagged vessels. MMD Principal Officer Captain Giashuddin Ahamd said they brought ease to their services such as that on issuance of registration certificates and also directly sat with vessel owners to provide encouragement.

Russia warns United States to stay away from Ukraine

Russia is seeking a legally binding pledge that NATO will stop expanding east, including to Ukraine. If the United States refuses, is war next?

Either the US and NATO provide us with "legal guarantees" that Ukraine will never join NATO or become a base for weapons that can threaten Russia — or we will go in and guarantee it ourselves.

This is the message Russian President Vladimir Putin is sending, backed by the 100,000 troops Russia has amassed on Ukraine's borders.

At the Kremlin last week, Putin drew his red line:

"The threat on our western borders is ... rising, as we have said multiple times. ... In our dialogue with the United States and its allies, we will insist on developing concrete agreements prohibiting any further eastward expansion of NATO and the placement there of weapons systems in the immediate vicinity of Russian territory."

That comes close to an ultimatum and NATO Secretary General Jens Stoltenberg backhanded the President of Russia for issuing it:

"It's only Ukraine and 30 NATO allies that decide when Ukraine is ready to join NATO. ... Russia has no veto, Russia has no say, and Russia has no right to establish a sphere of influence trying to control their neighbors."

Yet, great powers have always established spheres of influence. Chinese President Xi Jinping claims virtually the entire South China Sea that is bordered by half a dozen nations. For 200 years, the United States has declared a Monroe Doctrine that puts the hemisphere off-limits to new colonization.

Moreover, Putin wants to speak to the real decider of the question as to whether Ukraine joins NATO or receives weapons that can threaten Russia. And the decider is not Jens Stoltenberg but President Joe Biden.

In the missile crisis of 60 years ago, the US, with its "quarantine" of Cuba and strategic and tactical superiority in the Caribbean, forced Nikita Khrushchev to pull his intermediate-range ballistic missiles, which could reach Washington, off of Fidel Castro's island.

If it did not do so, Moscow was led to understand, we would use our air and naval supremacy to destroy his missiles and send in the Marines to finish the job.

Accepting a counteroffer for the US withdrawal of Jupiter missiles from Turkey, Khrushchev complied with President John F. Kennedy's demand. Russia's missiles came out. And Kennedy was seen as having won a Cold War victory.

When the Warsaw Pact collapsed and the USSR came apart three decades ago, Russia withdrew all of its military forces from Central and Eastern Europe. Moscow believed it had an agreed-upon understanding with the Americans.

Under the deal, the two Germanys were reunited. Russian troops were removed from East Germany, Poland, Czechoslovakia, Hungary, Bulgaria and Romania and there was no NATO expansion into Eastern Europe.

If the US made that commitment, it was a promise broken. For, within 20 years, NATO had brought every Warsaw Pact nation into the alliance along with the former Soviet republics of Lithuania, Latvia and Estonia.

Neocons and Republican hawks such as the late John McCain sought to bring Ukraine and two other ex-Soviet republics, Georgia and Moldova, into NATO.

Ukraine is not going to be a member of NATO or a military ally and partner of the United States, nor a base for weapons that can strike Russia in minutes. For Russia that crosses a red line, if NATO proceeds with arming Ukraine for conflict with Russia, it reserves the right to act first.

In Ukraine and in Georgia, as was evident in the 2008 war, Russia had the tactical and strategic superiority it had in 1962 in Cuba. Moreover, while Ukraine is vital to Russia, it has never been vital to us.

When President Franklin D. Roosevelt recognized Joseph Stalin's USSR in 1933, Moscow was engaged in the forced collectivization of the farms of Ukraine, which had caused a famine and the deaths of millions. United States did nothing to stop it.

During the Cold War, the US never insisted on the independence of Ukraine. Though, it celebrated when the Baltic States and Ukraine broke free of Moscow, it never regarded their independence as vital interest, and the super power should be willing to go to war.

A US war with Russia over Ukraine would be a disaster for all three nations. Nor could the US indefinitely guarantee the independence of a country 5,000 miles away that shares not only a lengthy border with Russia but also a history, language, religion, ethnicity and culture.

Will Russia invade Ukraine?

Fears of Russia launching an offensive against Ukraine have raised tensions between Moscow and the West. Russia’s massing of troops near Ukraine is fueling fears that Russian President Vladimir Putin may once again invade the former Soviet state.

President, Joe Biden is emphasizing diplomacy to cool tensions and avoid a military confrontation, while the US is a key supplier of arms to Ukraine.

Reported intelligence is raising alarm that Putin is amassing more than 100,000 troops along Ukraine’s border and preparing for an invasion in early 2022 — raising the stakes over a planned call between Biden and Putin. Here are five things to know about the emerging crisis: 

1-       Could be more serious than 2014 invasion

Experts warn Russia’s military buildup on the border of Ukraine is posing a more serious threat than its previous invasion and annexation of the Crimean peninsula in 2014 and its ongoing support for pro-Russian separatists in the east of the country, called the Donbas. 

"Russia is not signaling a repeat of its 2014 operations on the Donbas, in fact they are signaling this current situation could be larger and more overt,” said Dara Massicot, a senior policy researcher at the RAND Corporation. 

“I am concerned about the impact of Russian air and missile strikes conducting rapid punitive strikes on Ukrainian military facilities or other important locations — in many cases from Russian territory or Russian proxy-controlled territory in eastern Ukraine,” Massicot said. 

Putin has issued a demand that the North Atlantic Treaty Organization (NATO) not expand eastward nor deploy weapons systems that are viewed as threatening Russia, the Associated Press reported.

Russia’s posturing and more heated rhetoric is aimed at forcefully testing the Biden administration’s resolve to support Ukraine in the face of aggression, said retired Lt.-Gen. Ben Hodges, who served as US Army Europe Commander until 2017.

“I think the Kremlin is testing how high a priority that is and what we’re willing to do to protect and respect Ukrainian sovereignty,” he said in an interview with C-SPAN on Sunday. 

2-       Biden is upping the diplomatic consequences

The Biden administration has raised the possibility of action against Russia including economic measures and increasing the delivery of lethal defenses for Ukraine.  

“We’ve been very clear that there would be serious, serious consequences,” if Ukraine invades Russia, Secretary of State Antony Blinken said in an interview Sunday with a Swedish television network. 

“We’re looking, for example, at economic measures that would have a very high impact and things that we have refrained from doing in the past when we’ve had profound differences with Russia,” he added. 

Army Chief of Staff Gen. James McConville said at the Reagan National Defense Forum on Saturday that deterrence should be a “whole-of-government” effort.

“The way you deter is you impose some type of cost — to make sure the cost is worth more than the benefit,” McConville said. “Making sure people understand you just can't go into another sovereign country and conduct malign activities without having some type of cost.” 

3-       Yet US troops maintaining readiness 

A senior administration official hinted on Monday that an invasion would result in US troops being deployed in the region, noting that the 2014 invasion was followed by the US sending additional forces to NATO's eastern flank.

“I think you could anticipate that in the event of an invasion, the need to reinforce the confidence and reassurance of our NATO allies and our eastern flank allies would be real and the United States would be prepared to provide that kind of reassurance," the official said.  

But Pentagon Press Secretary John Kirby told reporters that there’s “still space and time for diplomacy and leadership,” echoing comments Secretary of Defense Lloyd Austin made at the Reagan forum. 

Angela Stent, director of Georgetown University’s Center for Eurasian, Russian and East European Studies, suggested that Russia could launch a limited incursion to retake the Donbas “quite soon”, but would likely hold back from launching a major offensive on the capitol of Kyiv.

“In Russia, this conflict is not popular. … People don’t want to see Russian soldiers coming back in body bags," she said.

4-       Part of Russia’s broader destabilizing behavior

Along with Russia’s amassing tens of thousands of troops on the border with Ukraine, US officials have also denounced Moscow’s support of Belarus’s illegitimate President Alexander Lukashenko and his alleged efforts to spark an immigrant crisis in Europe. 

This is on top of worries that Russia may use its position as a key supplier of energy to Europe — in particular for the cold winter months — as leverage to extract concessions from the West. 

“What we’re seeing in Belarus on the borders of three countries, the really outrageous use of migrants as a political weapon — well, that can sow chaos and instability and at the same time the mounting pressure against Ukraine, and yes, energy too, especially heading into the winter.  I think these things are joined,” Blinken said in an interview with Reuters on Friday. 

Minsk said last week that it would conduct joint military drills with Russia near Ukraine’s borders in response to new military deployments to the west and south of Belarus, Reuters reported. 

"We see troop formations around our state borders... We can only be concerned by the militarization of our neighboring countries, which is why [we] are forced to plan measures in response,” Belarus’s Defense Minister Viktor Khrenin said Monday, according to the outlet. 

On top of this, Russia controls large deliveries of energy to Europe and there are fears Putin could hold delivery hostage — during critical winter months — in an effort to extract concessions from the West. 

5-       Ukraine's security a rare area of bipartisan support 

Ukraine is a key US ally and Kyiv’s shift away from Russia and towards the West is viewed as both a symbolic and strategic advantage, bolstering the protection of neighboring NATO-allied countries and as a key economic partner connecting Europe and Eurasia. 

This has made support for Ukraine’s security an area of bipartisan support on Capitol Hill. 

Sen. Chris Murphy chair of the Senate Foreign Relations subcommittee on Near East, South Asia, Central Asia, and Counterterrorism, told CNN’s "State of the Union" on Sunday that he hopes Biden’s meeting with Putin can “bear fruit,” but warned of a strong US response if Kyiv is threatened. 

“But let me say this — If Russia does decide to move further, it would be a mistake of historic proportions for Moscow,” Murphy said. “Ukraine can become the next Afghanistan for Russia if it chooses to move further, and it’s up to us in the Congress that we are going to be diplomatic, political and military partners with Ukraine.”

Sen. Joni Ernst also sounded the alarm during a panel at the Reagan National Defense Forum. 

“This is a moment in time where we need to show leadership and we need to push back and say to Putin, you can't do this,” Ernst told the forum. “We need to show that [if] you do this there are going to be repercussions.”

  

Bennett seems adamant at embarrassing Biden

The news from the Middle East is that negotiators in Vienna are going on to restart the Iran deal, but Israel is doing all it can to end the talks. Israeli Prime Minister is telling United States for an immediate cessation of talks. 

Israeli Defense Minister will travel to Washington this week to appeal to the Biden administration that there may be a point when we will have no choice but to act.

The Israelis and their many rightwing friends in the US are demanding Biden must maintain crippling sanctions on Iran and keep threatening war. Israel is free to attack Iran in Syria. And Israel will bomb Iran if it deems it has crossed a nuclear threshold– which is always just six months from now, forever. While anonymous Israeli officials tell pliable Israeli reporters that Tony Blinken is the biggest leftist in the Biden administration and he is stoking tensions between the US and Israel.

In August, Biden welcomed Bennett at the White House and announced that they were close friends, and Israel’s friends in the US rejoiced in the fact that Israel was a bipartisan cause again, because the divisive Netanyahu was gone, and Democrats and a rightwing Prime Minister were on the same page.

One tenet of that close bond is that if there are any disagreements, they will be aired privately. Bennett has now violated that understanding. He is trying to embarrass Biden publicly, and tell the United States what to do with Iran. Just as Netanyahu embarrassed Biden very publicly and went to the Congress to try to undermine the Iran deal in 2015.

On that occasion, Barack Obama made perhaps the bravest statement of his presidency, saying, “As president of the United States, it would be an abrogation of my constitutional duty to act against my best judgment simply because it causes temporary friction with a dear friend and ally.”

American leaders need to follow Obama’s example. They should stop taking dictate from Israel. It is in US interest to restore the Iran deal, and also to get Israel to stop stealing Palestinian land. Both of which aims are completely counter to the new Israeli government. It loves having a global cold war with Iran to keep the world’s attention off apartheid.

The superpower should have its way with Israel too; but no, Israel is a spoiled brat that issues ultimatums. The reason it gets away with this behavior is obvious. There is a powerful Israel lobby inside the United States (though the US mainstream press claims it might not exist), and the lobby has one overriding purpose, to make sure there is no daylight between the US political establishment and Israel.

The power of the lobby is the reason that Netanyahu once told a hot mic that the US is a thing that can be easily moved. The power of the lobby is why Trump trashed the Iran deal in 2018, to keep the support of his biggest backer, Sheldon Adelson. The power of the lobby is the reason progressive Congressperson Jamaal Bowman goes and meets with a rightwing Israeli prime minister, and sells out Palestinian human rights organizations, out of fear he will lose his seat in Congress if he doesn’t defer to Israel.

It is really a pity, and a moral horror too, that the US leaders can’t tell Israel to stay away. But there are countless well-funded organizations, telling these politicians to stand up and grin for the unwavering special relationship between the United States and Israel. Donald Trump threatened the American consensus by trying to politicize it, and say the Democratic left was going off the reservation. But then former members of AIPAC promptly started a new branch of the lobby, the Democratic Majority for Israel, to close rank in the Democratic Party. And Nancy Pelosi banished the left by saying that the Capitol would crumble and fall before the US abandoned its support for Israel, so please ignore the leftwing critics in her party.

Now Joe Biden is reluctant to take on the lobby because the midterms are looming; and Tony Blinken has to cater to Israeli prime minister, even when he is insulting him. The clear message from Vienna is that the Iran deal will not be restored because Biden is refusing to lift the sanctions that Donald Trump reimposed on Iran. Obama’s point man Ben Rhodes says it’s all about the lobby.

Biden is afraid to politicize the issue. He knows that Adelson’s widow is conducting the same sweepstakes her late husband did: to see which Republican candidate for president will be the most pro-Israel. He knows that AIPAC is all over the Democratic Party.

The special relationship with Israel should be politicized. It helped get us into the Iraq war, with catastrophic consequences for many nations, and is now endangering war with Iran. It has granted endless immunity to apartheid, with desperate consequences for the Palestinian people.

Fifteen years ago, Walt and Mearsheimer called out the lobby’s influence in a landmark book on American foreign policy, and as Mearsheimer said often, “We just Israel to be treated like a normal country.”

But that book can still only be read in brown wrappers in Washington, and the intrusion in our politics by Israel and its friends just keeps getting deeper. Twenty-seven states adopt legislation that would limit free speech rights by penalizing those who boycott Israel. A Georgia lawmaker confesses that the Israeli government “asked me” to introduce one of those bills. A dozen attorneys-general seek divestment from Unilever because one of its brands, Ben & Jerry’s, doesn’t want to be foster the persecution of Palestinians by selling ice cream in occupied territory.

A Republican congressman who voted against Iron Dome says AIPAC’s effort to turn him out of office is “foreign interference in our elections.” The University of North Carolina clamps down on a teacher who wants to tell the true history of Palestine after the Israeli consulate and a Democratic congressperson pressure school officials. “[I]t is strange that the Israeli consulate general was granted an audience,” the instructor says. “If this was a class on Hungary or Australia, would the university have permitted the attempted interference of a foreign government? The fact that this meeting happened at all is clearly a threat to academic freedom.”

The American people want distance. Polling shows that they are overwhelmingly for an evenhanded approach to the Israel-Palestine conflict, that young people are moving to the Palestinian side, and that Democratic voters are for sanctions on Israel over its settlement behavior.

It is time that our mainstream press surveys all the damage and takes on the corruption in our political process. It’s time our leaders stop worrying about what the lobby and Israeli officials want and channel Obama’s question of 2015. What is the US interest?

Iran’s Natanz nuclear facilities hit for third time since July 2020

A question is getting louder; did Mossad or someone just try to sabotage Iran’s nuclear facilities at Natanz for the third time since July 2020? Natanz was hit by physical explosive sabotage in July 2020 and again in April this past year.

Reports were still hazy, but as of Saturday night, the narratives varied from Iran undertook a preplanned air defense drill unrelated to sabotage, to it shot down an attack drone thwarting a sabotage attempt. Electricity and Internet were down for some unspecified part of Natanz, which could mean a sabotage attempt succeeded, but the Islamic Republic is still trying to cover it up.

Reportedly, July 2020 attack was more successful and destroyed the vast majority of an above-ground nuclear site. April attack destroyed centrifuges and a variety of utilities of a newer underground site, but only fully delayed Iran’s advanced centrifuge progress for about four months, while causing some longer-term slowdowns.

Curiously, the April attack took place near the start of Vienna nuclear negotiations. If this event was an attack, it would have taken place at the end of a new first week of nuclear negotiations.

Both in July 2020 and this past April, Iran initially tried to deny there was an attack or deny its success until The Jerusalem Post reported that the attacks were successful and had caused severe damage.

Following the Post’s and other media reports, Tehran was forced to acknowledge that its nuclear sites had been hit, and badly.

It later accused the Mossad of both hits, so Tehran’s initial denials should be taken with a grain of salt.

Another nuclear site, Karaj, was hit this past June, days after Ebrahim Raisi was elected Iran’s new president.

This could be a second message to Raisi that his attempt to push the envelope with increasing nuclear violations as well as taking maximalist positions in Vienna could leave him vulnerable, even if much of the West is intimidated by him.

Or maybe this time Iran’s air defenses improved and thwarted an attack.

Then again, for the first time in four such similar events, maybe it was just a pre-planned air-defense drill.

Satellite footage made it impossible for Tehran to cover up the damage in both Natanz attacks, but strangely, satellite footage was slower in coming with Karaj, when Raisi had taken power and the Biden administration was seeking a return to talks.

It will be interesting to see what satellite footage shows this time.

Pakistan to host OIC foreign ministers’ meeting to avert human crisis in Afghanistan

Foreign Minister, Shah Mahmood Qureshi on Saturday said Pakistan would host a session of Council of Foreign Ministers of Organization of Islamic Cooperation (OIC) on December 19. It will focus on highlighting the need for urgent assistance and mobilization of resources to avert a humanitarian crisis and economic collapse in Afghanistan.

“If we don’t pay timely attention, half of Afghanistan’s population or 22.8 million people can face food shortage and 3.2 millio children may face malnutrition. This is the magnitude which we and the world should understand,” Qureshi said while talking to the media in Lahore.

Considering the gravity of the situation, he said Pakistan made an effort and moved ahead to host the international event while realizing that, if not addressed timely, the situation would have dire consequences for "Afghanistan, its neighbors as well as the whole region".

Qureshi stressed that Afghanistan could face economic collapse if its frozen assets were not released to cope with the burgeoning needs.

He also pointed out that such a session of the OIC FMs on the Afghanistan situation would be held after 41 years with the first held in 1980. The foreign minister added that besides the foreign ministers of the OIC countries, Pakistan had also invited the special representatives of P-5 countries including the United States, China, Russia, France and the United Kingdom.

Invitations were also extended to the European Union's high representative on foreign affairs and international organizations such as the World Bank and relevant United Nations agencies which could assist in the whole process.

Important countries such as Germany, Japan, Canada and Australia would be invited as well with the objective of "evolving an international consensus".

Qureshi said that Pakistan also wanted to invite a high-level delegation of Afghanistan to interact with the visiting dignitaries and apprise them of the latest on-ground situation.

He noted that senior officials of the respective countries would be meeting prior to the session and officials of the OIC Secretariat would be arriving earlier around Dec 1 to oversee the preparations.

Qureshi said the idea of holding the session on Afghanistan emerged during the meeting between Prime Minister Imran Khan and Saudi Crown Prince Mohammed bin Salman in Riyadh on the sideline of the Green Summit in October.

As Afghanistan was a founding OIC member, he said it was discussed that the Ummah should make efforts to steer it out of the difficult situation. Qureshi thanked Saudi Minister of Foreign Affairs Prince Faisal bin Farhan Al Saud for taking a "keen interest" to achieve consensus on the issue.

Qureshi stressed that abandoning Afghanistan would be a "historic blunder and the world should learn from the past instead of repeating the same mistake".

“If timely attention is not paid, a new crisis can emerge which would bring in instability. This instability will beget mass exodus of refugees. We are already hosting 3m Afghan refugees and it will be difficult to host anymore. The countries like Iran, Tajikistan, and other bordering countries are also similarly concerned,” he said.

The foreign minister also told the media he would meet the EU high representative and EU parliamentarians in Brussels on Dec 7 to apprise them on Afghanistan's situation.

Qureshi said after the withdrawal of troops and the Taliban takeover in Afghanistan, India had launched a campaign to sanction Pakistan by blaming it for the Afghan situation. "However, due to its effective foreign policy, Pakistan thwarted all such Indian designs," the foreign minister added.

He said the international community had been convinced in the wake of Pakistan's diplomatic outreach that engagement with Afghanistan was in everyone’s interest as delegates had started visiting the country.

The foreign minister added that in collaboration with China, a platform of six neighboring countries was also formed to discuss the situation and explore opportunities after the revival of peace in Afghanistan.

Qureshi also highlighted that Pakistan was already assisting Afghans by dispatching medicines, 50,000 tons of wheat and other relief items. He added that India was also allowed to transport wheat through Pakistan.

Indian agriculture to face investment crunch

Repeal of agriculture laws in India aimed at deregulating produce markets will starve its vast farm sector of much-needed private investment and saddle the government with budget-sapping subsidies for years.

Late last year, the government headed by Prime Minister Narendra Modi introduced three laws meant to open up agriculture markets to companies and attract private investment, triggering India's longest-running protest by farmers who said the reforms would allow corporations to exploit them.

With an eye on a critical election in populous Uttar Pradesh state early next year, Modi agreed to rescind the laws in November, hoping to smooth relations with the powerful farm lobby which sustains nearly half the country's 1.3 billion people and accounts for about 15% of the US$2.7 trillion economy.

But by shelving the most ambitious overhaul in decades, Modi's backtracking now seemingly rules out much-needed upgrades of the creaky post-harvest supply chain to cut wastage, spur crop diversification, and boost farmers' incomes.

"This is not good for agriculture, this is not good for India," said Gautam Chikermane, a senior economist and vice president at New Delhi-based Observer Research Foundation.

"All incentives to shift towards a more efficient, market-linked system (in agriculture) have been smothered."

The u-turn does allay farmers' fears of losing the minimum price system for basic crops, which growers say guarantees India's grain self-sufficiency.

"It appears the government realized that there's merit in the farmers' argument that opening up the sector would make them vulnerable to large companies, hammer commodities prices and hit farmers' income," said Devinder Sharma, a farm policy expert who has supported the growers' movement.

But the grueling year-long standoff also means no political party will attempt any similar reforms for at least a quarter-century, Chikermane said.

And, in the absence of private investment, "inefficiencies in the system will continue to deliver wastage and food will continue to rot," he warned.

India ranks 101 out of 116 countries on the Global Hunger Index, with malnutrition accounting for 68% of child deaths.

Yet it wastes around 67 million tons of food every year, worth about US$12.25 billion - nearly five times that of most large economies - according to various studies.

Inadequate cold-chain storage, shortages of refrigerated trucks and insufficient food processing facilities are the main causes of waste.

The farm laws promised to allow private traders, retailers and food processors to buy directly from farmers, bypassing more than 7,000 government-regulated wholesale markets where middlemen's commissions and market fees add to consumer costs.

Ending the rule that food must flow through the approved markets would have encouraged private participation in the supply chain, giving both Indian and global companies incentives to invest in the sector, traders and economists said.

"The agriculture laws would have removed the biggest impediment to large-scale purchases of farm goods by big corporations," said Harish Galipelli, Director at ILA Commodities India, which trades farm goods. "And that would have encouraged corporations to bring investment to revamp and modernize the whole food supply chain."

Galipelli's firm will now have to re-evaluate its plans.

"We have had plans to scale up our business," said Galipelli. "We would have expanded had the laws stayed."

Other firms specializing in warehousing, food processing and trading are also expected to review their expansion strategies, he said.

Poor post-harvest handling of produce also causes prices of perishables to yo-yo in India. Only three months ago, farmers dumped tomatoes on the road as prices crashed, but now consumers are paying a steep 100 rupees (US$1.34) a kilogram.

The laws would have helped the $34 billion food processing sector grow exponentially, according to the Confederation of Indian Industry (CII), an industry group.

Demand for fruits and vegetables would have gone up. And that would have cut surplus rice and wheat output, slicing bulging stocks of the staples worth billions of dollars in state warehouses, economists said.

"Crop diversification would also have helped rein in subsidy spending and narrow the fiscal deficit," said Sandip Das, a New Delhi-based researcher and farm policy analyst.

Food Corporation of India (FCI), the state crop procurement agency, racked up a record US$51.83 billion in debt by last fiscal year, alarming policymakers and inflating the country's food subsidy bill to a record US$70.16 billion in the year to March 2021.

However, while the federal government now has limited scope for change, local authorities "can opt for reforms provided they have the political will to do so," said Bidisha Ganguly, an economist at CII.

Similarly, venture capital-funded startups have also expressed interest in India's agriculture sector.

"Agritech, if it is allowed to take root, has the potential to enable a better handshake of farmers and consumers through their technological platforms," Chikermane said.