Arvind Kumar Sharma, the Secretary, Ministry of Micro, Small and Medium Enterprises (MSME), has been assigned an additional charge of Secretary, Ministry of Textiles.
The additional charge has been presented to Sharma, as the term of Textiles Secretary Ravi Capoor, who was on Central deputation from 23 July 2019 till 31 December 2020, ended.
Ministry of Textiles has updated Sharma’s name as Secretary on its website.
Prior to the appointment as MSME secretary he has served as Additional Secretary in Prime Minister’s Office.
Additionally, an IAS officer of Gujarat cadre batch 1988, he has performed several other roles in the Government of Gujarat including at field and policy level and as Secretary to the Chief Minister of Gujarat.
He has strong experience in grass root regulatory and developmental administration. Known for his contribution in industrialisation of Gujarat as Managing Director of Industrial Extension Bureau and as a pioneer of the Vibrant Gujarat experiment, he was also recognised as the best District Development Officer when he worked in Vadodara district.
Furthermore, he is also well known for his experience in infrastructure as he held the position of CEO of Gujarat Infrastructure Development Board (GIDB) for a long time. During these years, GIDB was acclaimed as the most admired infrastructure agency of the country.
His more than a decade experience in industry and infrastructure sector and his position in MSME ministry would particularly bring lot of value to the Textiles Ministry and help in rejuvenating India’s textile and garment sector.
Source: Apparel Online
India’s economy is recovering at a better-than-expected pace since the fiscal second quarter but it may take a long time to regain the momentum it had before the pandemic kicked in. The projected GDP growth does indicate that the worst is over, but it still does not indicate whether the economy has recovered the lost ground or surpassed it, said a report by India Ratings. The size of the Indian economy in FY20 was Rs 145.66 lakh crore at constant prices. Further, it is expected to contract 7.8 per cent on-year to Rs 134.33 lakh crore in FY21, and grow 9.6 per cent on-year to Rs 147.17 lakh crore in FY22, according to the estimates of India Ratings.
Though in on-year growth terms, FY22 would appear to be an extremely good year, in level terms, it would only be slightly better than FY20. It would be only about 1 per cent higher than the FY20 level. This suggested that the economy will be able to just recover the lost ground in FY22, and surpass the FY20 GDP level in a meaningful way only in FY23, the rating agency added.
To further understand the actual impact of the pandemic and calculate the recovery in a more appropriate way, it is important to understand that if the pandemic had not arrived and the Indian economy had posted modest GDP growth of 5 per cent in FY21 and FY22 respectively, the size of the economy by FY22 would have been Rs 160.59 lakh crore. Based on this, even with a 9.6 per cent GDP growth, the size of the economy in FY22 would reach only Rs 147.17 lakh crore, due to the pandemic. On the other hand, to achieve Rs 160.59 lakh crore, the GDP will have to grow at 19.5 per cent in FY22, which looks impossible at the moment.
The above analysis shows how the enormity of the loss to the economy becomes quite unclear with an on-year growth and why there has to be pragmatism why calculating the recovery. India Ratings underlined that if the output loss is converted into loss in consumption demand and employment, the damage to the economy may appear even bigger.
Source: The Financial Express
The Centre has released the tenth instalment of Rs 6,000 crore to states as back-to-back loan to meet the goods and services tax (GST) compensation shortfall, taking the total amount released so far through the special borrowing window to Rs 60,000 crore, the finance ministry said on Monday.
Of this, an amount of Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore to Delhi and the union territories of Jammu & Kashmir and Puducherry.
The remaining five states—Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim—do not have a gap in revenue on account of GST implementation.
"Now, more than 50 percent of the estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly," the ministry said.
The amount has been borrowed this week at an interest rate of 4.1526%, while the average interest rate was 4.6892%.
An additional borrowing permission of Rs 1,06,830 crore has been granted to states, it added, equivalent to 0.5% of states’ gross domestic product.
All states have now taken the Rs 1.1 lakh crore option where Centre will borrow the amount and transfer to the states as loans on a back-to-back basis.
The Centre had put two options of borrowing—Rs 97,000 crore and Rs 2.35 lakh crore—with different sets of conditions, for each to meet the GST compensation shortfall. The Centre sweetened the first option by increasing the borrowing to Rs 1.1 lakh crore. The second option was taken off the table as no state showed interest in it.
Some states had initially declined to take any of the options but later chose the first option. The Centre had set up a special borrowing window in October, 2020 to meet the estimated shortfall arising on account of implementation of GST.
Source: The Economic Times
India’s tax pie seems to have undergone a subtle change with a sharp drop in direct tax collections resulting from a disproportionate impact of the COVID-19 carnage on incomes.
The share of indirect taxes, which mainly comprise of levy on goods and services as well as import duty, has risen while that of direct taxes – made up of corporate and personal income tax – has gone down in 2020.
In an interview with PTI, Finance Secretary Ajay Bhushan Pandey said in a pandemic like this where the economy has been impacted, any large scale changes impact direct taxes more severely, whereas indirect tax collection is mostly proportional to business turnover and compliance.
“In a situation like this where the economy has been impacted and we are on the recovery path, the direct taxes are impacted more severely because the profitability of a company is not directly proportional to the turnover always. If your turnover reduces below a certain benchmark then the profit will not merely reduce, but it may get into a negative zone and therefore the company may not pay any income tax as it will be into a loss.
“Similarly, when we are in a recovery phase, the companies will take a longer time to come into the profitable zone to pay income tax. In the case of indirect tax, it is more or less proportional to the business volume and turnover and compliance,” he said. While the government has officially not released direct and indirect tax collections, industry sources said the share of indirect taxes in overall tax collections rose to about 56 per cent, the highest in over a decade for the period. This follows a sharp 26-27 per cent decline in direct tax collections.
Direct taxes are a direct outcome of income levels while indirect taxes are mostly driven by consumption as demand for some goods is inelastic either because of they being essential in nature or not substitutable like petrol and diesel.
Excise collections rose in 2020 after the government raised the tax on petrol and diesel by Rs 13 and Rs 10 per litre, respectively. Customs collections, which reflect duty paid on goods imported, grew substantially in November and December. While the revenue in December was up 94 per cent to Rs 16,157 crore, in November it was up 43 per cent to Rs 11,598 crore.
Pandey said this buoyancy in Customs collection would be due to many factors, including the introduction of faceless assessment. “We are doing the analysis as to what kinds of goods are getting imported and customs duty on those items,” he said. “We have also brought in CAROTAR rules wherein the import from FTA countries are also being subjected to greater scrutiny and we are ensuring that goods which have undergone requisite value addition in exporting countries only they are given the benefit of FTA. So these measures, along with an uptick in the economy, are yielding results.”
The havoc wrecked by the pandemic on tax collections – that is a reflection of the economic well-being of a nation – led to the first major showdown between the Centre and the states since the implementation of the GST regime three years ago.
Sharply split on political lines, states demanded Centre to compensate them – through borrowing or from its own coffers – for the loss of revenue in a year that saw 69-days of complete lockdown and gradual easing thereafter.
The sharp decline in GST collections has led to Rs 1.80 lakh crore shortfall in GST revenues on states. This includes Rs 1.10 lakh crore revenue loss on account of GST implementation and Rs 70,000 crore on account of the pandemic.
The Centre initially opposed the demand made by non-BJP ruled states, insisting that states should borrow against future accruals of GST. For days and weeks, it gave all kinds of reasons why states should borrow but one fine day it agreed to borrow and pass on the loans to states.
GST collections, which along with excise and customs duties form part of indirect tax kitty, seemed to have stabilised over Rs 1 lakh crore mark towards the end of the year as the economy reflated and touched an all-time high of over Rs 1.15 lakh crore in December. But by then the pandemic had left its indelible mark.
Deloitte India Partner M S Mani said “the trend in GST collections during the next two months would indicate the extent to which the collection targets are likely to be fulfilled. The shortfall in the collections during the initial part of the current fiscal due to the countrywide lockdown is significant and would have a bearing on the fiscal deficit numbers”.
Shardul Amarchand Mangaldas & Co Partner Rajat Bose said “It appears that the share of indirect tax collections will increase in the overall tax collections this year. This is because generally, the deficit in indirect tax collections is significantly less as compared to the deficit in direct tax collections.”
Pandey said the government took many landmark steps during 2020 including bringing a dispute resolution scheme Vivad Se Vishwas, introducing faceless assessment, equalisation levy on e-commerce supply or services, replacing Form 26AS by Annual Information Statement.
With over Rs 9 lakh crore locked up in disputes, the Budget announced the Vivad Se Vishwas scheme by way of which disputes could be settled on a payment of tax which is under litigation along with complete waiver from interest and penalty and immunity from prosecution. The scheme garnered over Rs 72,000 crore till mid-November.
Faceless assessment and appeals has brought in a paradigm shift from the earlier face-to-face scrutiny assessment and appeals procedure and is aimed at ensuring no personal interface between taxpayer and assessee.
Taxability of dividends in India underwent a major overhaul during the year with Finance Act 2020 abolishing Dividend Distribution Tax (DDT) payable by domestic companies on the declaration of the dividend and re-introducing the conventional regime of taxation of dividends in the hands of shareholders.
Source: The Financial Express
Infrastructure credit by banks and NBFC-IFCs in the country marginally grew to Rs 22.6 lakh crore in the first half of the current fiscal compared to Rs 22.5 lakh crore in 2019-20, says a report. "While the infrastructure credit grew 7 per cent in FY2020 (19 per cent in FY2019) to Rs 22.5 lakh crore as on March 31, 2020, it increased marginally to Rs 22.6 lakh crore as on September 30, 2020," Icra Ratings said in the report.
According to Icra's vice president and head (financial sector ratings) Manushree Saggar, the tepidness in infrastructure credit in first half of 2020-21 was primarily due to the sequential degrowth (10 per cent) in banking sector credit to the infrastructure segment.
However, non-banking financial companies-infrastructure finance company (NBFC-IFCs) continued to grow at a modest sequential pace of 12 per cent in this period, Saggar noted.
She said that the growth was majorly led by disbursements related to the liquidity package announced by the government for cash-strapped discoms.
The share of NBFC-IFCs in infrastructure credit has increased to 53 per cent as of September 30, 2020 from about 38 per cent five years ago, the report said.
The decline in share of banks during past few years was largely attributable to the conversion of their exposures to state distribution companies into bonds and subdued lending amid asset quality issues and capital constraints, it said.
At the same time, portfolio for NBFC-IFCs continued to grow though largely at the back of growth in the public sector NBFC-IFCs, it said.
As for asset quality, NBFC-IFCs witnessed a deterioration during FY2016-FY2018 on the back of severe stress in the thermal power sector. However, the trend over the past three years suggested receding asset quality pressures, particularly up to the onset of COVID-19-induced disruption, it said.
The gross stage 3 percentage had eased to 5.7 per cent as on March 31, 2020 from 7.3 per cent as on March 31, 2018, supported by controlled fresh slippages and some resolution in legacy stressed assets, the report said.
"The gross stage 3 percentage for NBFC-IFCs eased further to four-year low of 5 per cent as on September 30, 2020, partly aided by limited forward bucket movement amid the prolonged moratorium period," it added.
It said while more clarity on the impact of COVID-19-induced disruption on asset quality trajectory will emerge over coming quarters, most infrastructure sub-sectors remained relatively resilient from debt servicing perspective in lockdown conditions supported by factors such as must-run status of renewable energy projects, healthy recovery in toll collections, liquidity support to discoms.
Source: The Economic Times
Indian Texpreneurs Federation (ITF), Coimbatore believes that Indian textile & apparel sector bounced back very strongly and is doing well now.
“As an association representing the entire value chain of textile sector, we are more confident about achieving the much-needed growth in the year 2021 in our sector,” said Prabhu Dhamodharan, Convenor, ITF.
He said that industry and its stake holders have to focus on six areas including eyeing US market for apparels; on value addition with new capex; thrust on product diversification and innovation as PLI scheme is there; tech adoption & digitalisation, as well as on agility and discipline in credit cycles.
He also added that Vietnam’s free trade agreement (FTA) with the European Union would intensify competition for India, and at the same time a level-playing field with top competing nations for the US market in terms of duty combined with quick economic recovery make a compelling case for Indian apparel sector for immediate growth.
He also said that the industry is currently managing the trade well with sufficient liquidity due to infusion of funds in the system with Central Governments’ Emergency Credit Line Guaranteed Scheme.
ITF, being a leading trade body of the textile and apparel sector, would help ensure the strategies are in line with these focus areas with its member companies and work towards the theme and goal of 2021 ‘A Year of Progress for the Textile and Apparel Sector’.
Source: Apparel Online
The normalisation process in the economy continued its pace for the latest reporting week as well on the back of higher mobility in the holiday season, a Japanese brokerage said on Monday.
Nomura India Business Resumption Index (NIBRI) picked up to 94.5 for the week ending January 3 from an average of 91.7 December, as per a statement.
The rise in the index was “led by an improvement in mobility indices, in sync with the holiday season”, the statement said.
It can be noted that economic activity had reached a trough due to the lockdown to contain the spread of COVID-19 infections in mid-2020 and led analysts to downwardly revise their estimates of economic performance.
However, the recovery has been faster than many expected after the unlock process and the RBI now expects the economy to contract by 7.5 per cent in FY21.
The brokerage said the power demand, which rose 2.7 per cent and 3.1 per cent over the preceding two weeks, corrected 2.7 per cent week-on-week in the latest reporting week.
The labour participation rate eased to 40.3 per cent in early January from 40.9 per cent in December, it said.
The index averaged higher in December (91.7) than in November (86.3) and is starting January at another high (94.5), the statement said.
“This faster normalisation reflects a further moderation in new cases, despite the festive and winter season. In tandem, activity data like auto sales, import growth, GST proceeds, manufacturing PMI and diesel sales improved,” it added.
The key short-term risks include a weak global growth and a sudden volte-face on domestic pandemic control, it said.
Over the medium-term, easier financial conditions, stronger global demand and accelerated vaccinations could lead to an economic upcycle in 2021, it noted.
Source: The Financial Express
The Asian roundtable discussion, held as part of the Economic Times Global Business Summit Unwired Edition 4.0, involved panelists from six countries - Japan, Malaysia, Philippines, Indonesia, Singapore and India. The discussion focused on the economic strength of the region, how intra-regional trade and relationships can be further strengthened, how the various governments have responded to Covid-19 and new investment opportunities that startups in the region bring.
World GDP is likely to contract 4.5 - 5% this year and Asian economies have done marginally better as they are going to contract by 1.5 - 2%, one of the worst contractions after the second world war. “Interestingly Asian trade has stood up and the fall in exports has been much less than what we have seen globally. Which is reflective of the swift policy response, and maybe the inherent resilience of the trading giants of Asia,” says Nitin Jain, MD & CEO, Edelweiss NSE 0.65 % Wealth Management who was the chairperson and moderator of the roundtable discussion.
There are signs of growth all over Asia: Data from IMF shows that growth started in the third quarter of 2020. China’s PMI has strengthened, Japan’s PMI has recovered and South Korea’s PMI scored its highest since Feb 2011. Factory activity grew in Taiwan and Indonesia. India’s manufacturing will get moving again, once vaccines are rolled out next year. Growth in the region is forecast to rebound strongly, in the next two years and as this happens, there will be new opportunities and challenges that both businesses and governments will have to face.
“Asian countries must strengthen internationality, as much as they pursue transnational interests. Diversifying Asia’s economies from over-reliance on exports, to the west is a work in progress. Reorientation towards regional and domestic demand will take time. India is moving in the right direction to cultivate self reliance,” says Prasoon Mukherjee, Chairman, International Business Division IBD, Singapore Indian Chamber of Commerce, SICCI.
One constant theme that emerged in the discussion was India’s importance in the region. “India is the powerhouse that I think has not really been appreciated for what it is. We’ve always looked to China. China is a global power, it’s a manufacturing power, it’s a global strength that none of us can ignore. But I think India's time is coming, and I’d like to see greater cohesion, and greater opportunities coming from linking ASEAN and India.” says Datuk Vinod Balachandra Sekhar, Chairman and Group Chief Executive, Petra Group, Malaysia.
Japan, which went through a severe GDP contraction as its consumer spending dipped heavily during Covid-19 also believes that Japan and India need to have a strong trade relationship that is similar to US and China. “The confrontation between China and the US is becoming very high for these two big economies, and the rest of the countries need to bounce back, especially India and Japan, who are the two biggest economies after China in the region. We need to cooperate to balance the business environment and the political environment for it to become more stable,” says Yoshiki Sasaki, CEO, Japan Strategic Capital, Japan
NASSCOM is doing many programs to strengthen the Japan-India relationship by bringing together Japanese hardware with Indian software and Japanese investors to Indian startups. During Covid-19 NASSCOM was able to increase the number of engagements it did every quarter because of technology. “Earlier, we used to do one program a quarter, but now, we do one program a quarter, but now, we do one program a month for the startups and for the SME community. There is a huge appetite for Japanese venture companies and the investor community,” says Gagan Sabharwal, Senior Director, Global Trade Development, NASSCOM, India
Relationships within the Asia region also have to improve for reasons of supply chains. Most nations are now opting for a ‘China plus one’ strategy and India has to gain from that. “ COVID-19 has provided unique opportunities to to participate in the global supply chains. Multinationals have lost a lot of trust in China with the anti Chinese rhetoric fueled by the international media”, says Dr. Asif Iqbal, Indian Economic Trade Organization.
Industry veterans from Singapore also believe that strengthening relationships between nations in the region is the way forward. “The strength of the region will lie in the social and economic unity of the ACI (ASEAN, China and India) without encroaching on each other's country's borders, and in the wisdom of working together for the betterment of all. The region has been resilient to the challenges in the past, like the Asian financial crisis, the 2008 financial crisis, and we have seen it on and we have emerged together undefeated”, says Atul Temurnikar, Co-Founder & Chairman, Global Schools Foundation, Singapore.
The acceleration that Covid-19 has brought to technology is undeniable. In most countries, this is the only sector that has thrived despite the pandemic. The case is the same for the Philippines. The IT and BPO industry in the Philippines was declared an essential service and has done much better than any other industry in the country.
Many digital and infrastructure initiatives taken by the Philippines are similar to India. “We have to further strengthen our telecom infrastructure, upskill the talent pool, and tap opportunities beyond the metro cities to sustain the growth of the industry. This is why we’ve launched the Digital Cities 2025 program, which aims to establish twenty-five new IT-BPO hubs around the Philippines by intervening in four key areas: Institutional Development, Talent Attraction and Development, Infrastructure Development, and Marketing and Promotion,” says Rey Untal, President and CEO, IBPAP, Philippines.
Indonesia, which has been severely impacted due to Covid-19 as domestic consumption came down drastically, is now looking at revitalizing the economy through trade. “For economic recovery, in health care industry, tourism sectors, agriculture,we will need investment in the agriculture sector to make agri-food products which can be exported for example palm oil. This will be required to improve the economic situation and increase employment in the country,” says Mayra Andrea Mueller, President, Indonesia - Jordan Business Councils.
The discussion also focused on stark economic inequality in the region and how addressing that is the responsibility of businesses. “We need to find a way through which capitalism can uplift everyone. As devastating as Covid has been it has given us an opportunity to rethink and relook at the way we operate. Asia is the future. There is no question about it. It was the future before this pandemic, it is certainly the future going forward,” says Datuk Vinod Balachandra Sekhar, Chairman and and Group Chief Executive, Petra Group, Malaysia.
Collaboration, digital initiatives, a balance between nationalism and regionalism emerged as the key themes during the discussion. It is evident that India is extremely important in the region and more so because of its large start-up ecosystem that offers a great investment opportunity to international investors. The governments in all countries are taking the right steps to support MSMEs and provide new credit lines and opportunities to individuals. With more collaboration and trade the Asian economy can only grow and strengthen more.
Source: The Economic Times
Indian rupee today jumped against towards the US dollar, tracking a broader weakness in dollar and higher domestic equity markets. Rupee rose to a four-month excessive of 72.84 towards the US dollar as in comparison with earlier close of 73.12. In the meantime domestic stock markets continued their record-breaking streak at present with Sensex hitting the 48,000 levels for first time.
Abhishek Goenka, founder and CEO of IFA Global, expects the positive momentum in rupee to proceed within the close to time period.
“In a major positive development, the Drug Controller General of India has cleared the Covishield vaccine (developed by Oxford University and Astra Zeneca and manufactured by Serum Institute of India) and Covaxin (developed by Bharat Biotech) for emergency use authorization in India,” he mentioned.
“In another encouraging development, GST collections for December came in at a record ₹1.15 lakh crore. It is encouraging to see the collections holding up and rising steadily even post the festive season. December trade deficit came in at $15.71 billion, again to pre-COVID levels which indicates that domestic consumption has recovered well.”
On the other hand, Mr Goenka mentioned, the developments on the global front although haven’t been encouraging with US continuing to document a surge in cases and deaths.
The major data to focus on this week would be the FOMC minutes late Wednesday and US December jobs data on Friday. Georgia Senate runoffs may also be closely tracked.
“The race is too near call and if Democrats manage to win both, the president, House and Senate would all be Democrat which would be negative for the Dollar. If however, Republicans win even one runoff, they’d retain control of the Senate. The Dollar could recoup some of it is recent losses in this case,” he mentioned.
The Indian rupee is likely to trade in a range of 72.80-73.20 levels in near term, says Amit Pabari, MD of CR Forex Advisors. “Domestically, sentiments remain boosted as DGCI has granted approval to AstraZeneca and Bharat Biotech for an emergency use of vaccine within the country enabling begin to an enormous immunization program in a week. Optimism on again of vaccine programs and consistent foreign fund inflows amid dollar uncertainty has its drive for rupee momentum on one side, whereas RBI tolerance for the appreciation in INR on different aspect. So far, the pair has respected 73.00 levels for previous couple of months as a consequence of RBI’s active intervention. If RBI will get lenient because the previous week, rupee shall transfer near 72.75 levels that have been last seen in September. However, the strength appears to be short lived considering the widening fiscal deficit and expectations of a growth centric budget that would further aggravate the risk of fiscal slippage for the upcoming year.”
Source: Shree1news
The Coimbatore-based Indian Texpreneurs’ Federation (ITF), which represents the entire value chain of the textile sector, has suggested a six-pronged strategy to to achieve double digit growth in the textile and apparel sector, with the theme '2021-A year of progress for Indian Textile & Apparel Sector'.
As the Indian textile and apparel sector bounced back strongly after the turbulence caused by Covid-19, it hopes to achieve stronger growth in 2021.
“As a sector we are doing $35-37 billion exports (average of last few years) of all products put together. If all goes right we can reach double-digit growth. We can make 2021 a year of progress for the Indian textiles and apparels sector.” Prabbhu Dhamodharan, Convenor, ITF told Business Line.
As the Indian textile sector has staged a strong recovery and is gunning for big growth in the post-Covid era, ITF has outlined six key areas that need stronger focus to achieve their growth objectives.
Firstly, there should be a strong focus on the US market for apparels. The Indian home textile sector was the biggest gainer in volume terms in the US market in the first 10 months of this year. Efforts should be made to repeat the success for Indian apparel.
Vietnam’s FTA with the EU will intensify the competition for India in that regionl. At the same time, a level playing field with our top three competitors in the US market in terms of duty, combined with a quick economic recovery and consumption in the US, makes a compelling case for the Indian apparel sector to focus on the US market for immediate growth.
“We need to intensify efforts and focus at all levels, including the government, cluster and firm level, to grab our share in the US market in apparels, “he said.
Secondly, it is time to focus on value addition with new capex. Using the low interest regime and easy liquidity, combined with robust demand visibilities due to post-Covid opportunities, it is time for the Indian textile & apparel sector to step up efforts in terms of new capex investment at various stages of the value chain, with a single focus on value addition with the goal of a 20 percent increase in per product revenue.
Thirdly, the Indian apparel sector should use the forthcoming PLI scheme as the stepping stone for much-needed product diversification and innovation in the MMF (man-made fibre) space, and build scale to attract global buyers.
Other key areas include focus on technology adoption and digitalization with Industry 4.0 strategies, development of an agile mindset and focus on discipline in credit cycles.
The industry is currently managing the trade well, with sufficient liquidity due to infusion of funds in the system with the Central Government’s ECLGS scheme.
The sector needs to utilize the opportunity to maintain financial discipline, to work on shorter credit terms across the value chain to improve business performance and sustain the recovery momentum, he said.
The Indian textile sector is the sixth largest exporter of textiles and apparels in the world. It has a 12 per cent share in the mercantile exports and is the second largest employment generator after agriculture.
Source: The Hindu Business Line
The external affairs ministry has cautioned the commerce ministry against rising cyber frauds against Indian exporters, which are causing a spike in bilateral trade disputes. This has prompted the Directorate General of Foreign Trade (DGFT) to issue an adisory to exporters to put in place adequate security protocols to ward off such frauds. Cyber frauds are the latest in a series of adversities—from a Covid-induced fall in shipments to an acute container shortage and a drastic cut in official benefits — to hit exporters this fiscal.
In a trade advisory for export organisations, traders and regional authorities on Monday, the DGFT said: “The ministry of external affairs has informed that email spoofing/phishing cyber frauds are causing increased bilateral trade disputes. Though this is registered as a cybercrime in the respective jurisdictions of the country, the authorities cannot do much to reverse the transaction. The victims end up being the Indian exporters who after supplying the goods, have neither the goods in their possession nor have received payment for it.”
The DGFT said after examining the matter, it found that such issues can be largely tackled by implementing security protocols such as sender policy framework, domain keys identified mail and domain-based message authentication reporting & conformance. It has also asked its regional authorities to sensitise exporters through outreach programmes. The exporters should have better passwords and they could confirm bank details by another channel such as a secure voice line.
A contraction in merchandise exports narrowed to 0.8%, year on year, in December from 8.7% in the previous month, according to a preliminary estimate released by the commerce ministry on Saturday. But imports rose at a faster pace of 7.6% in December, the first increase since February, driving up trade deficit to a 25-month high of $15.7 billion.
Source: The Financial Express
The lasting legacy of Covid-19’s impact on India won’t be the large number of fatalities it has caused, it will be how governments across India watched silently as a crashing economy caused a devastating impact on the lives of millions of poor. Going against the call by leading economists to increase spending by targeting direct support to the poor, just as many rich or poor countries around the world had done, the Bharatiya Janata Party (BJP) government’s Atmanirbhar Bharat package restricted direct spending to a fraction of India’s Gross Domestic Product (GDP) and targeted it mostly at businesses. Most state governments followed suit. As a result, the poor were left to fend for themselves during the biggest pandemic in a century.
In contrast, the economic response of the Aam Aadmi Party (AAP) government in Delhi has focused primarily on the poor and created the closest equivalent of a universal social safety net anywhere in India. In the immediate aftermath of the lockdown, the Delhi government’s first priority was food security for all. After announcing free and double ration for nearly 7.1 million existing beneficiaries of the Public Distribution System (PDS) from April onwards, the government also provided free ration to non-PDS beneficiaries by creating 588 additional distribution points, mostly government schools. An additional 5.8 million people were reached, taking the total to 13 million or nearly 65% of Delhi’s population — the widest such coverage for any state.
Knowing that many, especially migrant workers, may still be left out, the Delhi government set-up hunger relief centres at over 1,500 points across the city. At their peak, these centres served two cooked meals to one million people every day — again an unparalleled effort by any Indian state in terms of scale. Additionally, 234 night shelters were set up that provided free stay, food and recreational activities to the thousands rendered homeless during the lockdown. When India started unlocking and special trains started running for migrant workers, the Delhi government paid advance bus/train fares for close to 400,000 workers returning home without any assistance from Centre or their home states.
Targeted cash transfers to those hardest hit by the lockdown were deployed at a wider scale by the Delhi government than any other state. Nearly 160,000 drivers and owners of para-transit vehicles such as auto rickshaws, e-rickshaws, taxis and gramin sewa whose income stopped abruptly during lockdown received ₹5,000 transfer via direct benefit transfers into their accounts. Close to 50,000 construction workers too received ₹10,000 transfer each into their accounts to help them tide over the devastating impact of the lockdown on their livelihoods.
Besides these special measures, however, it is the social safety net synonymous with the Delhi Model created by the Arvind Kejriwal government in the last five years that has stood by the people of Delhi in these troubled times. A household survey conducted by the Delhi government last year estimated that an average Delhi family received ₹2,500 in benefits every month (or ₹30,000 a year) due to four key subsidies under the Delhi Model — free lifeline water and electricity, free treatment and medication in government hospitals and clinics, and free public education. In no other part of India, do citizens expect quality public services for free as they have today come to do in Delhi.
That all these subsidies continued during the last year even though the government revenues dropped by a staggering 90% after the lockdown, is a testimony to the commitment of the Kejriwal government to stand by the common man struggling to survive the economic impact of Covid-19. Besides being the only conscionable path of action, this decision was fuelled by a belief that our economy will survive only if our people emerge strong out of this crisis. Covid-19 has taught all governments many lessons. But the most important one will be this: The strength of our social safety net will determine the heights the Indian economy will scale.
Source: The Hindustan Times
After an increase in purchases by domestic buyers, the textile industry in Gujarat is now witnessing encouraging export demand from Europe, USA, Australia and New Zealand.
The textile industry went through a tough period from April to July 2020 following the Covid-19. Now, however, demand is high on both the domestic and international fronts.
“From August, textile units started functioning again amid scattered orders from domestic buyers. By Diwali, most textile manufacturers got many orders from all across the country. Not only were manufacturers able to exhaust unsold inventory, but also the entire textile value chain, especially in Ahmedabad and Surat, experienced unprecedented business opportunities,” Gaurang Bhagat, president of the Ahmedabad-based New Cloth Market, said.
He said that from December 2020, home textile, cotton and synthetic fabric manufacturers started getting exports orders too.
Bhagat, who is also the trade committee chairman of the Gujarat Chamber of Commerce & Industry (GCCI), claimed that some importers from the US, Europe, Australia and New Zealand have decided to source textiles from Indian suppliers instead of China, Pakistan and Turkey.
He said the industry is also benefitting from the textile exhibition FABEXA 2020, in which participants from 52 countries took part. Organisers were forced to hold the exhibition online, but the efforts seem to be translating into real business, Bhagat said.
Sanjeev Sancheti, CFO Welspun India, said that domestic textile players are getting extra export business as global brands are finding it risky to depend on suppliers from a single country due to the pandemic. “China being the dominant supplier is obviously losing some part of supply to India. This new situation is advantageous for smaller textile players. Welspun, being a big company, already has long-term supply orders. However, we are expecting a significant upside in the flooring textile space,” Sancheti said.
Anand Prakash, general manager of Ahmedabad-based Nandan Terry, said his company recently received export orders till June this year. “Retailers in Europe, US and other markets have run out of stock and need to create inventory for four to five months, which is a huge quantity. Suppliers in Pakistan and Turkey have capacity restrictions. In the case of China, there is a trust deficit due to the outbreak of coronavirus. Hence, the Indian textile industry is benefitting,” Prakash said.
Source: The Financial Express
Under the Trump administration, US-India tensions have increased over each side’s tariff policies, a Congressional report has said, noting that the two sides have also held concerted negotiations to address these trade frictions.
The bipartisan Congressional Research Service (CRS), in its latest report, pointed out that India’s recent tariff hikes on cell phones and other telecommunication goods went up from zero per cent to 15-20 per cent in the last few years.
“Under the Trump administration, bilateral tensions increased over each side’s tariff policies. In general, India has relatively high average tariff rates, especially in agriculture. It can raise its applied rates to bound rates without violating its commitments under the WTO (World Trade Organization), causing uncertainty for US exporters,” said the CRS report, which is prepared for the members of Congress ahead of trade decisions.
The United States and several other countries have requested to join various WTO dispute consultations against India, related to its technology tariffs, also questioning its compliance with the WTO Information Technology Agreement (ITA).
“India opposes the 25 per cent steel and 10 per cent aluminum national security-based ‘Section 232’ tariffs that the Trump Administration imposed in 2018. India repeatedly delayed applying planned retaliatory tariffs against the United States in hopes of resolving the issues bilaterally,” it said.
After India lost its eligibility for the US Trade Preference Program, India imposed higher tariffs of 10 per cent to 25 per cent, affecting about USD 1.32 billion of US exports, such as nuts, apples, chemicals, and steel, the report stated, adding that the two sides are challenging each other’s tariffs in the WTO.
“Under the Trump administration, the United States and India held concerted negotiations to address trade frictions. A potential trade deal could include partial restoration by the United States of India’s GSP (Generalised System of Preference) benefits in exchange for certain market access commitments according to press accounts,” CRS said.Yet, the long expected limited trade deal has not materialised to date, the report said.
Negotiations under prior administrations on a Bilateral Investment Treaty (BIT) are stalled due to differences on approaches on investor protection.
On the government-to-government trade policy, the CRS listed a set of key issues. Main among them was what aspects of bilateral trade relations would change or remain the same under a President-elect Joe Biden-led administration.
President Donald Trump, a Republican, is set to be succeeded by Biden, a Democrat on January 20 after he won the November 3 presidential election.
Other key issues were, what trade issues should the United States and India prioritise in future talks, the potential for broader trade agreement negotiations, will India and the United States renegotiate entry into the Regional
Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), or potentially seek other ways to engage on regional issues, and are there opportunities for the United States and India to bridge differences on multilateral trade issues.
Noting that India and the US have signed defense contracts worth more than USD 20 billion since 2008, up from USD 500 million in all previous years combined, the CRS said the future big deals are the purchase of an Integrated Air Defense Weapon System, valued at nearly USD2 billion, and 30 MQ-9B Sky Guardian drones worth more than USD 3 billion.
“India is eager for more technology-sharing and co-production initiatives, while the United States urges more reforms in India’s defence offsets policy and higher Foreign Direct Investment caps in its defence sector. India’s multibillion-dollar deal to purchase the Russian-made S-400 air defense system may trigger US sanctions on India under the Countering America’s Adversaries Through Sanctions Act, the CRS said.
Source: The Financial Express
Germany was again the driving force and in contrast to the bloc’s dominant service industry - which has been particularly badly impacted by lockdown measures to tackle the coronavirus - factories in the region have mostly remained open.
IHS Markit’s final Manufacturing Purchasing Managers’ Index (PMI) rose to 55.2 in December from November’s 53.8, although that was below the initial 55.5 “flash” estimate.
Anything above 50 indicates growth, and December was the highest reading since May 2018. An index measuring output, and which feeds into a composite PMI due on Wednesday that is seen as a good guide to economic health, rose to 56.3 from 55.3.
“The economy consequently looks set to be hit by the pandemic in the fourth quarter far less than the unprecedented decline in the second quarter thanks to the resilience of manufacturing,” said Chris Williamson, chief business economist at IHS Markit.
Although the euro zone economy likely contracted again last quarter as renewed lockdown measures stifled activity, a December Reuters poll suggested the bloc’s GDP will return to pre-crisis levels within two years.
New orders increased amid strong demand for German goods and in part reflecting a temporary spike in British demand prior to the end of the Brexit transition period.
But despite strong demand and factories building up a backlog of orders at one of the sharpest paces in nearly three years, headcount was reduced again last month, albeit at a slower pace. The employment index nudged up to 49.2 from 48.7.
“Employment continued to be cut, but this follows a similar pattern to the recovery from the global financial crisis, with the job market improvement coming later than the rise in production,” Williamson said.
“Assuming output growth can be sustained, jobs should soon follow.”
Source: Reuters India
Industry experts, while speaking at the recently concluded ASW-organised V-Expo, were of the view that Indian apparel exporters are fast heading towards the right direction.
The general view was that majority of apparel exporters were doing everything right as preferred suppliers to their respective buyers.
While speaking at the panel discussion on ‘Preferred Supplier in The New Normal’, the industry experts, however, added that it was necessary for the apparel exporters to maintain the same momentum in 2021 as the new year will continue to pose global business challenges such as retail bankruptcies, smaller MOQ, tight costing, amongst others.
The panellists included the likes of Mridula Lall, Global Sourcing Manager, Indiska; Sanjay Thakur, Sourcing Director, Ethical Sourcing; Venky Nagan, Group CEO, Asmara and Alpana Razdan, Country Manager (India and Bangladesh), Falabella.
Anika Passi, Global Sourcing Expert, was the moderator of the show.
Speaking about the threat from China, the panellists cautioned that China was definitely down at this moment, but they were much in the race and cannot be overlooked.
China was continuously investing in many countries and therefore there will be indirect competition for other destinations, going forward.
Source: Apparel Online
U.S. manufacturing activity picked up at its briskest pace in more than six years in December, extending a recovery in the factory sector that has spurred the strongest pricing environment for goods producers since 2011 as the coronavirus pandemic upends supply chain networks.
Still, IHS Markit’s final manufacturing purchasing managers’ survey of a rocky 2020, released on Monday, showed the sector’s rebound was uneven. Consumer goods makers saw weaker order flow as COVID-19 infections surged and limited consumer spending, while producers of machinery and equipment noted strong demand in a potential sign of improving business investment, said Chris Williamson, Chief Business Economist at IHS Markit.
IHS Markit said its manufacturing PMI climbed to 57.1 in December from 56.7 in November. The index also improved from its preliminary - or “flash” - reading in mid-December of 56.5, with a reading above 50 signaling expansion in activity.
The index finished 2020 at its highest level since September 2014, with December’s gain marking the eighth straight month of improvement after plunging to its lowest in more than a decade in April when the first rounds of business shutdowns to contain COVID-19 were in full swing.
With output moderating to 58.3 last month from 59.2 in November, the headline index’s improvement was driven largely by a strong pricing environment, IHS Markit said. Its output price index rose to its highest since May 2011.
“Amid a significant deterioration in vendor performance, cost burdens and selling prices soared, as firms sought to partially pass on higher input prices,” IHS Markit said in a statement. “Output expectations moderated slightly, however, as the post-election spike eased and virus cases surged once again.”
Source: Reuters India
The recent monthly data published by the Pakistan Bureau of Statistics for the first four months of the current financial year confirms that the textile and clothing export shipments are back on the growth of their quantity and dollar value.
The data shows that the textile shipments have surged by 3.8 percent to $4.8 billion between July and October from $4.6bn a year ago. The rise in the textile and clothing group has been faster than the 0.6pc growth in the overall export.
All Pakistan Textile Mills Association (Aptma) Chairman Adil Bashir described this could not happen automatically.
Bashir told, “Industry’s demand for rationalizing energy tariff had been accepted by the current government and just when we were about to take off in early 2020, COVID-19 hit the world.”
Around 60% share in total exports of Pakistan’s economy comes from the textile market. Contributing to the national gross domestic product (GDP) is 8.5% and with 15 million people, directly and indirectly.
Stakeholders want to expand Pakistan’s minuscule share in global textile exports.
The government has recently announced a lucrative energy package for the industry to help the exporters. The package does away with peak electricity rates, offers reduced tariffs on additional power consumption, and fixes power price at $0.07 a unit and gas tariff at $0.065mmbtu for the export industries.
The central bank has reduced interest rates by 625bps, approved refinancing of wages and deferred payments of the principal amount of loans, provided relief under the Export Financing Scheme (EFS) and the Long-Term Financing Facility (LTFF). Furthermore, the State Bank has also launched a long-term facility.
Like all global players, Pakistani counterparts have been urged to focus on value addition for a greater share in the European and American markets. A lack of value addition is the reason why export figures have been almost stagnant for a decade.
In the financial year 2019-20, Pakistan’s textile sector fetched $12.5 billion in export earnings against $13.33 billion in 2018-19, whereas in 2010-11 the export revenue stood at $13.8 billion.
In the first five months of 2020-21, the sector posted export revenue of $6.05 billion against $5.76 billion. Many exporters and government officials are calling it a huge success. Most of the textile entrepreneurs are optimistic about the future, believing Covid-19 has somehow helped boost the sector.
Currently, the entire value chain is overloaded with export orders due to lockdown in competing markets and expected the trend to continue in the future. They need new investment in Greenfield projects.
It can be done when the government streamlines things for the sector. A proper textile policy to date implemented in true letter and spirit along with long-term energy tariffs to build investors’ confidence can cause this sector to perform overwhelmingly in the coming years.
Source: Textile Today
