The Centre’s fiscal deficit will touch at least 6.1 per cent of gross domestic product (GDP) in 2020-21 (FY21). This based on the first set of advance growth estimates released by the government on Thursday, ahead of the Union Budget on February 1.
This assumes the gap between Centre’s expenditure and revenue to be at least Rs 12 trillion, based on increased borrowing announced by the government in May to deal with the Covid-19 outbreak.
However, economists estimate the full-year’s fiscal deficit to range between 7 per cent and 9 per cent of GDP, against 3.5 per cent estimated by the government in the Budget. Then, the government had assumed a nominal GDP growth of 10 per cent over the previous fiscal year at Rs 224.8 trillion.
Economic activity had come to a standstill in the first quarter (Q1) of FY21, causing steep fall in revenue, followed by increased government spending in the form of three stimulus packages to revive demand.
The National Statistical Office on Thursday estimated nominal GDP at Rs 194.8 trillion — a 4.2 per cent contraction over the previous fiscal year.
Madan Sabnavis, chief economist, CARE Ratings, estimates fiscal deficit to widen to 9 per cent of GDP in FY21. “With the resumption of economic activity, the tax and non-tax revenues could see improvement. However, the gains will not be sufficient to make up for the lost revenue and will also be contingent on the sustainability of pick-up in economic activity,” he said.
Aditi Nayar, principal economist, ICRA Ratings, projects the Centre’s fiscal deficit at Rs 14.5 trillion in FY21, which is 7.5 per of GDP.
The central government had budgeted to borrow Rs 7.8 trillion in FY21, but was forced to raise it by as much as 54 per cent in May amid decline in revenue, taking the borrowing close to Rs 12 trillion. The Centre will borrow Rs 4.34 trillion, or about 34 per cent of the full-year target, in the second half, which will account for stimulus measures and lower-than-expected disinvestment revenue.
The government had budgeted disinvestment proceeds of Rs 2.1 trillion for FY21, but only 3 per cent of that has been achieved till October.
The Centre’s fiscal deficit had widened to 135 per cent of the full-year’s Budget Estimates at Rs 10.7 trillion in the first eight months of FY21. It is 33 per cent higher than the corresponding period last year. The fiscal deficit had breached the Budget target in July itself as the economy faced the most stringent Covid lockdown in Q1.
Finance Minister Nirmala Sitharaman had last month outlined the government’s resolve to increase spending to support the economy without worrying about the fiscal deficit target.
Source: The Business Standard
The COVID-19 pandemic had its adverse effect on the sales of the Indian textiles and apparel industry, with overall sales dropping by 36 per cent in H1 FY21 compared to that in H1 FY20. In Q2 FY21, however, there have been signs of a remarkable recovery, with the average EBIDTA percentage recovering by 7.4 percentage points from Q1 FY21 to Q2 FY21.
The overall EBIDTA showed a decline of 58 per cent in H1 FY21 as compared to H1 FY20. Raw material (RM) cost and manpower cost also decreased by 36 per cent and 23 per cent, respectively during the same period, according to the latest edition of the Wazir Textile Index (WTI), which encompasses the highlights of the cumulative financial performance of the top Indian textile companies with respect to the market performance of the Indian textiles sector in H1 FY21.
The consolidated sales of the selected top 10 companies were ₹12,934 crore in H1 FY21 as compared to ₹20,235 crore in H1 FY20 and showed a decline of 36 per cent as compared to the previous year, according to the WTI.
As compared to H1 FY20, the average EBITDA margin has also declined by 4.5 percentage points in H1 FY21 for the selected top companies. Average RM cost decreased by 0.3 percentage points, while the average employee cost increased by 2.3 percentage points in H1 FY21 as compared to the same period during the previous financial year.
The textiles & apparel (T&A) exports in H1 FY21 stood at $11.9 billion, showing a dip of 29 per cent from H1 FY20. The exports of filament and apparel witnessed the highest dip of 49 per cent and 39 per cent, respectively. In Q2 FY21, exports of fibre have shown a significant recovery of 78 per cent y-o-y due to the increase in cotton exports amid the US ban on the purchase of cotton products from China. On the home textiles front, exports witnessed a steady recovery in Q2, led by high hygiene and wellness consumption across the US and EU territories.
The Indian T&A industry showed a significant recovery in overall sales and EBIDTA levels in Q2 FY21 as compared to Q1 FY21. The consolidated sales rebounded by 97 per cent from Q1 FY21 to Q2 FY21 and the average EBIDTA percentage recovered by 7.4 percentage points from Q1 FY21 to Q2 FY21. The performance of exports also showed recovery with only 1 per cent decline in Q2 FY21 as compared to 56 per cent decline in Q1 FY21. With these results and the beginning of the post-COVID world, the T&A industry is anticipated to show positive results in the next quarter.
Source: Fibre2fashion News
Will the Indian economy cross the $5-trillion mark? It is like asking if the sun will rise tomorrow. The real question is: when?
Belying many doomsday predictions, the Covid-struck Indian economy has proven to be resilient. Recent data provides some evident signs of recovery. Auto sales, consumer durables, freight traffic, and consumption of petroleum products, all have shown a marked acceleration in the last 3-4 months. The GST figures for December 2020 at Rs 1.15 lakh crore are by far the highest monthly collection with an impressive year-on-year growth rate of 11.6 percent.
Contrary to the feared double-digit contraction, the economy size is expected to shrink by only 7-8 % for this fiscal year. Due to bumper harvest and income support provided by the Centre, the agricultural sector has registered a decent growth in the June 2020 quarter. Besides, the relatively small share of luxury services such as hotels, restaurants, etc. — the most affected economic activities by the Covid — restricted the extent of the damage to the economy.
The economy is expected to grow at 10% in the next fiscal year to become one of the fastest-growing economies in the Asia-Pasific region. By the end of 2021, the economy would have made up for the contraction this year. What happens thereafter will determine how fast India will achieve the $5 trillion mark. Will there be enough steam left to deliver a growth rate of 8-9%?
The journey is not going to be smooth. The pandemic has hit the employment and income of many engaged in services and informal sectors. According to media reports, there is a spike in small borrowers’ auto-debit transactions’ failure rates, presumably due to lack of funds in their accounts. Private demand and investments remain subdued as the credit growth rates are low to 5.5-6 % compared to the long-term average of 14-15%. After the second wave of Covid in the developed world, prospects for exports are also uncertain.
Fortunately, the medium to long-term prospect remains sanguine. Contrary to the pessimistic view in the World Bank’s Global Economic Prospects report 2021, the Indian economy has come out of Covid without severe damage to the factors of production: labour and capital. For most banks and NBFCs, loan repayment rate remains high. The quality of their assets now is better than the past one decade.
Macro fundamentals like low-interest rates, sufficient foreign exchange reserves, low external debt, manageable inflation and political stability are conducive for growth. There is pent-up demand from middle and high income groups who were unable to spend much in the last three quarters. Quick vaccination can expedite the economic recovery. Pharmaceutical, information technology, and textiles sectors would benefit from the sizable fiscal spending by foreign governments’ vaccination and income supports.
However, reaching the $5-trillion mark would require serious doses of additional investment and increased productivity.
Structural reforms such as insolvency and bankruptcy code or the GST along with agricultural and labour sector reforms and digital India initiatives will help boost productivity of public and private sectors.
The real challenge is to ensure funding of the fresh investments required to make the Indian economy the third largest economy. The three sectors calling out for attention are healthcare, agriculture, and infrastructure.
Good quality physical and digital infrastructure is crucial for the Atmanirbhar Bharat Abhiyan. Given the states’ dismal fiscal position, the onus of infrastructure funding is with the centre. Moreover, private investment through public-private partnerships (PPP) can provide some much-needed funding support. This author’s study shows that PPPs expedite project execution speed and improve infrastructure assets’ quality. The benefits of infrastructure investment will be multifold — employment, demand boost across sectors, efficient supply chains, and increased competitiveness of the economy. Investment in digital infrastructure and artificial intelligence is needed for India to emerge as an intelligent services’ hub, and for foreign companies to see it as a viable alternative to China and relocate to India.
According to an estimate, we need an investment of Rs 500 lakh crore over the next seven years. Inevitably, most of this investment would be sourced from domestic banks and capital markets, and foreign direct investment. However, private investment depends on the cost of capital, and regulatory certainty. Here, much more remains to be done. Many projects remain mired in contractual disputes with government departments and face various regulatory hurdles. Regulation and pricing of infrastructure remains a source of uncertainty. All these factors that make private investment unnecessarily risky are the primary reasons behind investors’ aversion towards projects.
The funding support provided for infrastructure and policy measures to reduce uncertainty over private investment will determine when we become a $5 trillion economy. The Budget 2021 is going to be a tightrope walk for the Finance Minister.
Source: The Economic Times
Digital Services Taxes (DST) imposed by India, Italy and Turkey discriminate against American companies and are out of sync with established international tax principles, the US Trade Representative’s (USTR) office has said, rejecting New Delhi’s contention of its equalisation levy, or the so-called ‘Google tax’, being non-discriminatory. Although the USTR held off potential retaliatory tariffs against the country, for the time being, it warned it “will continue to evaluate all available options”. The US Trade Representative’s “Section 301” investigation into the DST suggests that of the 119 companies that are likely liable under the tax regime, 86 or 72% were American companies.
While New Delhi isn’t planning to roll back the levy, adopted from April 2020, anytime soon, it may review the impost once there is a global consensus on such taxation under a G20 framework that is being worked out, an official source indicated. Another senior government official termed the USTR’s probe finding “deeply flawed”, as it erroneously argued that the levy was imposed only on “non-resident” entities. In fact, it was brought in to ensure the level playing field between residents and non-residents.
The latest impost was introduced in the Finance Act 2020 by widening the scope of the equalisation levy to include e-commerce players and intermediaries. It’s a sort of digital tax on non-resident e-tailers at 2% on the revenue they generate in India from eCommerce supply or services. This levy has to be deposited by the e-commerce operator and not by the buyer of the goods or service.
Earlier, the equalisation levy (at 6%) was introduced in 2016 and slapped on the revenues generated on business-to-business digital advertisements and allied services of the resident service provider. The levy is designed to nullify the advantage of foreign-commerce firms sans a physical presence in India over local competitors. The USTR probe argues that the levy taxes companies’ revenue rather than income, so it’s inconsistent with international tax principles. But the Indian official points out that several international tax measures such as tax on royalty and on technical fees are levied on revenues received as royalty or fees for technical services. Similarly, the US probe seems to argue that companies should not be subject to a country’s corporate tax regime absent a territorial connection to it. But the Indian official said as many as 50 of the 52 US states have enacted laws on taxation of remote sellers and marketplace facilitators, which tax entities that are not US residents.
Earlier, in its reply to the office of the USTR office, India had opposed the US probe, firmly asserting that its equalisation levy was “non-discriminatory”, has only prospective application and didn’t specifically target American companies. “The underlying policy objective and application of India’s equalisation levy is to ensure that neutral and equitable taxation is applicable to e-commerce operators that are resident in India or have a physical presence in India and those that are not resident in India.” “The purpose is to ensure a level playing field with regard to e-commerce activities undertaken in India.
“This, in fact, is the very antithesis of the underlying apprehensions listed out in the USTR’s S.301 DST Initiation,” India had argued. The probe was launched under the Section301 of the Trade act of 1974. This law authorises authorities to initiate action, including punitive tariffs, in response to a foreign country’s action that is deemed unfair or discriminatory and curbs American trade.
Source: The Financial Express
India has implemented several measures to facilitate trade, such as simplification of procedures and customs clearances for imports and exports, according to WTO.
Geneva-based World Trade Organisation (WTO) said that the other trade-facilitation initiatives introduced by India since 2015 include introduction of Indian Customs Electronic Gateway (ICEGATE); Single Window Interface for Facilitation of Trade (SWIFT); the Direct Port Delivery and the Direct Port Entry facilities; and the increased use of the Risk Management System (RMS).
These points were part of the report of India’s seventh Trade Policy Review (TPR), which began on January 6 at the World Trade Organization. The TPR is an important mechanism under its monitoring function, and involves a comprehensive peer-review of the member’s national trade policies.
India’s last TPR took place in 2015.”During the period under review, India implemented several measures to facilitate trade, such as a reduction in the number of documents required, and the automation of the customs clearance system for imports and exports,” the WTO has said. It added that India’s trade policy remained largely unchanged since the previous review. India continues to rely on trade policy instruments such as the tariff, export taxes, minimum import prices, import and export restrictions, and licensing, it said.
“These are used to… manage domestic demand and supply requirements, protect the economy from wide domestic price fluctuations, and ensure conservation and proper utilisation of natural resources. As a result, frequent changes are made to tariff rates and other trade policy instruments, which creates uncertainty for traders,” it added.
To support both domestic production and exports, it said, India continues to provide a number of incentives, in the form of direct subsidies and price support schemes, tariff concessions or exemptions, or preferential rates of interest. Meanwhile, an official statement said that India’s delegation for the TPR was headed by Commerce Secretary Anup Wadhawan.
In his opening statement to the WTO Membership on the occasion, the secretary emphasised that this review is taking place at a time when the world is witnessing an unprecedented health and economic crisis.With an eye on the rapidly expanding size of the Indian market, leading industrialised and developed countries sought greater liberalisation of India’s trade policy, especially in the area of agriculture, harmonising its standards regime with international standards as well as reducing anti-dumping and other trade-remedy measures, it said.
He highlighted that, in order to deal with the immediate fall-out of the COVID-19 pandemic, India has advocated a short-term package of effective measures at the WTO that includes a temporary waiver of certain TRIPS provisions to increase manufacturing capacity and ensure timely and affordable availability of new diagnostics, therapeutics and vaccines for COVID-19; and a permanent solution for public stockholding for food security purposes to address food security concern.
The country has also suggested for a multilateral initiative that provides for easier access to medical services to facilitate easier cross-border movement of health care professionals.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement came into effect in January 1995. It is a multilateral agreement on intellectual property rights such as copyright, industrial designs, patents and protection of undisclosed information or trade secrets.
“A comprehensive report issued by the WTO Secretariat on the occasion, chronicling all major trade and economic initiatives that India took over the last five years, acknowledged India’s strong economic growth at 7.4 per cent during the period under review and made a positive note of India’s reform efforts during this period,” the statement said.
The TPR meeting will continue till January 8, when further discussions on India’s trade and economic policies will continue among members.
Source: The Financial Express
The economy will grow between 8 and 11.5 per cent at constant prices and at 11-15.5 per cent at current prices during 2021-22, say economists.
It is gross domestic product (GDP) growth or economic expansion at current prices that plays a crucial part in Budget making. It is on the basis of this number that tax figures and fiscal deficits are projected.
As the economy is expected to decline 7.7 per cent in the current fiscal year, D K Srivastava, chief policy advisor, EY India, has pegged GDP growth at constant prices at 8 per cent in 2021-22. He projected nominal GDP to be 11-11.5 per cent.
He said there would be very strong recovery next fiscal year largely due to the base effect.
He said manufacturing, which was projected to decline by 9.4 per cent in the current financial year by advance estimates, would do better. Also construction will do well, he said.
Within services, financial, real estate and professional services are expected to perform well, he said. This sector was projected to fall 0.8 per cent in 2020-21.
On the other hand, trade, hotels, transport, communication and services related to broadcasting are likely to witness continued contraction, Srivastava said.
However, the rate of construction may fall compared to the 21.4 per cent decline expected this financial year by official estimates, he said.
Government-induced public administration, defence, and other services are likely to grow 8 per cent in the next financial year compared to a fall of 3.7 per cent projected this financial year by advance estimates.
Soumya Kanti Ghosh, State Bank of India group chief economic advisor, estimated real GDP growth at 10-11 per cent and nominal GDP growth rate at 14-15 per cent. He said nominal GDP would be more or less the same as was assumed for 2020-21 in the Budget, presented in February last year.
The Budget had assumed nominal GDP at Rs 224.89 trillion for the current fiscal year, but advance estimates have now pegged it way down at Rs 194 trillion.
CRISIL Chief Economist D K Joshi says the real GDP growth rate would be 10 per cent and the nominal one 14 per cent in the next fiscal year. He said depending on the stimulus provided in the Budget and spread of the pandemic, one may have to adjust and readjust numbers.
“Nothing is cast in stone,” he said.
ICRA Principal Economist Aditi Nayar estimated the real GDP growth rate at 9.5-10.5 and nominal GDP growth rate at 13.5-14.5 per cent.
Vivek Kumar, economist at QuantEco Research, projected GDP at constant prices to grow 11.5 per cent and at current prices by 15.5 per cent during 2021-22.
He said it would be primarily due to the base effect but there will be some recovery. After the vaccine is rolled out in the next few months and it reaches a critical number, there will be a positive impact on sentiment on both the consumer and business fronts, he said.
Kumar said improved consumer sentiment would lead to demand generation, which was lacking in the current fiscal year. This would also have repercussions on business sentiment and investment, he said.
He expects fiscal and monetary policies to support economic growth in 2021-22.
Source: The Business Standard
India’s fiscal deficit for year ending in March is likely to be over 7% of gross domestic product, three sources told Reuters, as revenue collections suffered from a lockdown and restrictions to rein in the spread of COVID-19.
India’s government had projected a fiscal deficit of 3.5% of GDP for the current year last February. It estimated government borrowing of 7.8 trillion rupees, later revised to 12 trillion rupees, to provide relief to millions of people and businesses hurt by the pandemic.
A fiscal deficit of more than 7% would be higher than some private economists have projected. Many of them forecast an uptick in tax collections in the second half of the fiscal year. But government sources say the uptick won’t be enough to compensate for earlier losses.
“The fiscal deficit will be bigger than what is estimated by some ... Our revenue collections suffered due to the complete lockdown in the first three months and that is hard to recover,” said a source with direct knowledge of budget discussions. “What we’re looking at is a 7% plus.”
Two of the sources said the revenue shortfall from tax and divestment of state-run companies could be as much as 7 trillion rupees.
A finance ministry spokesman declined to comment on the matter. The government has yet to release any revised fiscal deficit estimates.
The pandemic and stringent lockdown measures imposed by India in the early stages hit India hard. Asia’s third largest economy recorded its first-ever recession with a contraction of 23.9% in the April-June quarter and a 7.5% fall in the September quarter.
India is set to release its first advance estimates of GDP for the 2020/21 fiscal year later on Thursday.
Another senior government source said government finances were in poor condition because of the shortfall in tax receipts, but the government has limited room to cut spending as revival of the growth remained top priority.
“We could see the worst-ever fiscal deficit numbers in the current financial year,” said another government source with direct knowledge of budget matters, adding the fiscal deficit could touch 8% of GDP.
The final fiscal deficit estimates will be announced by Finance Minister Nirmala Sitharaman on Feb. 1, when she presents her annual budget for the next financial year.
Source: Reuters India
The finance ministry on Thursday said the GDP estimates suggest a continued resurgence in economic activity in second half of the current fiscal and point at post-lockdown sustained V-shaped recovery.
The ministry was commenting on the first advanced estimates (AE) of the national income released by the National Statistical Office on Thursday, which projected 7.7 per cent contraction in GDP for the current fiscal year.
“The AE of 2020-21 reflect continued resurgence in economic activity in Q3 and Q4 — which would enable the Indian economy to end the year with a contraction of 7.7 per cent,” it said in a statement.
The continuous quarter-on-quarter growth endorses the strength of economic fundamentals of the country to sustain a post-lockdown V-shaped recovery, it added.
It further said the movement of various high frequency indicators in recent months, points towards broad based nature of resurgence of economic activity.
“The relatively more manageable pandemic situation in the country as compared to advanced nations has further added momentum to the economic recovery,” the ministry added.
On the demand side, it said real GDP in 2020-21 has been supported by an estimated increase in Government Consumption Expenditure by 5.8 per cent.
On the supply side, agriculture is estimated to register a growth of 3.4 per cent against 4 per cent as per the provisional estimate of 2019-20.
In the manufacturing sector, electricity sector is estimated to register a growth of 2.7 per cent, the data showed.
The pandemic and associated public health measures have adversely affected the contact-sensitive services sector where trade, hotels, transport and communication are estimated to contract by 21.4 per cent in 2020-21.
The ministry further said as two vaccines get emergency use approval in India, the government is undertaking preparations of a mass mega vaccination drive.
However, while the impending vaccination is drawing closer, continued observation of “covid-appropriate” behaviour, caution and surveillance is crucial.
Source: The Financial Express
After staying low and stable for over five years, the inflation rate based on the Consumer Price Index has started hovering over and above the RBI’s targeted upper level of 6 per cent over the past eight months since April 2020. Currently, for the month of November 2020, it is at 6.93 per cent, and this is lower than 7.6 per cent registered in the previous month.
Although the recent inflation expectations survey done on households by the RBI suggests an expected moderation due to expected cooling of food prices, it also suggests a continued pressure on core (excluding food and fuel) inflation in the coming months. This is against expectations of many analysts during the beginning of lockdown that there could be deflationary pressure while what is experienced since then is the inflationary pressure.
While this appears to put pressure on the RBI as it is against its legal mandate and may need to submit a report to the parliament explaining the reasons for such slippage, it is important to understand what led to such prolonged inflationary pressure. But most importantly, it is also necessary to discuss the policy options to mitigate the problem going forward. As the government is also going to review the existing inflation targeting framework in March 2021, these issues become more crucial.
Before we understand the drivers of inflation, it is necessary to look at inflation variability. The recent data for November 2020 suggest that inflationary pressures appear to be more in the rural areas than in the urban areas. Further, between the states, there appears a large variation where out of 36 states nearly 29 states suggest a larger rural inflation compared to urban inflation when we look since 2012. In a way, from a public policy perspective, while headline inflationary pressures appear to be a major concern, in our view, such variability across the regions should equally be a cause for concern.
One of the three major drivers for high inflation during the pandemic is the huge disruptions in the supply side factors. Although the lockdown has led to sudden stop to the demand, it appears that the supply disruptions appear to be larger than the disruptions to demand and, hence, inflationary pressures. Another reason could be due to firming up of international oil prices, which was subdued for a long time, and the subsequent increase in the petroleum taxes. And lastly the fiscal and monetary support measures to rescue the economy from deep recession also appear to put inflationary pressures. While, unlike during the 2008 Global Financial Crisis, the short-term fiscal support measures where muted and hesitant, monetary support measures such as cuts in policy interest rates and liquidity measures have been rightly frontloaded. There were few fiscal measures as part of the Atmanirbhar Bharat and that were a combination of stimulus as well as support measures. In the context of inflationary pressures, there is a need to distinguish between support and stimulus measures. While the stimulus measures are expected to stimulate demand, support measures are expected to revive the economic activities from the supply side. The relative efficacy of these measures could to some extent explain the present inflationary pressures.
In terms of outcomes, the monetary support measures have seen better transmission mechanisms with bank lending rates adjusting to reduction in policy rates faster than was experienced in the recent past. Liquidity measures have helped ensure financial stability in a big way, although huge surplus liquidity overhang could be leading to inflationary pressures. But more concern is the impact of these measures on the credit off-take, which appears to be minimal. Similar outcomes are also expected from the fiscal measures where the stimulus measures have been implemented successfully, support measures are yet to show similar outcomes. This could be largely because of supply chain disruptions that could have hampered production units in revival plans. Painful reverse migration that was witnessed during the lockdown could pose long term challenges to reviving production activities especially in crucial sectors such as MSMEs, construction, as well as in trade sectors, which have significant forward linkages with other sectors in the economy.
Now the issue is what needs to be done? As inflation management is still a core objective of RBI, can they start tightening the monetary policy? With the economy still facing recessionary trends, can fiscal policy start exiting its stimulus/support measures? The answer is clearly one of calibration of both the policy measures in such a way that premature withdrawal of support measures does not stall the recovery process. However, there is a need for better sequencing of exit policies especially when there is trade-off between inflation and GDP growth. While interest rate tightening could wait until growth revival is robust, there is a need to mop-up (sterilise) excess liquidity in the system especially when the financial stability is intact. On the fiscal policy side, as it has been following, there is a need to address sectoral concerns especially in crucial sectors such as rural development, MSMEs, real estate, trade groups, etc. However, depending on what the 15th Finance Commission recommended, there could be limits to what extent the government could run the fiscal deficits. While one can assume that the Finance Commission could have adopted a pragmatic approach, tight fiscal targeting need not be the policy option in the coming Budget. Rather focusing on quality and efficacy of public expenditure becomes utmost important.
Source: The Economic Times
The Insolvency and Bankruptcy Code (IBC) has delivered a 95% rescue rate for financially distressed firms when insolvency proceedings that have been settled or withdrawn midway or cases that have been resolved prior to admission are included, according to MS Sahoo, chairman of the Insolvency and Bankruptcy Board of India (IBBI).
Out of the 20,000 applications for initiation of corporate insolvency resolution process (CIRP), 16,000 applications were resolved before admission, Sahoo said during a virtual conference hosted by the National Law University Delhi on Thursday.
“A firm makes all possible efforts to settle to prevent filling of applications for initiation of CIRP and even after the application is filed, it tries hard to resolve the stress to avoid admission,” Sahoo said, adding, “It continues efforts to resolve stress midway, through settlement, review, mediation or withdrawal to avoid consequences of CIRP.”
As per official data available until September last year, from the remaining 4,008 cases that were admitted into the CIRP, 1,942 cases were on going, while 764 cases were resolved midway through settlement, review, mediation or withdrawal with the balance 1,302 completing the process.
About 300 out of these 1,300-odd cases resulted in approved resolution plans with around 1,000 cases proceeding to liquidation, Sahoo said, adding, “So one may work out, 300 upon 1,300 to find a rescue rate of 25% of CIRP.”
“But one can also work out the number of companies where stress was resolved before admission, midway and through resolution plans as a percentage of the number of applications concluded, then we get a rescue rate of 95%,” he said.
Further, while the rescue rate for CIRPs stood at 25% in terms of the number of companies, the rescue rate under the IBC was 75% in terms of value of assets that saw resolution, Sahoo said.
Source: The Economic Times
India on Thursday said the two per cent equalization levy does not discriminate against US companies as it applies equally to all non-resident e-commerce operators irrespective of their country of residence.
The comments came in the backdrop of an US Trade Representative (USTR) investigation which has concluded that India’s two per cent digital services tax on e-commerce supply discriminates against American companies and is inconsistent with international tax principles.
In a statement, the commerce and industry ministry said there is no retrospective element as the levy was enacted before the 1st day of April, 2020, which is the effective date of the levy.
It also does not have extra territorial application as it applies only on the revenue generated from India, the ministry said.
The purpose of the equalization levy is to ensure fair competition, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations.
The levy, it said, is recognition of the principle that in a digital world, a seller can engage in business transactions without any physical presence, and governments have a legitimate right to tax such transactions.
The office of the USTR on January 6 released its findings on the section 301 investigation into India’s Digital Services tax (DST) and concluded that the DST — the equalization levy — is discriminatory and restricts US commerce.
Similar determinations were also made against Italy and Turkey.
The ministry also said that India-based e-commerce operators are already subject to taxes in the country for revenue generated from Indian market.
“However, in the absence of the EL (Equalisation Levy), non-resident e-commerce operators (not having any Permanent Establishment in India but significant economic presence) are not required to pay taxes in respect of the consideration received in the e-commerce supply or services made in the Indian market,” it added.
Further, the ministry said that the EL levied at two per cent is applicable on non-resident e-commerce operators not having a permanent establishment in India.
“The threshold for this levy is Rs 2 crore, which is very moderate and applies equally to all e-commerce operators across the globe having business in India.
“The levy does not discriminate against any US companies as it applies equally to all non-resident e-commerce operators irrespective of their country of residence,” it said.
According to the statement, the Government of India will examine the determination/ decision notified by the US in this regard and would take appropriate action keeping in view the overall interest of the nation.
Source: The Financial Express
The Jammu and Kashmir administration on Thursday announced a new industrial developmental scheme (IDS) with a total outlay of Rs 28,400 crore to encourage new investment and to take industrial development to the block level and far-flung areas of the Union territory.
"In a major decision of far-reaching consequence, Government of India has approved a new Industrial Developmental Scheme for Jammu and Kashmir," Lieutenant Governor Manoj Sinha announced at a press conference here.
"The scheme will go a long way in ushering an era of socio-economic development of the region and for catering to the aspirations of people," he said.
Sinha said that this scheme is from the period of date of notification up to the year 2037 with a total outlay of Rs 28,400 crore.
Source: The Economic Times
The Ministry of Statistics and Programme Implementation (MOSPI) today said that India’s GDP may contract by 7.7 per cent in the current fiscal year 2020-21. Real GDP at constant prices in the year 2020-21 is likely to attain a level of Rs 134.40 lakh crore, as against the Provisional Estimate of GDP for the year 2019-20 of Rs 145.66 lakh crore, it added. The government’s first advance estimates are in line with the estimates of the Reserve Bank of India and various rating agencies. RBI has predicted India’s economy to shrink by 7.5 per cent in FY21 while rating agencies ICRA and Crisil have predicted it to contract by 7.8 per cent and 7.7 per cent respectively. Are Ratings has estimated the GDP to fall in the range of 7-7.9 per cent this year.
After the coronavirus pandemic hit the Indian shores, the government had imposed a strict nationwide lockdown to arrest the spread of the virus. However, it brought the wheel of the economy to a standstill and consequently, India recorded a record contraction in the country’s GDP in the fiscal first quarter, which was 23.9 per cent. However, as the unlock phase began in June, the GDP revived sharply to a contraction of only 7.5 per cent in the second quarter.
Though a significant amount of recovery was seen during the festive season after Q2, it is unlikely to have been reflected in the first advance estimates as it is based on projections from a seven month period (April–October), using a mix of the corporate results, agriculture production data, transport and freight estimates, the index of industrial production, bank credit and deposits, and various other indicators. Nevertheless, the second advance estimates will be released by the end of February and will be based on a more comprehensive set of data.
Meanwhile, from GST collections to passenger vehicle dispatches to dealers, and from the Manufacturing Purchasing Managers Index (PMI) to other macro indicators, the wheels of the economy appeared to be recovering in December. However, the recovery in the economic figures has not helped the employment condition improve. The unemployment rate shot up to 9.1 per cent in the last month, according to the Centre for Monitoring Indian Economy (CMIE).
Source: The Financial Express
The central bank’s newly established corpus of Rs 345 crore for developing payment infrastructure in rural India could ease the unit economics for key stakeholders to deploy terminals in the absence of Merchant Discount Rate (MDR).
However, key stakeholders – the banks and payment companies -- would continue to demand the resumption of transaction charges albeit a discounted one, on UPI and RuPay, in the upcoming Union budget.
The Reserve Bank of India (RBI) on Tuesday announced the operationalisation of the Payments Infrastructure Development Fund (PIDF) with an initial corpus of Rs.345 crore for three years – extendable up to an additional two more years.
The objective of PIDF is to increase the number of acceptance devices multi-fold in the country, the central banks said in a notification. According to Vishwas Patel, the chairman of the Payments Council of India (PCI), the scheme will boost payment acceptance in untapped regions.
“This support from the RBI will motivate the industry to set targets for itself and unveil the potential of the targeted geographies in a great way,” said Patel, who is also a member of the ex-officio Advisory Council for the scheme,
A senior official of the payments industry said that the PIDF cannot be viewed as an alternative to MDR as the revenue mismatch, estimated by the NPCI earlier this year at nearly Rs.2,000 crore due to the absence of MDR, is much higher than the newly operationalized corpus.
Most players in the core business of payments are operating on losses. But PIDF is a positive motive that’ll hugely benefit the digital payments penetration in hinterlands,” the official said, requesting anonymity, “The industry will continue to demand a revised MDR even if it’s a discounted one.”
Source: The Economic Times
The Labour Standing Committee of the Parliament has decided to examine the rules of all four Labour Codes as and when the Centre tables them in the Parliament.
Chairman of the panel Bhartruhari Mahtab told BusinessLine that he has received a number of petitions from citizens and organisations against the draft rules for the Code on Wages. He said it is the duty of the panel to see whether the rules are in tune with the idea of bringing the labour codes by changing a number of related Acts.
The panel has informed the Union Labour Ministry that, “We will be going into the rules and regulations of all the codes. It is a matter of subordinate legislation, but as these codes are amalgamations of a number of Acts, our intention is to look at the point whether these rules are in tune with the parent Acts. We are also getting petitions from people and organisations against the draft rule. We will also see that the rules are in the interest of the employers and the employees. We will also see whether the rules reflect the basic idea on which the codes are framed. We need to see if that is diluted in the rules,” Mahtab said.
Usually, the committees on Subordinate Legislation of both Rajya Sabha and Lok Sabha examine whether the rules contradict other laws or the parent Act. This could be for the first time that a department related standing committee is examining the rules to see if they are in tandem with the parent Acts. The Parliament has passed all the the codes on wages, social security, industrial relations and the occupational safety, health and working conditions.
Source: The Hindu Business Line
According to Ministry and Commerce and Industry data, India has seen a decline of 5.57 per cent in its knitted fabric export values during Jan.-Oct. ’20 period.
The country shipped US $ 348.71 million worth of knitted fabrics during the said period as against US $ 369.27 million in the corresponding period of 2019.
The top export destination was Sri Lanka which imported US $ 144 million worth of the Indian knitted fabrics, declining 15.12 per cent on Y-o-Y basis. However, Sri Lanka’s import from India grew by 3.41 per cent in October month on yearly basis, which signals a slight recovery.
USA, on the other hand, witnessed a sharp increase of 73.18 per cent in its imports of knitted fabrics from India, which valued US $ 90.24 million.
Bangladesh remained the 3rd top destination for India for knitted fabrics export but a steep contraction in the former’s manufacturing activities resulted in a 30.65 per cent downfall and India could just clock US $ 44.74 million in Jan.-Oct. ’20 from its knitted fabric shipment to Bangladesh.
Knitted fabric exports to Ethiopia too grew by 15.84 per cent to US $ 19.34 million.
Markedly, these four markets accommodated around 86 per cent of total knitted fabric that was exported from India during first 10-month period of 2020.
Source: Apparel Online
Top economists and experts will hold virtual interaction with Prime Minister Narendra Modi on Friday on the state of Indian Economy. The meeting will be hosted by NITI Aayog.
Finance minister Nirmala Sitharaman, minister of state for finance Anurag Thakur, vice chairman of NITI Aayog Rajiv Kumar besides members and CEO of the Aayog will be other key government officials who will be present at the meeting.
Top economists and experts who will brainstorm with the government will include Arvind Panagariya, the first vice chairman of NITI Aayog and KV Kamath who is chairing a government set up committee on loans restructuring.
Besides, former deputy RBI governor Rakesh Mohan, Shankar Acharya of Icrier, Shekhar Shah of Ncaer, former chief economic advisor of India Arvind Virmani and Ashok Lahiri, member of the fifteenth finance commission will also be present at the meeting.
The meeting, which comes ahead of the Union Budget on February 1, is critical as government chalks out strategy to give a boost to the economy.
The Modi government has taken a series of measures to arrest the slowdown in economic growth. Apart from reduction in corporate tax, the government is all set to implement labour reforms. Besides, a massive effort has been made to boost manufacturing by introducing production linked incentive scheme for 10 sectors.
Since the outbreak of the Covid-19 pandemic, the government has rolled out relief measures thoughh three rounds of stimulus packages, amounting to over Rs 20 lakh crore to revive demand and boost consumptions.
Though industrial activity across sectors have picked up since June, the challenge before the government is not only to sustain economic growth but push it further.
The government, on Thursday, projected India’s economy to contract 7.7% in the current fiscal compared to an 11-year low growth of 4.2% in 2019-20. Contraction is likely in almost all sectors with the exception of agriculture which is projected to grow at 3.4% in FY21. Manufacturing, however, is expected to shrink by 9.4%.
Source: The Economic Times
Leading multinational retailer M&S to ban Xinjiang cotton in its apparels over alleged treatment of its Muslim Uighur minority.
The retailers said in a statement that it had become ‘one of the first companies to formally sign the call to action on human rights abuses’ in relation to Xinjiang.
Around 80 per cent of China’s cotton is grown in the Uighur region, which is almost 20 per cent of global production.
It is pertinent to mention here that M&S is already amongst the few retailers that do not work with any supplier in or sourcing from Xinjiang.
“This is in line with the company’s long-term focus on ensuring its supply chains are sustainable and ethical, where workers are treated fairly, and their human rights are respected,” the company said.
Anti-Slavery International has welcomed the M&S step. Its ED Jasmine O’Connor said, “We welcome the leadership shown by Marks and Spencer today… providing assurance to its consumers that M&S products will not be linked to the abuses of Uighurs.”
Across the globe, brands and retailers are boycotting Uighur and even China also as almost 2 years ago, US-based Badger Sportswear announced it would stop sourcing clothing from the Chinese apparel company Hetian Taida, over concerns it was using forced labour from internment camps in Xinjiang.
Source: Apparel Online
Hours after hundreds of President Donald Trump’s supporters stormed the US Capitol in a harrowing assault on American democracy, a shaken Congress on Thursday formally certified Democrat Joe Biden’s election victory.
Late on Wednesday houses of Congress resumed their work on certifying Biden’s Electoral College win, with debate stretching into the early hours of Thursday. After debate, the Senate and the House of Representatives rejected two objections to the tally and certified the final Electoral College vote with Biden receiving 306 votes and Trump 232 votes, reports Reuters.
Vice President Mike Pence, in declaring the final vote totals behind Biden’s victory, said this “shall be deemed a sufficient declaration of the persons elected president and vice president of the United States.”
The outcome had never been in doubt, but had been interrupted by rioters – spurred on by Trump – who forced their way past metal security barricades, broke windows and scaled walls to fight their way into the Capitol.
Police said four people died during the chaos - one from gunshot wounds and three from medical emergencies - and 52 people were arrested.
Some besieged the House of Representatives chamber while lawmakers were inside, banging on its doors and forcing suspension of the certification debate. Security officers piled furniture against the chamber’s door and drew their pistols before helping lawmakers and others escape.
The assault on the Capitol was the culmination of months of divisive and escalating rhetoric around the Nov. 3 election, with the Republican president repeatedly making false claims that the vote was rigged and urging his supporters to help him overturn his loss.
The chaos unfolded after Trump - who before the election refused to commit to a peaceful transfer of power if he lost - addressed thousands of supporters near the White House and told them to march on the Capitol to express their anger at the voting process.
He told his supporters to pressure their elected officials to reject the results, urging them “to fight.”
Some prominent Republicans in Congress strongly criticised Trump, putting the blame for the day’s violence squarely on his shoulders.
“There is no question that the President formed the mob, the President incited the mob, the President addressed the mob. He lit the flame,” House Republican Conference Chairwoman Liz Cheney said on Twitter.
Republican Senator Tom Cotton, a leading conservative from Arkansas, called on Trump to accept his election loss and “quit misleading the American people and repudiate mob violence.”
Biden and Vice President-elect Kamala Harris are due to take office on Jan. 20.
Source: The Financial Express Bangladesh
Having around 7 million passionate and brand-loyal customers across the US, Charming Charlie, women’s apparel and accessories’ retailer, hopes to make a big comeback in 2021.
The retailer is coming back one and half years after the firm fell into bankruptcy and closed all 261 of its stores.
Established in 2004, Houston-based Charming Charlie Holdings Inc. filed for Chapter 11 bankruptcy protection in July 2019, which was its second bankruptcy filing in 2 years.
The company opened six sites in 2020 and plans to open at least 10 more for 2021.
The eventual plan is to build back to 50 to 75 locations, “which is quite different from our previous years,” said Charlie Chanaratsopon, company’s founder.
Charlie added “we see an opportunity for the brand to thrive in the online ecosystem and select retail locations across the country. Our goal is to continue to be the same customer-facing company. That commitment has always been there.”
Once it had more than 390 stores in North America, the Middle East and the Philippines. But in a 2019 court filing, the company wrote that it faced “unsustainable operating expenses, including onerous leases.”
Source: Apparel Online
Around 4,000 financial firms in Britain were at “heightened risk” of collapsing due to fallout from the first wave of the pandemic, the Financial Conduct Authority said on Thursday.
The FCA surveyed 23,000 financial firms to check on their resilience to Covid-19, which last year triggered Britain’s worst economic downturn in 300 years.
“At end of October we’ve identified there are 4,000 financial services firms with low financial resilience and at heightened risk of failure,” said Sheldon Mills, the FCA’s executive director of consumers and competition.
“These are predominantly small and medium sized firms and approximately 30% have the potential to cause harm in failure.”
The FCA faced strong criticism that it was “deficient” in handling the collapse of the London Capital & Finance investment fund in 2019, and the watchdog is under heavy pressure to avoid delays in mitigating harm to investors from other struggling companies.
The survey showed that insurance intermediaries and brokers, payments and electronic money, and investment management firms showed a drop in liquid assets like cash that is needed to bolster their defences in a downturn.
But the FCA urged caution in interpreting the survey’s results.
“In addition, this survey was conducted before the extension of the government’s furlough scheme, the positive vaccine developments and the announcement of new rules and restrictions,” the watchdog said.
The survey looked at financial firms that are only regulated by the FCA, and did not cover the 1,500 largest firms in the financial sector which are regulated for financial stability by the Bank of England’s Prudential Regulation Authority.
Source: The Financial Express Bangladesh
Bangladesh’s economic backbone, its readymade garment (RMG) manufacturing export earnings, which typically contributes 84% to the national exports, dropped 2.99% to $15.54 billion, according to data from the Export Promotion Bureau (EPB).
On top of it amid the COVID-19 pandemic disaster, the overall garment export observed an extraordinary 16.94% year-on-year drop in 2020.
Rubana Huq, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said, “Given the effects of the lockdowns in Europe and the US and their impact on retail and demand, the worst-ever Christmas sales, and the effect of price decline, it was a dark year for the industry.”
Of the export earnings, knitwear shipment earned $8.52 billion, up 3.9% from a year ago. While woven exports declined 10.22% to $7.01 billion.
Amid this negative scenario, the knitwear export rose as consumers mostly wear casual dresses as they stay and work from home because of the COVID-19 crisis.
EPB data also showed that apparel export was down 9.64% in December as the pandemic continues to pound the global economy.
Last month, woven garment export showed the worst performance since June plunging 18.07%. While knitwear export fell 0.45%.
“As the fears and stresses instigated by the second wave continue tied with the fairly poor administration and absence of vaccines, and the impact on international economy it would leave, this downtrend in RMG exports will probably continue until April,” Huq added.
Mohammad Hatem, Senior Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), more extended homestay by people for the higher export of knitwear items.
Hatem told the ‘Made in Bangladesh’ knitwear items prices were lower compared to those in other apparel manufacturing countries.
“As an outcome, fashion buyers have continued their business with Bangladesh even during the pandemic. Though in knitwear items case, the shorter lead time is a key factor, Mohammad Hatem added.
As for sourcing raw materials for knitwear items were not a hassle for the local manufacturers as these are available locally. Whereas the majority of raw materials required to produce woven garments, traders need to depend on imports.
Source: Textile Today
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Dr Rubana Huq has said the current downtrend in RMG export is likely to continue until April of this year.
"I seek all your help to look at the industry perspective and help us frame our narrative for policymakers to pay heed to the real situation and not the perceived one," she said in an open plea on Thursday.
She said the uncertainties and stresses caused by the second wave of Covid-19 still persists, coupled with the unavailability of vaccine, and highlighted the impact on the global economy it would leave.
Given the effect of lockdowns in Europe and USA and their impact on retail and demand, the worst-ever Christmas sales the world has seen, and most of all the effect of price decline (which is around 5 per cent since September 2020), it was a dark year for the Industry that they have seen, said the BGMEA chief.
"This is one of the most tragic turns in our industry. In the absence of proper restructuring or even an exit policy, shrouded by western bankruptcies, hounded by buyers’ unforgiving contracts and force majeure clauses, factories are facing turbulent times," Rubana said.
The BGMEA chief said the perception of the industry doing well and getting all the favours from the government must kindly be reassessed today. "Otherwise, jobs of 4.1 million workers will be at stake."
The commercial banks have been instructed by Bangladesh Bank to arrange repayment of the stimulus package by the third week of January 2021.
"The letters were issued day before yesterday. And the industry, amidst the second wave of Covid is taking a deep plunge into uncertainty," Rubana said.
Without the moratorium of the salary stimulus package being extended by six more months or the tenure of the loan being extended by at least one more year (currently 24 months) the industry will collapse, she said.
The Export Promotion Bureau (EPB) of Bangladesh has just published the export performance data for the month of December 2020 which continues to portray the worrisome scenario of exports.
"RMG has had consecutive downturn in export in December by 9.64 per cent, which wrapped up the annual export performance for 2020 with an unprecedented fall of 16.94 per cent," she said.
In December, the BGMEA chief said, woven garment export posted the worst performance since June 2020, as it declined by 18.07 per cent.
Knitwear export managed to have a relatively stable position with -0.45 per cent growth in December, thanks to the demand for apparel for home use, she mentioned.
While looking at two years trend, it shows that growth between October 2018 and 2020 was -26.03 per cent, and November 2018 and 2020 was -14.32 per cent.
"The two years change in export for the month of December is -8.55 per cent, meaning that we exported 8.55 per cent less in December this year compared to what we exported in December 2018!" said the BGMEA chief.
Source: The Financial Express Bangladesh
Economic stimulus approved in the United States and Japan at the end of last year will help to power a recovery in their economies in the second half of 2021, IMF chief economist Gita Gopinath said on Wednesday.
Gopinath told Yahoo Finance in a live interview that the US and Japanese rebounds may prompt upgrades of economic forecasts in some parts of the world. But she said the recovery in some developing countries could be delayed until 2022 by limited availability of coronavirus vaccines.
She repeated earlier remarks that the global economy is starting 2021 in a stronger position than anticipated last year due to a stronger-than-forecast performance in the third and fourth quarters. Gopinath, however, added that the outlook was clouded by a race between the surging COVID-19 pandemic and the worldwide vaccination campaign.
But the combination of a stronger starting point and new stimulus “should power recovery in the second half,” Gopinath told Yahoo Finance. “Based on the 2020 better-than-expected numbers, we should see an upgrade in some parts of the world.”
That assumes that vaccines will be widely distributed by mid-year in those countries, she said, adding that those with limited access to vaccines will recover more slowly, including many developing economies.
The International Monetary Fund is expected to revise its World Economic Outlook forecasts on Jan 26. In October, it forecast a 4.4 per cent global GDP contraction for 2020, followed by a rebound to growth of 5.2 per cent for 2021.
Source: The Financial Express Bangladesh
Vietnam’s success in curbing the coronavirus so far, while its Southeast Asia neighbours struggle, is helping the country power ahead in economic growth and attracting funds, foreign investors, experts and analysts say.
Its strength in containing the pandemic saw it build on the foundations of two free trade agreements signed in 2020, also outpacing peers in luring manufacturers moving production out of China because of the Beijing-Washington trade war. Vietnam was one of the world’s few countries to record growth last year - well down on 2019, but still a 2.9 per cent expansion.
Vietnam watchers expect the country to ride high as long as it keeps the virus - resurgent in many countries - at bay. Thanks to rigorously targeted testing, a centralised quarantine programme and early border closures, Vietnam’s coronavirus tally stands at just over 1,500 cases and 35 deaths to date - far fewer than any comparable country given its population of nearly 98 million.
“The successful management of the pandemic to date has already enabled the country to capture a larger share of global trade and FDI (foreign direct investment) during 2020,” said Carolyn Turk, the World Bank’s country director in Vietnam.
Parliament has set an economic growth target of 6 per cent for this year, but Prime Minister Nguyen Xuan Phuc, looking to extend his term or rise up the Communist Party of Vietnam’s ranks, said last month that Vietnam would target 6.5 per cent.
At WHA Group, a Thai logistics firm which has expanded its industrial estate business in Vietnam, chairwoman Jareeporn Jarukornsakul said investors who had wanted to relocate operations to Thailand from China had not been able to do so because the coronavirus had spread in Thailand.
While infrastructure and regulatory issues are worse in Vietnam than in Thailand, she said, “Costs are cheap in Vietnam and its government is very quick with investment, allowing provinces to issue their own regulations and investment incentives.”
Still, there is much work to be done, even if the country does retain its prowess in handling the coronavirus: Vietnam suffers from a lack of highly-skilled labour, its dated bureaucracy is in need of digitisation and there is an over-reliance on polluting coal imports to fuel development.
But the cocktail of positives flowing through the economy currently has left foreign-invested asset managers in Vietnam able to raise significant amounts, for example, with some reporting oversubscribed funds.
On Monday, Ho Chi Minh City-based Mekong Capital said it had raised $246 million for its largest-ever fund - nearly 25 per cent more than the original target of $200 million.
Dominic Scriven, chairman of Vietnamese asset manager Dragon Capital said a combination of the country’s trade deals, more cash in the economy and political stability had underpinned better-than-expected interest across three new funds launched by his firm.
“We were very pleasantly surprised by the market uptake,” said Scriven.
PULLING AHEAD
That extra cash, along with savings accounts offering declining interest rates after three cuts in the central bank’s policy rate since March, has created a surge in local stock market investors.
The number of new investors has increased so much that the benchmark Ho Chi Minh City Stock Exchange has been forced to halt afternoon trading in order to process the surge.
Development was also boosted by the two free trade deals signed last year: the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trading block, and an agreement with Britain modelled on the EU-Vietnam Free Trade Agreement (EVFTA), which Vietnam ratified in June.
Hanoi also has bilateral trade deals with both South Korea and Japan, its largest sources of foreign direct investment, and is a signatory to the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The trade deal push has given it an advantage over some of its regional competitors. The EVFTA in particular has “put Vietnam clearly on the map”, said Sven Schneider, Chief Executive of the EU-Malaysian Chamber of Commerce.
“Malaysia, on the other hand, is only waking up to this missed opportunity now,” said Schneider.
WHA Group’s Jareeporn also said the EVFTA had given Vietnam an advantage. “If an industry needs cheap labour, it’s definitely going to Vietnam,” Jareeporn said.
In the short term, Vietnam is well placed to pull ahead of its regional rivals in 2021, just as it holds a massive Communist Party meeting to select a new leadership later this month.
“It’s safe, the government functions smoothly, and in face of impediments like COVID the country rises to the challenge without hesitation and wins,” Chad Ovel, partner at Mekong Capital, said.
“Vietnam has clearly earned its position as the most attractive investment destination in Southeast Asia.”
Source: The Financial Express Bangladesh
ISLAMABAD: The government will unveil an excellent textile and apparel policy with cash subsidy and low rates worth Rs 960 billion to promote the export and production of value-added textile products.
According to the details, the proposed policy would be the third such policy, estimating three scenarios that would increase textile and clothing exports to a minimum of $15.7 billion and a maximum of $20.8 billion by the end of 2025.
Sources said that the Federal Board of Revenue (FBR) has asked for a week to analyze the implications of the proposed measures under the policy, a major recommendation of the Textile Division is that five exports In order to implement zero rate tax in the sectors, this facility was withdrawn in the year 2019.
The FBR will raise the issue of restoration of the zero-rate tax system with the International Monetary Fund, the source added, adding that stakeholders also want its restoration to deal with the effects of COVID-19.
The FBR claimed that the highest refunds of the industry have been implemented. In the last two years, the government has paid Rs 9.70 billion in pending payments to the previous governments while the previous two governments have paid Rs. Only Rs 68 billion was paid.
The policy is equipped with measures that will help address the issues faced by the textile sector during COVID-19, which has disrupted the supply chain, affecting global commodity trade.
Furthermore, the policy should attract domestic and foreign investment in the development of textile value chain and value-added sector with special focus on small and medium enterprises (SMEs), however, incentives only in existing industries. Businesses are focused on reducing costs and no specific link is suggested to increase exports or expand production lines.
Past policies have only increased subsidized exports instead of expanding the production line. Currently, the textile and garment industries are working to the best of their ability to meet the demands of buyers.
Under this policy, the government has proposed a subsidy of Rs. 200 billion for the next five years to supply electricity to the export sector at discounted rates. Electricity will be provided at 9 cents per kilowatt-hour, as well as industry. An amount of Rs. 150 billion will be allocated for the supply of gas at subsidized rates.
The government will provide RLNG at 6.5 per MMBTU and system gas at 786 per MMBTU over the next five years, to pay the drawback of local tax and levy scheme (DLTL). It is proposed to allocate Rs. 400 billion for this which is a cash subsidy on exports in the country.
Currently, the government provides cash subsidy under DLTL which was started by the previous government.
It has been decided in principle that there will be no change in the existing Export Finance Scheme and Long Term Financing Facilitation Schemes, allocating Rs. 200 billion to ensure the availability of short-term credit and long-term financing facility to exporters.
Source: Bol News Pakistan
