Indian economy heading towards V-shaped recovery in 2021: Assocham

India’s economy is showing decisive signs of a ‘V-shaped’ recovery in 2021 with the return of consumer confidence, robust financial markets, an uptick in manufacturing and exporters braving it out in the global market with never-say-die spirit, Assocham said on Sunday.

The industry chamber said it expects immense accruals of economic benefits from the COVID-19 vaccination programme about to be rolled out.

“The high-frequency data is a strong pointer to a V-shaped recovery in 2021 with the seeds bursting into green shoots over the last two months of 2020 itself,” Assocham Secretary General Deepak Sood said.

India’s GDP is estimated to contract by a record 7.7 per cent during 2020-21 as the COVID-19 pandemic severely hit the key manufacturing and services segments, as per government projections released on Thursday.

“With India about to roll out its vaccination programme with approvals of the two vaccines, the accruals of the economic benefits would be significant, especially to sectors such as hospitality, transportation, entertainment, which were hit hard during the pandemic,” Sood said.

According to Assocham, the most definitive of the data is the record collection of Rs 1.15 lakh crore in the Goods and Services Tax (GST) during December.

“The state-wise collection showed the fightback spirit in consumer confidence. Illustratively, the largest consumption state of Maharashtra, which was amongst the severely affected by the COVID-19 pandemic, has posted a healthy growth of seven per cent in GST collection; even as the total GST mop-up was up 12 per cent year-on-year,” Sood said.

He said the Budget for 2021-22 would be a major catalyst. “Great focus on healthcare, agriculture and revival of demand would be imperatives in Finance Minister Nirmala Sitharaman’s Budget”.

The entire healthcare value chain from hospitals to medical education, primary health centres, scientific laboratories and further to the pharmaceutical industry along with the logistics is most likely to receive a booster shot of support from the forthcoming Budget, Sood added.

Source: The Financial Express

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NCTC appeals to PM Modi seeking removal of anti-dumping duty on viscose staple fibre

The National Committee on Textiles and Clothing (NCTC)has appealed to Prime Minister Narendra Modi seeking removal of anti-dumping duty on viscose staple fibre and redressal of VSF spun yarn availability and price issues to prevent job losses across the VSF textile value chain.

Taking a serious view of the high price of viscose staple fibre (VSF) in India, captains of various segments of VSF value chain including the Apparel Export Promotion Council, the Confederation of Indian Textile Industry, the Clothing Manufacturers Association of India, the Indian Spinners Association and the Powerloom Development Export Promotion Council under the common platform of the NCTC have submitted a joint representation to the Prime Minister.

The representation seeks the removal of “anti-dumping duty on import of VSF to achieve global competitiveness and accomplish the target of USD 350 billion by 2025 set by the Ministry of Textiles for the textiles and apparel sector”.

The NCTC observed that owing to the growing demand for viscose staple fibre and its blended textiles and clothing market opportunities, the demand for viscose staple fibre has increased steeply not only in India, but also across the globe.

“As the imported yarn price was cheaper due to high anti-dumping duty prevailing on the domestic viscose staple fibre, the weaving and knitting sectors have been importing large volume of VSF spun yarn. The import of VSF spun yarn has increased from 2 million kgs during 2016-17 to 56 million kgs during 2019-20,” the committee stated.

The NCTC also highlighted in the appeal that “in the post-Covid market scenario, VSF price has increased from USD 1.15 to USD 1.50 per kg during the last few months”.

“As the domestic VSF price was expensive due to anti-dumping duty (up to USD 0.512 per kg), the demand for domestic spun yarn got reduced and therefore, the availability and price are affecting the entire VSF value chain especially the knitted and powerloom sectors,” said the committee.

It observed that all the major VSF powerloom clusters in the states like Tamil Nadu, Maharashtra, Gujarat, etc are agitating against the steep increase in VSF prices.

“In view of the above, NCTC has appealed to the Prime Minister to remove the anti-dumping duty levied on viscose staple fibre on a war footing to address the burning issue, grab the emerging market opportunities and to protect the livelihoods of several lakhs of workers employed in the VSF textile value chain. This is the second appeal to the Prime Minister, in this regard,” it stated.

Source: The Financial Express

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Cancelled garments orders coming back

Previously cancelled orders due to the pandemic are slowly coming back, boosting optimism of a rebound of garments and hard goods exports of between 10 and 15 percent this year.

The Philippine Exporters Confederation Inc. (Philexport) in a newsletter quoted the Foreign Buyers Association of the Philippines (FOBAP) as saying local factories have received new orders worth $280 million.

“From sewing floor to store shelf, the 2021 outlook for troubled mid to high fashion items are dim and hazy, therefore a price recosting/re-levelling is a must. Only the basics and essentials, such as undergarments, fast fashion are now staying alive,” said Robert Young, FOBAP president and trustee of Philexport for textile, yarn and fabric sector.

Young said fresh confirmed export orders for the country’s soft goods comprising mostly garments of about US$200 million will be on the sewing floor up to the first quarter. Buyers are Wacoal, Adidas, Ralph Lauren, Ann Taylor, JCPenny, among others.

He said Philippine hard goods and home fixtures or wares, on the other hand, received   reinstated orders roughly US$80 million from stores like TJMax, Crate & Barrel, Target and Costco.

“We expect to receive fresh orders in March 2021,” Young said.

He said bulk or 70 percent of the orders come from the United States, while the rest from European Union, Canada, Australia, among others.

Young is optimistic about export growth of the sector despite the pandemic, as the country’s factories hope to book orders which are unserved by other Asian neighbors due to their full production.

“Most of these orders are coming from the relocated (moved out) foreign factories in China. Also, the Philippines will have added volume for the more complicated items jackets/sportswear which are not the production preference of other countries. They opt for more basic wearables,” he said.

To boost exports particularly to the EU, Young urged government to request the EU to grant the usage of imported fabric/textile in the apparel production, thus it will be eligible for zero duty to the trading bloc under the Generalized Scheme of Preference Plus (GSP+).

This, as the EU requires Philippine-made textiles to be used in garment making to qualify for the zero duty into the bloc.

Young said, “once the EU grants the usage of imported fabric in the apparel production, then, EU GSP+ utilization can reach a projected additional $100 million in garment shipment.”

Young also urged exporters to adapt bio-material textile (antivirus) innovation that will be a “big thing and in demand in 2021 onwards.”

“Other items in demand post pandemic are essential items such as undergarments/protective apparel; simple practical fast-fashion wearables; and price driven and functional products for both soft and hardgoods,” he added.

Source: Business Insight

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Govt creates special unit in Income Tax dept for probe into undisclosed foreign assets

A special unit has been created by the government in the countrywide investigation wings of the Income Tax department for focussed probe in cases of undisclosed assets held by Indians abroad and possession of black money in foreign shores, officials said. The Foreign Asset Investigation Units (FAIUs) have been recently created in all the 14 investigation directorates of the tax department located in various parts of the country that are primarily tasked to undertake raids and seizures, and develop intelligence to check tax evasion done by various methods.

A total of 69 existing posts in the tax department were "diverted" by the Central Board of Direct Taxes (CBDT) in November last for the creation of this unit after approval from Union Finance Minister Nirmala Sitharaman, a senior officer told .

The CBDT frames policy for the Income Tax department.

"The FAIUs have been created as new wings within the various investigation directorates of the tax department to bring focus on cases of undisclosed assets held abroad by Indians and black money stashed abroad.

"India is now getting voluminous data in this context by way of various fresh treaties signed and some of those which have been re-negotiated in the recent past," another officer said.

We are now in a global regime where automatic exchange of tax information is the norm. More and more countries and jurisdictions are following the international protocols set by the Organisation for Economic Co-operation and Development (OECD) and the Financial Action Task Force (FATF) for tax transparency and combating instances of global money laundering, terror financing and tax evasion, he said.

The taxman now has huge data coming in from various international and domestic sources to check possible illegal foreign assets holding of an individual and hence, a dedicated wing was required to analyze this information and sift through this mountain of data, the official said.

The new units will also probe cases of Indian entities named in global tax document leaks like the Panama Papers.

The major treaties or automatic tax information exchange protocols through which Indian tax authorities get information include the Double Taxation Avoidance Agreement (DTAA), Tax Information Exchange Agreements (TIEAs) and the most recent Foreign Account Tax Compliance Act (FATCA) between India and the US.

FATCA covers automatic sharing of information on bank accounts as well as financial products like equities, mutual funds and insurance, and is aimed at fighting the menace of black money stashed abroad.

Banks, mutual funds, insurance, pension and stock -broking firms will report their Indian client details to the US which will be shared with New Delhi. Similarly, Indian entities will do a reciprocal information sharing about Americans.

The FAIUs will be under the authority of the jurisdictional director general of income tax (investigation) rank officer and its work will be directly monitored by the CBDT, the officials said.

The Income Tax Return (ITR) forms also have a separate column seeking details of foreign assets of an individual or entity and these get obviously matched with the information obtained through automatic exchange from global counterparts. Any mismatch requires dedicated investigation and the new wing can very well do that job, they added.

Source: The Economic Times

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GST authorities arrest 215 persons in fake invoice cases, recover over Rs 700 cr in 2 months

The Directorate General of GST Intelligence (DGGI) and the CGST Commissionerates have recovered more than Rs 700 crore and arrested 215 persons in the last two months in cases related to fake GST invoices that were used to illegally avail or pass on input tax credit (ITC).

GST intelligence authorities have registered about 2,200 cases and unearthed more than 6,600 fake GSTIN entities during this period, sources said.

The Directorate General of GST Intelligence (DGGI) and the CGST Commissionerates have so far arrested 215 persons, including six chartered accountants and one company secretary, and recovered more than Rs 700 crore from these fraudsters, sources said.

Those arrested not only include operators of fake entities but also the end beneficiaries who connive with these fraudsters running businesses of fake invoices on commission basis, sources said.

Use of data analytics, data-sharing and Artificial Intelligence (AI) along with BAFTA tool has enabled the GST ecosystem and intelligence authorities to identify layer-by-layer activities of these fake entities and pinpoint the fraudsters with precise input, sources said.

Those arrested include managing directors, directors, proprietors and partners of various business and trade entities who are either involved in availing and/or utilising the ineligible ITC fraudulently, they said.

To further tackle the menace of fake invoice frauds and mis-utilisation of ITC, sources said the government has acted on the recommendations of the Law Committee of GST Council and has placed qualified restrictions of 1 per cent on the use of ITC for tax liability in a manner that does not impact ease of doing business for genuine taxpayers.

So far, maximum arrests have been made in Mumbai zone with 23 persons.

Source: The Financial Express

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Currency in circulation rises Rs 3.23 lakh crore in first nine months of FY21

The Currency in Circulation (CiC) grew by around 13 per cent in the first nine months of the current fiscal as people preferred holding on to cash as a precautionary measure amid the uncertainty caused due to the COVID-19 pandemic.

CiC grew by Rs 3,23,003 crore, or 13.2 per cent, to Rs 27,70,315 crore as on January 1, 2021 from Rs 24,47,312 crore as on March 31, 2020, according to recent data released by the Reserve Bank of India (RBI). In the April-December period of FY2020, it had grown by nearly 6 per cent.

According to Care Ratings NSE 0.06 % Chief Economist Madan Sabnavis, the growth in currency in circulation so far in the current fiscal has been high as people were accumulating more cash to meet any exigency during the lockdown.

"Whenever there is a crisis-like situation, there is a tendency for households to latch on to cash. That is the reason there has been an increase in demand for cash. What you see is nothing else but a precautionary motive overwhelming everything," Sabnavis said.

The RBI in its annual report for 2019-20, released in August 2020, had also mentioned that demand for currency started to increase in the wake of heightened uncertainty caused by the COVID-19 pandemic.

The central bank also took a series of measures in order to meet the enhanced demand.

During the calendar year 2020, CiC grew 22.1 per cent, or Rs 5,01,405 crore, to Rs 27,70,315 crore as on January 1, 2021.

CiC includes banknotes and coins. At present, RBI issues notes in denominations of Rs 2, Rs 5, Rs 10, Rs 20, Rs 50, Rs 100, Rs 200, Rs 500 and Rs 2,000.

Coins in circulation comprise those of 50 paise and Re 1, Rs 2, Rs 5, Rs 10 denominations, and the recently launched coin of Rs 20 denomination.

As per RBI's annual report, the value and volume of banknotes in circulation increased 14.7 per cent and 6.6 per cent, respectively, in FY20.

In value terms, Rs 500 and Rs 2,000 banknotes together accounted for 83.4 per cent of the total value of banknotes in circulation at end-March 2020, with a sharp increase in the share of Rs 500 banknotes, it had said.

In volume terms, Rs 10 and Rs 100 banknotes constituted 43.4 per cent of the total banknotes in circulation at end-March 2020, RBI had said in the annual report.

Source: The Economic Times

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Cities key to India’s post-pandemic growth: WEF study

Cities have borne the maximum brunt of the COVID-19 outbreak but they will also be key to India’s post-pandemic growth as they account for nearly 70 per cent of the country’s GDP and an average of 25-30 people migrate to cities from rural areas every single minute, a new study has shown.

The study by the Geneva-based World Economic Forum (WEF) said the unfolding COVID-19 pandemic has been catastrophic for cities. “According to estimates, about 70 per cent of India’s GDP comes from its cities and around 25-30 people migrate to the cities from rural areas every minute. However, most big cities in India have a wide economic disparity, with expansive slums and a large urban poor population,” the WEF said.

The study further said that about 25 million households in India — 35 per cent of all urban households — cannot afford housing at market prices and it is time to create a new urban paradigm that enables cities to be healthier, more inclusive and more resilient.

The WEF report, titled Indian Cities in the Post-Pandemic World, highlights the country’s most pressing urban challenges that were further exacerbated by the pandemic. The report also provides insights for translating the lessons learned from the pandemic into an urban reform agenda.

The impact of the pandemic has been profoundly uneven on different population groups. Vulnerable populations, including low-income migrant workers, have suffered the dual blows of lost income and weak social-protection coverage, while the pandemic has also laid bare gender-based imbalances in public and private life in India’s urban areas, the WEF said.

The report, produced in collaboration with Mumbai-based IDFC Institute, compiles insights from leading global and Indian urban experts across seven thematic pillars — planning, housing, transport, environment, public health, gender and vulnerable populations.

Among other recommendations, the report underscores the critical role data can play in helping cities manage and direct emergency operations during a crisis. “But data alone is not a panacea; realizing the potential of cities requires empowered and capable governance, investment in transport and infrastructure to fuel productive urban economies, and a rethink of outdated planning norms and regulations,” the WEF said.

The wide-ranging recommendations compiled in the report include a rethink of outdated urban planning regulations, which will make cities more compact, commuter-friendly and green.

It also recommends greater decentralisation and empowerment of local governments, which will allow for more proximate and responsive governance. Besides, it suggests addressing supply-side constraints to building houses at an affordable cost and encouraging a vibrant rental housing market that allows for labour mobility.

The study also calls for investing in transport solutions that recognise the need to integrate peri-urban areas with urban cores, and bolstering health capacity in cities by increasing the number of trained healthcare personnel.

It also recommended ensuring that infrastructure has the adequate functional capacity, aligned with current and future demands, and prioritising inclusivity by addressing the biases and impediments faced by women and vulnerable populations in accessing urban opportunities.

Another suggestion calls for prioritising action on environmental sustainability, air pollution and disaster management in urban rebuilding efforts.

“Well-designed and governed cities can be dynamic centres that spur innovation, drive economic productivity and provide citizens with a good quality of life. The pandemic is an opportunity to address historical urban challenges and bring about positive long-term change,” said Viraj Mehta, Head of India and South Asia and Member of the Executive Committee, World Economic Forum.

“Amidst every pandemic, from the bubonic plague to the Spanish flu, pundits have foretold the death of cities. And yet they have emerged stronger every time. The pandemic can be a turning point in India’s urban journey if we draw the right lessons and translate them into lasting change,” said Reuben Abraham, CEO and Senior Fellow at IDFC Institute.

The study is part of the WEF’s broader collaboration with the IDFC Institute for a working group on ‘Rebuilding Cities’ which has emerged from the Regional Action Group for South Asia. This group brings together public and private sector leaders and prominent experts from the region to interact regularly in order to support an adequate public-private response to the COVID-19 pandemic and jointly chart recovery efforts.

The working group on Rebuilding Cities is partnering with multiple Indian state governments to constitute state-level working committees comprising local and municipal government representatives, urban experts, and other relevant stakeholders to devise implementable and context-specific urban reform recommendations.

Source: The Financial Express

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Exports show signs of revival, up 16.22 pc during Jan 1-7: Official

The country's exports grew 16.22 per cent year-on-year to USD 6.21 billion in the first week of January, mainly driven by healthy growth in pharmaceuticals, and engineering sectors, reflecting signs of revival, an official said on Sunday.

The exports during the first week of January last year were at USD 5.34 billion.

Imports during January 1- 7 this year too increased by 1.07 per cent to USD 8.7 billion as against USD 8.6 billion in the same period of 2020, the official said.

Imports, excluding petroleum, increased by 6.56 per cent during the week, the official added.

Exports of pharmaceuticals, petroleum and engineering grew 14.4 per cent (USD 61.62 million), 17.28 per cent (USD 114.72 million), and 51.82 per cent (USD 636.77 million), respectively.

The rate of contraction in the outbound shipments was 8.74 per cent in November 2020. The country's exports had shrunk marginally by 0.8 per cent in December 2020.

The improvement was mainly due to the increase in shipments of certain sectors such as gems and jewellery, engineering and chemicals.

After a gap of nine months, imports in December 2020 had recorded a positive growth of 7.6 per cent at USD 42.6 billion.

Source: The Economic Times

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Narendra Singh Tomar, Nitin Gadkari, Smriti Irani to participate in online Davos Agenda summit

Several union ministers including Narendra Singh Tomar, Nitin Gadkari, Smriti Irani, Piyush Goyal and Dharmendra Pradhan along with top business leaders such as Mukesh Ambani and Anand Mahindra will participate in a five-day online Davos Agenda summit of the World Economic Forum this month.

While the WEF will host its physical annual meeting in May in Singapore, as against the regular venue of Swiss ski resort town of Davos, the Geneva-based organisation is hosting an online event, named ‘Davos Agenda’ around the same time it generally hosts its yearly congregation of the rich and powerful of the world.

The online Davos Agenda summit from January 25-29 will also see several heads of state and government deliver special addresses and engage in dialogue with business leaders at the start of a “crucial year to rebuild trust”.

While the WEF’s Davos 2020 summit was the last major global event that took place before almost the entire world got locked down due to the COVID-19 pandemic, the next annual meeting has been shifted to May 2021 and is scheduled to be held in Singapore.

The ‘Davos Agenda’ will also mark the launch of WEF’s ‘Great Reset Initiative’ and begin the preparation of the special Annual Meeting in the spring, said the Geneva-based entity, which describes itself as an international organisation for public-private cooperation.

Heads of state and of government and international organisations will give special addresses on the state of the world, besides engaging in dialogue with business leaders.

Industry leaders and public figures will discuss how to advance and accelerate public-private collaboration on critical issues such as COVID-19 vaccination, job creation and climate change, among others, according to the WEF. Those who have already registered for the event also include former RBI governor Raghuram Rajan and ex-IMF chief Christine Lagarde.

From India, the registered participants from the business community are Mukesh Ambani, Sanjiv Bajaj, Shyam Sunder Bhartia, Hari S Bhartia, Ajay Khanna, Jayadev Galla, Dipali Goenka, Ajit Gulabchand, Shobana Kamineni, Hemant Kanoria, Neeraj Kanwar, Onkar S Kanwar, Vikram Khemka, Grandhi Kiran Kumar, S P Lohia, Anand Mahindra, Sunil Bharti Mittal, Rajan Bharti Mittal, Pawan Munjal, Salil S Parekh, Jai Shroff, Sumant Sinha and Vaishali Sinha.

The ministers registered for the event so far are Nitin Jairam Gadkari, Piyush Goyal, Smriti Zubin Irani, Dharmendra Pradhan and Narendra Singh Tomar.

The final programme is still in the works and the names of heads of state or government are yet to be announced by the organisers. While the WEF annual meeting for 2021 will be held on May 13-16 in Singapore, the high-profile summit will return to Davos in 2022.

Source: The Financial Express

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UP's new Excise Policy aims Rs 6,000 crore excess revenue next fiscal

The Uttar Pradesh government has given its approval to the Excise Policy 2021-22, expecting revenue to jump by Rs 6,000 crore during the fiscal.

The approval was granted by the state cabinet headed by Chief Minister Yogi Adityanath. The cabinet meeting took place on Saturday night.

"To provide good quality liquor at economic prices, UP Made Liquor (in Tetra-pack and of 42.8 per cent strength only) made from Grain ENA, shall be sold at an MRP of Rs 85 through country liquor shops, Integrated Supply Chain Management System (IESCMS) shall be implemented by computerizing the various processes of the department. The system of sale of liquor in retail shops using PoS machines shall be implemented in 2021-22," the state government said in a statement on Saturday.

The Excise Policy got clearance of the UP Cabinet hours after five people died and 16 others hospitalised after allegedly consuming spurious liquor in Uttar Pradesh's Bulandshahr district on Friday.

The authorities have suspended four policemen and removed three senior Meerut zone excise officials from their post for laxity. An excise inspector and three other members of the department have also been suspended.

Police have also arrested the main accused, identified as Kuldeep.

As against expected revenue Rs 28,340 crore in 2020-21, the expected revenue for 2021-22 is Rs 34,500 crore, the statement said.

Renewal of country liquor, foreign liquor, beer, bhang retail shops and model shops permitted for 2021-22. Due to situation arising out of Covid-19, the period April 2020 to June 2020 shall be excluded in determining the renewal criteria, according to the new policy.

To promote production of wine within the state, wine made out of locally produced fruits shall be exempted from excise duty for a period of five years, it said. Vintners shall be allowed retail sale of wine. Wine Tavern shall also be allowed in its premises, the policy said.

The sale of Low Alcoholic Beverages (LAB) shall be allowed in foreign liquor retail shops, model shops and premium retail vends in addition to beer shops. The excise duty on beer is reduced and the shelf life of beer will be 9 months, it added.

Premium retail vends shall be permitted at airports. Wine tasting facility and sale of drinking accessories shall be allowed at premium retail vends.

A special campaign will be launched to create awareness to the public on the ill effects of drinking and responsible drinking, the statement said. The campaign will mainly focus on --- underage drinking, drunken driving and responsible consumption. Rupees one crore will be earmarked for this campaign, it added.

To promote ease of doing business, brand registration, label approval, bar and micro-brewery licences will have the option to be renewed up to 3 years instead of requiring approvals every year, the New Excise Policy said.

Advance storage of foreign liquor, beer and wine for the year 2021-22 will be allowed from February 15. Also, to ensure availability of liquor during the beginning of the year, rollover process of residual stock on March 31 for next year is simplified and there will be no roll over fee for carrying forward of these stocks.

Keeping in view the festival of Holi, the renewed country liquor retail shops will be allowed sale of residual stock till April 7, it said.

To encourage exports from the state, brand and label approval process for exports to other states and countries simplified. Keeping in view the complex process of trade mark registration and the time taken, brand registration will be permissible on submission of proof of filing of application for trademark registration, the state government said.

At present, the strength of alcohol is being measured by manual hydrometers. To promote use of technology in monitoring of production processes, the use of digital alcohol meters certified/ calibrated by NABL will be mandatory in laboratories of the department and in distilleries.

The sugar mills and distilleries in the state shall install mandated modern electronic devices before December 31, 2021.

Sale of imported liquor (BIO) and Indian made foreign liquor in scotch category, with maximum retail price of Rs 2,000 or more, will be permissible in mono-cartons.

The provision that no liquor shop shall be opened within 5 kilometers of the border of another district, without the consent of the collector of both the districts will be done away with, the policy said.

The power for renewal of micro-brewery licenses shall be delegated from Excise Commissioner to District Collector shall be authorised to amend the names of the renewed shops, the statement said.

Source: The Economic Times

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India’s self-reliance goal must not be taken as move ‘towards isolating itself’: Sunil Munjal

India’s self-reliance campaign must not by any stretch of imagination be taken as a move “towards isolating itself”, but to be a part of the global value chain, it must improve standards, skill levels, consistency and service levels to consumers and customers, Hero Enterprises Chairman Sunil Kant Munjal said on Saturday.

Speaking at the 25th Wharton India Economic Forum, he said India has to become a significant exporter if it has to become a key player in global trade and the country’s industry and businesses want to stand up and be counted to meet the ambitions.

Stating that there are two aspects that must be kept in mind regarding Aatmanirbhar campaign and global competitiveness, he said, “One is for India to become better at what it does is absolutely essential but Aatmanirbhar must not by any stretch of imagination be taken as India’s move towards isolating itself. That’s a very important point that we must all remember.”

He further said, “India wants to be a part of a global value chain. India and Indian industry, and Indian business wants to stand up and be counted.”

The other, Munjal said, “We have to remember that for India to be a part of the global value chain we have to improve our standards, we have to improve our skill levels and we have to improve both consistency and service levels to consumers and customers.”

Citing the example of how Japanese goods were once derided for low quality, he said, “Then Japan in the 70s became the greatest manufacturing machine in the world.”

Same thing happened to Taiwan, South Korea and China after that, he added.

Munjal said today India has the “the amazing capability of the underlying technological platforms having got strengthened in the last few years, which allow robotics, machine learning, artificial intelligence to come in, along side what we were doing to enhance the capabilities”.

He, however, added India must ensure that the new technologies are only used as tools and not get driven by it as the country also has the need to ensure that “million and million” its citizens are productively employed.

“…it should be done for the right reason. So it is both sides actually operating… For India it is also an essential requirement and it can serve a great need in the world as well,” Munjal added.

Reiterating the significance of exports, Munjal said, “In some sense is also a part of the Aatmanirbhar movement that if India has to become a key player then India has to become a significant exporter.”

Stating that the Indian market is an amazing learning place, he said, “It is a nursery that we must all train and learn. We have to be competitive across the globe. Somebody making brass components in Moradabad, some engineering components in Rajkot or a bicycle component in Ludhiana all have to compete with those in Brazil and the US and other places.”

Source: The Financial Express

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Increase price! Exporters urge buyers

Garment exporters have appealed to all apparel brands to support and increase the garment prices at this hour of crisis.

Tirupur Exporters Association (TEA) has appealed to the buyers in this regard and also requested TEA Members to immediately send the appeal to the buyers dealing with them.

Raja M. Shanmugham, President, TEA, said as the garment input prices have increased, we earnestly appeal to the buyers to understand a plethora of real issues being faced by the garment suppliers and would act as a crisis killer at this moment for our members to come out of the woods.

Apparel exporters have been still passing through a challenging business environment caused due to various adverse factors like increasing of yarn prices, job working charges and accessories prices apart from the spurt in freight charges to the tune of 15 to 20 per cent.

Despite this, exporters are strenuously supporting its work force at one side and collectively working to cater to the needs of buyers.

The steep hiking in organic cotton yarn prices in recent months has totally impacted the organic garment exporting units and these units are no way in a position to absorb the price hike happened to the tune of 30 per cent.

It is apparently clear that they could not continue to export organic garments with the same price to niche markets.

Source: Apparel Online

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COVID-19 impact | Budget documents will not be printed first time since 1947

For the first time since 1947, the Budget documents will not be printed this year due to the COVID-19 pandemic.

The government has been given permission from both the houses to not print the documents this year, CNBC-TV18 reported. Soft copies of the Union Budget for 2021-22 will be provided to Members of Parliament (MPs).

The Ministry of Finance was of the view that it the government cannot keep over 100 people in printing press together for two weeks, due to the risk of coronavirus transmission, the news channel reported.

The documents have been printed every year since the Union Budget was first presented on November 26, 1947.

Every year the Ministry of Finance conducts a halwa ceremony every year to mark the beginning of the process of printing the Budget documents, where halwa is offered to the staff. The process takes place in the basement of North Block, beginning a fortnight before the Budget presentation.

On the Budget Day, finance ministers usually carry the documents to Parliament  in a leather briefcase. In 2019 and 2020, Finance Minister Nirmala Sitharaman carried the documents in a traditional bahi khata.

Sitharaman will present the Union Budget for 2021-22 on February

Source: Money Control News

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India ushering in rapid structural reforms to become USD 5 trn economy by 2025: Goyal

India is strengthening the entire ecosystem to achieve Prime Minister Narendra Modi’s dream of becoming a USD 5 trillion economy by 2025 through rapid structural reforms, Union Minister Piyush Goyal said on Saturday. Addressing the Pravasi Bharatiya Diwas conference, the Commerce and Industry Minister said: “We are working simultaneously to bring about a quantum leap in our quality, in our productivity, in our efficiency, so that Indian Industry can truly expand our export basket, making it bigger, better and broader”.

The minister observed that new markets were being explored aggressively to enhance the reach of Indian products globally. “The Indian diaspora living abroad have more familiarity with consumer markets. You have unique insights into consumer behaviour and can guide Indian Industry to develop customised products for foreign markets,” Goyal said.

The minister said the disruptions due to COVID-19 have made everyone realise that one needs to dare to do great things.

“Otherwise we may lose our ability to be a global leader. This is the philosophy behind Aatmanirbhar Bharat. It is not about closing doors but to open the doors wider to build India’s capability and capacity and our resilience with speed, skill and scale,” Goyal said.

He highlighted that through rapid structural reforms, India is strengthening the entire ecosystem to achieve the Prime Minister’s dream of a USD 5 trillion economy by 2025. “Our holistic approach consists of improving the ease of starting a business, ease of doing a business, and ease of growing our businesses,” Goyal added.

The minister pointed out that India is growing rapidly and offers a plethora of opportunities for Indians both in India and across the world. “Our wish is that our brothers and sisters from across the world become the first to avail these opportunities.”

“Let us fulfill our duty to our motherland with determination and devotion and develop India into a leader, a participant in resilient global supply chains into a dominant player in international supply trade,” the minister said.

Source: The Financial Express

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Tirupur urges Government to support in upcoming budget

Tirupur Exporters’ Association (TEA) has submitted pre-budget memorandum for the ensuing Union Budget 2021-22 to the Union Minister of Finance Nirmala Sitharaman and requested to address the same.

The same has been shared with Smriti Irani, Union Minister of Textiles, Arvind Kumar Sharma, Textiles Secretary (Additional Charge) and other senior officials.

Raja M. Shanmugham, President, TEA, informed that housing for labour, requirement of R&D support to Tirupur cluster and individual units, to include sma-1 and sma-2 category units under ECLGS scheme, market promotion support to reputed industry associations, remission of duties and taxes on exported products (RODTEP) are some of the requests made by the TEA to the Government.

He has urged the minister to address the issues in the ensuing Union Budget 2021-22 and help grow knitwear sector exports.

If the above-mentioned demands get fulfilled, Tirupur’s apparel export can grow well. It is pertinent to mention here that during 2019-20, Tirupur exported knitted apparels worth Rs. 27,280 crore, which is 51.3 per cent of India’s total knitted apparels.

Even during 2020-21 (April to November), its knitted export was Rs. 14,150 crore.

Source: Apparel Online

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Fiscal deficit to be 7.5 pc of GDP during current fiscal: Experts

India’s fiscal deficit is expected to be around 7.5 per cent of the GDP for the current fiscal owing to moderation in revenue collection due to the COVID-19 crisis, experts said.  This would be a 100 per cent jump from the Budget estimate of 3.5 per cent of GDP pegged for the current fiscal.

The government had pegged the fiscal deficit at Rs 7.96 lakh crore or 3.5 per cent of the GDP in the Union Budget 2020-21, which was presented by Finance Minister Nirmala Sitharaman in February 2020.  The finance minister in Budget 2020-21 had pegged the gross market borrowing, which is also a reflection of fiscal deficit, at Rs 7.80 lakh crore for the current fiscal.

Hard-pressed for funds to combat the COVID-19 crisis, the government had in May increased its market borrowing programme for the current financial year by more than 50 per cent to Rs 12 lakh crore.  According to ICRA’s Principal Economist Aditi Nayar, the fiscal deficit is expected to touch 7.5 per cent for the fiscal ending in March.  “We estimate the fiscal deficit at Rs 14.5 lakh crore or 7.5 per cent of the GDP,” she said.

Small savings and treasury bill will make up the balance apart from government borrowing programme of Rs 12 lakh crore, she said.  Nominal GDP or GDP at Current Prices in the year 2020-21 is likely to attain a level of Rs 194.82 lakh crore, as against the provisional estimate of GDP for the year 2019-20 of Rs 203.40 lakh crore, released on May 31, 2020.

The growth in nominal GDP during 2020-21 is estimated at (-) 4.2 per cent. Nominal GVA at Basic Prices is estimated at Rs 175.77 lakh crore in 2020-21, as against Rs 183.43 lakh crore in 2019-20, showing a contraction of 4.2 per cent.  The central government may have to incur a larger fiscal deficit than what was earlier announced at Rs 12 lakh crore, said D K Srivastava, chief policy advisor, EY India.

“We assess that the government may revise upwards its borrowing target so as to exceed 7 per cent of 2020-21 nominal GDP and signal a move towards restoring fiscal consolidation in a limited way in the budget estimates for 2021-22,” he said.

The Centre’s fiscal deficit had widened to 135 per cent of the full-year’s Budget Estimates (BE) at Rs 10.7 lakh crore in the first eight months (April-November) of FY’21. 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 lockdown in the first quarter to contain the outbreak of the coronavirus pandemic.  The government’s total receipts stood at Rs 8,30,851 crore (37 per cent of BE 2020-21) till the end of November 2020. This included Rs 6,88,430 crore tax revenue (net to Centre), Rs 1,24,280 crore of non-tax revenue and Rs 18,141 crore of non-debt capital receipts. Non-debt capital receipts consist of recovery of loans and disinvestment proceeds.

The tax revenue collection was 42.1 per cent of BE of 2020-21, compared to 45.5 per cent of BE (2019-20) during the corresponding period a year ago. Non-tax revenue was 32.3 per cent of BE. During the corresponding period of the last fiscal, it was 74.3 per cent of BE 2019-20.

Source: The Financial Express

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2020 cotton market trend and price overview

According to the latest data of the US Department of Agriculture a 2.2 million cotton bale reduction to the global production forecast (to 113.9 million) and a 1.6 million cotton bale increase to the global consumption forecast (to 115.6 million).

The blend of a smaller cotton crop and higher offtake caused the forecast for 2020-21 concluding stocks to drop 3.9 million cotton bales to 97.5 million.

Although this is a substantial decrease relative to figures suggested in previous months, the present estimation for cotton stocks remains very high by past standards.

COVID-19 is still a great threat to the global economy forcing uncertainty and pushing down global cotton demand.

When COVID-19 hit forced spinning mills to shut globally cotton stocks climbed and, in the years, surrounding the highest levels of Chinese reserves (in 2013/14 and 2014/15 global ending stocks were 99.9 million and 106.8 million) were warehoused supplies higher than they are expected to be at the end of 2020/21.

In the meantime, world mill-use is predicted to recover in 2020/21 (was 102.2 million bales in 2019/20), but the projection of 115.6 million cotton bales is still below the volumes over 120 million from 2017/18 and 2018/19.

Most worldwide benchmark prices

Over the past month, most worldwide benchmark prices augmented.

The NY March futures contract climbed from 70 cents/lb to 74 cents/lb. Cotlook’s A Index rose from 76 to 80 cents/lb.

While the China Cotton Index (CC Index 3128B) increased from 100 to 102 cents/lb. In domestic terms, values climbed from 14,500 to 14,700 RMB/ton. The RMB strengthened against the USD, from 6.60 to 6.53 RMB/USD.

Indian cotton prices (Shankar-6 quality) increased from 69 to 71 cents/lb. In domestic terms, values increased from 40,200 to 40,700 INR/candy. The Indian rupee was steady against the USD near 74 INR/USD.

In international terms, Pakistani prices decreased from 74 to 72 cents/lb. In domestic terms, prices eased from 9,700 to 9,500 PKR/mound. The Pakistani rupee was steady against the USD near 159 PKR/USD.

In the US, due to the drought in West Texas and the series of hurricanes in the growing season, a reduction in the cotton production estimate the U.S. had been expected for several months. This month, the forecast for the American crop was lowered from 1.1 million bales to 15.9 million.

Numerous other countries also saw cotton harvest expectations decrease, and other notable reductions were made for India (-500,000 bales to 29.5 million), Pakistan (-500,000 bales to 4.5 million), and Australia (-100,000 bales to 2.4 million). The present forecast for Pakistan calls for the lowest level of production since 1983/84.

Most important changes to country-level consumption figures were optimistic. These included the 1.0 million bale increase for India (to 24.0 million), a 500,000-bale surge for China (to 38.0 million), and a 200,000-bale rise for Pakistan (to 10.0 million). Thailand was the only country with a prominent decrease for 2020/21 mill-use (-125,000 bales to 700,000).

The international business is estimated to surge slightly, increasing 330,000 bales to 43.2 million. In terms of imports, the largest updates were for China (+500,000 bales to 10.0 million), Pakistan (+400,00 bales to 4.7 million), Bangladesh (-400,000 bales to 6.9 million), Thailand (-120,000 bales to 700,000), and Indonesia (-100,000 bales to 2.8 million).

For exports, the major changes were for the U.S. (+400,000 bales to 15.0 million), Argentina (+125,000 bales to 550,000), and Australia (-100,000 bales to 1.4 million).

The latest USDA data revisions highlight dissimilar cotton supply and demand related influences on cotton prices. From one side, there is the global production deficit in 2020/21. On the other side, there is a massive accumulation of global stocks that occurred in 2019/20.

Macro influences

Macro influences are also diverse. The international pandemic patient rise has been a result of surges in many locations triggering new restrictions on consumer activity.

This will distress overall economic growth, which is connected with cotton demand. It can also have more impact by closing more brick-and-mortar retail outlets.

Yet, apparel consumers and retailers have had nearly a year to adjust to COVID-driven market situations, and many sales have switched online.

Into this multi-dimensional influence, the US forced a ban on products made with fiber grown or processed by the Xinjiang Production and Construction Corps (XPCC) or its subsidiaries.

XPCC produces about a third of all cotton grown in China. The traceability requirements to prove or disprove XPCC content are unknown.

Business lawyers have indicated that the ban includes third-party countries that import intermediate textiles from China and convert them into goods that are eventually sent to the U.S.

The implication is that China could meet its direct U.S. import demand three times over using the foreign fiber and yarn it has already been getting from the rest of the world.

Though, China also exports a good amount of fabric. With the ban extending to third party countries, it could be said that the ban could inspire China and other countries to import more from non-Chinese sources.

But China could also hit back, and China has demonstrated a willingness to respond. Instances include the series of supplemental tariffs China placed on US goods since 2018 and the unofficial ban imposed on Australian cotton in reaction to criticism over human rights abuses in Xinjiang. If China does respond, it could be predicted to be harmful to global cotton demand and prices.

Source: Textile Today

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Economists ask PM for simpler GST, accelerated privatisation

Ahead of the Budget for FY22, a group of economists on Friday asked prime minister Narendra Modi to rationalise direct and indirect tax regimes, undertake further bank capitalisation, accelerate privatisation and boost public spending on infrastructure projects to create jobs.

In the video conference, also attended by finance minister Nirmala Sitharman, officials from Prime Minister’s Office, the finance ministry and Niti Aayog, economists also asked for measures to bridge the gap in poverty alleviation programmes by implementing technology for better targeting and service delivery anywhere in the country. Among others, the meeting was attended by former Niti Aayog vice-chairman Arvind Panagariya, former RBI deputy governor Rakesh Mohan and former chief economic adviser Arvind Virmani.

“To reduce tax compliance burden on small entrepreneurs, both cost of compliance and the time they spend on worrying about these issues should be reduced by simplifying and rationalizing direct and indirect tax systems,” Virmani said. He said the Direct Tax Code with best practices should be brought in. In the goods and service tax (GST), Virmani batted for a single rate regime with no cess on more than 75% of items. To boost textile product exports, he sought removal of differential rates on cotton, manmade fibre, artificial fibre, mixed fabrics, etc.

Economists also emphasised the need for development of acceleration of public investment in infrastructure and public goods projects, especially on construction heavy projects to create immediate jobs. With 3/4th of workforce back in labour market, the unemployment rate has risen recently.

Even though the government has announced a series of measures and stimulus packages under Aatmanirbhar Bharat initiative in 2020, the government will need to keep expenditure momentum in FY22 to boost consumption and investment demand to revive economic activity.

India’s real gross domestic product (GDP) in FY21 could be 7.7% lower than in FY20 and 3.9% lower than even the FY19 level in absolute term, the National Statistical Office (NSO) forecast on Thursday, releasing the advance estimate for the benefit of the formulation of the Central Budget, due on February 1. The sharpest annual GDP contraction in recorded history was caused by Covid, though a slowing phase had begun a few quarters earlier. The contraction estimated by the NSO is, however, narrower than prognosticated by various other agencies including the IMF (10.3%), World Bank (9.6%) and other prominent global rating agencies, but a bit worse than RBI’s latest forecast of 7.5%.

Source: The Financial Express

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Covid-19: Jaishankar invites diaspora to be part of India's efforts to build stronger capabilities

An India with greater capacities can be an additional engine of growth for the global economy and it will always be a "trusted partner and a reliable supplier" in line with international norms, External Affairs Minister S Jaishankar said on Saturday as he invited the Indian diaspora to be part of the country's efforts to emerge stronger from the coronavirus crisis.

In an address at the 16th Pravasi Bharatiya Divas, Jaishankar said the objective of the Aatmanirbhar Bharat (self-reliant India) initiative is to build greater capacities and enhance the country's contribution to the world.

Hailing the Indian diaspora community, the external affairs minister described it as an extended family "transplanted from the motherland to distant shores", adding that it has now "flourished into an evergreen tree, with its lush branches spreading across all the regions and continents".

The Pravasi Bharatiya Divas (PBD) is celebrated to recognise the contribution of the overseas Indian community towards the growth and development of the country. January 9 was chosen as the PBD as it was on this day in 1915, Mahatma Gandhi, the "greatest pravasi", returned to India from South Africa and led the country's freedom struggle.

"Certainly, it is our ambition to build the capacities and strengths commensurate to one of the leading economies of the world. To do that, we recognise the need to think, plan and act more strategically. What is underway may be a national endeavour, but it is one very much based on global partnerships," Jaishankar said.

He mentioned India's consistent efforts to make it easier to do business in the country for both domestic and global players.

"Our objective may be to increase our own trade, investments and services, but they will surely contribute to a larger global re-balancing. An India with greater capacities can be an additional engine of growth for the global economy. It will also be a trusted partner and a reliable supplier, in line with global norms and practices," the minister said.

His comments came amid an increasing focus on China's aggressive trade practices as well as its trade-related disputes with a rising number of countries.

Jaishankar delivered three separate speeches at the event.

Quoting Prime Minister Narendra Modi, he said India's self-reliance initiative does not advocate a self-centred system and that it reflects a concern for the happiness, cooperation and peace of the whole world. "I underline this message because it is important that the world be fully aware of the global nature of India's objectives," he said.

Jaishankar said an engagement with the world is fundamental to India's beliefs and traditions.

"After all, during the pandemic, India not only met its own medicine requirements, but supplied to the rest of the world. Similarly, we not only brought our own people back home, but those of neighbours as well. And as we now look at the supply of vaccines, the prime minister has assured that we will live up fully to our international responsibilities," he said. Jaishankar said the experience of the pandemic has driven home the need for more trusted, resilient and and reliable supply chains. "Involving the diaspora in that endeavour is natural. To start with, they have always been enthusiastic contributors to nation-building," he said.

The external affairs minister said India has responded to the pandemic through the larger framework of "Aatmanirbhar Bharat" to enhance its capacities at home to make a larger contribution abroad.

"We, in India, have responded through the policy of Aatmanirbhar Bharat, building stronger capacities at home to make a larger contribution abroad. It is natural that we seek to involve our diaspora in that process, as they have a well-earned reputation as high achievers," he said.

Jaishankar said India has demonstrated an ability to rise to the challenge and that determination is now becoming visible as a larger approach to enhance national capabilities and prospects. Lauding the diaspora community, he said it represents the best of India's culture, ethos and values in foreign countries.

"The hard work, discipline and peace-loving nature of Indians have made them role models wherever they have settled. As high achievers, they have enhanced the prestige of India, especially as some have risen to occupy the tallest positions in their country," Jaishankar said at the valedictory session.

Source: Deccan Herald

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Budget 2021-22 wishlist: Here are the key challenges in real estate sector

Key challenges

  • Given the market / pandemic situation, there is an overall fall in the fair market values of properties. The reckoner values (circle rates) have pretty much remained at the pre-Covid levels. Such a situation leads to tax being calculated on deemed income basis.
  • Pre-sales have reduced significantly due to lack of customer confidence on delays in project completion. This has created liquidity issues with residential developers.
  • Real estate transactions (immov Industry ask
  • Real estate transactions (immovable property or shares of property companies) between non-related parties to be exempt from deemed income provisions [such as 56(2)(x) and 43CA]. The fall in market value due to the pandemic is much more than the safe harbour currently provided under these provisions.
  • Reduction in stamp duties in some states led to significant increase in demand. To enhance the demand further across the country, a long-term capital gains exemption could be provided on all under construction properties purchased during FY 2021 / 22. With reduced stamp duties and no capital gains, it would be a great incentive for property buyers and would also boost the GST collection.
  • In view of the enhanced focus on the digital economy, there will be a need for high quality data centres. Tax incentives for developers undertaking data centre projects would help in providing the initial boost to this niche asset class.

Source: The Business Standard

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‘Developing nation’: India for voluntary forgoing of benefits

Amid persistent attacks by the US on countries, including China and India, for “self -designating” themselves as developing nations at the World Trade Organization (WTO) to enjoy special and differential trade benefits, New Delhi has rooted for a policy of voluntary forgoing of such a status.

India has also called for expeditiously restoring the almost disfunctional Appellate Body of the WTO for dispute resolution, without diluting its core features. The US has blocked the appointment of judges, thus crippling the WTO’s appellate mechanism. In its recent submissions with the WTO, India has also stressed that any reform agenda must be “development-centric, preserving the core values of the multilateral trading system and strengthening the provisions of special and differential treatment” for poor and developing countries in both existing and future agreements.

Meanwhile, India’s seventh Trade Policy Review (TPR) at the WTO concluded in Geneva on Friday. The TPR is a mechanism under the WTO in which members’ trade and related policies are examined by the trade body with an aim to improve adherence to its rules.

“The premise that developing country Members, who consider themselves in a position to do so, may voluntarily decide to forgo the S&DT (special and differential treatment ) in current and future negotiations appears to be a more acceptable solution,” India has said in its submission in November.

US President Donald Trump had expressed disappointment with the WTO for allowing nations that, he believed, were actually rich to “self-designate” themselves as developing countries to grab assorted benefits. His administration had sought a review of this policy, among others.

The special and differential treatment allows developing countries longer time frames to implement commitments and greater flexibilities in adopting measures to improve their presence in global markets.

For instance, developing countries are allowed to provide considerably larger input subsidies and minimum price support (they can offer product-specific farm subsidies up to 10% of the value of production, against 5% for developed countries, although the latter enjoy other flexibilities). Further, developing countries will continue to provide indirect export subsidies, covering internal transport and marketing, until 2023, five years after the deadline for elimination of all forms of export subsidies.

At the meeting, India stressed that S&D treatment for all developing and least developed countries is a core principle of the WTO that needs to be preserved. “While some developing members may have made progress, the gaps in the levels of development still persist and have even widened in some areas,” it said. Further, new divides, especially in the digital and technological spheres, have become more pronounced.

As FE has reported, analysts say while the US demand for a change in the status quo has some merit, as some of the richest countries — such as Singapore, South Korea, Saudi Arabia, Brunei, Hong Kong and Qatar — and the world’s largest goods trader, China, claim to be developing to enjoy certain benefits, targeting India in the same breath is disingenuous by any stretch of imagination. This is because in several indicators of development, such as per capita income, poverty, undernourishment, hunger, farm employment and adoption of B2C e-commerce, India still lags even some of these developing nations.

India also highlighted that the resolution of the impasse in the Appellate Body must precede other reforms, as “there is little incentive in negotiating new rules in the absence of an independent and effective guarantor of those rules”.

Any agenda for reform must also preserve the multilateral character of the WTO, including consensus-based decision making. “In order to be widely acceptable, discussions on WTO reform should be premised on the principles of inclusivity and equity,” India said.

A good starting point for the reform agenda would be the elimination of unequal and trade-distorting entitlements of developed countries in the Agreement on Agriculture. According to a paper submitted with the WTO earlier by India, China and others, the US’ domestic support per farmer was $60,586 in 2016, 267 times of India’s ($227), although Beijing’s support ($863) was almost four times of New Delhi’s. Massive subsidies have led to huge competitive advantage of farm products of developed countries in the global market. While agriculture accounts for less than 2% of the total employment in the US, it is as much as 44% in India and 20% in China.

Source: The Financial Express

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Union Budget may give fiscal breather to states

The Budget may provide some additional fiscal space to states if they implement certain citizen-centric reforms as a special dispensation in line with the Aatmanirbhar Bharat (Self-reliant India) stimulus package that raised their borrowing limit by 2% of gross state domestic product (GSDP) in 2020-21, amounting to over ₹4.27 lakh crore, people familiar with the development said.

The role of states is crucial in a rapid recovery of the economy ravaged by the Covid-19 pandemic. States will require additional resources in achieving faster economic growth, which would mean borrowing beyond the limit of 3% of GSDP, two persons said, requesting anonymity.

The Union government is scheduled to present the Budget for fiscal year 2021-22 on February 1, which is expected to focus on reviving economic growth, which was battered by the nationwide lockdown imposed on March 25 to check the spread of Covid-19. As a result, the Indian economy contracted by 23.9% and 7.5% in the quarters ending June and September, and according to the first advanced estimate by the National Statistical Office (NSO), the country’s GDP is expected to contract by 7.7% in fiscal 2020-21.

“One of the options is to allow a special borrowing dispensation beyond the available space for fiscal deficit, which could be conditional and linked with specific reforms that will help to boost growth,” one of the two persons cited above said. Under the Fiscal Responsibility and Budget Management (FRBM) Act, states are allowed to keep their fiscal deficit at 3% of GSDP.

On May 17, 2020, the government raised the borrowing limit by an additional 2% of GSDP in 2020-21, worth over ₹427,300 crore.

While the first 0.5% or ₹106,830 crore was unconditional, another 1% was on condition that the states implement four citizen-centric reforms with a 0.25% value each -- put in place a one nation, one ration card system, improve ease of doing business, reform urban local bodies and the power sector. The remaining 0.5% was conditional on states implementing three out of the four reforms. Later, this was relaxed for states if they opted for the first borrowing option of plugging their shortfall in Goods and Services Tax (GST) revenue of ₹1.10 lakh crore.

The Union finance ministry on Thursday said 10 states have so far implemented the one nation, one ration card system, seven of them have undertaken measures for ease of doing business and three states have implemented reforms in urban local bodies. They have been permitted additional borrowings of ₹54,190 crore.

Experts said that for a rapid economic recovery, states must be allowed to borrow more than usual and money must be spent judiciously. DK Srivastava, chief policy adviser at consulting firm EY India, said, the financial year 2021-22 would be critical for providing a significant growth push to GDP through the central and state budgets.

“As such, both central and state governments may have to rely on fiscal deficits that are well above their respective FRBM norms. A continued relaxation of states’ fiscal deficit by a margin of 2% points of GDP in FY22 should be considered a welcome step,” he said.

Commenting on the ongoing additional borrowing dispensation in 2020-21, he said states could not avail of the entire fiscal space that had been given to them because of excessive conditionalities attached to the scheme. “The only relevant condition that should be imposed with respect to additional borrowing should relate to ensuring that the additional borrowing is spent fully on additional capital expenditure.

This would be prudent in the long run because additional liabilities due to borrowing would be matched by additional assets through infrastructure spending,” he said.

“The citizen-centric reforms linked to additional borrowing are not relevant in the context of borrowing.

Those incentives should be separately designed and linked to the centrally sponsored schemes. In any case, these reforms are better implemented in a normal year rather than in a Covid affected abnormal year,” he added.

Divakar Vijayasarathy, founder and managing partner at consulting firm DVS Advisors LLP, said that although performance-based incentives for state governments “is a tricky issue, going forward, this could become the norm”.

He said states are “more inclined towards adhering to the Finance Commission recommended performance parameters since the commission is a constitutional body, independent of the central government”.

Source: The Hindustan Times

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Sharp Drop: States’ capex seen down a quarter

Against a 30% year-on-year jump projected for FY21, budgetary capital expenditure by state governments may have dropped by a quarter in April-November, going by an FE review of data from 12 states. Among them, these 12 states — Uttar Pradesh, Tamil Nadu, Madhya Pradesh, Andhra Pradesh, Karnataka, Rajasthan, Odisha, Telangana, Kerala, Chhattisgarh, Haryana and Jharkhand — reported combined capital expenditure of Rs 1,09,860 crore in April-November FY21, compared with Rs 1,48,571 crore in the year-ago period, down 26%. The annual capex target for all states as per their budgets is Rs 6.5 lakh crore.

Compared with this, the Centre has managed to spend Rs 2.41 lakh crore as budget capex during April-November, up 12.8% on year, even though the FY21 target is Rs 4.12 lakh crore (up 22.4% on year).

The slippage in states’ capex is sure to have been unprecedentedly steep.

If public-sector fixed capital formation has held up in recent years even amid a worrisome, prolonged decline in private investments, the contribution of state governments has been vital; state capex is also seen to have a higher growth multiplier potential than Central Budget/CPSE capex.

Reversing a decline seen in the first six months of this fiscal, a conscious effort is being made by the government to accelerate capital expenditure in H2FY21. The Centre’s capex in November at Rs 43,803 crore was up 248.5% on year, though the April-November data showed only a 12.8% rise.

With states’ capex seeing sharper fall, the Centre is also prodding the central public sector enterprises (CPSEs) to ramp up investments in this fiscal.

The Centre, states and central PSEs among them will likely spend Rs 7.5 lakh crore on capital investments in the second half of this fiscal year, up 80% over such expenditure in the first half, according to an FE analysis based on official projections and information gathered from different sources.

The curbing of capex by the states is primarily due to the acute revenue constraints they are facing. While the low revenue buoyancy was evident last year itself, the situation has aggravated due to the pandemic. Even after liberal transfers by the Centre from the divisible tax pool in the initial months of this fiscal, tax revenues of the 12 states declined by 16% on year during April-November.

To be sure, many states have in recent months seen a rise in own tax revenues (OTR) from the lows witnessed in the lock-down period. From the range of 25-50% of normal in May, OTR of most states in October either surpassed or was on a par with the same in the year-ago month.

Capital expenditure undertaken by states, which accounts for more than 60% of general government capital expenditure, is generally prone to adjustments, conditional upon revenue generation. In 2017-18 and 2018-19 as well, capital spending was reduced from budgeted levels, but not to the extent this year.

Borrowings by the 12 states whose finances were reviewed by FE rose 23% on year to about Rs 3 lakh crore in April-November of this fiscal compared with a 26% increase witnessed in the year-ago period.

What is more worrisome for the states is that the Centre which transferred budgeted amounts to state governments as their tax share from divisible pool in April-May, has since found this practice unsustainable — November transfers were a fifth less than envisaged in budget, at Rs 37,233 crore. The customary pattern is the Centre makes adjustments on state tax transfers based on actual receipts only during February-March, the final two months of a financial year. With tax devolution likely coming down drastically in the remaining months of this fiscal, the states are sure to further accelerate borrowings to make up partly for revenue shortfalls.

According to Icra, the shareable tax pool may turn out to be Rs 13.4 lakh crore in FY21, 30% lower than the budgeted amount of Rs 19.1 lakh crore. The agency has projected the central tax devolution to the state governments at about Rs 5 lakh crore (after adjusting for Centre’s extra transfers of Rs 48,400 crore in FY20) in FY21, a substantial Rs 2.8 lakh crore lower than the Rs 7.8 lakh crore budgeted.

As per state budgets, their combined fiscal deficit stood at 2.6% of GDP in FY20 and 2.4% in FY19. FY21 will, however, likely see a record spike in the fiscal deficits of both the Centre and states.

Source: The Financial Express

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Income tax returns cross 58 million hours before deadline, shows data

Income tax returns (ITRs) crossed 58 million on Sunday, the last day for individuals to file returns for financial year 2019-20, with close to 2 million returns filed during the day. As on January 9, 56.4 million returns were filed compared to 56.6 million filed by September 9 in 2019-20, when the due date was August 31.

In view of the pandemic, the government had extended the deadline for filing returns multiple times in the past. The original deadline for filing ITRs was June 31, 2020, which was extended to November 30 and then to December 31. With several industry representations seeking more time, a 10-day extension was provided until January 10 for ITR filings for individuals and for companies till February 15. “1,797,625 ITRs have been filed up to 6 pm today & 239,013 ITRs filed in the past 1 hour,” it tweeted on Sunday.

Source: The Business Standard

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IMF says China recovering fast ahead of most big economies

China is recovering fast ahead of most large economies, but the recovery is still unbalanced and facing significant downside risks, the IMF has said, projecting an eight per cent growth rate for the world’s second largest economy in 2021. However, the main concern around the Chinese recovery that the International Monetary Fund (IMF) has is the lack of balance, said Hlge Berger, Mission Chief for China and Assistant Director, Asia and Pacific Department of the IMF.

The recovery is still relying mostly on public support. Private investment has strengthened recently, but consumption is lagging. Growth rates and consumption recently have been higher, but the level of consumption compared to its pre-crisis trend is still rather low, he told reporters during a conference call on Saturday on the publication of the 2020 China Article IV Staff Report.

”China is recovering fast ahead of most large economies, but the recovery is still unbalanced and facing significant downside risks. We are seeing growth at around 2 per cent in 2020 and around 8 per cent in 2021. December numbers have been surprising on the upside, so there are some upside risks to that forecast,” said Berger.

On the other hand, he said that there are significant downside risks. Domestically, there is a pandemic risk that is still around. Also, the external environment has generally become a little bit more difficult for China and its economic relations with other countries.

”This is a large reason for the fact that we think that there’s still an output gap this year of 1.8 per cent. That’s the difference between what the economy potentially can have in terms of GDP and what we are actually expecting in terms of demand. So that’s where this lack of balance comes in, and this has important implications for the way macro policies should be conducted,” Berger said.

In the short term, he said, the IMF does not withdraw macroeconomic policy support prematurely in China. And this is the advice that other countries are getting from the IMF, so this is a bit of a global concern, but it applies to China as well. ”The second implication of our analysis of the outlook and the risks around it is that we need to make sure that we adjust the composition of macroeconomic support away from investment towards household support. This will directly help consumption. This has implications, of course, for our policies to strengthen the social safety net,” Berger said.

Noting that structural reforms have been progressing despite the pandemic which is quite an achievement in China, Berger said that this reform effort has been predominately in the area of opening financial services to the outside world, and less so in the real sector. Real sector reforms, however, are important, he said. While productivity has increased in the past, the levels for the productivity in China are still relatively low compared to the global frontier, he said. Average productivity across all sectors is around 30 per cent of the global frontier.

The external environment has become a bit difficult in recent years and if that stays like this, it will be harder to tap into external productivity improvements through normal means of trade and FDI, he said.

China, Berger said, can also help others to overcome the challenges from the crisis. ”There we note the very helpful engagement of China to providing debt relief for low-income countries,” he added. China is the world’s second largest economy behind the US.

Source: The Financial Express

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Dhaka drops plan to negotiate FTA with US

The government has backtracked from a plan to propose the United States for signing a free trade area (FTA) deal considering its lack of preparedness, an official says.

Failing to get the generalised system of preferences (GSP) facility restored in the US market, the government had planned to ease the duty burden by signing the FTA accord with Bangladesh's single largest export destination.

The Bangladesh Trade and Tariff Commission studied the feasibility of signing a free trade pact with the US, which found that the country could reap financial benefits only if the deal is signed on trade issues.

However, it found various barriers including shortcomings on labour and human rights issues, differences on intellectual property rights, public procurement system, service sector, and investment issues may not favour inking a deal with the US.

A senior commerce ministry official told the FE the ministry high-ups had earlier discussed on proposing the US in the next meeting of the Trade and Investment Cooperation Forum Agreement (TICFA) for the agreement that will see tariff eliminate on both sides.

But now the ministry officials think that such a proposal would not draw any positive signal from the US side. Even if the US agrees, Bangladesh would not be able to meet the rigorous conditions to be imposed by the world's biggest economy, he added.

Bangladesh lost the GSP facility in the US market after the Rana Plaza collapse back in 2013, and since then it has implemented various labour rights conditions set by the US and the European Union.

However, the US did not restore the GSP facility and is still putting pressure to further improve workplace safety and labour rights.

The government functionaries believed revoking the GSP facility is a "politically motivated" decision of the US.

Due to the GSP facility cancellation, apparels, Bangladesh's main exportable item, enter the US market by paying as much as 15 per cent duty, making exporters less-competitive.

Bangladesh Trade and Tariff Commission member Mostafa Abid Khan told the FE on Friday the US usually strikes comprehensive FTA deals, covering trade in goods, trade in services, and trade in investments.

"Firstly, the matter is whether the US will agree or not. Secondly, are we able to address many pressing issues?" he asked.

Mr Khan said the Bangladesh market is tiny in terms of the size of US's overall external trade. "The trade in goods is not the main issue, many other issues are there. Considering all other things, US's interest is very minimal."

He suggested that Bangladesh should slash duty burden through product diversification and exporting goods other than apparels. "The duty on apparel is very high while for other products, it is not high."

Research director of the Centre for Policy Dialogue (CPD) Dr Khondaker Golam Moazzem told the FE on Friday the US suspended GSP facility mainly on labour standard issue, which will remain a sticking point in case of any future deal.

"Since the US is not restoring the GSP on labour rights concern, it also would not sign the FTA with Bangladesh, leaving the issue unaddressed," he said.

After Rana Plaza collapse, Mr Moazzem said, conditions on labour rights came only in case of the apparel and shrimp sectors. "Even if the US agrees to sign the FTA deal, now the labour standard issues will be applicable to all sectors."

"Considering these, we are not prepared at all," he said.

When the US signs an FTA deal, it not only considers trade, it also assesses investment, public procurement, intellectual property rights, and governance among other standards.

"We will face big challenges in this case because the practices we follow is not compatible with such deals," Mr Moazzem added.

Bangladesh exported goods to the USA worth $6.7 billion in 2019, up by 9.5 per cent compared to 2018. On the other hand, the US exported goods worth $2.3 billion to Bangladesh in 2019, up by 12.4 from the previous year.

Bangladesh's major exportable items to the USA include apparels, footwear, pharmaceuticals, plastic, leather, ceramic, tobacco and textile fibre.

The US's top exports to Bangladesh in 2019 were aircraft, grain, seeds, fruit (soybeans), cotton, iron and steel, and machinery.

The USA is a major investor in Bangladesh, focused mainly on the energy and power sector. In 2018, the US companies invested some $2.1 billion, up by 43 per cent compared with the previous year.

Source: The Financial Express Bangladesh

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HeiQ moving towards new heights

Arvind Ltd, Raymond Ltd, RSWM Ltd, Donear and many such other leading Indian textile companies recently strengthened their association with Switzerland-based HeiQ, a leader in textile innovation, creating some of the most effective, durable and high-performance textile effects. HeiQ, listed last month on the London Stock Exchange, has developed over 200 technologies in partnership with over 300 major brands.

HeiQ Viroblock, the latest innovation of the company, was recently honoured with Swiss Technology Award 2020. It is an antimicrobial technology which helps in the fight against enveloped viruses, including SARS-CoV-2 (the virus causing Covid-19). It is already being used by more than 150 global brands.

With a manufacturing capacity of 35,000 tonnes per year in its sites in Switzerland, Australia and US, HeiQ is established on three pillars – scientific research, speciality materials manufacturing and consumer ingredient branding. Apparel Resources had an exclusive discussion with Hoi Kwan Lam – Chief Marketing Officer of the company. She discussed various aspects of the antimicrobial textile revolution, HeiQ Viroblock.

The company is just 15-years-old but throughout its years of development, with extensive research network with universities and PhDs around the world, HeiQ has gathered a good amount of knowledge about textiles that becomes very helpful when it comes to a global crisis like COVID-19.

“We try to apply all our knowledge into something so essential as textiles – to make them antiviral. We launched HeiQ Viroblock as a means to contribute our part to the world. Our thinking was: until there is a cure or vaccine for this disease, at least we can help to mitigate the spread of it with what we do,” says Hoi Kwan Lam.

She further adds that the company is very impressed with the speed at which brands and manufacturers have adopted this technology. “Usually, any new product development project would take 18-24 months to be accepted by the market. In some extremely fast cases, we are talking about 9 months. In the case of HeiQ Viroblock, it was shortened to 3 months! The high market acceptance has proven to us that the market needed it. Manufacturers hear the demand and react to it. The supply then awakens yet bigger demand for this kind of products.”

It is pertinent to mention here that as per Global Market Insight, the antimicrobial textile market was estimated to be US $ 10 billion in size in 2019 at a CAGR of 9.8 per cent (a figure before the pandemic). However, after the pandemic, the situation has changed completely as the market has expanded.

She believes that now antiviral textile is a subcategory but this terminology basically didn’t exist before the pandemic, or so to say before HeiQ launched HeiQ Viroblock. There was no such market. Now the awareness of such textile functionality has grown and the market is there to stay. Hoi Kwan Lam explains, “We can be sure that the overall antimicrobial textile market will continue to grow. If we look at the last SARS epidemic, consumers’ behaviour has permanently changed: hygiene habits, household disinfectant consumption and usage of more such products has increased that are marketed as antimicrobial or antibacterial. If you look at Dettol, this brand had only a handful of SKUs before SARS but the product portfolio has grown to about a hundred by now.”

HeiQ Viroblock (NPJ03, as the formulation is called), is a patent-pending formulation that combines HeiQ’s advanced silver (which it has been developing knowledge on since the inception of HeiQ) and a vesicle component. All the ingredients are carefully selected from the international nomenclature of cosmetic ingredients so you can be rest assured that the chemistry doesn’t add any skin irritation or allergens to the fabric.

Normally silver-ions always have certain antimicrobial efficacy, but it works slowly. Traditionally antimicrobial was targeting odour control in textiles so it did not need to work very fast. But in the case of a virus, we want to deactivate it fast, so the silver alone wouldn’t be enough. That’s why HeiQ combined it with its vesicle component. It has a very similar structure as the virus membrane but contains no cholesterol, while virus membrane contains a lot of cholesterol. The vesicle draws away cholesterol from the virus so its shield becomes brittle. Thus, the virus can be deactivated by silver-ion much more rapidly. The company has tested the technology against Sendai virus (which is an enveloped virus, just like the Coronavirus) and the efficacy is shown within 2-5 minutes.

Working with Indian companies since over a decade, HeiQ sees India as a very important market as Indian companies have a significant role to play in the supply chain helping Western brands realise their innovative product ideas.

In her words, “We want our products to benefit as many people as possible. Asia has a huge population and a fast-growing middle-class. So, the consumer market is interesting for us. HeiQ operates in these markets mainly through manufacturers who sell locally. We work with these manufacturers/ brands to make sure that the added value of HeiQ technologies is explained to the consumers in the most precise and correct manner, e.g. by use of our ingredient brands.”

To make sure that a consumer is using proper HeiQ antiviral solution in their merchandise, HeiQ has a strict trademark licensing protocol and brands need to fulfil its product validation, check claims and trademark approval.

The company also has an online monitoring system to spot any unauthorised claims.

“There is no perfect solution, we understand that. But the legitimate licensees are also helping us spot the unauthorised users and we can then take the required action, sometimes legal action against them. Consumers also know how to reach us (via social media and email) if they have a doubt,” she says.

The people are using/misusing the term antimicrobial, antiviral, antibacterial interchangeably. And Hoi Kwan Lam is of the view that microbes can refer to bacteria, viruses, fungus, etc. Antimicrobial is a broader term without specifically referring to one specific type of microbe, while the words ‘antibacterial’ and ‘antiviral’ discuss biocidal efficacy referring to one specific type of microbes.

“Consumers are much more informed nowadays and their natural curiosity leads them to google it and find out more anyway without us trying to push. But it is in our plan for HeiQ to produce more fun facts and educational contents to engage with the consumers more as well as to make them more informed and equip them better to make educated purchase decisions for something so new as ‘textile innovations’,” she informs.

Antiviral treatment as an innovation itself has a huge social impact. Moreover, at the beginning of the pandemic, when global logistics was paralysed, HeiQ helped its customers, hospitals, clinics and the Swiss Army to source PPEs, making use of its dynamic and agile team and global reach.

“We are very motivated to help. We were told by some of our customers in the South Asian region that they could continue with their business activities thanks to HeiQ Viroblock, as many Governments ordered businesses to shut down and these businesses were allowed to continue because they were producing pandemic-relevant products. Their employees continued to receive an income and thus be able to sustain their families,” Hoi Kwan Lam concludes.

Source: Apparel Online

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Biden calls Trump ‘unfit’ but doesn’t endorse impeachment


President-elect Joe Biden says that President Donald Trump isn’t “fit for the job,” but he repeatedly refused to endorse growing Democratic calls to impeach him a second time.

House Speaker Nancy Pelosi said in a letter to members of her chamber that lawmakers could move as early as next week to impeach Trump for inciting a violent mob that overran the U.S. Capitol if the president didn’t “immediately” resign. Pelosi and Democratic Senate leader Chuck Schumer also have called on Vice President Mike Pence and the Cabinet to invoke the 25th Amendment to force Trump from office — a process for stripping the president of his post and installing the vice president to take over.

Addressing reporters in his home state of Delaware after an event Friday introducing some of his Cabinet choices, Biden noted that a key reason he ran for president was because he’d “thought for a long, long time that President Trump wasn’t fit for the job.”

“I’ve been saying for now, well, over a year, he’s not fit to serve,” Biden said. “He’s one of the most incompetent presidents in the history of the United States of America.”

But he refused to back efforts to remove Trump from the White House and insisted that impeachment was up to Congress. Instead, Biden said he was focused on the start of his own administration on Jan. 20, and he said his top three priorities are beating back the coronavirus, distributing vaccines fairly and equitably and reviving the struggling economy.

His comments laid bare the political balance Biden has worked to strike in the months since winning the presidential election. He has continued to sharply criticize Trump and nearly every facet of his administration but also worked to keep the public’s attention focused on what the new administration will do rather than indulging recriminations against the last one.

Biden nonetheless conceded that Trump “exceeded my worst notions about him. He’s been an embarrassment” and likened the “damage done to our reputation around the world” to “tin horn dictatorships.” The president-elect also suggested that a key hurdle to removing Trump was that he has less than two weeks remaining in his term.

“If we were six months out, we should be doing everything to get him out of office. Impeaching him again, trying to evoke the 25th Amendment, whatever it took,” Biden said. “But I am focused now on us taking control as president and vice president on the 20th and to get our agenda moving as quickly as we can.”

Trump would be the only president to be impeached twice. The House impeached him in late 2019, but the Republican-led Senate acquitted him. Removal from office could also prevent Trump from running for president in 2024, or ever holding the presidency again.

Most Democrats, and many Republicans, put the blame squarely on Trump after hundreds of protesters broke into the Capitol on Wednesday and caused destruction and mass evacuations. The president had urged his supporters to protest as Congress was counting the electoral votes that confirmed Biden’s win. Five people died, including a Capitol Police officer.

Biden called what happened a “god-awful debacle” and said it had “the active encouragement of the president of the United States.”

The president-elect’s comments came hours after Trump tweeted that he planned to skip Biden’s inauguration, becoming the first president in more than 150 years — and just the fourth in U.S. history — to do so. Biden said he’d be “honored” to have Pence at the swearing-in, but didn’t feel the same way about Trump.

That’s “one of the few things he and I have ever agreed on,” Biden said. “It’s a good thing, him not showing up.”

Also Friday, Biden called on the Senate — which Democrats won narrow control of thanks to a pair of runoff election victories in Georgia earlier this week — to confirm his Cabinet choices “promptly and fairly.”

“Given what our country’s been through the last few days,” Biden said, “they should be confirmed as close to Jan 20 as possible.”

Source: The Tribune

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BGMEA publishes sustainability commitments

Bangladesh’s leading trade body, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has published its first sustainability report with the theme #GoHumanGoGreen. Where BGMEA outlines the country’s readymade garment (RMG) sector’s commitment to becoming more ecologically aware and socially responsible.

The sustainability report has been developed with the assistance of the German Government via the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, as part of the Promotion of Social and Environmental Standards in the Industry (PSES) program.

Dr. Rubana Huq, President, BGMEA declared 7 pledges to contribute more on improving workers education, early childhood learning of workers’ children, mental health, sustainability, culture export of Bangladesh, workers health, industry innovation and efficiency for the RMG sector.

The launching program was held virtually on 12 December 2020. Where Commerce Minister Tipu Munshi, MP inaugurated BGMEA’s ‘Go Human, Go Green’ program.

BGMEA Senior Vice President Faisal Samad made a presentation on the new website of BGMEA which was launched by Tipu Munshi.

Bangladesh is the world’s second-biggest garment manufacturer, after China, and the sector employs about 4.1 million workers and is responsible for more than 80% of the country’s export earnings.

Rubana Huq said, “In today’s world business is beyond production and profit; rather social, economic and environmental impacts caused by its everyday activities matter and are counted.”

“This is what is reflected in sustainability reporting which helps to measure and manage the impacts of a business or industry on people and planet and accordingly set goals to perform better in the coming days,” Huq added.

She told, “We are happy to present the first Sustainability Report of BGMEA to demonstrate our actions aligned with the aspiration of building the ready-made garment (RMG) industry of Bangladesh so that it becomes economically, socially and environmentally sustainable.”

Source: Textile Today

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