In a big boost for the nation's textile sector, the Government is readying the plan to develop seven mega textile parks as a part of the proposed National Textiles Policy (NTP), reports Economic Times.
The Smriti Irani headed Ministry of Textiles has already prepared a Cabinet note on the proposed NTP which is aimed at positioning India as a fully integrated and globally competitive manufacturing and exporting hub.
The mega textile parks will be called "Mega Integrated Textile Region and Apparel" or 'MITRA' parks and will form a key element of the NTP. The parks would come up on an area of 1,000 acres of land each and boast of uninterrupted water and electricity supply. They will also have research and development laboratories. Similar parks already exist in nations like Vietnam, China and Ethiopia.
The development comes as the government is planning to double the domestic textile industry's size to $300 billion by 2025-26 and the NTP is being prepared to achieve that goal. The policy covers the entire spectrum of textiles, silk, handloom and exports with a focus on employment generation and environment.
Source: Swarajya
Manipur has become the fourth state to complete urban local bodies reforms and consequently received the Union Finance Ministry’s approval for additional borrowing of Rs 75 crore.
Andhra Pradesh, Madhya Pradesh and Telangana are other three states which have undertaken ‘Urban Local Bodies (ULB)’ reforms stipulated by the Department of Expenditure, Ministry of Finance.
With the completion of the reform, Manipur has become eligible to mobilise additional financial resources of Rs 75 crore through open market borrowings, and permission for the same was issued by the Department of Expenditure on January 11, 2021, the Finance Ministry said in a statement on Tuesday.
On completion of the urban local body reforms, the three states have been granted additional borrowing permission of Rs 7,481 crore, it said.
Reforms in the urban local bodies and urban utilities are aimed at financial strengthening of ULBs (Urban Local Bodies) in a state and to enable them to provide better public health and sanitation services. Also, economically-rejuvenated ULBs will be able to create a good civic infrastructure, the statement added.
The reforms stipulated include the state concerned notifying floor rates of property tax in ULBs – which are in consonance with the prevailing circle rates, and floor rates of user charges in respect of the provision of water supply, drainage and sewerage that reflect current costs or past inflation.
In view of the resource required to meet the challenges posed by the COVID-19 pandemic, the central government on May 17, 2020, as part of the Atmanirbhar Bharat package enhanced the borrowing limit of states by 2 per cent of their gross state domestic product (GSDP).
Half of this special dispensation was linked to undertaking citizen-centric reforms by the states, the statement said, adding that the states get permission to raise additional funds equivalent to 0.25 per cent of GSDP on completion of reforms in each sector.
The four citizen-centric areas identified for reforms were the implementation of One Nation One Ration Card System, ease of doing business reform, ULB/utility reforms and power sector reforms, the ministry said.
So far, 10 states have implemented the One Nation One Ration Card System, 7 states have done ease of doing business reforms, and 4 states have done local body reforms.
Total additional borrowing permission issued so far to the states that have done the reforms stands at Rs 54,265 crore, as per the statement.
Source: The Financial Express
Union Ministry of Commerce and Industry on Tuesday said that India''s new Foreign Trade Policy 2021-2026, under formulation, will come into effect from April 1, 2021, for five years and will strive to make the country a leader in international trade.
The Parliamentary Consultative Committee of the Ministry of Commerce and Industry held a meeting on the subject ''New Foreign Trade Policy 2021-26'', the commerce ministry said in a statement.
It was chaired by the Minister of State for Commerce and Industry Hardeep Singh Puri, and attended by Members of Parliament (MPs) and senior officers of the ministry.
"It was informed that the District Export Hubs Initiative will form an important component of the new FTP," the commerce ministry said.
The Department of Commerce through the Regional Authorities of Directorate General of Foreign Trade (DGFT) has engaged with state/Union Territory governments to take forward this initiative in the districts and enable its implementation in a phased manner, with the objective of mobilizing the potential of each district of the country to achieve its potential as an export hub, the ministry said.
"It was informed that the new FTP will come into effect from 1 April 2021 for a period of five years and will strive to make India a leader in the area of international trade and channelize the synergies gained through merchandise and services exports for growth and employment with a goal to make India a USD 5 Trillion economy," the ministry statement said.
A key driver for India to achieve the USD 5 trillion mark in an expedited time frame would be boosting exports, both merchandise and services, it further added.
This has to be done through systematically addressing domestic and overseas constraints related to the policy, regulatory and operational framework for lowering transaction costs and enhancing the ease of doing business, and creating a low-cost operating environment through efficient logistical and utility infrastructure, the ministry said.
Improvements in the operations of the domestic manufacturing and services sectors in combination with efficient infrastructure support by the government would result in correcting the imbalances within India and feed into the trade policy, it added.
For the formulation of the new Foreign Trade Policy, meetings have been held with stakeholders. In December 2020, a Board of Trade meeting was held where State Governments and other stakeholders' inputs were received, it said.
Further meetings were held with the Chambers of Commerce, Industry Associations, and Export Promotion Councils to provide their inputs, the ministry said.
A Trade Notice, inviting suggestions from various stakeholders was issued and more than 2000 suggestions have been received. All the suggestions will be examined while formulating the new FTP, it said.
Minister of State for Commerce and Industry Hardeep Singh Puri invited all MPs to also give further inputs and suggestions.
Source: The Business Standard
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Source: Textile Today
Paperless Budget
The Union Budget papers will not be printed for the first time since Independence, due to COVID-19 pandemic, said sources aware of the development. Every year, the Union Budget is printed in the finance ministry's in house press, involving nearly 100 employees who have to stay together for nearly a fortnight till the time the papers are printed, sealed and delivered on the day of the Budget.
Soft copies
However, this year, given the Covid 19 pandemic and rise in the number of cases again, the government has decided not to undertake the exercise and share soft copies of the Budget instead. "The Budget papers - the Union Budget and Economic Survey - will not get printed, soft copies will be provided," an official said. All members of Parliament will receive the soft copies of the Union Budget, the official added.
In two parts
The Union Budget will be presented on February 1 by finance minister Nirmala Sitharaman. The Budget session in Parliament will begin on January 29 and go on till April 8. The session will take place in two parts. The first will be starting January till February 15 and the second session will take place between March 8 and April 8.
Breaking conventions
This budget for the financial year 2021-22 may see several conventions being broken as the sources said that the traditional 'Halwa' ceremony may also not take place this year or a subdued function may be held with limited gathering. This ceremony, which normally starts around January 20, is attended by all the people involved in budget-making, and marks the beginning of printing.
Changing times
This is not the first time that there would be a change in tradition in the presentation of the budget under Finance Minister Nirmala Sitharaman. Last year, she did away with a colonial-era tradition of carrying Budget papers in a briefcase, and introduced the Budget 'Bahi Khata' or a ledger, enclosed in a red cloth folder and tied with a string.
Source: The Economic Times
The Reserve Bank of India (RBI) on Tuesday said it has imposed a penalty of ₹2 crore on Deutsche Bank for non-compliance with certain provisions of directions issued by RBI (Interest Rate on Deposits) Directions, 2016.
Penalty has been imposed in exercise of powers vested in RBI under the provisions of the Banking Regulation Act, 1949, the central bank said in a release.
RBI said that a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the directions. After considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions, the central bank said it concluded that the charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.
"This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.," it said further.
Source: The Mint
With substantial grants being transferred to local bodies since the 14th Finance Commission award period, the Comptroller and Auditor General of India (CAG) is preparing an action plan to improve accounting and auditing standards in the local bodies to bring in efficiencies in their functioning, CAG Girish Chandra Murmu told FE.
While the CAG has no plan to directly audit these entities, the statutory auditor wants to bolster the mechanism set up by the state governments for examination of fund flows and use. It will also assess how the 74th Constitutional amendment, which mandated states to devolve a portion of tax revenues to local bodies and give them certain taxation powers, have been implemented across states.
“We are working on a plan how to strengthen audit for local bodies. We receive little inputs from these entities although a lot of funds flow to them after 14th Finance Commission award,” Murmu said. Central grants to local bodies (urban and rural) has increased from Rs 26,917 crore in FY16 (first year for 14th FC) to Rs 84,459 crore in FY20 (revised estimate) and is pegged at Rs 99,925 crore for FY21 (First year of 15th FC). Fifteenth Finance Commission has said in its first report that from FY22 onwards, the entry level conditions for rural local bodies getting these grants is the timely submission of audited accounts.
Currently, these entities are audited by state government appointed organisations/local fund examiners.
“A committee has been formed to look into how auditing standards and standard operating procedures can be formed for local bodies. We would like to take the state governments on board, so that, synergy is developed,” Murmu said. CAG will help states in capacity building as well as supplement with manpower whenever annual audit takes place for local bodies, he added.
The CAG will also assess implementation of the 74th Constitutional Amendment to know how urban local bodies are getting devolution from state governments and whether taxation powers have been given to them.
The Constitutional amendment empowered states to devolve the responsibility of 18 functions, including urban planning, regulation of land use, water supply, and slum upgradation to ULBs. However, in most Indian cities, a majority of these functions are carried out by state government agencies. As a result, not much taxation happens at ULBs except a few such as house tax, mela tax, water tax, etc.
Previous Finance Commissions and the Centre had nudged states to take steps to increase ULBs own revenue by tapping other sources like trade licences, taxes on entertainment, mobile towers, solid waste user charges, water charges and parking fees etc. Efficient water-metering systems for residences (which will reduce pilferage that is above 50% in majority of Indian cities/towns) is seen to be a revenue stream that holds great potential.
Currently, roughly 60% of the revenue of municipal bodies in the country — about 8,000 in number — comes from devolution by the Centre and states.
In FY18, the combined annual ‘own revenue’ of urban bodies in the country was about 1% of the country’s gross domestic product. The corresponding figures for comparable countries were much higher — 6% in both Brazil and South Africa.
Improvements in book keeping and tax revenues will help ULBs tap the bond market in a meaningful manner to improve service delivery and quality of lives of residents.
Source: The Financial Express
The country's real gross domestic product (GDP) is likely to expand by 11 per cent in the next financial year due to a faster economic recovery and on a low base, says a report. The report by domestic rating agency Brickwork Ratings said economic activities are slowly reaching pre-COVID levels following the relaxation of the lockdown, except in sectors that remain affected by social distancing norms.
"With progress in developing an effective vaccine for COVID-19 and signals of faster- than-expected recovery in the domestic economy, and also supported by a low base, we expect the real GDP to grow at 11 per cent in FY22, from the estimated contraction of 7 per cent to 7.5 per cent in FY21," the agency said.
According to the first advance estimates of national income released by the National Statistical Office (NSO), the country's GDP is estimated to contract by a record 7.7 per cent during the current financial year.
The report said the economy is likely to witness positive growth in H2FY21, though some sectors will continue to record staggered recovery due to social distancing norms.
Revival in sectors that fall under discretionary spending is likely to be delayed as the economy is still under the grasp of the pandemic, it said.
"Nevertheless, the outlook for next fiscal has improved with the progress in developing the vaccines," the report said.
It said the agricultural sector may continue with stable growth momentum in the next fiscal also at around 3.5 per cent, but these projections are largely based on normal monsoons and the effective implementation of farm reforms.
The agency expects the industrial sector to grow at 11.5 per cent and services sector to rise by 11 to 12 per cent in the next financial year.
Source: The Economic Times
A spate of frauds has hit the banking sector in recent times which could significantly deplete the capital position of the lenders as they are mandated to set aside capital as provision for the entire fraud amount.
In the last month, two cases of fraud have come up. Firstly, that of IVRCL, where the company’s MD E Sudhir Reddy and Joint MD R Balarami Reddy was booked by the Central Bureau of Investigation for the alleged fraud of Rs 4,800 crore against a consortium of banks. Another was State-owned Punjab & Sind Bank which declared the account of Sintex Industries which has an exposure of Rs 294 crore as fraud.
Earlier this month, Delhi-based Shakti Bhog Foods Ltd was booked for an alleged fraud of Rs 3,269 crore on a consortium of 10 banks led by the State Bank of India (SBI).
According to the reports, in the October to December 2020 quarter, banks have reported fraud of at least Rs 3,350 crores. This is according to the data reports of eight non-performing accounts of two companies of Pratibha Group, IL&FS Financial Services, Sintex Industries, SEL Manufacturing of four banks - Punjab & Sind Bank, Indian Bank, Karnataka Bank, and Punjab National Bank.
In 2019-20, the Indian banking sector saw a 159% jump in dubious transactions to Rs 1.86 lakh crore, the Reserve Bank of India’s data showed. The data, which pertains to frauds that are above Rs 1 lakh, shows the number of frauds grew by 28% to 8707 in FY20 from 6799 in the previous financial year. There was a concentration on high value frauds with top 50 credit accounts contributing 76% of the frauds reported in 2019-20.
Data for the first six month of 2019-20, which was compiled by some of the public sector banks, showed that State Bank of India – the largest lender of the country with about 25% market share in loans – reported 2939 incidents of fraud valued at Rs 25,417 crore.
SBI was followed by Punjab National Bank (Rs 10,822 crore in 225 cases), Bank of Baroda (Rs 8,273 in 180 cases) and Allahabad Bank (Rs 6,509 crore in 724 cases).
Source: The Free Press Journal
Now that the Prime Minister has revealed his ‘Mann Ki Baat’ that India should adopt global standards, it should bring to an end the unnecessary debate that has been going on at many a fora, both in the government and industry, arguing for country-specific standards for a variety of reasons.
As our industry gears up to access global markets, it faces two kinds of challenges as far as standards and conformity assessment domain is concerned. One, regulations of importing countries on grounds such as health, safety, environment, deceptive trade practices and national security enshrined in the WTO’s Agreement on Technical Barriers to Trade (TBT Agreement). Two, the buyers’ demand for voluntary standards and certifications, be it in a regulated sector like food or an unregulated sector like textiles.
The TBT Agreement, which lays down rules for technical regulations, standards and conformity assessment, as also the Agreement on Sanitary and Phytosanitary measures (SPS Agreement) that governs agri-food trade so important to India, encourage, not oblige, member nations to adopt international standards in their regulations, deeming them to be not impediments to trade. Most developed nations and many developing nations have done precisely that, and therefore the Prime Minister’s advocacy of global standards is so relevant.
Not only the WTO Agreements merely encourage adoption of international standards, they also provide for member nations to adopt even stricter standards if there is valid justification, a provision that many developed countries have used especially in the agri-food sector, making it a big challenge for the Indian industry.
How does the industry, then, access the global market?
All countries that have prescribed regulations for any product also specify the procedure for demonstrating compliance to these regulations. Any individual manufacturer, therefore, can approach the foreign regulator, fulfil its requirements, and get its product accepted. The pharmaceutical sector is a good example to cite of Indian industry’s success in using this approach. The challenge here would be the access to right information (imagine regulations in Japanese or Chinese languages), the capability to understand and meet the requirements laid down (for example, testing capability), and the cost that may be incurred in the entire exercise, which can be prohibitive but with a judiciously-designed financial assistance scheme can be subsidised for MSMEs.
Ideally, it would help if India’s own regulations are based on international standards, which would mean that all the manufacturers would be capable of meeting regulations of importing countries. This is what the Prime Minister’s call should lead to.
In fact, this is the first impediment to our export ambitions—either we do not have regulations in place or are unable to adopt international standards in our regulations. We have just begun regulation of telecommunication products or transition to a comprehensive regulation of medical devices. And in sectors like machinery safety and chemicals, we are yet in the process of developing regulations. Therefore, imports and even domestic manufacturers have a free run in the Indian market, both to the detriment of users and consumers, as well as a quality conscious industry which is subject to unfair competition. This explains numerous stories of poor quality PPEs in the media in the recent months. The Department of Commerce’s exercise currently on should, hopefully, in the coming months, bridge the deficit in technical regulations India has.
Another problem we have is that where we have regulations in place, we are yet to adopt international standards fully—for example, the adoption of WHO GMP (Good Manufacturing Practices) in drugs which continues to be resisted by the AYUSH industry, or the inclusion of HACCP system in the food industry, due to the unorganised nature of industry we have.
Therefore, there is an urgent need for individual regulators to review their regulations and adopt international standards in a time-bound manner, keeping preparedness of industry and availability of quality infrastructure in mind. However, it is easier said than done—challenging as it is for our vast micro and small industry sectors to upgrade themselves. It is tougher in the unorganised sector as the government recently discovered in toys and proceeded to exempt artisans from the newly notified regulation based on international safety standards. There is a need to provide handholding support to such industry by creating a proper framework of consulting and training, and even financially support them through an appropriate scheme by the Ministry of MSME which covers compliances needed in the market rather than focus on newer models like ZED (Zero Defect Zero Effect).
Even if we upgrade our regulations to international standards, with the provision for stricter standards allowed in the WTO regime, an issue would remain if importing countries adopt stricter standards which may not be appropriate for India and therefore may not be needed to be adopted in our regulations. This would call for an institutional mechanism to test and certify our products to such stricter regulations which, for example, is available through the Export Inspection Council (EIC) for seafood or the AYUSH Premium Mark or ICMED schemes of the Quality Council of India (QCI) based on international standards like WHO GMP or ISO 13485, the latter having an advantage that these can be operated both for the domestic and overseas markets while the former is mandated only to deal with exports but has the advantage of being able to regulate exports, if needed.
As the above narration would reveal, India needs to fix its domestic regulatory regime and the philosophy that it can have differential standards for domestic market and exports should be buried. Further, it should also highlight that standards and conformity assessment are tools for international trade that has become increasingly complex and there is no one-size-fits-all solution for the myriad challenges India faces in meeting regulations of importing countries for accessing global markets. This calls for an integrated and cohesive approach, failing which India would not only struggle in the overseas markets, but several initiatives of the government like Make in India or Ease of Doing Business or Atmanirbhar Bharat or ZED approach articulated by the Prime Minister himself would not truly deliver the benefits intended.
Source: The Financial Express
The Index of Industrial Production (IIP) contracted 1.9 per cent for November 2020, culling the trend of factory output in the previous two months showing signs of revival, data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed on Tuesday.
For November, IIP with base 2011-12 stands at 126.3, the Ministry's data showed. IIP for mining, manufacturing and electricity sectors for the same month stand at 104.5, 128.4 and 144.8, respectively.
Mining and manufacturing output shrank by 7.3 per cent and 1.7 per cent, respectively, while electricity output grew by 3.5 per cent in November.
October IIP had grown at 3.6 per cent helped by festive demand and a sharp base effect, while in November 2019 IIP grew 2.1 per cent. Economists had however cautioned that this did not signal recovery, and estimated IIP to mildly contract in November.
The previous high was in February, when IIP rose 5.2 per cent. After February, with the Covid-19 lockdowns in effect, factory output rose after many months in September at 0.48 per cent.
Output of eight core infrastructure sectors dropped by 2.6 per cent in November, a recent release showed, contracting for the ninth consecutive month.
Source: The Economic Times
The RBI's latest financial stability report highlighted the growing distinction between PSUs and private banks.
The RBI has projected that the gross non-performing assets in the banking sector may rise to 13.5% by September 2021, from 7.5% in September 2020. In a severe stress scenario, the GNPA ratio may escalate to 14.8%.
The public banks (PSBs), on expected lines, are going to see the bulk of the stress. GNPL% for PSB is expected to rise from 9.7% in September 2020 to 16.2% and 17.6% in September 2021. For private banks, GNPL is expected to rise from 4.6% in September 2020 to 7.9% and 8.8% in September 2021 as per the RBI's projections.
Source: The Free Press Journal
While many buyers have been showering praises over ASW Marketplace majorly due to the variety the platform has been offering ever since its launch in December 2020, quite a few of them are bowled by the ‘newness’ factor too.
One such buyer who has been highly impressed by the ASW Marketplace is this Jeans Buyer from the United States – PIPE CANDY!
William Seward of PIPE CANDY says that though she imports a lot of products from China and Turkey, the experience of watching new things at the marketplace has been one-of-a-kind.
“There are a lot of new things that I haven’t seen before. These can make my original products more appealing and sellable,” said William.
So, while ASW Marketplace has been offering an exquisite display of new products from different exhibitors, there’s been a good exhibition of trendy products as well at the digital platform.
More on this, Annemarie Vlaming, Owner and Designer, AAI made with Love (from Holland), shared “At ASW Marketplace, I have found what I wanted, and it is pleasing to see apparel manufacturers do a lot to tune in with the trends prevalent across the globe.”
Trendy and good looking products have managed to attract the attention of many buyers at the platform over the last month.
And all this the buyers can find just by sitting on their sofa or chair – whichever part of the globe they are and, importantly, 24×7.
Source: Apparel Online
India's fiscal deficit in the current financial year is likely to reach 7.4 per cent of the GDP on the back of enhanced government expenditure amid the pandemic, said the SBI Ecowrap report.
The report noted that as per the first advanced estimate of the GDP, real GDP will contract by 7.7 per cent in FY21, and nominal GDP growth is expected at (-) 4.2 per cent. Accordingly, the nominal GDP for FY22 would grow by 15 per cent to Rs 224.04 lakh crore.
"Current trends in the GDP for FY21 will translate into Rs 3.2 lakh crore net revenue shortfall for the Centre this fiscal and at the same time, expenditure is higher by around Rs 3.3 lakh crore, thus taking the fiscal deficit to Rs 14.46 lakh crore and with new revised nominal GDP estimate for FY21, it will be around 7.4 per cent of GDP," it said.
For FY22, assuming the government keeps the expenditure growth at 6 per cent over FY21 estimates and overall receipts, excluding borrowing and other liabilities, expected at 25 per cent, it would result in fiscal deficit of around Rs 11.67 lakh crore or 5.2 per cent of GDP.
The net market borrowing of the Centre will be around Rs 8.8 lakh crore and with repayments of Rs 2.7 lakh crore, gross borrowings are expected at Rs 11.5 lakh crore, according to the report.
"With states' gross borrowing around Rs 9.4 lakh crore, total gross market borrowing would be around Rs 20.9 lakh crore, but could have a clear downward bias," it said.
Source: The Business Standard
The Finance Ministry has rejected the demand for further extension of the last date for filing returns where audit is required beyond February 15.
Last month, the government had extended the income tax return (ITR) filing deadline for individuals till January 10, and for companies till February 15.
“CBDT passes order u/s 119 of Income-tax Act, 1961 in F No. 370153/39/2020-TPL dt 11th January, 2021, disposing off the representations for extension of due date for filing of Audit Report u/s 44AB, in compliance with the order of hon’ble Gujarat High Court dt 8th January, 2021,” the income tax department said in a tweet on Monday.
This was in response to the Gujarat High Court order dated January 8, 2021, in the case of the All India Gujarat Federation of Tax Consultants versus Union of India, directing the Finance Ministry to look into the issue of extension of due dates for filing of audit reports under Section 44AB of the Income Tax Act.
As per the provisions of the Act, the due date for filing of the audit report under Section 44AB was one month prior to the due date of filing of income tax return, it said.
The due dates for payment of self-assessment tax for taxpayers, whose amount due does not exceeded Rs 1 lakh, also coincide with the due dates for filing of ITR, it said.
On December 30, 2020, the government had announced extension of the last dates for filing of returns by individuals to January 10, 2021, from December 31, 2020.
In case of return for tax audit cases, the date was extended to February 15, from the earlier January 31. It was for the third time the tax department extended the dates. PTI
Source: The Tribune
A major announce could be on its way for the insurance sector in the upcoming Union Budget 2021. In a move to attract foreign direct investment (FDI), the country’s finance minister, Nirmala Sitaraman may increase the FDI limit from the existing 49 per cent to 74 per cent.
FDI cap on insurance company was first raised from 26% to 49% in March 2016. However, it failed to cheer the foreign investors who were looking at management control with at least a 51% stake.
The government which is counting on FDI as a major source of non-debt finance is expected to remove several procedural impediments in attracting the FDI.
According to the reports, the FDI policy is under review to increase inflows of foreign investment. Sectors that have huge potential to attract overseas investments could contain policy directives facilitating FDI, the report adds.
In February last year, the government had amended the FDI policy to allow 100 per cent foreign investment in insurance intermediaries such as insurance agents, web aggregators of insurance policies and brokers. The FDI cap on insurance companies remained at 49 per cent.
It is learnt that the domestic promoters want to unlock the value of their investments and many want to make an exit. Reports reveal that there are investors who want to invest in those companies that are stuck at the upper limit of 49 per cent currently.
Source: The Free Press Journal
India Inc's wishlist
The upcoming Union Budget is being keenly watched by India for measures that can accelerate the economic recovery underway. ET looks at some key measures that top industry's wish list.
Fiscal consolidation roadmap
Reviving demand & investment
Tax relief for industry & payers
Package for banking sector
Push to exports
Source: The Economic Times
Industrial production contracted by 1.9 per cent in November, entering the negative territory after a two-month gap, mainly due to poor showing by manufacturing and mining sectors, official data showed on Tuesday.
The manufacturing sector -- which constitutes 77.63 per cent of the index of industrial production (IIP) -- recorded a contraction of 1.7 per cent in November 2020, as per data released by the National Statistical Office (NSO).
Mining sector output too witnessed a decline, shrinking 7.3 per cent. However, power generation grew 3.5 per cent in the month under review.
The IIP had grown by 2.1 per cent in November 2019.
Industrial production had plunged 18.7 per cent in March last year following the COVID-19 outbreak and remained in the negative zone till August 2020.
With the resumption of economic activities, factory output posted a flat growth of 0.48 per cent in September.
The IIP growth for October has been revised upwards to 4.2 per cent from last month's provisional estimates of 3.6 per cent.
The government had imposed a lockdown to contain the spread of COVID-19 infections on March 25, 2020.
With the gradual relaxation of restrictions, there has been a relative improvement in the economic activities by varying degrees as well as in data reporting, the Ministry of Statistics and Programme Implementation had said in a statement issued in November.
The ministry had also given a disclaimer that it may not be appropriate to compare the IIP in the post-pandemic months with the data for months preceding the COVID-19 outbreak.
The manufacturing sector had recorded a growth of 3 per cent in November 2019.
Similarly, mining sector output grew 1.9 per cent, but electricity generation shrank by 5 per cent in November 2019.
The output of capital goods, which is a barometer of investment, fell by 7.1 per cent in November 2020 as against a contraction of 8.9 per cent earlier.
Consumer durables output fell by 0.7 per cent, compared to 1.4 per cent contraction in November 2019.
Consumer non-durable goods production fell by 0.7 per cent, compared to a growth of 1.1 per cent a year ago.
The IIP for the April-November period has contracted by 15.5 per cent, according to the data. It had registered a flat growth of 0.3 per cent during the same period last fiscal.
Source: The Free Press Journal
Ties with the United States, on the other hand, were converging and were likely to expand under the new administration in Washington, India’s top diplomat told the Reuters Next conference.
Tensions with China erupted in June, when 20 Indian soldiers were killed in brutal hand-to-hand fighting, while China suffered an unspecified number of casualties in the clash on a disputed section of the border in the western Himalayas.
Both sides have deployed heavily in the contested area, and the escalation poses the most serious military crisis between the nuclear-armed neighbours for decades.
“After 45 years, you’ve actually had bloodshed on the border. And that’s had a huge impact on public opinion and politically. ...really the impact of trust and confidence in India where China and their relationship is concerned. That has been profoundly disturbed,” Jaishankar said.
Source: Reuters India
Country's leading economists have expressed concern over the gradually lessening involvement of the economists in the policymaking process and feared that it would affect achieving sustainable development of the country.
The task of the economists has also become more complex in the contemporary era amid lower political demand for good economic analysis, which resulted in under-representation of the majority people, they said at a virtual discussion on Saturday evening.
As part of a series, Power and Participation Research Centre (PPRC) organised the discussion 'Ajker Agenda: What is the Social Role of Economists?' moderated by PPRC executive chairman Dr Hossain Zillur Rahman.
The discussion was told that the economists nowadays feel more comfortable working within their own territory amid the changed political atmosphere as compared to the past, which has somewhat shrunk their presence in the social movements.
Besides, it was observed that there is a need to identify the reasons behind the risk-averse attitude of the economists in social agenda apart from their professional and academic duties.
"Crony capitalism has shrunk the scope of economists which has lessened the demand of economists in the policymaking activities while many economists have chosen sides in this regard," said noted economist Professor Rehman Sobhan, who is the Chairman of Centre for Policy Dialogue (CPD).
Taking part in the discussion, he said that most of the economists in the country have been only diagnosing the problem instead of making policy influences to solve it or actively getting involved in the problem-solving process.
"Incentivising the business community which represents only a small portion of the society cannot bring long term changes in a society as without welfare of their workers, the development wouldn't be sustainable," he said.
Dhaka University Professor Dr M M Akash, CPD Distinguished Fellow Dr Mustafizur Rahman, a former lead private-sector specialist at the World Bank (WB) Dr Akhtar Mahmood, former senior adviser to the Consultative Group to Assist the Poor (CGAP) Dr Syed Hashemi also took part in the discussion as the panellists.
Dr Mustafizur Rahman said there are four key roles of the economists - professional, policy influencing, policy activism and political role.
"Apart from the professional and policy influencing, many of the economists have detached themselves from activism, thinking about risks of getting involved in socio-political agenda," he said.
The economists in 1960s or 1970s were actively involved in the socio-political activism as there was demand from the political forces, but as the demand lessened, the scope for economists to get involved in movements has reduced, he said.
Dr Akash said that today's economists having different ideologies are divided in different political fronts where mutual benefit is cared about, not the welfare of the people.
People are now busy securing self-interest instead of social interest, he said, adding: "The economists in the 1960s who left the country for the higher study had come back to contribute, but the new generation does not come back that much."
PPRC executive chairman Dr Hossain Zillur Rahman said that the people in power do not need the exchange of ideas now, but they need economists only to legitimise their policies.
Considering risks, many economists are also refraining from getting involved in social activism while the community also failed to identify the newly emerged social forces, he said.
"It is true that organised social efforts are weak now, but perhaps there are truths in that which deserves further discussion," he said, adding that there must be new social forces emerged which the economists should link to the social agenda.
Source: The Financial Express Bangladesh
Good American is working towards a more sustainable long-term future in reducing its impact without sacrificing its superior fit and stretch. This includes using ethically produced fabrications in its denim, eco-friendly packaging, and environmentally safe washes.
The company aims to procure 90 percent of its denim fabrics made from sustainable components by the end of 2021. Similarly, Calik Denim, with its Passion for Life, Passion for Denim sustainability strategy, focuses on the purpose of making a positive impact for a better life.
Calik Denim is encouraged by its passion to become the leading denim brand that triggers the sustainability-driven transformation in the industry.
Collaboration between these two companies on making the sustainably made, perfect fitting denim will make a great example to the industry by showing how valuable partnerships are. The collection itself will have a lower environmental footprint and will meet the expectations of the responsible and conscious denim customer.
Innovation meets sustainability
With Selfsized, Calik Denim aims to minimize the risk of buying the wrong size jeans through e-commerce channels, which was launched in the SS ’20 season. The Selfsized concept amazed people with its unique feature that one single size jean can fit a wide range of different sized wearers perfectly due to its ultra-high elasticity and cotton for maximum comfort and softness.
Selfsized fabrics are produced using Denethic, which is developed with a sustainable approach for the whole supply chain of denim garment manufacturing. Denethic technology offers rinse washed, rinse+enzyme washed as well as bleached-look fabrics. Since the fabrics are produced at the mill with a look of washing effects, customers who wish to get clean look garments can use these fabrics even as cut and sew.
For the rinse look, rinse+enzyme look and bleached-look fabrics; water-saving amounts are 44 percent, 15 percent and 32 percent, respectively.
Furthermore, fabrics used in partnership between Good American and Calik Denim have been specially developed. While it is almost impossible to achieve such high saving values in fabrics with high elasticity; this has been possible thanks to the technology specially developed for this project by Calik Denim.
The Always Fits collection, launched in cooperation with Calik Denim and Good American, can be purchased at www.goodamerican.com and is coming soon to retail locations across the U.S.
Source: Textile Today
The US has determined that India’s Digital Services Tax is discriminatory and has an adverse impact on American commerce and is actionable under the trade act. At the same time, the outgoing Trump administration has left the onus of taking any action against India under Section 301 of the US Trade Act to the incoming Biden administration. Publishing the results of the investigation on the Digital Service Tax (DST) in the Federal Register on Tuesday, the US Trade Representatives (USTR) said that it had consultations with the Indian Government on the issue on November 5, 2020.
Responding to the outgoing Trump administration’s move, India on Thursday said the two per cent equalisation levy does not discriminate against US companies as it applies equally to all non-resident e-commerce operators irrespective of their country of residence. In the report, the USTR describes DST as ‘an outlier’ which burdens US companies by subjecting them to double taxation. India had adopted the operative form of its Digital Services Tax or DST on March 27, 2020.
The DST imposes a two per cent tax on revenue generated from a broad range of digital services offered in India, including digital platform services, digital content sales, digital sales of a company’s own goods, data-related services, software-as-a-service, and several other categories of digital services. India’s DST only applies to ‘non-resident’ companies. The tax applies as of April 1, 2020, it said.
The USTR in the federal register said that DST, by its structure and operation, discriminates against US digital companies, including due to the selection of covered services and its applicability only to non-resident companies. In a statement in New Delhi on January 7, the commerce and industry ministry said there is no retrospective element as the levy was enacted before the 1st day of April, 2020, which is the effective date of the levy. It also does not have extra-territorial application as it applies only on the revenue generated from India, the ministry said. T
he USTR alleged that DST is unreasonable because it is inconsistent with principles of international taxation, including due to its application to revenue rather than income, extraterritorial application, and failure to provide tax certainty. “India’s DST burdens or restricts US commerce,” the USTR said. It noted that sections 301(b) and 304(a)(1)(B) of the Trade Act provide that if the US Trade Representative determines that an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce, the US Trade Representative shall determine what action, if any, to take under Section 301(b).
“These matters will be addressed in subsequent proceedings under Section 301,” the USTR said. In its report published by the USTR on January 6, it alleged that US ‘non-resident’ providers of digital services are taxed, while Indian providers of the same digital services to the same customers are not. ‘This is discrimination in its clearest form,’ it said. ‘Indeed, one Indian government official confirmed that the very ‘purpose’ of the DST is to discriminate against nonresident foreign companies, explaining that: “[a]ll parts of the digital taxation incident should be on the foreign player, because if the incidence is passed on to the Indian player, then it doesn’t really serve the purpose,” it said.
The USTR in its investigation report determined that three aspects of the DST are inconsistent with principles of international taxation: First stakeholders have found the text of the DST to be unclear and ambiguous. “This creates uncertainty for companies regarding key aspects of the DST, including the scope of taxable services and the universe of firms liable to pay the tax. India has published no official guidance to resolve these ambiguities. This amounts to a failure to provide tax certainty, which contravenes a core principle of international taxation,” the USTR alleged.
“The DST taxes companies with no permanent establishment in India, contravening the international tax principle that companies should not be subject to a country’s corporate tax regime absent a territorial connection to that country,” it said. Noting that the DST taxes companies’ revenue rather than their income, the USTR said that this is inconsistent with the international tax principle that income ’not revenue’ is the appropriate basis for corporate taxation. Alleging that DST creates an additional tax burden for US companies, the USTR estimates that the aggregate tax bill for US companies could exceed USD 30 million per year. Several aspects of the DST exacerbate this tax burden, including the DST’s extraterritorial application, its taxation of revenue rather than income, and its low domestic revenue threshold which allows India to tax US firms that do relatively little business in India, it alleged.
Source: The Financial Express
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
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet will take five crucial decisions on Wednesday linked with the implementation of an ambitious Textile and Apparel Policy 2020-25, Dawn has learned from knowledgeable sources on Tuesday.
The decisions, which are mostly political in nature, are expected to generate heated debate in the ECC meeting to be chaired by Finance Minister Dr Hafeez Shaikh. The policy will be the third in a row for the sector.
One of the major policy decisions is the revival of zero-rating for the five export-oriented sectors. The Federal Board of Revenue (FBR) has sought time for consultation on this crucial issue with the International Monetary Fund.
Official documents seen by Dawn show that the Textile Division proposed to provide electricity at cents 7.5/kWh all-inclusive. The subsidy amount allocated for this at Rs243 billion for a period of five years.
The government will provide RLNG at the US $6.5/mmBtu for the next five years. An amount of Rs111bn will be allocated for providing gas at a concessionary rate to the industry.
It has been proposed to allocate Rs420bn for payment of Drawback of Local Taxes and Levy (DLTL) scheme and duty drawback of tariff for value-added products, which is simply a cash subsidy on exports proceeds from the country.
Under the scheme, the government will provide support at four per cent to garments and technical textiles, 3pc to made-ups. This support will be binding on the government for the next five years.
It was also decided in principle to bring no change in the existing Export Finance Scheme (EFS) and Long Term Financing Facility (LTFF) schemes. It was decided to continue the LTFF at 5pc for investment. The total amount allocated for LTFF is Rs75bn.
The EFS at a rate of 3pc will continue for the next five years. The amount proposed for the scheme is Rs109bn.
The total amount to be spent in these five areas is estimated at Rs958bn. The allocation of this amount will be spread over five years.
The Textile Division has also evolved a comprehensive roadmap of facilitation measures for the value-added sectors to be implemented in a minimum of three months to a maximum of two years.
It has been proposed to carry out tariff rationalisation of the textile and apparel value chain in the next six to 12 months and simplification of temporary importation schemes. The duty drawback rates and to upgrade the system besides providing the LTFF to indirect exporters.
It has also been proposed to provide the LTFF for infrastructure development in apparel/made-ups, enhance project limit of the LTFF as well as enhancement of disbursements by Rs100bn per annum. It was also proposed to restore the tax credit for investment, establish new garment cities, establish combined effluent treatment and water recycling plants, develop an international brand and acquisition scheme.
The proposed policy estimates that the measures will lift the value-added textile exports to $14.781bn by end June 2025 from $9.498bn to be achieved by end June 2021. The textile exports will reach $4.146bn at the end of June 2025 from $3.362bn. The export estimations are projected by the Commerce Division.
The proposed policy is laden with measures to tackle issues confronting the textile sector amid Covid-19 that has resulted in supply chain disruptions, affected global prices of commodities hitting trade adversely, while also addressing the issues of the withdrawal of SRO-1125 and cost of doing business.
Furthermore, the policy should attract domestic and foreign investment in the textiles value chain and the development of value-added sectors, with a prime focus on small and medium enterprises (SMEs).
Source: Dawn, January 13th, 2021
