Bolstered by improved domestic demand, India’s services sector expanded for the fourth consecutive month in January as business activities quickened and rising business optimism is set to sustain the growth momentum, a monthly survey said on Wednesday.
The seasonally-adjusted India Services Business Activity Index rose from 52.3 in December to 52.8 in January, pointing to a quicker expansion in output.
The index was above the critical 50 mark that separates growth from contraction for the fourth month in a row during January.
Though the pace of growth accelerated from December, the headline figure remained below its long-run average of 53.3 and was consistent with a moderate pace of growth, the survey said.
According to panelists, marketing efforts, the reopening of some establishments and strengthening demand all supported the increase in sales.
“The Indian service sector enjoyed good levels of activity in January, with new business volumes rising for the fourth successive month and growth rates for both measures picking up from December,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
Further, the survey said the rise in new business was centred on the domestic market, as new export work decreased further as travel restrictions and the COVID-19 pandemic dampened international demand for services.
On the inflation front, input costs increased for the seventh straight month at the start of 2021, with monitored companies reporting higher prices for fuel and a wide range of materials.
“The main area of concern is the extent to which costs are rising across the services economy, with the rate of inflation remaining above trend despite easing from December,” Lima said.
Lima also noted that “there are signs that higher costs are preventing firms from taking on additional staff, with the PMI (Purchasing Managers’ Index) survey showing a second successive fall in employment”.
There were back-to-back declines in service sector employment. The pace of job shedding was, however, marginal as 97 per cent of survey members indicated no change in payroll numbers since the preceding survey period.
Meanwhile, the launch of COVID-19 vaccine programme boosted optimism towards the 12-month outlook for output. The overall degree of optimism touched an 11-month high.
“… with business optimism rising to an 11-month high in light of the new COVID-19 immunisation programme, the service sector looks set to sustain growth and confidence towards hiring may improve as COVID-19 concerns diminish,” Lima said.
Meanwhile, business activity across the private sector expanded at a marked and accelerated pace at the start of 2021, with growth picking up among manufacturers and service providers.
The Composite PMI Output Index, which measures combined services and manufacturing output, edged up to 55.8 in January, from 54.9 in December.
“When we combine the results for the service sector with those for manufacturing, the picture for the Indian economy looks brighter. Across the private sector, output and new orders rose markedly and at rates that surpassed their respective long-run averages,” Lima noted.
Source: The Financial Express
The textiles and clothing industry has urged the government to withdraw 10% import duty on cotton and cotton waste as that will help Indian textiles and apparel industry sustain the global competition.
The industry welcomed setting up of seven mega textiles parks under MITRA, and duty reduction on nylon raw materials. However, the levy of 10% import duty on cotton saw mixed reactions. The grant to the textiles and clothing sector in Union Budget 2021-22 is Rs 3,614.64 crore, about 10% higher than the revised Budget amount of Rs 3,300 crore in 2020-21. The Budget also puts emphasis on infrastructure development and research & capacity building as the grant for these sectors has been increased by about 43.7% and 77.5%, respectively, compared to last year.
This year’s Budget allocates Rs 700 crore for Amended Technology Upgradation Scheme (ATUFs) against Rs 545 crore in the last one, which will help clear the pending capital subsidy. It earmarks Rs 30 crore for Export Promotion Studies against Rs 5 crore in the last Budget, and Rs 100 crore for Integrated Scheme for Skill Development. “With the active support and cooperation of the government, the textile industry will become globally competitive, attract large investments and boost employment generation and exports in the years ahead,” the Northern India Textile Mills’ Association (NITMA) president Sanjay Garg said. “Basic customs duty (BCD) rates on caprolactam, nylon chips and nylon fibre and yarn will be uniformly reduced to 5% to spur textile industry, MSMEs, and exports,” he said.
“The Production Linked Incentive (PLI) scheme for man-made fibres and technical textiles with a total outlay of Rs10,683 crore will help the textile industry become globally competitive, attract large investments and boost employment generation. Moreover, to achieve the target of $350 billion from the current size of $167 billion, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains, possess core competence and cutting-edge technology,” CITI chairman Rajkumar said. He added that the reduction in customs duty on caprolactam, nylon chips and nylon fibre and yarn to 5 % is a step in the right direction, as it will bring nylon chain on a par with polyester and other man-made fibres.
The associations appealed to the Prime Minister to immediately withdraw the levy of 10% import duty on cotton and cotton waste to sustain the global competition, prevent job losses and fall in the exports and also curb cheaper imports of value-added products from the SAFTA countries like Bangladesh, Sri Lanka, etc.
On the MITRA scheme, Chandran said Tamil Nadu, being the largest textile manufacturing state, is planning to develop three mega parks under the scheme, as Andhra Pradesh and Telangana are already having one such park each. “This would facilitate attracting large scale investments, including FDI and JVs,” he said.
Source: Fibre2Fashion News
For all industries, including textiles and apparel, the push in modernising infrastructure, improving logistics, creating district-level export hubs, setting quality standards for manufacturing and developing ports is welcome. Increased allocation for R&D in public institutions is encouraging, and hopefully the FM will see fit to extend this to the private sector, going forward.
Specifically for textiles and apparel, a positive is the MITRA scheme announcing seven mega textiles parks to be launched in the next three years. If these are planned with plug-and-play facilities, good logistics for material/workers, in-house utilities and special work rules for workers that allow for competitive manufacturing, it would help improve India’s competitiveness in this sector.
The PLI scheme has drawn serious criticism from textiles and apparel industry, for its limited coverage of products as well as its high threshold limit for investment and growth. Industry has strongly represented a re-look at these parameters and hopefully this will be re-examined. The National Technical Textiles Mission with a four-year implementation period from FY20-23 and an outlay of `1,480 crore is a welcome step.
The FM’s confirmation that the GST Council would work to correct inversion of duty structures is also welcome, particularly for synthetic fabric/apparel manufacturers who bear the brunt of non-refunded GST because of inverted tax structure.
An unexpected, and undesirable, pronouncement in the Budget was the imposition of 10% import duty on imported cotton “to help farmers”. Cotton is imported only in the ELS (Extra Long Staple) varieties and where we need contamination-free cotton. As businesses move from China, India’s ability to offer cotton products across different counts was an important strength. ELS and contamination-free cotton is hardly grown in India, and the Kasturi scheme launched by the textiles minister in October 2020 towards developing Indian fine counts cotton is well-intentioned, which will take a few years to deliver results. Creating a tariff wall at this early stage leads to much pain and little gain. It will steer value-added export business towards Bangladesh and Vietnam, will give a fillip to the unprecedented increase in cotton/yarn prices in India in the last few months, will create distortions in our fibre policy where cotton would suddenly have a higher duty (intended 10%) than polyester/nylon (5%), and create unnecessary friction with our trade partners like the US from where we import this fibre. Many of the FM’s policies will depend on good implementation; here, I borrow the FM’s quote from Rabindranath Tagore in her speech: “Faith is the bird that feels the light and sings when the dawn is still dark.”
Source: Fibre2Fashion News
The Finance Ministry on Wednesday released the 14th installment of Rs 6,000 crore to states to meet the GST compensation shortfall, taking the total amount of fund released so far to Rs 84,000 crore.
Till now, 76 per cent of the total estimated GST compensation shortfall has been released to states and 3 UTs.
Out of this, an amount of Rs 76,616.16 crore has been released to 23 states and Rs 7,383.84 crore to the 3 UTs with Legislative Assembly (Delhi, J&K, Puducherry).
The remaining 5 states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim, do not have a gap in revenue on account of GST implementation, it added.
The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST.
The Finance Ministry in a statement said it has released the 14th weekly installment of Rs 6,000 crore to states to meet the GST compensation shortfall. The amount has been borrowed this week at an interest rate of 4.61 per cent.
“So far, an amount of Rs 84,000 crore has been borrowed by the central government through the special borrowing window at an average interest rate of 4.74 per cent,” it added.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50 per cent of Gross State Domestic Product (GSDP) to states to help them mobilise additional financial resources.
Permission for borrowing the entire additional amount of Rs 1,06,830 crore (0.50 per cent of GSDP) has been granted to 28 states under this provision, the statement added.
Source: The Financial Express
Reacting to the Union Budget-2021, yarn manufacturers are giving a mixed response to it. According to the businessmen, several positive steps have been taken by Union finance minister Nirmala Sitharaman, which will benefit them, but there is an urgent need for raising customs duty on the man-made yarn from 5% to 10% and this is the only way, by which the local yarn industry can prosper.
Giving more information, Sanjay Garg, president of Northern India Textile Manufacturers Association (NITMA), “We welcome the proposal of the Union Budget as the grant to the textile and clothing sector is budgeted at Rs 3,631.64 crore, which is about 10% higher than the previous year’s revised Budget of Rs 3,300 crore in 2020-21. Also, in the present Budget, the government has emphasised on infrastructure development and research and capacity building as the grant for these sectors has been increased by about 43.7% and 77.5%, respectively as compared to last year. Mega Investment Textiles Parks (MITRA) scheme is a very positive step and with the active support and cooperation of the government, the textile industry will become globally competitive, attract large investments and boost employment generation and exports in the years ahead.”
Garg added that, “Basic customs duty (BCD) rates on caprolactam, nylon chips and nylon fibre and yarn will be uniformly reduced to 5% to spur the textile industry, MSMEs and exports. Customs duty on cotton from nil to 10% and on raw silk and silk yarn from 10% to 15% will benefit domestic cotton and silk growers. The taxation changes proposed in the Budget will help and benefit the MSMEs in a big way. The measures taken to simplify GST are praiseworthy with the hope that the government will take corrective measures to smoothen the GST further by removing anomalies such as the inverted duty structure.”
Garg added that, “We humbly appeal to the FM that there was an urgent need of raising customs duty on man-made yarns from 5% to 10%, which has not been considered by the finance minister. Man-made yarn sector, which is one of the largest employment generating segments within the textile industry and it’s highly capital and labour intensive industry as well. The unreasonably low-priced imports of man-made yarn into India have been causing considerable amount of injury to domestic manufacturers for the last five years or so. The industry has deep concerns over the rise in import quantities being dumped into India, which can potentially cause permanent damage to domestic MMF (man-made fibre) sector with a cascading effect, from closure of units to NPAs and eventually resulting huge employment losses.”
Source: The Times of India
The Cotton Textiles Export Promotion Council has expressed surprise over levy of 10 per cent import duty on raw cotton and urged the government to have a relook at the proposal.
Welcoming the Government move to set up seven textile parks over three years, Manoj Patodia, Chairman of The Cotton Textiles Export Promotion Council, said the move to levy import duty on cotton will make imports of Extra Long Staple Cotton costly, especially GizaCotton from Egypt and Supima Cotton from the US. Patodia also expressed his apprehension that the levy of import duty on cotton will increase the domestic prices which will now be based on the import parity price plus the basic customs duty.
This, in turn, will push up cost for value-added products like fabrics, made-ups and garments. He also pointed out that there has been a decline in imports of cotton by a sharp 77 per cent between January and November 2020 compared to the same period in 2019 and as such there is no case for an imposition of import duty on cotton.
Patodia appealed to the Government to withdraw the basic customs duty on cotton in the interest of the textile and clothing sector and its orderly development, especially as India is a cotton surplus country.
Globally competitive
However, he said the Government move to set up seven textile parks under the ‘Mega Investment Textiles Parks' over three years will enable the textile industry to become globally competitive, attract large investments and boost employment generation, said Patodia.
The Budget has reduced the basic customs duty on caprolactam, nylon chips and nylon fiber and yarn to 5 per cent. This will encourage the growth of the man-made fibre sector, especially the MSMEs, he said.
On the direct taxes, the Budget has reduced the time-limit for re-opening of assessment to 3 years from the present 6 years to remove the uncertainty for the assessees, he added.
Source: The Hindu Business Line
India does not agree with the United States Trade Representative (USTR) report that the country's two per cent equalisation levy on foreign e-commerce firms discriminates against American companies, Commerce Secretary Anup Wadhawan said on Wednesday.
Last month, an USTR investigation has concluded that India's 2 per cent digital services tax on e-commerce supply discriminates against US companies and is inconsistent with international tax principles.
"We do not agree with that conclusion," Wadhawan told reporters when asked whether India has responded to the USTR report.
"Basically, if there is an economic benefit from a certain jurisdiction then there has to be some taxation in that jurisdiction...OECD (Organisation for Economic Co-operation and Development) is also moving in that direction that if you have an economic presence and economic gain, then you must have taxation in that jurisdiction. You have billions of dollars of revenue in a certain jurisdiction, you have to pay taxes," he said.
Some countries are protesting because they have huge domination in that kind of activity whether it is Facebook, Google or Amazon, he added.
Over the progress in the proposed mini trade deal between India and the US, he said bilateral discussions are always ongoing and they never end.
The "status is very good" on that deal and the sticking points have been "largely addressed" and there is "no" sticking point as such, he noted.
The two countries are negotiating a trade package to iron out certain issues and promote two-way commerce.
India has demanded resumption of export benefits to certain domestic products under their Generalised System of Preferences (GSP), and greater market access for its products from sectors like agriculture, automobile, auto components and engineering.
On the other hand, the US wants greater market access for its farm and manufacturing products, dairy items and medical devices, data localisation, and import duties cut on some information and communication technology (ICT) products. The US has also raised concerns over the high trade deficit with India
Source: The Economic Times
Archroma, a global leader in specialty chemicals towards sustainable solutions, recently announced a strategic partnership with technology innovator CleanKore, aiming to advance sustainable dyeing processes throughout the denim supply chain.
The agreement will allow Archroma and CleanKore to promote the benefits of each other’s technologies. This includes Archroma’s robust catalog of dyes and specialty chemicals along with CleanKore’s patented process of dyeing yarns at the denim mill that completely eliminates the need for potassium permanganate (PP) spray and laser booster to achieve the bright white abrasion effect in the garment finishing process.
The result is a large and circular bright white core with a small ring of indigo dye. The technology does not just eliminate the chemicals associated in the PP spray and laser process, which is much safer for denim workers, it also allows to save significant amounts of water and energy throughout the manufacturing process from fabric to garmenting.
CleanKore initially looked at eliminating potassium permanganate due to its being classified as hazardous if inhaled or ingested, or in case of contact with the skin or the eye. It is also considered very toxic to aquatic life.
No new equipment or capital expenses are needed to implement the CleanKore technology, which works on all denim fabric, including dark indigo, sulfur top/bottom and sulfur black.
This is where Archroma comes into the picture. Its global technical team of denim coloration specialists will provide support to denim mills seeking to implement the CleanKore technology and develop the desired looks and effects – with the right colors and chemical systems for their production set-up.
CleanKore estimates that the technology allows to save up to 15 liters of water per garment, or the equivalent to the drinking needs of 5 people per day, and up to 0.51 kWh of energy per garment, or the equivalent of five 100-watt light bulbs on for 1 hour.
The CleanKore technology also leads to a 10% to 20% increase in production throughput, as a result of a faster garment wash-down and the elimination of PP spray.
For CleanKore CEO Darryl Costin Jr., the announcement comes at an ideal time for CleanKore: “We have successfully proven the technology with mill partners such as Arvind and other denim mills in Pakistan, Bangladesh, China, Vietnam, Thailand and the United States. The response from the industry has been overwhelmingly positive. Having a partner in Archroma, one that is highly respected for their innovation and emphasis on sustainability throughout the industry, will allow us to take CleanKore to the next level.”
Umberto Devita, Global Indigo Manager at the Archroma Global Competence Center for Denim & Casualwear adds, “CleanKore is perfectly aligned with the 3 pillars of ‘The Archroma Way to a Sustainable World: Safe, efficient, enhanced’. ‘Safe’ through the elimination of a potentially harmful substance and the protection of the denim workers, ‘Efficient’ through the reduction of resource consumption, improved productivity and cost effective profile.”
“And ‘Enhanced’ through the gorgeous colors and effects allowed with Archroma’s innovations and systems, in particular our aniline-free* Denisol® Pure Indigo and Diresul® sulfur dyes. We look forward to help promoting an innovation that will help with many of the challenges facing our denim customers throughout the world. Because it’s our nature,” Devita added.
Source: Textile Today
On February 1, Honorable Nirmala Sitharaman, Union Finance Minister of India introduced the Indian budget for the financial year 2021-22.
As a move to support farmers, Government will impose a 10% custom duty on cotton imports, which has been nil at present. While the budget has received positive feedback from the textile sector, spinning sector is feeling the pinch due to the duty on imported cotton.
The budget supports boosting the textile sector and enhancing its global competitiveness with investments for Mega Investment Textile Parks. Seven textile parks will be established within three years. To enhance the manmade fiber sector, import duties on raw materials like nylon fiber and yarns, nylon chips and caprolactam have been reduced from 7.5% to 5 percent. This duty structure is similar to polyester and other manmade fibers. Duty on raw silk and silk yarns will be increased from 10 to 15 percent.
India’s textile sector for fine count spinning has been importing cotton from countries like Egypt and imposing duty may affect the competitiveness of the spinning sector. Countries like Vietnam and Bangladesh have been doing well in garments exports to United States and Europe, and this duty may negatively impact the Indian spinning sector and the value chain.
“Overall, the budget has positive aspects but for the custom duty on cotton imports,” stated, Gandhiraj Krishnasamy, General Manager of Coimbatore-based Lakshmi Card Clothing, 40 years veteran in the textile sector. “Indian industry needs scale to compete against other countries,” added Gandhiraj Krishnasamy.
Jayalakshmi Textiles, which has about 70,000 ring spindles and spinning fine count yarns has started recently importing Egyptian Giza cotton as its price was competitive against Indian DCH-32. In fine count yarns, customers are demanding the use of imported cotton and hence this industry has recently purchased about 500 tons of Giza cotton. “Custom duty on cotton may add pressure to the Indian spinning sector,” stated Velmurugan Shanmugam, General Manager of Aruppukkottai-based spinning mill, whose average yarn count is about 70s Ne.
The budget is in the right tract with enhancing the domestic sector in terms of value-addition, agriculture, and innovation. The custom structure on cotton puts emphasis on the Indian cotton sector to focus on research, quality enhancement, contamination reduction and build the overall infrastructure.
Source: Apparel Online
The government has no plan to close down loss-making public sector telecom firms BSNL and MTNL, Minister of State for Telecom Sanjay Dhotre told Lok Sabha on Wednesday.
The minister shared that BSNL's loss has swelled to Rs 15,500 crore from Rs 14,904 crore, and that of MTNL increased to Rs 3,811 crore from Rs 3,398 crore between 2019-20 and 2018-19.
"The government has no plan to close down BSNL and MTNL," Dhotre said in a written reply. The government had announced a revival package of around Rs 69,000 crore in October 2019.
The revival plan includes reduction in employee costs through a voluntary retirement scheme (VRS) for the employees of age 50 years and above, administrative allotment of spectrum for 4G services with funding through budgetary allocation and debt restructuring by raising of sovereign guarantee bonds.
It also includes monetisation of assets to generate resources for retiring debt, capital expenditure and other requirements, and in-principle approval for merger of BSNL and MTNL.
In his reply to a separate question, Dhotre said 78,569 employees of BSNL and 14,387 of MTNL opted for VRS which led to about 50 per cent reduction of salary expenditure in BSNL and by about 75 per cent in MTNL.
"The government has allotted Rs 16,206 crore to meet the total funds requirement for ex-gratia on VRS. An amount of Rs 14,890 crore has been released to BSNL and MTNL.
"In addition, the government has incurred expenditure for Rs 1,952 crore on account of incremental pension till December 21, 2020," Dhotre said.
The government has provided sovereign guarantees of Rs 8,500 crore and Rs 6,500 crore to BSNL and MTNL, respectively.
BSNL has raised Rs 8,500 crore at a coupon rate of 6.79 per cent per annum, while MTNL has raised Rs 4,361 crore at a coupon rate of 7.05 per cent per annum and Rs 2,139 crore at coupon rate of 6.85 per cent per annum in two tranches.
"Total allocation of Rs 24,084 crore for spectrum for 4G services was made in FY 2020-21. Due to a delay anticipated in launch of 4G services, the funds are being re-allocated in financial year 2021-22," Dhotre said.
Under the revival package, the government had approved asset monetisation plans of BSNL and MTNL.
"BSNL has informed that it has been able to generate Rs 241.87 crore from monetisation of land/building assets since announcement of revival package," the minister said.
Source: The Business Standard
The fourteenth installment of Rs 6,000-crore GST compensation payment was released to the states, the central government said on Wednesday. The states and union territories have so far received Rs 84,000 crore of Rs 1.1 lakh crore to be disbursed by the Centre this fiscal.
The central government borrows the funds under a special window and passes it on to states in back-to-back loan arrangement. The interest rate for the latest loan installment was 4.61 % while the average rate for the entire borrowing so far is at 4.74%, the government said.
While 23 states have been allotted Rs 76,616 crore so far, the remaining money (Rs 7,384 crore) has been released to the 3 union territories with legislative assembly (Delhi, Jammu & Kashmir & Puducherry) which are members of the GST Council.
“The remaining 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation,” the government said.
Source: The Financial Express
India’s economy has suffered more than most from the pandemic and so have its people. The country has lost more than a year’s worth of growth and perhaps a decade’s progress in its efforts to reduce poverty. The economic contraction — the first in India since the 1970s — has put pressure on its government like so many others to respond.
Until this week, that response had been relatively restrained. Prime Minister Narendra Modi’s government seemed to recognize that there was only so much it could do to address the economic contraction, especially while the pandemic is still raging. By its actions, the government implied that any welfare-promoting and growth-enhancing measures had to stand on a solid macro-economic foundation.
The budget for the next financial year, which starts in April, has poked a hole in this optimistic narrative. Not only has the fiscal deficit for the current year exploded to 9.5% of GDP — two percentage points higher than the consensus estimate, but still defensible for a pandemic year — next year’s deficit is now forecast to reach almost 7%.
The government has effectively abandoned its long-term commitment to bring the deficit down to close to 3% of GDP, pitching instead for a gentle descent to 4.5% — six years from now.
Once the pandemic retreats, India might end up with a debt-to-GDP ratio north of 90%, compared to the low seventies at present. It would be saddled with a permanently elevated fiscal deficit and a financial system bogged down by unknown levels of bad debt.
Consumer price inflation has topped the Reserve Bank of India’s target zone of 2%-6% since the Covid-19 lockdown began last year. These are, I am afraid, numbers more associated with Latin American stagnation than your typical Asian tiger.
The government is obviously hoping that increased spending will help India grow out of this predicament. Unfortunately, actual growth before the pandemic was already just 4% a year.
Fitch Ratings thinks India’s potential growth is at best 5.1%. That won’t be enough to deal with the macro-economic predicament India’s in.
The only way India can pull itself out of this jam is if private investment pours into the country, financing projects that push up the country’s potential growth rate. Yet the government, already monopolizing domestic financial savings, seems to want to go to war with the global markets as well.
In his pre-budget survey of the economy, the government’s seniormost economist spent an entire chapter attacking the ratings agencies — a pre-emptive salvo against a possible sovereign downgrade. Print money without fear, he urged, saying that doing so would “not necessarily lead to inflation and a debasement of the currency” if the extra money is invested in the right projects.
To paraphrase “Tropic Thunder,” never go full MMT. Unlike the U.S. or China, countries in India’s position — which have neither a reserve currency nor strong growth momentum — can’t grow while exploding their debt. They can’t afford to ignore ratings agencies because of their supposed bias or cock a snook at the bond markets and just run the currency presses instead. They need to grow in order to reduce their debt. That’s a very different dynamic.
India isn’t so attractive that it can expect vast sums of investment to arrive even if the macro-economic numbers look bad and the sovereign rating is junk. We don’t have a history of deflation, we aren’t hitting the zero lower bound — quite the opposite, we have an economy prone to sustained high inflation.
And, finally, if there’s a country somewhere with a government bureaucracy efficient enough to build really productive assets using sustained deficits, that country definitely isn’t India. This is still a developing economy, which especially in bad times should tread carefully rather than throw caution to the winds.
Modi’s greatest strength as an economic manager had been his commitment to fiscal responsibility. Some of that was visible in this year’s budget as well — which, for example, boasted a welcome return to transparency about how much the government is borrowing, ending a tradition of fudging that has persisted since the last financial crisis.
Yet, with this new willingness to binge on debt, Modi now faces the prospect of leaving India’s macro-economy far less secure than when he inherited it. That would be a dire legacy indeed.
Source: The Economic Times
This year’s budget revealed the mindset of a confident and unapologetic India. In this newspaper, on January 22, I had argued for the need for developing economies such as India to view themselves as “project finance” economies and not “working capital” economies of the developed West. While a developed economy has good infrastructure, near full employment and high per capita income so that it has the revenue base to meet its expenditures, a country with low per capita income, high disguised unemployment and poor infrastructure needs to borrow to meet its required expenditures.
Project finance economies need to build the infrastructure lacking in their nations so that they can increase the productivity of their economies. Sustainable growth in Gross Domestic Product (GDP) cannot be achieved without plugging the gap in hard and soft infrastructure. What is important is to ensure that the borrowing is well-directed and spent on the right things. It is in this context that I applaud this year’s budget.
Finance Minister (FM) Nirmala Sitharaman was not coy in signalling to the world her intent to spend to grow out of the pandemic. She was not cowed down by the constraining orthodoxy of neo-classical economic thinking that inhibited action in the past. The budget was bold and unafraid in a crisis year. It combined pragmatism in some areas, with a bold attack on the traditional holy cows of old and did not fall prey to ineffective symbolism and needless populist tinkering.
Sitharaman broke with the constraint imposed by the Fiscal Responsibility and Budget Management Act. It transparently accounted for expenditures and openly stated the true deficit this year at 9.5% and targeted a deficit of 6.8% next year. She was clear that critical spending on infrastructure, health and education could not be delayed if India was to recover its old growth path. Revenue expenditures and some subsidy allocations were reduced, but capital expenditure was sharply increased. All this was done without tinkering with direct taxes and only some minor adjustments in tariffs and indirect taxes. Policy signalled consistency and an attempt was made at reducing tax harassment by reducing the time frame within which tax cases could be taken up and tried.
The outlay for hard infrastructure was increased to ₹5.54 lakh crore from ₹4.39 crore spent this year. The allocation was spread on roads, rail, urban infrastructure, ports, shipping, waterways, and airports. Another important area which continued to attract focus was water ( ₹2,87,000 crore allocation over five years) — a key requirement for the population, a basic human need which brings important side benefits in respect of health and hygiene. State power distribution companies were, at the same time, asked to get ready for competition to shake up this vital sector.
The pandemic had put a focus on India’s crumbling health care system. The finance minister increased allocation for health care to ₹22,3846 crore as against ₹94,452 crore this year, a 137% increase, with ₹35,000 crore of that amount earmarked for vaccines. The signal here is very important but we all recognise this to be a multi-year journey. Perhaps some more could have been done for education and skilling, but one hopes it is recognised as a critical area for coming budgets.
The measures for the financial sector were long-overdue. The finance minister announced the reversal of the policy on development finance institutions by setting aside ₹20,000 crore to establish one to supplement the needs of India’s infrastructure. She also announced the setting up of a bad bank to facilitate the resolution of bad loans and cleaning up of bank balance sheets to spur credit growth in the economy.
But the announcement of privatisation, yes privatisation, of two public sector banks in addition to IDBI Bank, one general insurer, the listing of Life Insurance Company and allowing 74% foreign investment in insurance, were pathbreaking. To raise resources for these expenditures, the government wants aggressive disinvestment and asset monetisation. In addition to providing resources, these actions increase the efficiency of the sectors and signal a return to the maxim of maximum governance minimum government.
My two concerns on the budget relate to implementation. First, we must ensure the divestment targets are met unlike in the past. Divestment is always political, complicated but vital. Second, the government should earmark a certain minimum spending on soft infrastructure and target outcome goals it monitors and share these with the nation in Parliament. Outcomes in health and education are as important as sharing the fiscal deficit figure. The government should focus on the level of monitoring required — a monthly FM-led review and a quarterly prime minister-led review — to ensure the programme stays on track.
This budget boldly espoused a project finance economy mindset — based on spending with confidence on hard and soft infrastructure to improve the productive capacity of the country. FM Nirmala Sitharaman deserves high praise for betting on unlocking India’s full potential and setting it on a path to growth. I doff my hat to you, Madam FM.
Source: The Hindustan Times
According to data from the Export Promotion Bureau (EPB) between July and January, the first seven months of the 2020-2021 fiscal year, the shipment of readymade garment (RMG), which usually contributes more than 80% to Bangladesh’s national export, declined 3.44 percent year-on-year to $18.40 billion.
Of the earnings from the RMG export, $9.98 billion came from the knitwear export, which was up 3.84 percent. The export of woven items dropped 10.85 percent to $8.41 billion.
The woven items export has been falling since June last year as many people have limited themselves to homes and countless worked from home because of the COVID-19 pandemic.
An extended stay at homes has surged up the demand for knitwear items.
According to data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the apparel export endures to demonstrate a dismal trend, showing the worrying state in the global trade, mainly about RMG.
Besides, the newest EPB export data shows that garment export in January dropped 7.01 percent year-over-year and woven export dropped 13.89%.
In this regard, Rubana Huq, President, BGMEA, “The key export markets of our RMG items are struggling with the intensity of the pandemic.”
Exporters opined that to recover from this scenario, the stimulus package should be increased.
Source: Textile Today
India may emerge as the next big trade market for Australian exporters after China imposed heavy tariffs and sanctions on several Australian export commodities amidst a strain in relations with Beijing, according to the latter’s trade minister Dan Tehan, who recently flagged India as the country’s top priority while looking at new trade opportunities.
Australia's trade ties with its major trading partner China deteriorated last year when Australia supported a call for an global inquiry into China's handling of COVID-19, which was first reported in Wuhan.
China took several measures that restricted Australian imports, ranging from levying new tariffs to imposing bans. China imposed sanctions and tariffs on several Australian commodities including barley, timber, coal, cotton, wine and lobster.
Australia then asked the World Trade Organisation to mediate in their dispute over stiff duties on Australian barley in the Chinese market.
“We haven't had a formal trade ministers meeting with China for over three years, this is something we have been seeking to constructively engage with China for over three years, he said. Looking to really boost the relationship with India, there are enormous opportunities. We have to be patient but we have to be very proactive with India,'' Tehan said.
He said that Japan, Vietnam, the new US administration all present many opportunities for Australia and that's what he will be focusing on, as well as seeking to constructively engage with the Chinese.
Source: Fibre 2 Fashion News
With Myanmar witnessing a coup, bringing to an end a period where the military and the democratic forces coexisted in a complex political structure, India is confronting a familiar dilemma. As a democracy, India’s sympathies naturally lie with a popularly elected system of government, an open society, free speech, and civilian control over military. Its role is underestimated, but, as scholarly work by Constantino Xavier has shown, India has often — without making too much noise about it — promoted democracy in the neighbourhood through active interventions or technical support.
The challenge arises when there is a mismatch between immediate national interests, values, and India’s own power in shaping outcomes. In the case of Myanmar, India shares a critically important relationship with the military — which has been cooperative in helping tackle extremism in the Northeast and is uncomfortable with China’s intrusive presence in its ethnic politics. India also does not have either the tools or the leverage to be able to persuade the military to roll back, or help carve out an inclusive political regime. In this backdrop, Delhi will have little choice but to work the regime in power in Myanmar.
This is, however, a call that needs to be taken depending on the specifics of each case. In Nepal, the alignment between values, interests, and India’s ability to shape outcomes means New Delhi should stand with constitutional democracy, which Prime Minister KP Oli is undermining. In Sri Lanka, the Rajapaksa regime, by withdrawing from an infrastructure agreement with India, has once again shown that besides being authoritarian and exclusivist internally, it is not necessarily receptive to Indian interests externally. This should prompt a rethink in Delhi about its Sri Lanka policy. Or in Bangladesh, the Sheikh Hasina government has been remarkably sensitive to Indian security interests — but its own internal democratic record is weak. This has resulted in Delhi working with Dhaka, at the cost of turning a blind eye to the regime’s excesses. India’s dilemma will only increase because, on one hand, China’s footprint in the region will make Delhi focus on interests, even when its democratic commitment and global partnerships with other democracies will add pressure to focus on values.
More than 400 leaders from the world of fashion have signed an open letter to the UK government amid fears for the future of the industry over the Brexit trade deal.
The letter, organised by think tank Fashion Roundtable, claims the UK's fashion and textile industry contributes "£35 billion to UK GDP and employs almost one million people".
Prominent names among the 451 signatories include designers Alice Temperley and Katharine Hamnett, model Yasmin Le Bon and British fashion photographer Nick Knight.
They warn the sector is "at real risk of decimation by the Brexit trade deal and current Government policy".
They also said the deal leaves "a gaping hole where promised free movement for goods and services for all creatives, including the fashion and textiles sector, should be".
The letter claims those working across the EU will now need "costly work permits" for each member state they visit and "a mountain of paperwork for their products and equipment".
Addressed to Prime Minister Boris Johnson, it calls on the Government to, among other things, bring back a VAT retail export scheme and ensure frictionless work travel for British creatives in the bloc.
"This is a step backwards and out of touch with the realities of how the sector works," the signatories say.
Leading figures from the music and fishing industries have criticised the Government's Brexit deal and claimed it endangers their sectors.
"We contribute more to UK GDP than fishing, music, film and motor industries combined," today's letter reads.
"Yet we have been disregarded in this deal and our concerns overlooked in current policy decisions," it added.
Fashion Roundtable's open letter has received cross-party parliamentary support as well as from leaders in manufacturing, retail, modelling, creative business, education, brands and journalism.
English designer Hamnett said: "We need a radical overhaul of customs arrangements including VAT on all goods shipped into the EU by the end of February, or British brands will die."
"It is crucial not only for people in our business but crucial for the welfare of the UK economy that all people in the creative and fashion industries can travel freely within the EU," Yasmin Le Bon said.
"I have been working continually in this industry for the past 37 years, it works in a very particular way, with jobs being confirmed literally at the last minute. I may get a call, make a decision and be at the airport within two hours, ready to fly to Madrid, Milan or Miami," she said.
"The wealth of these creative industries is in our ability to move and change quickly. This is our future, we cannot be stuck back in the dark ages or we will be left behind," she added.
Isabel Ettedgui, creative director and owner of clothing brand Connolly, said: "The sadness, the lack of goodwill and the red tape we are now experiencing as a Brexit trading outpost, the financial ramifications of creating barriers with our major trading partner, and also the loss of their skills, will be devastating and the result could be the possible closure of a 185-year-old company that holds the Royal Warrant."
"We are working closely with businesses in the fashion industry to ensure they get the support they need to trade effectively with Europe, and seize new opportunities as we strike trade deals with the world's fastest growing markets," a UK government spokesperson said.
"We are aware that some businesses are facing challenges with specific aspects of our new trading relationship with the EU. To this end, we are operating export helplines, running webinars with policy experts and offering businesses support via our network of 300 international trade advisers," the spokesperson said.
"This is on top of the millions we have invested to expand the customs intermediaries sector," he added.
Source: Fibre2 Fashion
Kenya imports about 30 billion shillings (about 272 million U.S. dollars) of apparel annually due to the high cost of local products, a government official said Tuesday.
Lawrence Karanja, the Ministry of Industrialization, Trade and Enterprise Development chief administrative secretary, told journalists in Nairobi that the country is importing over 70 percent of its retail and fashion needs both in the form of new clothes and second hand.
"There is thus a need for local manufacturers and designers to find the right product and value match to meet the affordability element," Karanja said during a forum on Kenya's textile and apparel sector.
Karanja said that one of the challenges facing the domestic clothing sector is that the Kenyan market remains cost driven, due to the low economic status of most of the population. He noted that the government is keen to discuss with the domestic manufacturers to agree on policy support that will increase the competitiveness of the locally manufactured products.
"The aim is to increase the market penetration of locally produced textile and apparel products in both fashion retail mass market and the uniformed markets," he observed.
He reckoned that more and more people are geared towards purchasing locally manufactured products but don't have an idea where they can purchase the products.
"For this reason, our manufacturers and designers need to have more linkages with the physical and virtual retail spaces," Karanja added.
He revealed that the COVID-19 pandemic proved that Kenya needs to look internally and develop local supply chains in the textile and apparel sector in order to meet consumer demand. Enditem
Source: Fibre2 Fashion
The ambassadors for the United Kingdom and Tunisia recently endorsed the Buy Tunisia Textiles project at a webinar conducted by the Professional Clothing Industry Association Worldwide (PCIAW) and OCO Global to empower the relationship between the UK and Tunisian professional clothing industries. The project aims to forge long-term partnerships between both sides.
While Tunisian ambassador to the United Kingdom Nabil Ben Khedher thanked PCIAW and OCO Global for the tremendous work they have been doing to promote and expand the trading relationship between both sides, British Ambassador to Tunisia Edward Oakden said the department for international trade is helping UK businesses to engage with Tunisian textile companies.
Tunisia has a natural advantage on these considerations due its close proximity to the UK and the maturity of its textile industry, according to a press release from PCIAW.
As a member-oriented association, PCIAW is seeking to fulfill this surge in interest by dedicating its resources to supporting the diverse textile and manufacturing industry, it added.
Source: Fibre2 Fashion
Leading knitting technology provider KARL MAYER has developed a platform TEXTILE MAKERSPACE to connect the textile industry with new technologies that offer diverse potential for innovations.
The platform is aimed at encouraging exchange ideas and offer interested companies the opportunity to test new technologies for their project. Furthermore, the focus of TEXTILE CIRCUIT is also on the promising topics of smart textiles and wearables.
According to the company, the innovators from various fields have been investigating the possibilities offered by string bar technology to incorporate electrically conductive yarns directly on the machine.
Initial results include comfortable arm cuffs for controlling robots, textile charging stations for inductively charging smartphones and a T-shirt that measures vital functions. Further projects with field-based partners are underway at the headquarters in Obertshausen in Germany.
By the end of 2020, the customers were able to develop and implement ideas for e-textiles at KARL MAYER North America facility. A modified standard machine and competent service technicians are now available for this purpose in Greensboro, said the company.
KARL MAYER further reported that it successfully presented itself as a competent partner in the production of e-textiles and answered numerous specific project enquiries from innovative partners based in the USA recently.
Source: Apparel Online
Pakistan and Uzbekistan have agreed to enhance bilateral trade relations by entering into a Preferential Trade Agreement (PTA).
The understanding was reached at the first meeting of Joint Working Group of Pakistan and Uzbekistan on Trade and Economic Affairs and the meeting of Tripartite Working Group on Implementation of Trans-Afghan Railway Project in Tashkent, said a press statement issued on Tuesday.
Adviser to the Prime Minister on Commerce and Investment Abdul Razak Dawood, who is leading a delegation to Uzbekistan, represented the Pakistani side in the meeting.
The two sides discussed enhancing banking cooperation, working on rail and road connectivity matters and establishment of off-dock terminals. They also resolved to cooperate in shipping, textile, engineering and IT sectors.
The Uzbek side invited Pakistan business delegation to organise a joint exhibition in Tashkent in June this year.
Earlier on Monday, Abdul Razak Dawood called on Uzbekistan President Shavkat Mirziyoyev to discuss matters related to economic cooperation between the two countries. Dawood also met with Chamber of Commerce and Industry of Uzbekistan President Adkham Ikramov and discussed cooperation in textile, leather and engineering sectors.
The commerce adviser is leading a delegation to Uzbekistan for the first meeting of the Joint Working Group on Trade and Economic Affairs and the meeting of Tripartite Working Group on Implementation of Trans-Afghan Railway Project.
Source: Fibre2 Fashion
Sri Lankan apparel manufacturing giant and a leader in sustainability Hirdaramani Group has launched smart mask – BreathTech-S³.
The mask is termed as the world’s first sustainably designed smart face mask with respiration sensor technology which is developed in partnership with the Sri Lanka Institute of Nanotechnology (SLINTEC) and CirQ Technologies.
BreathTech-S³ is manufactured using a combination of sustainably sourced, natural & biodegradable materials and features an advanced graphene-based sensor (patent pending) that measures breathing rate, mask fit, CO2 build-up, and mask usage, all of which are accessible via a secure mobile app.
According to Hirdaramani Group, the increasing concerns over the environmental issues caused by disposable face masks have paved way for more sustainable approach of both the industry and the consumers.
“BreathTech-S³ provides consumers a sustainable choice that also ensures their safety,” said Hirdaramani in its LinkedIn post.
Furthermore, the graphene used to make the mask is locally sourced. “It is the highest value-addition you can give to Sri Lankan graphite,” commented Dr. De Silva, Head of Technology Transfer, SLINTEC.
Source: Apparel Online
