Finance Minister Nirmala Sitharaman is scheduled to address the post-Budget meeting of the RBI's central board on Tuesday and highlight key points of Union Budget 2021-22, including the fiscal consolidation roadmap.
Fiscal deficit -- the excess of government expenditure over its revenues -- is estimated to hit a record high of 9.5 per cent of the gross domestic product (GDP) in the current fiscal ending March 31 due to the COVID-19 pandemic.
For the next 2021-22 fiscal, the deficit has been pegged at 6.8 per cent of GDP, which will be further lowered to 4.5 per cent by the fiscal ending March 31, 2026.
The meeting will be held virtually for the first time due to COVID-19 protocol, sources said.
Earlier this month, Reserve Bank of India (RBI) Governor Shaktikanta Das said the central bank will able to manage the high quantum of government borrowings at Rs 12 lakh crore for the next fiscal in a "non-disruptive" manner.
The governor had said the extraordinary event of the pandemic has resulted in deviation from the fiscal consolidation roadmap but declined to comment on what view the rating agencies will be taking on the high fiscal gap at 9.5 per cent in FY21 and 6.8 per cent in FY22.
Das had said the RBI, being the debt manager for the government, did discuss the borrowing with the Ministry of Finance even before the Budget.
The government was earlier committed to getting the fiscal deficit down to 3 per cent in the medium term as per the Fiscal Responsibility and Budget Management (FRBM) Act mandate, and now plans to touch 4.5 per cent by FY26. A wider deficit generally entails bigger borrowing by the government.
The finance minister would also apprise the board of various other announcements made in the Budget to revive growth by spending more on infrastructure and attending to the needs of the healthcare sector.
The Indian economy is expected to contract by 7.7 per cent in the current fiscal ending March, hit by the COVID-19 crisis.
The Budget has estimated nominal GDP growth rate of 14.4 per cent and revenue growth at 16.7 per cent for the next financial year. Real GDP growth is expected to be in the range of 10-10.5 per cent.
To boost growth, the finance minister in the Budget increased spending on capital expenditure to Rs 5.54 lakh crore from Rs 4.12 lakh crore, while the health sector allocation has been hiked to Rs 2.23 lakh crore from Rs 94,000 crore in the Budget estimate for 2020-21.
Source: The Economic Times
The signing of the Regional Comprehensive Economic Partnership (RCEP) agreement by 15 countries of the Asia-Pacific, accounting for 30% of the global trade, late last year, and the launch of the African Continental Free Trade Area (AfCFTA) comprising 54 countries in January 2021, have revived the narrative on free trade agreements (FTA).
The parallel development to ‘take back control’ that propelled Brexit highlighted the backlash against globalisation and free trade. Nobel laureate Milton Friedman held that the economics profession has been almost unanimous on the desirability of free trade.
However, good economics is not always good politics. From India, which in the last five years has hiked tariffs on a fourth of all products traded, to the US, which promotes buy American, protectionism is the flavour of the season.
Trade, one of the engines of economic growth, has not fired for India in the last decade. Merchandise exports that create jobs in manufacturing have been flat around $300 billion.
Simultaneously, import of goods—which generates employment in services like transportation and logistics, provides value and choice to consumers and cheap inputs for our exports—has also remained stagnant. This is a double whammy as our comfortable foreign exchange reserves allow us to safely leverage the advantages that imports offer.
It is noteworthy that India’s trade as a percentage of GDP has plummeted from 56% in 2011 to 40% in 2019, a period during which we have not signed any FTA.
What is an FTA?
FTAs between two or more countries increase trade by reducing customs duties and non-tariff barriers on substantially all trade. They also cover services and non-trade issues like investment.
‘High standard’ FTAs, being aggressively promoted by the US, also include rules on e-commerce, intellectual property, labour standards and environment protection measures. FTAs became popular as the world lost patience with the ‘consensus by exhaustion’ approach of the World Trade Organisation.
Today, the spaghetti bowl of FTAs includes about 500 arrangements with linkages and overlaps.
India’s first comprehensive FTA was in 2005 with Singapore, an entrepôt with a near-zero tariff regime. We reduced duties on a range of products, getting little in return.
Perhaps it was the price we paid for entry into the ASEAN+6 club.
The ASEAN FTA in 2009 was worse. A ‘goods only’ agreement with a number of manufacturing tigers, when our main strength was services, ended up sacrificing many industrial sectors. Moreover, bereft of negotiating leverage, we were forced to accept a dud as the ASEAN Services Agreement.
Surprisingly, the better deals were with stronger economies like South Korea and Japan. These FTAs of 2009 and 2011, respectively, enhanced our trade deficit, but also our competitiveness in some key areas. Take for example automobiles.
The Japanese and Koreans negotiated lower tariffs for their special steel. Investment in car production in India increased, riding on robust promotion and protection measures incorporated in the FTAs. Their auto majors expanded factories in India to meet the huge domestic demand and by leveraging cheap skilled labour helped transform India into a small-car hub.
Later, with economies of scale, they made inroads into the extremely competitive export market.
Negotiating FTAs can be a challenge as it involves an element of give and take.
Since companies trade and not countries, some benefit while others lose out. That is the nature of the beast! Negotiators can fight for the king, the queen and bishops, but have to throw away the pawns. This is contentious as it can create losers who end up kicking and screaming.
However, FTAs can help India gain substantial access to large markets at concessional duty for products where we are competitive.
Sectors like automotive, textiles, handicrafts, leather, pharmaceuticals, light electricals, some chemicals, many agricultural items, jewellery and professional services, which are all employment-intensive, could benefit.
It can trigger huge job creation riding on exports. In textiles and clothing, our competitors Vietnam and Bangladesh enjoy tariff-free access to the large and lucrative EU and US markets on account of their FTAs or LDC status. Tariff elimination under FTAs can provide our exporters a level-playing field and stop erosion of our market share and profits.
What should then be the path for the future?
Reduction in tariffs on intermediates enhances competitiveness of finished goods. Doing so under FTAs allows trading off liberalisation. Therefore, we need to restart our FTA journey urgently and scale it up rapidly with the past experience serving both as a lesson and a warning.
Conclusion of the India-EU agreement should be a priority. Negotiations tottered on differences on Indian tariffs on wines, Scotch whisky and luxury cars, and EU intransigence on country-specific quotas for Indian IT professionals.
But the real deal breaker in 2015 was India’s insistence on free cross-border data flows, which the EU found inconsistent with its privacy law.
In the era of artificial intelligence, data is the new oil. With technological evolution there is an opportunity of monetising India’s data so our position on this issue has reversed, removing a major hurdle to a deal.
An FTA with the UK should be a low-hanging fruit too in view of the complementary interests in services and the desire of the UK to rapidly diversify trade to cushion the impact of Brexit. Leaders’ meetings leading to the G7 summit in the UK in June 2021 offer an opportunity to prepare and cement the vision for a deal.
Engagement with the Eurasian Economic Union (EAEU), comprising Russia and many of the erstwhile Soviet republics, should be another high priority area. The EAEU is rich in energy resources, has a hunger for our pharmaceuticals, textile and agriculture exports, and traditional goodwill for India. Africa is another large, growing market and we should leverage their apprehension of Chinese dominance and take a lead in initiating a dialogue with the AfCFTA.
Equally important is drawing up a negative list of FTA partners. China, the factory of the world, with its huge subsidies and scale of manufacturing, is clearly one.
The government wisely abandoned the RCEP, where the proposed tariff elimination on 80% trade would have wrecked our domestic industry. The US, with its insistence on binding rules on digital trade and intellectual property and ambitious market access for US exports, is another one to avoid.
Many experienced negotiators liken an FTA with the US to the software licensing agreement of a website. Ultimately, you have to put aside all your concerns and sign off ‘I agree’.
Source: The Financial Express
The Central Board of Direct Taxes (CBDT) may relook at the ‘equalisation levy’ for purchases where Indian businesses use overseas ecommerce platforms to sell goods and services to Indian consumers.
The 2% levy paid by foreign ‘ecommerce operator’ on gross consideration attempts to address tax challenges in an increasingly digital economy.
But in cases where a local buyer and seller transact over a foreign e-commerce platform, a straight imposition of the equilisation levy on the total consideration would amount to double taxation.
Consider an Indian business traveller booking an apartment for Rs 15,000 on rent from a local property owner over an US rental online marketplace which collects a commission of Rs 3,000 and pays Rs 12,000 to the property owner.
The e-commerce operator should ideally pay a levy on Rs 3,000—and not on the entire amount because the person renting out the property would pay tax on the Rs 12,000 rental income. Similarly, there would be a duplication of levy when a local buyer orders an ethnic wear or handicraft listed on a foreign online market by an Indian seller.
At present, the language of the law or the amendments proposed in the Finance Bill, 2021 makes no exception or offers a carve-out to avoid double taxation.
The point was raised by a leading industry body in a post-budget discussion with CBDT joint secretary Kamlesh Varshney who agreed it was a “valid point”.
‘Not All Issues Addressed’
“...(there) may be situations where e-commerce participants are Indians and their gross consideration gets into the consideration of the e-commerce operators... There are issues and the government is not saying that all issues have been handled by the proposal in the Finance Bill,” said Varshney during the interaction.
When asked by ET whether CBDT could re-examine the proposal or the law, a CBDT official said, “It would be considered at an appropriate time.” There was no official response from the CBDT spokesperson.
“The levy provisions, as they stand today, fasten a liability of 2% on a non-resident ecommerce operator if there is supply or facilitation of supply to residents in India. Therefore, it applies when the buyer is an Indian resident and the platform facilitating the sale is owned or operated by a non-resident company.
The law is silent on the status of the seller," said Ajay Rotti, partner at Dhruv Advisors.
"Technically, if an Indian resident is registered as a seller on any of the overseas websites and another Indian buys those goods, equilisation levy would be payable by the non-resident platform.
The levy is applicable on gross consideration. This could lead to an unintended double taxable in India since the seller, being an Indian resident would be liable to income tax on profits earned by him on such sale….
"It would be good if the government can amend the law or issue suitable clarifications to exclude those transactions carried out on overseas ecommerce websites where the seller and buyer are both Indian residents,” he said.
The Finance Act, 2020 had expanded the scope of equalisation levy to consideration received by ‘e-commerce operators’ from ‘e-commerce supply or services’.
The levy has been in the effect from April 1, 2020.
For this purpose, an “e-commerce operator” is defined as a non-resident that owns, operates or manages a digital or electronic facility or platform for online sale of goods or the online provision of services.
Industry Taken Aback
Besides the fact that an e-commerce operator may not have adequate margin to absorb the levy, the industry is taken aback by the Finance Bill, 2021 proposal to broaden the scope of the levy.
According to Shefali Goradia, partner, Deloitte India, “As per the Finance Bill, any activity connected with the sale lifecycle which takes place online, will make the entire transaction subject to the levy.
Say, an Indian subsidiary of an MNC group purchases laptops by placing a procurement order on the ERP system of the group which then ships them to India."
Here, it is unclear if an internal portal accessible to all group companies would qualify as electronic platform.
If so, will such a transaction be subject to equilisation levy? There also needs to be some clarity that payment gateways will not be subject to EL on the gross consideration, especially where the foreign marketplace has already paid equilisation levy," she said.
Source: The Economic Times
Merchandise exports rose 6.2% in January from a year before, the highest since March 2019, and 0.1% higher than December, showed the data released by the commerce ministry on Monday. It also beats the ministry’s preliminary estimate of a 5.4% increase in exports for January, signalling a nascent recovery following the Covid-related disruptions.
Imports, too, recorded a second successive month of growth (2% year-on-year) in January but the pace of rise slowed from 7.6% in December 2020. Trade deficit narrowed to $14.54 billion in January from $15.44 billion in the previous month.
The data showed that exports rose to $27.45 billion in January, against $25.85 billion a year before. Imports increased to $41.99 billion last month from $41.15 billion a year earlier. Importantly, core exports (excluding petroleum and gem and jewellery), which reflects the competitiveness of the economy, grew an impressive 13.4% in January.
Similarly, non-oil and non-gold imports rose 7.5% last month. One third of the 30 key commodities registered growth. The data show the overall outbound shipments until January this fiscal remained 13.6% lower than a year earlier, while imports dropped at almost double the pace of 25.9%.
Hit by a Covid-induced lockdown that battered the supply side hard, exports have witnessed a roller-coaster ride this fiscal. Having risen by 6% in September 2020, the first expansion since February 2020, outbound shipments faltered by 5.1% in October and 8.7% in November before it witnessed a marginal rise in December.
Nevertheless, it’s an encouraging sign and can potentially sustain once business operations stabilise in the wake of the Unlock, analysts have said.
The exports of commodities that saw a sharp rise in January included cereals other than rice and wheat (344%), oil meals (258%), iron ore (109%), engineering goods (19%) electronics and drug & pharmaceuticals (16% each). However, exports of petroleum products dropped by 32% and garments by 11%.
Commenting on the rise in exports in January, Sharad Kumar Saraf, president of the exporters’ body FIEO, said it signals that our traditional and labour-intensive sectors of exports (except for apparels, leather, marine products and gems & jewellery) have passed the most challenging times.
Saraf also urged the government to soon notify the rates for the Remission of Duties and Taxes on Exported Products scheme, which will remove uncertainty from the minds of the trade and industry thereby forging new contracts with the foreigner buyers.
Source: The Financial Express
Chief Minister Sarbananda Sonowal on Saturday attended Sipini Samaroh (Weavers' Conclave) organized by Handloom and Textiles Department, Government of Assam at Sarusajai Sports Complex and said that weavers of Assam must strive to create demand of their products at national and international levels. He also stressed on the need to keep state's handloom market under the control of the local weavers.
Saying that weavers must become 'atmanirbhar' through economic independence, Sonowal stated that Assam is home to largest number of weavers in the country and efforts must be taken to develop standards of indigenous materials like eri and muga.
Handloom holds the key for strengthening the state's economy and survey of production, value addition and marketing chain must be conducted to estimate the requirement of clothing materials, he said.
The Chief Minister also laid emphasis on incorporating modern innovations of science and technology in weaving of handloom and said that value addition must be done with creative thinking to enhance the appeal of the products.
Sonowal said that the State's biodiversity, natural beauty must be reflected by the handloom products and State's handloom department participated not only in domestic but also in trade fair in Bangladesh.
He called on the weavers to strive for capturing the markets of Bangladesh along with other neighbouring countries and stressed on the need to incorporate latest technologies while not depending solely on traditional techniques.
Chief Minister Sonowal said that an example has to be set for women empowerment through development of textile industry in the State. He also said that the younger generation has to be motivated to get involved in textile industry.
He said that if the dedicated efforts are put in place to unlock the true potential then only handloom can be grown rapidly.
Handloom and Textiles Minister Ranjit Dutta said that handloom and textiles sector is biggest employer after agriculture and highlighted steps of state government like setting up of handloom training centres, providing threads at subsidised rates, opening thread banks etc.
West Guwahati MLA Ramendra Narayan Kalita also spoke at the programme where Secretary of Handloom and Textiles Atika Sultana gave the welcome address in presence of several dignitaries such as GDD Minister Siddhartha Bhattacharya, Revenue and Disaster Department Minister Jogen Mohan among others.
On the other hand, the Chief Minister presented awards to several weavers for their skills and distributed solar lamps, weaving equipment etc among beneficiaries.
Source: The Sentinel News
GST officers will immediately suspend registration of taxpayers whose sales return or GSTR-1 forms show "significant differences or anomalies" from the return filed by their suppliers, a move aimed at curbing tax evasion and safeguarding revenues.
The Central Board of Indirect Taxes and Customs (CBIC) has issued a Standard Operating Procedure (SOP) for suspension of registration of a person on observance of such discrepancies /anomalies which indicate violation of the GST Act.
As per the SOP, the registration of specified taxpayers shall be suspended and system generated intimation for suspension and notice for cancellation of registration in form GST REG-31, containing the reasons of suspension, shall be sent to such taxpayers on their registered e-mail address.
The registration would be suspended in cases where a comparison of the returns furnished by a registered person with the details of outward supplies furnished in form GSTR-1, or the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their GSTR-1, show 'significant differences or anomalies', indicating contravention of the provisions of the GST Act.
"Till the time functionality for FORM REG-31 is made available on portal, such notice/intimation shall be made available to the taxpayer on their dashboard on the common portal in Form GST REG-17.
"The taxpayers will be able to view the notice in the 'View/Notice and Order' tab post login," the SOP said.
GST officers have already intensified their drive against fake invoicing and this has also contributed to increase in tax collections in the past couple of months.
GST collections have crossed the Rs 1 lakh crore mark for four consecutive months and surged to an all-time high of about Rs 1.20 lakh crore in January.
The SOP further said the taxpayers whose registrations are suspended would be required to furnish reply to the jurisdictional tax officer within 30 days from the receipt of such notice / intimation, explaining the discrepancies / anomalies and the reasons as to why their registration should not be cancelled.
Reply has to be sent to the jurisdictional officer through the common portal within 30 days from the receipt of notice / intimation.
In case the intimation for suspension and notice for cancellation of registration is issued on ground of non-filing of returns, the said person may file all the due returns and submit the response, the SOP added
Source: The Economic Times
Finance minister Nirmala Sitharaman will address the central board of the Reserve Bank of India (RBI) in a crucial meeting on Tuesday in which she is expected to allay any concern over the impact of a spike in fiscal deficit on inflation.
The minister could also highlight the government’s budgetary goals to boost spending in productive assets (that won’t stoke inflation), establish a development finance institution to aid infrastructure creation and back a plan by lenders to set up a bad bank for resolution of toxic assets, among others, sources told FE.
The Budget has firmed up a road map for catapulting India to a high-growth orbit on a sustained basis over a longer-term, the minister is expected to stress. The meeting may also discuss the central bank’s inflation-targeting framework that is up for review in March.
The meeting this time promises to be much more than just a customary post-Budget huddle, as the Budget was presented on the backdrop of a “once-in-a-century” crisis that ravaged the economy. The Covid-19 pandemic forced the government to continue to spend despite strained finances, without bothering much about fiscal prudence.
Consequently, the fiscal deficit is now expected to spike to 9.5% of nominal GDP in FY21 and an estimated 6.8% next fiscal. While the monetary policy committee has held key rates and retained its accommodative stance to aid the government’s efforts to spur growth, an assurance from the Centre on maintaining the latest deficit trajectory once the crisis is behind us would signal its commitment to fiscal discipline over the medium term, a source told FE.
The government has delayed its pre-Covid goal of reducing the fiscal deficit to 3.1% by FY23; instead, it now intends to trim it to 4.5% by the only FY26.
In an interview with FE after the Budget, economic affairs secretary Tarun Bajaj told FE that the government will deploy much of the resources in creating productive assets, so the elevated fiscal deficit won’t stoke inflation.
Moreover, with capacity utilisation trailing the trend level in the wake of Covid-induced disruptions, even the supply side is unlikely to react negatively to this fiscal push, Bajaj said.
Citing the preliminary findings of its survey of manufacturing companies, the central bank had in December said capacity utilisation (seasonally-adjusted) improved from 47.9% in Q1, when the lockdown was in force, to 62.6% in Q2, but remained well below the long-term average of 74%. This was “either because of supply constraints or lack of demand”, it had said.
As such, the inflation gauges have thrown up conflicting signals over the past one year.
The retail inflation plunged to a 16-month low of 4.06% in January, on moderating food inflation and a conducive base.
But before this, it had remained above the RBI’s tolerance band for 10 of the 12 months. In contrast, wholesale price inflation remained subdued, having moved in the range of -3.4% to 3.5% during this period, complicating the job of assessing the actual price pressure in the economy.
The government’s fiscal deficit shot up to 9.5% of GDP in FY21, as it was forced to offer relief packages despite a plunge in revenue collections due to the pandemic.
Even though the nominal GDP is expected to reverse a contraction and expand at 14.4% in FY22, the imperative of continued spending to spur growth and save both lives and livelihood has forced the Centre to keep the deficit elevated in the current fiscal as well.
The government has budgeted capital expenditure at Rs 5.45 lakh crore for FY22, which is 26.2% higher than the RE of FY21 and 34.5% larger than the budget estimate (BE) level for this fiscal.
In contrast, at Rs 29.3 lakh crore, the BE of revenue expenditure for FY22 is 3% lower than the revised estimate for this fiscal and 11.4% higher than the BE of FY21
Source: The Financial Express
Having textile and apparel hub like Kolkata, West Bengal has set a target to double the state’s textile industry business in next five years from Rs. 35,000 crore to Rs. 70,000 crore.
Addressing an event, Amit Mitra, state’s Finance Minister said, “I am setting a target of a minimum of Rs. 65,000 crore to Rs. 70,000 crore within the next 3-5 years.”
He also pointed out that the potential of export from Bengal is far more than it is tapped.
This ambitious target can be supported through a combination of infrastructure in the form of textile parks — both existing and upcoming projects at Nungi and Budge Budge — and through state support in the form of interest subvention and marketing.
The minister urged the industry, “You need to tell us where you want us to invest. You want promotional work, we can do that.
You want us to network with the countries, we are ready to do that.”
The minister also said that West Bengal has core competencies in five areas — hosiery, handloom, readymade garments, powerlooms and silk. He added that the industry department was also exploring whether a continuous polymerisation plant can be set up in Bengal.
It is pertinent to mention here that West Bengal has 2,500 circular knitting machines and employs around 2 lakh people. There is enough scope in the growth of knitting industry in the state as many leading brands of undergarment and casualwear are from Kolkata. The state can have 10,000 knitting machines in next few years.
The state also has 3 lakh handlooms and employs around 7 lakh people.
Source: Apparel Online
India is giving topmost importance to develop its blue economy, said Prime Minister Narendra Modi on Sunday while inaugurating several projects in Kochi.
He said, "Our vision and work in this sector include improving infrastructure on current ports, more ports, offshore energy, sustainable coastal development and coastal connectivity."
PM Modi further said, "The Propylene Derivatives Petrochemical complex of Kochi Refinery will help strengthen our journey towards being Atmanirbhar," adding that a wide range of industries would gain employment opportunities with the help of the project.
Tourists come to Kochi not only as a transit point to go to other parts of Kerala and the spiritual, market, historical and other such places are widely known, he remarked.
"The central government is undertaking several efforts to improve tourism here. The inauguration of Sagarika - the International Cruise Terminal in Kochi - is an example of this," he added.
Sagarika Cruise Terminal brings both comfort and convenience for tourists and will cater to over 1 lakh cruise guests, he said.
He also commented that local tourism has facilitated added livelihood to people in the local tourism industry and also connects our youth and culture stronger. "I urge our young start-up friends to think about innovative tourism-related products," he said.
The PM also highlighted that the tourism sector in India has grown well in the last five years, adding that India's ranking has jumped from 65th to 34th in the World Tourism Index.
"VIGYAN Sagar is the new knowledge campus of the Cochin Shipyard NSE 2.41 %. Through this, we are expanding our human resource development capital," he mentioned.
"This campus is a reflection of the importance of skill development. It would particularly help those wanting to study marine engineering. In the times to come, I see a prime place for this sector. Youngsters who have knowledge in this domain will have several opportunities," he added.
He asserted that the definition and scope of infrastructure have changed today and is beyond good roads, development works and connectivity between a few urban centres. "We are looking at the quantity and top-quality infrastructure for coming generations," he stated.
Mentioning that Rs 110 lakh crores being invested through the national infrastructure pipeline, he said that a special focus is being given to coastal areas, the Northeast and mountain areas and that India today is embarking on an ambitious programme of broadband connectivity to every village.
He also pointed that this year's budget has devoted significant resources and schemes that will benefit Kerala. "This includes the next phase of Kochi metro. This metro network has come successfully and has set a good example of progressive work practices and professionalism," he added.
During his tour to Kerala, the PM had inaugurated the Propylene Derivative Petrochemical Project (PDPP) of Bharat Petroleum Corporation Limited NSE 0.26 % (BPCL); Ro-Ro Vessels at Willingdon Islands, Cochin; International Cruise Terminal "Sagarika" at Cochin Port; Marine Engineering Training Institute, Vigyana Sagar, Cochin Shipyard Limited and laid the foundation stone of Reconstruction of South Coal Berth at Cochin Port.
Source: The Economic Times
The aggregate fiscal deficit of states for FY22 will likely be 4.3% of the gross domestic product (GDP) compared to 4.6% (revised) in FY21, India Ratings and Research said on Monday revising the outlook on state finances to stable for FY22 from stable-to-negative in FY21.
Earlier, the rating agency had forecast states’ fiscal deficit at 4.5% for FY21. It estimates the nominal GDP to grow 14.5% in FY22 and believes a gradual pick-up in revenue collections could lead to an improvement in the capital expenditure from FY22.
“The share of capex in the total expenditure is likely to be higher at 15.5% in FY22 (2.9% of GDP) than 10.5% in FY21 (2.1% of GDP). The burden of fiscal adjustment brought on by the pandemic was met by states through a sharp reduction in capex during FY21,” said India Ratings.
Due to the economic downturn, even the Union government finances are under pressure, leading to a lower-than-budgeted devolution of Rs 5.5 lakh crore to states in FY21 (revised estimate) as against the budget estimate (BE) of Rs 8.03 lakh crore.
“This is Rs 2.53 lakh crore lower than budgeted states’ share in central taxes and accounts for nearly 92% increase in their fiscal deficit in FY21 over FY21(BE),” it said.
The agency now estimates the aggregate revenue deficit of states to come in at 3.2%, higher than the earlier forecast of 2.8% of GDP in FY21. It estimates the aggregate revenue receipt of the states to grow 8.4% on year in FY22 from a decline of 0.6% in FY21. The revenue deficit is expected to be 1.5% of GDP in FY22.
The agency said the states’ debt burden is likely to persist in FY22 due to a combination of revenue deficit, some pick-up in capex and repayment of past market borrowings. It estimates the states’ aggregate debt/GDP to rise to 33.9% in FY22 from 32.8% in FY21.
It has also estimated that the gross market borrowings of states will increase to Rs 8.38 lakh crore in FY22 from Rs 8.2 lakh crore in FY21. The net market borrowings would be Rs 6.4 lakh crore in FY22, up from Rs 6.8 lakh crore in FY21.
Source: The Financial Express
The Federation of Indian Export Organisations (FIEO) recently urged the government to start manufacturing containers as a medium-term strategy as the problems of abnormal hike in freight rate, unavailability of containers and frequent shutouts by shipping companies continue despite the government encouraging shipping companies to bring empty containers and offering free movement of such containers from gateway port to inland container depots and container freight stations.
While demand side should be taken care by the exporters, the government plays an important role in imparting competitiveness to exports particularly addressing the supply side issues.
The biggest challenge in international trade is uncertainty, which has increased with delayed announcements of schemes, rates and even backlog in rightful claims of exporters, FIEO claimed in a press release.
A large number of exporters of goods and services are still awaiting for their claims for 2019-20 and 2020-21 (up to December last year) both in respect of Merchandise Exports India Scheme (MEIS) and Services Exports India Scheme (SEIS).
Their liquidity has dried up completely. Many of them in micro and small sector are not in a position to take new orders due to rising uncertainty and lack of liquidity. Exporters are required to pay advance taxes on such receivables and thus they have been put under severe financial strain.
The Remission of Duties and Taxes on Export Products (RoDTEP) scheme was announced with effect from January 1, but no rates have been announced till now. Hence, exporters cannot finalise contracts. This has become more acute for sectors having razor thin margins where such benefits are important component of the profitability.
Certain provisions brought through the Finance Bill in the budget have serious bearing on exports, FIEO said.
Confiscation of goods under wrongful claim of refund/remission is particularly harsh as such confiscation will not only hurt exporters but will also affect the country’s exports and image.
The word ‘wrongful claim’ is subject to various interpretations and will put exporters at the mercy of field formations even if the remission rates are wrongly calculated or dispute about classification of the product under a particular rate arises. The remission rates may be 2 per cent of the product value, and for such a small benefit, the entire goods should not be confiscated, FIEO argued.
FIEO request the government to immediately introduce the e-Wallet scheme, recommended by the Goods and Services Tax (GST) Council in October 2017 and was supposed to be introduced with effect from April 1, 2018, and then deferred to October 2018.
It also urged the government to introduce a duty-free scheme for import of research and development (R&D) equipment and consumables by exporters with a minimum export turnover to encourage them to invest more in R&D.
Source: Fibre2Fashion News
Struggling due to high cost of raw material, Indian apparel exporters have urged the Government to reconsider the amendments made in the Budget especially regarding import of accessories.
Items like fasteners comprising buttons, zip fasteners including zippers in roll, sliders/pullers, eyelets, rivets, laces, badges, stones, Velcro tape, beads for embroidery, stud, tags, labels, stickers, belts, buttons or hangers, printed bags were being imported without payment of duty and the only requirement was that the importer had to produce using Export Performance Certificate (EPC) from AEPC.
In the recently announced Union Budget 2021-22, amendment has been made in the procedure for import of the above-mentioned items wherein, the importing units have to execute a bond with Customs for import without payment of Customs Duty and the issue is that even 10 days since Budget, the Customs Department has not given any clarification on how to execute the bond and for urgency, the units are paying Customs Duty and clearing it.
Tirupur Exporters Association’s President Raja M. Shanmugham has made a representation to Nirmala Sitharaman, Union Minister of Finance, to reconsider the amendments. He has requested to reconsider the amendment and restore the status quo.
Many trims will now attract Customs duty with effect from 1 April 2021 and the competitiveness will be eroded.
Raja also added while pointing out the delay in the announcement of Remission Of Duties And Taxes On Exported Products (RoDTEP) Scheme rates, the rates have to be announced quickly with additional benefits for a shorter duration.
Source: Apparel Online
Economic activity is on the "verge of normality" after getting severely hit by COVID-19 and Indian GDP will grow at 13.5 per cent in FY22, a Japanese brokerage said on Monday.
The Nomura India Business Resumption Index (NIBRI) picked up to 98.1 (provisionally) for the week ending February 14, from 95.9 in the preceding week, Nomura said.
The economic impact of the pandemic is set to lead the country's GDP to contract by 7.7 per cent in FY21, and the RBI expects the GDP to jump by 10.5 per cent in FY22.
The brokerage said it expects the real GDP to contract by 6.7 per cent in FY21, followed by a growth of 13.5 per cent in FY22.
For the week to February 14, mobility indicators continue to pick up, it said.
While power demand fell by 0.1 per cent week-on-week, this may be likely due to a payback from the stellar 9.6 per cent rise during the preceding week, it said, adding that labour participation rate inched down to 40.5 per cent from 40.9 per cent in the previous week.
The brokerage said its proprietary index has been on an uptrend since hitting its trough during the strict lockdown in April last year.
"This supports our view that sequential momentum remains positive and that year-on-year GDP growth likely moved into positive territory, at 1.5 per cent in Q4 2020 (from -7.5 per cent in Q3) and 2.1 per cent in Q1 2021," it said.
The continued recovery in the index is strongly predicated on containment of the pandemic, the brokerage said, adding it is upbeat on growth prospects due to the confluence of fiscal activism, the lagged effects of easy financial conditions, base effects and faster global growth.
Source: The Economic Times
The country’s exports grew by 6.16 per cent to USD 27.45 billion in January, according to data by the commerce ministry.
Imports too grew by 2 per cent to about USD 42 billion, leaving a trade deficit of USD 14.54 billion during the month under review, the data showed.
Exports during April-January this fiscal dipped by 13.58 per cent to USD 228.25 billion, while imports declined by 25.92 per cent to USD 300.26 billion.
Source: The Financial Express
Steps taken by the government is helping the country's exports to record positive growth and the trend is expected to continue, according to the Confederation of Indian Industry (CII), whose national committee on export-import chairman Sanjay Budhia recently said that uncertainties in the global markets are trending down as countries move out of lockdowns and vaccine rollout gains pace.
"India’s exports are seeing a pick-up in January 2021 over the previous year and this is likely to continue," he said in a statement.
Exports in January this year are estimated to be 5.37 per cent higher than in the same month in 2020.
The global recovery programmes have led to increased demand for goods and the rise in global commodity prices is indicative of the return of growth forces, he said.
Isues like delays at ports, movement restrictions on domestic freight, and other trade matters continued to be relentlessly taken up during the pandemic, Budhia said.
These steps ensured smoother movement of outward-bound cargo and helped faster return to normal activities, he added.
Source: Fibre2Fashion News
The commerce and industry ministry is organising as many as 45 sector-specific webinars to promote quality and productivity in the Indian industry. The Department for Promotion of Industry and Internal Trade's (DPIITs) initiative, Udyog Manthan, began on January 4 and will continue till March 2 this year.
The department has said the webinar series, comprising 45 sessions, is covering various major sectors in manufacturing and services including pharmaceuticals, textiles, toys, tourism, furniture, renewable energy, automobiles and set-top box.
Udyog Manthan is identifying challenges and opportunities; draw upon solutions and best practices, it added.
The exercise is enabling learning across industries and sectors for enhancing quality and productivity to promote 'Vocal for Local' and realising the vision of 'Aatmanirbhar Bharat', it said.
Commerce and Industry Minister Piyush Goyal has stated that the Udyog Manthan would be a harbinger of change in the way "we work, in our mindset and will truly be remembered for the base that it will set for India to engage as a global player with high productivity and high quality".
The exercise is being organised in association with the Quality Council of India, the National Productivity Council, and industry bodies.
Source: The Economic Times
India's annual rate of inflation, based on monthly wholesale price index (WPI), for January 2021, stood at 2.03 per cent over January 2020. The index for textiles increased by 3.47 per cent, while it rose by 0.36 per cent for apparel in January, according to the provisional data released by the Office of the Economic Adviser, ministry of commerce and industry.
The official WPI for all commodities (Base: 2011-12 = 100) for the month of January 2021 increased to 125.9 from previous month's 124.5, showing positive inflation for the sixth consecutive month since April this year when the economy was hit by COVID-19 pandemic and lockdowns.
The index for manufactured products (weight 64.23 per cent) for January 2021 increased by 1.54 per cent to 124.9 from 123.0 for the month of December 2020.
The index for ‘Manufacture of Textiles’ sub-group too rose by 3.47 per cent to 122.4 from previous month's 118.3. The index for ‘Manufacture of Wearing Apparel’ sub-group also rose by 0.36 per cent to 139.5 from previous month's 139.0.
The index for primary articles (weight 22.62 per cent) decreased by 1.77 per cent to 143.9 in January 2021 from previous month's 146.5. The index for fuel and power (weight 13.15 per cent) however increased by 5.84 per cent to 99.7.
Meanwhile, the all-India consumer price index (CPI) on base 2012=100 stood at 156.3 (provisional) in January 2021 compared to 157.3 (final) in December 2020, according to the Central Statistics Office, ministry of statistics and programme implementation.
Source: Fibre2Fashion News
The finance ministry on Monday released the 16th instalment of Rs 6,000 crore to states to meet the GST compensation shortfall, taking the total amount released so far to Rs 95,000 crore. Till now, 86 percent of the total estimated GST compensation shortfall has been released to the states and Union Territories (UTs) with legislative assembly.
Out of this, an amount of Rs 86,729.93 crore has been released to the states and Rs 8,270.07 crore to the three UTs with legislative assembly (Delhi, Jammu and Kashmir, Puducherry).
The remaining five 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 16th weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall. The amount has been borrowed this week at an interest rate of 4.64 per cent.
"So far, an amount of Rs.95,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7831 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 States Domestic Product (GSDP) to the states to help them in mobilising additional financial resources.
Permission for borrowing the entire additional amount of Rs 1,06,830 lakh crore (0.50 per cent of GSDP) has been granted to 28 states under this provision, the statement added.
Source: The Economic Times
Union Minister for Textiles Smriti Irani has called upon the farmers to use certified seeds to increase their income and productivity and contribute to the country in jute diversified and technical textile products.
She was virtually inaugurating the Certified Jute Seeds Distribution Plan and Jute Farmers Awareness Workshop, organised at ICAR-CRIJAF Institute at Barrackpore, West Bengal.
The Minister further informed that Government has approved a Technical Textiles Mission which includes Jute Geo-Textiles (JGT). She said the Bureau of Indian Standards (BIS) has approved standards for JGT, which will help promotion of JGT under the Technical Textile Mission.
The Minister informed that in August 2020, Government had taken a resolution to exponentially spread the distribution of certified jute seeds through commercial seed programme for the benefit of a much larger number of jute farmers wherein JCI would be distributing 10,000 quintals of certified jute seeds.
She stated that the move would benefit about 5 lakh jute farmers.
Source: Apparel Online
The Madhya Pradesh Industrial Development Corporation (MPIDC) recently proposed a piece of industrial land in Ratlam to develop a mega integrated textile park after finance minister Nirmala Sitharaman announced to launch seven mega textile parks with integrated facilities in three years in the last budget, according to its executive director Rohan Saxena.
Saxena said the selection of the site will be on a competitive basis and keeping in view the location and connectivity of Ratlam to the Delhi-Mumbai Expressway, the location well suits the requirement of the textile park.
The state’s industry department is eyeing investments from medium and large-scale industries in Ratlam, according to a report in a top English-language daily.
The state government should suggest a location that should be less than an hour from the airport for smooth transit so that it attracts global buyers and related stakeholders, Madhya Pradesh Textile Mills Association chairman Akhilesh Rathi said.
Source: Fibre2Fashion News
The German government reached a hard-fought compromise Friday on new legislation that would force companies to comply with social and environmental rules all along their global supply chains.
Labour Minister Hubertus Heil called the proposed law a “historic breakthrough” that would respect human rights and prevent exploitation.
He said it would protect those such as the “50 million children in forced labour worldwide, whether in textile factories in Bangladesh or gold mines in Burkina Faso.”
The planned legislation is the result of months of discussion and compromises between the labour, development and economy ministries.
Chancellor Angela Merkel’s coalition government is expected to formally approve the bill next month.
Heil said he hoped it would be adopted by parliament before September’s general elections, allowing the law to come into force from 2023.
The so-called Lieferkettengesetz — meaning “supply chain law” — obliges companies to track workers’ rights and environmental standards, not just in their own structures but also at their sub-contractors or suppliers at home and abroad.
Companies will have to verify possible standards violations in their supply chain and take corrective measures.
Though businesses will not be made systematically liable for any shortcomings, NGOs and trade unions will be able to bring lawsuits against German companies on behalf of foreign workers.
Germany’s economy ministry will also establish a controlling body to carry out checks and impose fines if necessary.
Heil said the German legislation would be “the most ambitious” in the world and would hopefully “set a standard” for the rest of Europe.
It will at first apply only to companies with over 3,000 employees, before being rolled out to include those with 1,000 employees from 2024. The development and labour ministries initially wanted the law to also target smaller companies, but backed down in the face of strong opposition from the economy ministry and industry voices.
A similar French law adopted in 2017 covers only companies with more than 5,000.
German environmental and human rights groups, who have long campaigned for the law, accused Merkel’s government of “watering down” the initial proposal.
The platform Lieferkettengesetz.de, which collected over 200,000 signatures while petitioning for the law last year, said that Friday’s announcement was an “important and overdue step” with “urgent room for improvement”. But industry lobbyists called for less stringent rules.
“The supply chain law puts the burden on the wrong people,” said the Kiel Institute for World Economics.
Source: Business Recorder
Sateri introduced FINEXTM as its new product brand for recycled fibre. FINEXTM, short for ‘Fibre Next’, is an innovative next-generation cellulosic fibre containing recycled content.
Since its announcement in March 2020 of a breakthrough in commercial production of viscose using recycled textile waste, Sateri has worked closely with its downstream yarn and garment manufacturing partners to bring the recycled fibre product to the consumer market.
FINEXTM is made from bio-based natural fibres derived from a mix of recycled pre and post consumer textile waste, and other PEFC-certified wood pulp from renewable plantations.
Innovation and technology has made cellulosic textile fibre recycling possible and FINEXTM represents how nature not only renews itself but that products made from nature can also be regenerated. This, at its heart, is what circular fashion looks like.
Sateri’s brand promise to customers remains constant– its products are sustainable, high quality, efficient, and cost-effective. The FINEXTM tagline ‘Together for a Better Next’ expresses our aspiration to be the partner of choice for next-generation fibre.
Allen Zhang, President of Sateri stated, “Being the world’s largest viscose producer gives us the advantages that come with volume, but the value is what we hope differentiates us. By this, we don’t only mean higher-value products like FinexTM but also the value we bring to communities, country, climate and customers.”
Globally, less than 1% of the material used to produce clothing is recycled into new clothing. This presents a big opportunity for textile fibre recycling, particularly in China which is the largest textile producing country in the world.
Just a month before the launch, Sateri became a council member of the China Association of Circular Economy (CACE). The company will work closely with CACE’s Textile Waste Comprehensive Utilisation Committee to establish standards and promote industrial-scale textile waste recycling.
Furthermore, the fibre is now certified to the Recycled Claim Standard (RCS) which verifies recycled raw materials through the supply chain. RCS is intended for use with any product that contains at least 5% recycled material, and Sateri has successfully produced FinexTM viscose fibres with up to 20% recycled content.
Under the RCS certification process, each stage of production is required to be certified, beginning at the recycling stage and ending at the last seller in the final business-to-business transaction.
The new developments were announced at the official launch of FinexTM. About 160 guests, mostly senior representatives of major fashion brands and fabric and garment makers, gathered to celebrate the milestones that cement the status of FinexTM as a game-changer for sustainable fashion.
Allen Zhang said, “The development of Finex has been an intensive effort for Sateri from initial commercialization, to partnering brands like Lafuma and Rico Lee, and finally to the launch.
This is all made possible with collaboration across the value chain – working alongside yarn spinners, garment makers and brand partners – to bring high quality and more planet-friendly product to consumers.
The fashion industry is changing fast and, beyond functionality, circularity is now of the greatest importance in apparel manufacturing.”
In the ‘2020 Sustainable Fashion Report’ released by China’s leading business news publication CBNweekly, results of a survey with stakeholders in the fashion value chain reinforced the potential of textile recycling as a solution to the problem of textile waste arising from over-consumption and production.
The report identified technology and capital as the biggest barriers to textile recycling and highlighted the critical role brands play in mobilizing manufacturers and consumers to advance sustainable fashion.
Source: Textile Today
The UK-Vietnam Free Trade Agreement (UKVFTA), which became effective on January 1, is expected to create a strong motivation pushing Vietnam forwards on the path of economic development and international integration.
According to Kenneth Atkinson, head of the British Business Group in Vietnam (Britcham), the deal will help strengthen trade and support employment, while promoting growth in both countries.
The erasing of 65 percent of the total tariff immediately after the deal takes effects and 99 percent of the tariff in 6-7 years will bring about practical benefits to British exporters of machineries, chemicals, and brandy, he held.
Along with the reduction of legal barriers as well as burden in administrative procedures in the two markets, the official said, highlighting that the UKVFTA will help observe the regulations and commitments that the two Governments and business communities have agreed on.
The deal will also ensure the increase in the trade by more than 3,000 UK businesses engaged in export activities to Vietnam, while meeting the demand for Vietnamese goods of UK customers, he said.
Atkinson asserted that the area of solar and wind power will receive priorities from the business communities and governments of both sides.
Experts held that Vietnamese products account for only 1 percent of the 700 billion USD import revenue of the UK, so Vietnam has high potential to provide more products to the promising market, including telephones, accessories, garment and textile products, footwear, seafood, wood and furniture, computers, cashew, and peppercorn.
The UK is currently the third largest trade partner of Vietnam in Europe.
Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), said that the UKVFTA not only facilitates the trade of goods and services but also helps promote partnership in many other areas, including green growth and sustainable development.
As the UK has officially left the EU, which means the preferential policies that Vietnam enjoys thanks to the EU-Vietnam Free Trade Agreement (EVFTA) will not be applied in the UK anymore, the UKVFTA has eased concern of the business community about the interruption of trade with the European country, he added.
Source: Vietnam News
The industrialist’s and former US officials quoted that the Biden administration needs to expand an aggressive, integrated digital policy to resist China’s thriving technological power and the White House should raise broadband connection to the United States helping U.S. companies to sell in foreign land and lead on global data as well as technology policy worldwide or put U.S. technology companies at risk of overwhelming Beijing.
The American Leadership Initiative (ALI), a think tank led by former U.S. trade negotiator Orit Frenkel, revealed that the Biden administration must originate a comprehensive, fully digitalized government strategy, providing better jobs for workers surrounded by automation, and improve the competitiveness of the United States. They also called for a “Digital Marshall Plan” that would provide export financing and support for US companies competing against Huawei Technologies Co Ltd and other Chinese technology providers abroad, that will cost at around $60 billion
U.S. Chamber of Commerce, the biggest U.S. business lobby said that they were poorly coordinated and overly politicized under former President Donald Trump but now the Biden administration is reviewing Trump’s approach toward China on trade, technology and other areas.
The American Leadership Initiative (ALI), announced about One critical step, that would be to set up an “Office of Global Digital Policy” at the White House, which would work more closely with US allies and they also presented a report, based on six months of meetings with experts, business leaders, academics and elected officials, including Antony Blinken, now US Secretary of State, includes dozens of specific recommendations moreover adding expanded access to broadband, connected devices, digital training and education to address existing racial, socioeconomic and geographic disparities.
Frenkel, a former General Electric Co executive revealed that about forty million Americans do not have reliable internet service, or none at all, and among low-income households, 30% don’t have a smart phone and now the US Federal Communications Commission is trying to achieve universal broadband and it would cost up to $80 billion but the White House has no immediate comment on this effort.
On this phenomenon Frenkel mentioned that the effort could be part of an infrastructure investment plan that Biden officials plan to unveil later this year after securing passage of a $1.9 trillion COVID-19 relief plan and while she was at GE, witnessed China’s aggressive push to sell their technology, noting it raised critical security concerns moreover Chinese technology also gave developing countries more refined tools to monitor and censor their populations.
Source: Textile Today
As scientists across the world continue to work on finding ways to contain the spread of COVID-19 pandemic, researchers at University of Cambridge are developing antiviral masks which may kill the deadly virus within one hour. Scientists are working with an anti-viral coating technology called DiOX, which uses organic disinfectant compounds in the textiles, The Telegraph reported.
As per the report, the invisible coating on facemasks attacks the virus by rapturing its outer layer, effectively eliminating all new mutant variants, including the UK's so-called Kent variant and the South African variant.
"The antiviral agent within the coating of the mask kills the virus by breaching its protective outer membrane, which is known as its envelope. Unlike other parts of the virus, the membrane remains the same regardless of any type of mutation.
Hence this way of attacking the pathogen will work on any new variant of coronavirus," Dr Graham Christie, senior lecturer at the Department of Chemical Engineering and Biotechnology at the University of Cambridge, told the newspaper.
"In fact, you could mutate the entire genome of the virus and it would have no effect on the envelope. We expect to see the same response regardless of the strain of coronavirus because structurally they are all very similar," he said.
The DiOX technology is based on quaternary ammonium salts - organic compounds widely used in the textile industry for their antimicrobial properties. Laboratory tests showed that the mask coated with it killed 95 per cent of pathogens on its surface within one hour and they were undetectable after four hours.
As per the expert, the action of the antiviral agent continues to work because it is unaffected by changes in the spike protein of the virus, which is the method by which coronavirus mutates.
Source: The Business Today
Major fashion brands, including H&M, M&S and C&A, are getting behind an initiative in Bangladesh that aims to use more recycled materials in clothing production and significantly cut planet-heating emissions from manufacturing by 2030.
The Circular Fashion Partnership, announced this week, brings together more than 30 international brands, Bangladeshi recycling firms and garment manufacturers in a push to reuse textile waste from clothing factories to create new products.
If successful, the initiative could be replicated in other countries, such as Indonesia and Vietnam, and help cut the broader fashion industry’s emissions, said the Global Fashion Agenda (GFA), a nonprofit body that is leading the new scheme.
In 2018, the sector’s greenhouse gas (GHG) emissions were just over 2 billion tonnes, a figure that needs to be halved by 2030, to be in line with global climate goals, said the GFA.
“Reducing environmental impacts such as GHG emissions and circularity go hand in hand,” said GFA spokeswoman Alice Roberta Taylor in e-mailed comments.
The partnership would cut carbon emissions from clothing production and demand for raw materials, which include fossil fuels, by slimming down the amount of waste and increasing the use of recycled materials over virgin materials, she noted.
Under the 2015 Paris climate accord, nearly 200 countries agreed to slash greenhouse gas emissions to net-zero by mid-century and limit global average temperature rise to “well below” 2 degrees Celsius above preindustrial times.
According to 2020 research by the GFA and McKinsey & Company, the fashion industry produces 4 per cent of global climate-warming emissions – equal to the combined annual emissions of France, Germany and Britain – and needs to intensify its efforts to align with the Paris Agreement goals to curb climate change.
The UN Environment Programme in 2019 put the fashion industry’s share of global carbon emissions at 10 per cent – more than all international flights and maritime shipping combined – and said it was the second-biggest consumer of water.
Bangladesh – a low-lying nation considered highly vulnerable to climate change impacts such as intensifying floods, storms and sea level rise – is the world’s second-largest producer of clothes and its economy depends heavily on the garment industry.
But most waste from the industry is either exported or down-cycled for less valuable uses, said the GFA, adding the circular plan aims to change that by increasing the value of the waste.
Miran Ali, a director at the Bangladesh Garment Manufacturers and Exporters Association, said it was time for the fashion industry to move away from a linear business model of “take-make-dispose” and towards a circular approach.
As Bangladeshi factories produce items in large volumes, their waste is standardised, making it relatively easy to deal with, he noted. “Therefore, Bangladesh can be a global leader in the area of circular economy,” he said in a statement.
The Green Climate Fund, set up to help developing nations adopt clean energy and adapt to climate change, approved a separate project last year to help cut emissions in Bangladesh’s garment sector by enabling more efficient energy use.
H&M, one of the Bangladesh industry’s biggest clients, told the Thomson Reuters Foundation it is working on transforming its whole business to become “fully circular and climate positive.”
To get there, the Swedish fashion chain’s targets include making its supply chain “climate neutral” – meaning it does not contribute to global warming – and only using recycled or other sustainably sourced materials, both by 2030.
“As we move towards a business model based on a circular economy, our climate agenda is pushed. And we want to use our size and scale to make a difference,” Cecilia Strömblad Brännsten, H&M Group’s environmental sustainability manager, said by email.
The Thomson Reuters Foundation is in a partnership with the Laudes Foundation, which is affiliated with the retailer C&A.
Source: Textile Today
The year 2020 was the worst year on record for UK retail sales growth, with in-store non-food declining by 24 per cent compared with 2019, according to the British Retail Consortium (BRC), which recently said these results have also been reflected in footfall, which was down by over 40 per cent last year.
The three lockdowns cost ‘non-food’ stores–mainly ‘non-essential’ retail—an estimated £22 billion in lost sales.
Furthermore, tighter restrictions in the crucial run-up to Christmas hampered retailers’ ability to generate much-needed turnover, which would have helped power their recovery in 2021, BRC said in a press release.
Retailers contributed £17 billion in business taxes in 2019, collecting a further £46 billion in value-added tax.
BRC believes action on rates, rents and grants is crucial in the upcoming budget to the recovery of ‘non-essential’ retailers and the wider economy, preventing the further loss of thousands of jobs in communities across the country.
An extension to business rates relief for the worst-affected businesses will reduce the unsustainable cost burden on retailers, giving them a fighting chance to continue trading, employing staff and serving their communities, it said.
An extension to the moratorium on debt enforcement will support thousands of retailers who face accumulating rents even while their stores are unable to trade due to government restrictions, it said.
The decision to apply European Union state aid limits to lockdown grants should be reversed and all bureaucratic restrictions stopping businesses receiving these vital support funds promised by the chancellor of the exchequer should be removed, it suggested.
These short-term actions will be crucial to allowing ‘non-essential’ retail to survive through a prolonged period of closure, avoiding administrations, shop closures and job losses, it added.
Source: Fibre2Fashion News
