The International Monetary Fund (IMF) has upped its growth projection for India by one percentage point for the current fiscal that started on April 1. Even for the next fiscal, it has revised the projection upwards.
According to the latest edition of the World Economic Outlook (WEO) released on Tuesday, India is projected to grow at 12.5 per cent during the current fiscal (FY 2021-22). This is the highest not just among emerging economies, but also in the group combining advanced economies. In fact, India will be the only country that is estimated to register double-digit growth. For FY 2020-21, the IMF estimates the GDP to contract by 8 per cent.
Growth forecast
In January, IMF’s projection for the current fiscal was 11.5 per cent. For the next fiscal (FY 2022-23), the forecast was 6.8 per cent, which in the latest report has been revised a tad to 6.9 per cent. India’s better performance has an impact on the ‘Emerging and Developing Asia’ regional group.
“For the Emerging and Developing Asia regional group, projections for 2021 have been revised up by 0.6 percentage point, reflecting a stronger recovery than initially expected after lockdowns were eased in some large countries (for example, India),” the WEO said. However, still high Covid-19 caseloads in some large countries in 2020:Q1 (such as Indonesia and Malaysia) put a lid on the growth prospects, it mentioned.
IMF’s optimism has come at a time when India has achieved the infamous landmark of one lakh plus Covid-19 cases in a single day amidst the second wave of pandemic. However, the agency’s optimism is matched by a report prepared by the Economic Affairs Department of the Finance Ministry and released on April 5. The report said: “As the vaccination drive continuously upscales in India, and guided by the learnings of India’s successful management of the pandemic during its first wave, India is now well armed to combat any downside risk posed by the recent surge in Covid-19 cases. With the end of a challenging FY 2020-21, the crest of a brighter and self-reliant FY 2021-22 awaits India!”
Global outlook
Talking about the global outlook, the report projected global economy to grow at 6 per cent in 2021 as against a contraction of 3.3 per cent in 2020. Further, it expected the global economy to moderate to 4.4 per cent in 2022.
“The contraction for 2020 is 1.1 percentage points smaller than projected in the October 2020 World Economic Outlook (WEO), reflecting the higher-than-expected growth outturns in the second half of the year for most regions after lockdowns were eased and as economies adapted to new ways of working,” the report said.
The projections for 2021 and 2022 are 0.8 percentage point and 0.2 percentage point stronger than in the October 2020 WEO, reflecting additional fiscal support in a few large economies and the anticipated vaccine-powered recovery in the second half of the year.
“Global growth is expected to moderate to 3.3 per cent over the medium term — reflecting projected damage to supply potential and forces that predate the pandemic, including ageing-related slower labour force growth in advanced economies and some emerging market economies,” the report mentioned.
Source: The Hindu Business Line
The Telangana government recently launched a new shopping portal to provide a platform to facilitate e-commerce of authentic handicrafts and handlooms from the state and promote local artisans. State information technology minister KT Rama Rao launched the E-Golkonda shopping portal of Telangana State Handicrafts Development Corporation (TSHDC).
“The government of Telangana has made all the efforts to strengthen the Telangana Handicrafts Development Corporation,” said Rama Rao.
He said arrangements will be made to ship the artefacts to any part of the globe after obtaining necessary permissions from the central government.
People can also view each artefact in a 3D format on the shopping portal, according to media reports from the state.
The state government is setting up a common facility centre, besides facilitating skill development and technical cooperation and marketing for the products developed by artisans and extend all the required support, he added.
Source: Fibre2Fashion News
India’s economic recovery is still “shallow” and a month’s national lockdown to curb the rising pace of COVID-19 infections can dent the GDP by up to 2 per cent, an American brokerage warned on Tuesday. Analysts at BofA Securities said there has been a six-times increase in the number of infections to over 1.03 lakh, and state governments have responded with localised lockdowns till now. A national lockdown, which it reckoned as a “last resort”, if declared, can have deep impact on the growth process, which is still “shallow”, it said.
“We grow even more concerned that rising Covid-19 cases pose a risk to our still shallow recovery…We estimate that a month of national lockdown costs 100-200 bps of annual GDP. Needless to say, this also aggravates fiscal risks,” it said. The country was kept under a lockdown to arrest the spread of COVID-19 infections last fiscal, which is going to be the primary reason for an over 7 per cent contraction in GDP. Analysts are expecting a double-digit GDP growth in FY22 on the base effect.
The brokerage said the infections have crossed the peak and warned that the pace of rise in cases is picking up. In 2020, it took three months for cases to rise from 10,000 levels in mid-June to 90,000 levels in mid-September, whereas in this round, it has taken only six weeks. Overall testing continues to be far from adequate, it said, making it clear that the infections have not risen due to a jump in testing per se.
The death rates are mercifully lower, it said, explaining that the 478 fatalities recorded on Monday were 42 per cent lower than what was observed when the daily cases were at the peak of 97,000. “Given the high economic cost, we expect the Center and State governments to try to contain the spread with the tightening of Covid-19 regulations, night curfews and localized lockdowns,” it said.
“It remains to be seen if this second wave of Covid 19 cases subsides without a national level lockdown,” it added.
In its base case, the brokerage continues to see a 9 per cent jump in the real gross value added growth for FY22, but there can be a 3 percentage point impact to the estimate in case of a national lockdown, it warned.
Source: The Financial Express
Manufacturing activity accelerated at its slowest pace in seven months in March, thanks to a resurgence in Covid-19 cases that weighed on domestic demand and output. Firms cut jobs again, continuing with a year-long reduction spree. The Nikkei Manufacturing Purchasing Managers’ Index (PMI), compiled by IHS Markit, dropped to 55.4 in March from 57.5 in the previous month. Despite the fall, however, the PMI reading for March remained above the long-period average. It also remained over the 50-mark that separates growth from contraction for an eighth successive month.
Nevertheless, the rise in input buying was curtailed by an intensification of cost pressures. Although the rate of growth was still marked and outpaced its long-run average, it eased from February’s near-decade high. “With Covid-19 restrictions expanded and lockdown measures re-introduced in many states, Indian manufacturers look set to experience a challenging month in April,” said Pollyanna De Lima, economics associate director at IHS Markit.
The Centre last week asked states to try and control the rapid spread of the Covid-19 cases. Any stringent restriction, especially in or around important commercial centres like Mumbai, will weigh on factory activity in April as well.
Despite pressure on domestic demand, new export orders rose further in March, stretching the current sequence of growth to seven months. Here there was an acceleration in the rate of expansion. According to the PMI survey, the rate of input cost inflation was among the strongest seen over the past three years. But selling prices increased only moderately as “companies limited their adjustments to retain a competitive edge and boost sales”.
“Goods producers indicated that strengthening demand and the receipt of orders in bulk underpinned a further rise in overall sales. The upturn was the eighth in successive months and sharp, despite softening to a seven-month low,” IHS Markit said in a release.
Source: The Financial Express
The Tiruppur Exporters’ Association (TEA) has requested finance minister Nirmala Sitharaman to permit repayment of funded interest term loans (FITLs) in six equal monthly instalments to boost revival of micro, small and medium enterprises (MSMEs) in the knitwear cluster, which has not recovered due to less exports and reemergence of COVID-19 in major European markets.
In a press release, TEA president Raja M Shanmugham said increasing cotton yarn prices and irregular supply of yarn for the past four months has badly affected the knitwear sector, particularly MSMEs, which are struggling to sustain and exporting units are finding it difficult to repay the FITLs.
The Reserve Bank of India (RBI) had decided to permit lending institutions to convert the accumulated interest on working capital facilities over the total deferment period of 6 months (i.e. from March 1 to August 31, 2020) into a FITL, which shall be fully repaid during the course of the last fiscal, ending March 31.
Another requisition has also been made to Sitharaman to advise RBI to permit extension of the Interest Equalisation Scheme for another three years, which will help MSME exporting units to work out their costing accordingly and strive to take more export orders and sustain in the business.
Source: Fibre2Fashion News
In a major bureaucratic reshuffle, the union government on Tuesday approved the appointment of Tarun Bajaj as new revenue secretary under the Ministry of Finance.
Bajaj was serving as secretary to the Department of Economic Affairs (DEA) since April 30, 2020. Tarun Bajaj took additional charge of Secretary, Department of Revenue, after the superannuation of Ajay Bhushan Pandey.
Pandey, who is a 1984 batch Indian Administrative Service (IAS) officer of Maharashtra cadre, retired on February 28. He was given the charge of Revenue Secretary in the Finance Ministry in November 2018.
Prior to taking over as Economic Affairs Secretary, Bajaj served as Additional Secretary in Prime Minister's Office.
Bajaj, a 1988 batch Haryana-cadre IAS officer, worked as Joint Secretary and Director in Department of Financial Services.
As a Joint Secretary in Department of Financial Services for four years, he was looking after insurance division.
The appointment committee of the cabinet has also approved the appointment of Ajay Seth, a 1987 batch Karnataka-cadre IAS officer, as new secretary for DEA. Along with this, there were also other changes in top bureaucracy notified by the Ministry of Personnel.
Gyanesh Kumar, additional secretary in the Department of Home, has been appointed as secretary in the Ministry of Parliamentary Affairs upon superannuation of R S Shukla on April 30.
Ali Raza Rizvi, special secretary and financial adviser in the Ministry of Information and Broadcasting, will be secretary in the Department of Public Enterprises.
Indevar Pandey, a 1988-batch IAS officer of the West Bengal cadre, has been appointed secretary in the Department of Administrative Reforms and Public Grievances.
Pandey is currently special secretary in the Ministry of Development of North Eastern Region.
Anjali Bhawra has been appointed secretary in the Department of Empowerment of Persons with Disabilities, Ministry of Social Justice and Empowerment.
She is at present working as special secretary in the Ministry of Corporate Affairs.
Jatindra Nath Swain will be secretary in the Department of Fisheries. Swain, a 1988-batch IAS officer of the Tamil Nadu cadre, is managing director at the Solar Energy Corporation of India Ltd.
Anil Kumar Jha special secretary in the Department of Revenue has been appointed as secretary in the Ministry of Tribal Affairs.
Source: the Business Standard
The• Indirect Tax Central Committee And Customs (((CBIC) Verification rules notified to new importers, exporters and customs brokers. Violations of this could result in a fine of Rs 50,000.
The Board issued Customs (Identity and Compliance Verification) Regulations in 2021 on Tuesday. It does not apply to the central government, State government, And public sector business.
“The Customs Secretary may impose a fine of no more than Rs 50,000 for violating any of these rules or not complying with any of these rules,” the CBIC notified. I mentioned in.
Failure to authenticate will result in suspension of customs clearance, refunds, disadvantages, or other monetary gains from imports and exports.
“This is a good move for the government in terms of preventing revenue leaks, and as the introduction of preventive regulations has increased GST collections, it is hoped that these rules will also lead to better tariff collections. I will. ” Abhishek Bachin, EY’s tax partner.
“That said, the government will need to prevent real taxpayers from facing unnecessary hassles,” he added.
The rules state that the Secretary of Customs may select importers or exporters for verification that take advantage of customs clearance, refunds, shortcomings, or other financial or other profits of goods arising from imports or exports. I will.
Such persons are notified through the common portal and Various documents Or information, such as legal entity establishment documents, documents certifying the appointment of an approved signer, PAN, GSTIN, bank statements, income tax returns, etc., if applicable. Choice.
The Customs Secretary is empowered to request documents and information from the Customs Automation System in order to protect the interests of income and prevent smuggling.
Employees shall verify the customs automated system and prepare a verification report within 30 days of submitting the documents and information. This is allowed up to 60 days for physical verification and can be extended by 15 days.
The Customs Commissioner shall determine the results of the verification within 15 days and register it with the Customs Automation System, based on the verification report submitted by the appropriate officer and any other evidence deemed necessary.
“The result of the verification shall be notified to the parties concerned on the common portal within 7 days from the decision date,” the notification added.
The rules also state the provisions of appeals by affected parties.
CBIC issues verification rules to new importers and exporters
Source: The Economic Times
Pakistan’s commerce ministry and Germany’s Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH recently signed an implementation agreement to support two projects, one of which is on improvement of labour, social and environmental standards in the country’s textile industry. The signing followed an earlier memorandum of understanding.
Under this programme, Germany would provide GIZ up-to €7,500,000 as German contribution for three years, according to Pakistani media reports.
The technical cooperation on this project aims to increase value-addition and competitiveness, and foster innovation by synergising the environmental, social and economic dimension of sustainability in the textiles and apparel industry.
The outcome of project would be to support digitalisation of labour and human resource department’s (LHRD) downstream institutions like Punjab Employees Social Security Institution (PESSI), formulation and implementation of measures to ensure sustainable production, transform 15-20 companies that made use of good environmental practices, innovative technologies or labour standards to move to higher value addition or enter new markets, and initiate two campaigns on occupational safety and health (OSH), particularly for small and medium enterprises, to achieve international certification in labour and environmental standards.
Source: Fibre2Fashion News
With the official coming into force of the UK-Vietnam free trade agreement (UKVFTA) on May 1, 2021, Vietnam's apparel exports to the UK are expected to improve significantly. The UKVFTA, signed on December 29 last year and temporarily applied since January 1, removes almost all customs duties between the two countries when fully implemented.
Vietnam’s apparel exports to the UK were valued at $734.83 million in 2019 with monthly average of $61.24 million. It considerably dropped in 2020 by 31.01 per cent to $506.96 million due to the restrictions and lockdown imposed following the spread of COVID-19 pandemic. The monthly average apparel exports declined to $42.25 million in 2020.
In January 2021, Vietnam's apparel exports to the UK stood at $27.37 million, and are optimistically forecast to grow to $66.12 million in June 2021, a growth of 141.57 per cent in five months, according to Fibre2Fashion's market intelligence tool TexPro.
Among the Southeast Asian exporters, Vietnam was the second largest exporter to the UK, next only to Thailand. The bilateral trade of the Vietnam and the UK was $6.7 billion in 2019.
Vietnam has several advantages over its strong competitor Bangladesh, when it comes to apparel exports. The production costs are lower in Vietnam compared to Bangladesh. Secondly, Vietnam is at the 70th position in the list of 190 countries based on Ease of Doing Business Index with better compliance, human rights regulations, and environmental protection practices. Thirdly, Vietnam has an advantage of proximity to China, a big raw material supplier for the textiles and apparels industry. Finally, Vietnam has maintained lower lead time as compared to the Bangladesh (approximately the 1/3rd of the time required for Bangladesh).
Source: Fibre2Fashion News
Value-added textile sector associations on Tuesday asked the government to place an immediate ban on the cotton yarn export to ease the commodity crisis. They also proposed a 10 percent duty on the cotton yarn export, saying the proposition if implemented will help stem falling trend in apparel textiles export.
The associations also demanded of the government to permit a duty free import of cotton yarn from worldwide for at least next six months to arrest the commodity crisis that continues to hit the local market. The proposals and demands were placed by the representatives of different apparel textiles associations to Adviser to Prime Minister on Commerce Razak Dawood during a meeting held on Tuesday virtually through internet.
Globally, the prices of cotton have decreased but the commodity is still costlier in Pakistan. Announcement of ECC proposal to allow import of cotton yarn from India had temporarily helped reduce the cotton yarn prices in the local market, but the cancellation of trade with the neighboring nation again spurred the commodity rates to the higher levels, they said.
They demanded of the government to open an immediate forensic audit of local cotton yarn producers, similar on the pattern of sugar probe.
“It is learned that approximately two million bales have been sold without sales tax and invoices in the local market, in order to identify the black-sheep and culprits behind the yarn crisis,” the associations asserted.
The value added textile exporters are facing jeopardy and financial hardships as their cost of manufacturing has outgrown because the dollar depreciation against Pak rupee from 164 to 153 and increase in prices of cotton yarn more than 40 percent and 700 percent increase in sea freight charges, they said.
Country is facing approximately 40 percent low cotton crop, which is the lowest quantity over the past three decades, they said adding that “therefore, the government must devise most urgent mechanism and policy to increase cotton produce as the cotton cultivation period is started in the country.”
They said the government should also help facilitate apparel makers to import cotton yarn from Central Asian Republics through land route via Afghanistan as the sea route is taking a long duration due to shortage of containers and vessels.
It will help bring a positive impact for textile export of Pakistan to reach at the level of Bangladesh textile within next few years, they said. They also requested to the adviser to speed up the release of payments of DLTL / DDT claims to support the textile export industry and demanded rates of gas (RLNG) should be same for new industrial units around the country.
Those attended the online meeting included: Jawed Bilwani, chairman Pakistan Apparel Forum, Riaz Ahmed central chairman, Faisal Mehboob Shaikh senior vice chairman, Tariq Munir vice chairman Pakistan Hosiery Manufacturers & Exporters Association, Mian Farrukh Iqbal senior vice chairman, PHMA Northern Zone, Ch Salamat Ali ex-central chairman, Syed Zia Alamdar ex-chairman, Kashif Zia, ex-chairman PHMA, Ijaz Khokhar chief coordinator & ex-central chairman Pakistan Readymade Garment Manufacturers & Exporter Association, Aamir Lari vice chairman, Haroon Shamsi ex-chairman Towel Manufacturers Association of Pakistan, Eng Bilal Jamil senior vice chairman, Arif Malik ex-chairman All Pakistan Bedsheets & Upholstery Manufacturers Association, Waheed Khaliq Ramay of Power Looms Owners Association and Engr Hafiz Ihtasham Javed president Faisalabad Chamber of Commerce & Industry.
Responding to the demands and suggestions of textile exporters, Razak Dawood assured them of a support. The concerned ministry will take all decisions in a consultation with the stakeholder associations, he added.
He noted the suggestions and demands of textile exporters to allow duty free import of cotton yarn, to place ban on export of cotton yarn or impose 10 percent duty on export of cotton yarn.
He said the commerce ministry has taken a serious notice of the situation and will revert back in next few days, according to the associations attended the meeting.
Source: Business Recorder
India and Russia discussed ways to deepen bilateral partnership in sectors such as investment, energy, military equipment production, nuclear and space, and moving ahead on talks for a Free Trade Agreement between India and the Eurasian Economic Union (EAEU), in consultations between External Affairs Minister S Jaishankar and his Russian counterpart Sergey Lavrov on Tuesday.
“We discussed prospective and additional manufacturing of Russian military equipment in India within the concept ‘Made in India’. So here, I didn’t see any changes from our Indian partners and friends,” Lavrov said at a press briefing after talks with Jaishankar.
Energy cooperation
Discussions also focussed on the expanding energy cooperation between the two countries and views were also exchanged on regional and global matters.
“We talked about long-standing partnership in nuclear, space and defence sectors. We assessed positively our economic cooperation, noting the new opportunities in Russian Far East. We spoke of connectivity, including the International North-South Transport Corridor and the Chennai-Vladivostok Eastern Maritime Corridor. Our rapidly expanding energy cooperation that now includes long term commitments was also on the agenda,” Jaishankar said.
As the annual India-Russia Summit between the Indian Prime Minister and the Russian President could not take place last year due to Covid-19, the two countries are trying to make it possible this year. “Much of our discussions today covered the preparations for President Putin’s visit for the Annual Summit later this year,” Jaishankar added.
India had entered into a deal with Russia to buy S-400 surface-to-air missile systems in 2018 despite warnings of sanctions from the United States. Since then, the US has been trying to convince India to get out of the deal. Specifics on the matter were not shared at the press conference.
Lavrov pointed out that there was a drop in bilateral trade due to the Covid-19 pandemic and both sides needed to discuss ways to boost both trade and investments. Both countries are also keen on moving forward on the negotiations for an FTA between India and the EAEU in a way that is mutually beneficially. The EAEU includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.
Jaishankar said that he shared with his Russian counterpart India’s approach on Afghanistan. “For India, what happens in Afghanistan impacts its security directly. I shared our approach that a durable peace there would require harmonising interests of all, both within and around that country. The peace process must be based on foundational principles to which we all subscribe. And a political solution should mean an independent, sovereign, united and democratic Afghanistan.
India also shared its viewpoint on the Indo-Pacific. “As our Prime Minister pointed out at the Shangri-La Dialogue some years ago, contemporary challenges require countries to work together in new and different ways,” he said.
Source: The Hindu Business Line
Indonesia's chemical, pharmaceutical and textile industries are prepared to implement the Industry 4.0 that will boost efficiency and competitiveness, according to the Industry Ministry.
"The fourth industrial revolution that integrates resources in technology, machinery, and humankind has brought about significant changes in the sector," the ministry's Director General of Chemical, Pharmaceutical and Textile Industry, Muhammad Khayam, stated at the Pre-Conference of Hannover Messe 2021 here on Tuesday.
Khayam noted that the industry has become a national priority in the Industry 4.0 for its superior performance, with exports in 2020 having reached US$33.99 billion.
Investment worth Rp61.97 trillion was realized during the period, with the largest share from chemical and chemical goods industry and having absorbed 6.24 million workers.
"In addition, the pharmaceutical industry is included in the priority to boost its transformation and make Indonesia self-reliant in the health sector," Khayam remarked.
It has become increasingly important for Indonesia to achieve self-reliance in the health and pharmaceutical industry in the wake of the current health emergency situation.
The ministry has outlined various programs to implement the road map of Making Indonesia 4.0 in the sector, including the assessment of Indonesia Industry 4.0 Readiness Index (INDI 4.0), implementation and adoption of the Industry 4.0 technology in the textile and garment sector, improvement in the flow of materials in the petrochemical industry, and the establishment of textile and textile industry pilot project in Industry 4.0.
"We also conducted technical training and training for transformation managers and developed the Indonesia Smart Textile Industry Hub (ISTIH)," Khayam stated.
The ministry has provided facility for restructurization in the textile, leather and footwear industry through renewal of machinery that utilize more advanced technologies.
In 2020, the ministry had awarded INDI 4.0 to seven companies in the sector and honored the National Lighthouse Industry 4.0 to one company.
The seven companies are PT Kaltim Parna Industri, PT Biggy Cemerlang, PT Schott Igar Glass, PT Kimia Farma Sungwun Pharmacopia, PT Globalindo Intimates, PT TI Matsuoka Winner Industry, and PT Asia Pasific Rayon. PT Pupuk Kalimantan Timur received the honor of National Lighthouse Industry 4.0 in the chemical industry sector.
Hannover Messe is expected to serve as a media for promotion, communication, and information among industries and users to create supply chain.
"Hannover Messe will also open up the opportunity for national branding with Indonesia's position as a new world economic power and global player in the manufacturing industry," Khayam stated.
Source: Antara News
Mumbai-based SVP Global Ventures, the holding arm of Shri Vallabh Pittie Ventures Ltd’s textiles businesses, plans to invest $150 million (about ₹1,095 crore) this financial year for expanding its Oman facility. The company, which has a facility located at Sohar Freezone in Oman, had invested a similar amount in FY21.
The expansion would enable the company double its production capacity of yarn to 3 lakh spindles and 7,000 rotors per year.
“We already have an order book of ₹5,000 crore lined up for the 2-3 years from buyers across global textile markets, which would be serviced mainly from Oman facility. The orders are mainly coming in from Pakistan, Bangladesh, Vietnam, Brazil and Turkey, while some part of it is also from China,” SVP Group Chief Executive Officer OP Gulia told BusinessLine.
About 70 per cent of the total investment would be raised as debt and the remaining 30 per cent would be pooled in from the company’s cash inflows.
The company also plans a forward integration of textiles under its ‘fibre to fashion’ policy. SVP Global Ventures,which currently manufacturers yarn, intends to make fibre, processed fabric and garments.
The company intends to invest about ₹575-690 crore for its forward integration plans, and will add 600 garment machines in Jhalawar (Rajasthan) and 800 in Oman plant. The company intends to modernise its Madurai (Tamil Nadu) plant also.
The company, which is also entering into manufacturing of fine quality cotton yarn, had invested a total of ₹2,300 crore in Indian operations.
The BSE-listed company now plans to list its shares on the National Stock Exchange, for which it has filed a Draft Red Herring Prospectus with the market regulator.
SVP Group has a yarn manufacturing capacity of over 4-lakh spindles and 6,000 rotors in India and Oman, which are operating at above 95 per cent capacity.
Source: The Hindu Business Line
Faced with accusations that it was profiting from the forced labor of Uyghur people in the Chinese territory of Xinjiang, the H&M Group — the world’s second-largest clothing retailer — promised last year to stop buying cotton from the region.
But last month, H&M confronted a new outcry, this time from Chinese consumers who seized on the company’s renouncement of the cotton as an attack on China. Social media filled with angry demands for a boycott, urged on by the government. Global brands like H&M risked alienating a country of 1.4 billion people.
The furor underscored how international clothing brands relying on Chinese materials and factories now face the mother of all conundrums — a conflict vastly more complex than their now-familiar reputational crises over exploitative working conditions in poor countries.
If they fail to purge Xinjiang cotton from their supply chains, the apparel companies invite legal enforcement from Washington under a U.S. ban on imports. Labor activists will charge them with complicity in the grotesque repression of the Uyghurs.
But forsaking Xinjiang cotton entails its own troubles — the wrath of Chinese consumers who denounce the attention on the Uyghurs as a Western plot to sabotage China’s development.
The global brands can protect their sales in North America and Europe, or preserve their markets in China. It is increasingly difficult to see how they can do both.
“They are being almost at this point told, ‘Choose the U.S. as your market, or choose China as your market,’” said Nicole Bivens Collinson, a lobbyist who represents major apparel brands at Sandler, Travis & Rosenberg, a law firm in Washington.
In an age of globalization, international apparel brands have grown accustomed to criticism that they are profiting from oppressed workers in countries like Myanmar and Bangladesh, where cheap costs of production reflect alarming safety conditions.
The brands have developed a proven playbook: They announce codes of conduct for their suppliers, and hire auditors to ensure at least the appearance of compliance.
But China presents a gravely elevated risk. Xinjiang is not only the source of 85% of China’s cotton, but synonymous with a form of repression that the U.S. government has officially termed genocide. As many as 1 million Uyghurs have been herded into detention camps, and deployed as forced labor.
The taint of association with Xinjiang is so severe that both the Trump and Biden administrations have sought to prevent Americans from buying clothing produced with the region’s cotton.
For the apparel brands, their dilemma is heightened by the fact that the Chinese government has weaponized China’s consumer market. In fomenting nationalist outrage, Beijing is seeking to pressure the international brands to pick a side — to ignore reports of forced labor or risk their sales in the world’s largest potential consumer market.
Framing this choice is the reality that China remains the world’s central hub for making clothing.
In pursuit of alternatives, many international brands are shifting production from Chinese factories to plants in countries like Vietnam, Cambodia and Bangladesh. But moving does not eliminate their exposure to Xinjiang cotton.
China exports unprocessed cotton to 14 countries, including Vietnam, Thailand, India, Pakistan and Bangladesh, and yarn to 190 countries, according to the International Cotton Advisory Committee, an international trade association in Washington.
China is the source of nearly half of all cotton fabric exported around the world. Most of that material includes cotton harvested in Xinjiang.
Long March to Xinjiang
As China has transformed itself from an impoverished country into the world’s second-largest economy, it has leaned on the textile and apparel industries. China has courted foreign companies with the promise of low-wage workers operating free from the intrusions of unions.
The brands have turned China into an export colossus. They have also invested heavily in selling their products to a growing Chinese consumer class.
Xinjiang, a rugged expanse more than twice the size of Texas, holds China’s largest oil reserves. Its abundant land and sunshine have made it fertile ground for cotton.
The Chinese government has rejected claims of worker abuse in part by claiming that much of Xinjiang’s cotton harvest is now automated. But manual picking remains common in the south of the region, where most Uyghurs live. There, nearly two-thirds of cotton is hand-picked, the regional government said last year.
As human rights groups have focused on the exploitation of the Uyghurs, apparel brands have sought to distance themselves from Xinjiang. Nike, Burberry and PVH, the parent of Calvin Klein and Tommy Hilfiger, have issued assurances that they have ceased buying cotton from sources in the region, while conducting audits of their suppliers.
But supply-chain experts caution that multinational manufacturers frequently game the audit process.
“The key tool it’s used for is rubber-stamping conditions in supply chains, as opposed to trying to deeply figure out what is going on,” said Genevieve LeBaron, an expert on international labor at the University of Sheffield in England.
In Xinjiang, efforts at probing supply chains collide with the reality that the Chinese government severely restricts access. Not even the most diligent apparel company can say with authority that its products are free of elements produced in Xinjiang. And many brands are less than rigorous in their audits.
Major apparel brands have coalesced around the Better Cotton Initiative, an organization based in Geneva and London whose official mission includes improving working conditions for those in the trade.
Last fall, the organization announced a halt to its activities in Xinjiang amid persistent reports of forced labor. But the body’s China branch recently asserted that its investigation in Xinjiang “has never found a single case related to incidents of forced labor,” dating back to 2012, according to a statement reported by Reuters.
That assertion flew in the face of a growing body of literature, including a recent statement from the United Nations Human Rights Council expressing “serious concerns” about reports of forced labor.
The Better Cotton Initiative declined a request for an interview to discuss how it had come to its conclusion.
“We are a not-for-profit organization with a small team,” the initiative’s communications manager, Joe Woodruff, said in an email.
The body’s membership includes some of the world’s largest, most profitable clothing manufacturers and retailers — among them Inditex, the Spanish conglomerate that owns Zara, and Nike, whose sales last year exceeded $37 billion.
Anger Among Consumers
Even as statements about Xinjiang cotton from apparel companies have failed to ease human rights concerns, they have provoked outrage among Chinese consumers.
On Chinese social media, people have posted photos of themselves throwing away their Nike sneakers or — for the less committed — covering the logos on their sweaters with masking tape.
An auto body shop in Hohhot, Inner Mongolia, put up a banner barring customers who wore Nike or H&M. A bar in Beijing offered free drinks to customers who wore apparel from domestic brands.
The global brands are putting stock in the enduring popularity of their products in China, while seeking to avoid further provocation. Inditex removed from its website a statement in which it had promised to avoid Xinjiang cotton.
Yet in muting their condemnation of forced labor in Xinjiang, the brands risk amplifying their problems outside China.
“If they do the right thing, they face serious commercial risk in China,” said Scott Nova, executive director of the Worker Rights Consortium, an advocacy organization. “Yet they know consumers globally will be repulsed by a brand that willfully abets forced labor. It is a profound moral test.”
Source: The Economic Times
The Office of the United States Trade Representative (USTR) announced that it is accepting comments on whether to impose 25 percent tariffs on roughly $880 billion of goods imported from Austria, India, Italy, Spain, Turkey, and the United Kingdom in retaliation for digital services taxes (DST) imposed by those countries.
The potential tariffs would be applied under Section 301 of the Trade Act of 1974.
Potential tariffs are aimed at products across various industries and include among others, leather articles, textile products, ceramic articles, stemware, glassware, glass fibers, copper alloys, printed circuit assemblies, and various instruments from Austria; seafood, rice, bamboo articles, corks, cigarette paper, wool yarn, bras, pearls, precious stones, precious metal articles, and furniture from India; seafood, perfumery, travel and leather goods, apparel, footwear, spectacle lenses, and optical elements from Italy; seafood, handbags, belts, footwear, hats, and glassware from Spain; textile floor coverings, bed linen, curtains, stone and ceramic articles, precious metal articles, and imitation jewelry from Turkey; and personal care and cosmetic products, apparel, footwear, ceramic articles, precious metal articles, imitation jewelry, refrigeration equipment, industrial robots, furniture, and games from the UK.
Complete country-specific lists of potentially affected products are included in the following notices: Austria/Deadline/Products, India/Deadline/Products, Italy/Deadline/Products, Spain/Deadline/Products, Turkey/Deadline/Products, and United Kingdom/Deadline/Products.
In January, USTR determined that each of the six countries’ digital services tax (DST) is unreasonable or discriminatory and burdens or restricts U.S. commerce, i.e., meets the legal standard under Section 301. USTR found these countries’ DST to be actionable for the following reasons:
Austria – only applies to companies with at least €750 million in global revenue and €25 million in Austria-specific revenue derived from digital advertising revenue; India – only applies to “non-resident” companies; Italy – only applies to companies with at least €750 million in global revenue and €5.5 million in Italy-specific revenue derived from the provision of digital services; Spain – only applies to companies with at least €750 million in global revenue and €3.0 million in Spain-specific revenue derived from the provision of digital services; Turkey – only applies to companies with at least €750 million in global revenue and TRY 20 million in Turkey-specific revenue derived from the provision of digital services; and the United Kingdom – only applies to companies with at least £500 million in global revenue and £25 million in U.K.-specific revenue derived from the provision of digital services.
The USTR’s latest action also terminates its prior investigations of Brazil, Czechia, Indonesia, and the European Union because USTR has determined that these jurisdictions have not adopted or implemented DST’s.
For copies of USTR’s determinations, which detail each country’s DST, please see the notices attached at the following: Austria, India, Italy, Spain, Turkey, and the United Kingdom.
The deadlines for the submission of comments and requests to appear at the virtual hearings, as well as the list of U.S. imports on which the 25 tariffs would be imposed, vary by country. The multi-jurisdictional deadlines are as follows:
April 21, 2021: Request to appear at the hearing and summary of written testimony
April 30, 2021: Written comments
May 3, 2021: Multi-jurisdictional virtual hearing on proposed actions
May 10, 2021: Multi-jurisdictional written rebuttal comments.
The country-specific deadlines are set forth at the first set of hyperlinks.
Source: The Global Trade
