State industries minister Syed Shahnawaz Hussain on Wednesday invited entrepreneurs from textile industry to come and invest in Bihar and together take the country ahead of Bangladesh in garmenting. Hussain held a discussion on draft textile policy for Bihar with the Synthetic Rayon Textile Export Promotion Council (SRTEPC) at its head office in Mumbai. He emphasised the strategic location of Bihar for both domestic and export markets and explained that most of its districts were connected via nearby airports in Bihar and adjoining states. He said the state has implemented the online filing of Common Application Form (CAF) to make the single-window system really effective. The minister spoke about recent investment intentions that the state has received from JSW, Essar and Micromax. The meeting was attended by the executive council of SRTEPC, including its chairman Dhiraj Raichand Shah. Additional chief secretary (industries) Brijesh Mehrotra and investment commissioner R S Srivastav also attended the meeting. The industry showed promising response to the draft policy applauding the progressive approach of the government and said that further suggestions if any shall be forwarded to the government.
Source: Times of India
The textile and clothing industry here is looking at policy initiatives from the State government to boost growth of the sector in Tamil Nadu. Textile and Handloom Minister R. Gandhi held meetings with the industry in Coimbatore and Tiruppur districts on Tuesday. According to Chairman of Southern India Mills’ Association (SIMA) Ashwin Chandran and Chairman of Confederation of Indian Textile Industry T. Rajkumar, there is scope for improvement in the Textile Policy announced by the State government in 2019. Some of the areas that need more focus in the Policy are technical textiles, mega textile parks, textile processing, and energy. States such as Gujarat offer a lot of support for technical textiles. Tamil Nadu has a couple of centres of excellence for technical textiles. However, some segments of technical textiles can be strengthened further in the State. The State government should also support these measures. Another major area that requires government support is industry-friendly renewable energy policies that will attract investments, they said. The SIMA will submit its proposals to the Government soon on the Textile Policy. In Tiruppur, the industry association heads highlighted the areas with growth potential and the challenges faced by the garment industry. “The State can create more clusters like Tiruppur with the right policy initiatives,” said Tiruppur Exporters’ Association president Raja Shanmugham.The industry has also urged the government to look at housing for workers as a major initiative. The job working powerloom weavers in Tiruppur district demanded revision of wages. “It is 10 years since the job working units got a revision. This is our main demand. We will present our demand to the District Collector within a week,” said Palladam job working powerloom unit owners association president Velusamy.
Source: The Hindu
The Indian department of justice recently launched an exclusive ‘enforcing contracts portal’, a comprehensive source of information related to the legislative and policy reforms being undertaken on the ‘enforcing contracts’ parameters laid down by the World Bank, which ranks ease of doing business (EoDB) in 191 nations. Currently, only Delhi and Mumbai in India are under the purview of the EoDB survey by the World Bank. During this World Bank evaluation, the ‘enforcing contracts’ indicator is an essential indicator that measures time and cost to resolve a standardised commercial dispute as well as a series of good practices in the judiciary. The EoDB index is a ranking system that indicates an economy’s position relative to that of other economies across 11 areas of business regulation. The department of justice under the ministry of law and justice has been monitoring an array of legislative and policy reforms to strengthen the ‘enforcing contracts’ regime for EoDB in India in coordination with the e-committee of the Supreme Court and the high courts of Delhi, Bombay, Kolkata and Bengaluru. In close collaboration with all these, the department has been aggressively pursuing various reform measures to create an effective, efficient, transparent and robust contract enforcement eegime, according to a press release from the department. The portal contains features like links of dedicated commercial courts in Delhi, Mumbai, Bengaluru and Kolkata; instructive videos related to e-filing, advocate registration; manuals on using electronic case management tools (ECMTs) like JustIS app for judicial officers and e-courts services app for use by lawyers; and a repository of all related commercial laws. The portal also hosts online reporting by all high courts regarding the mediation and arbitration centres annexed to commercial courts to monitor and promote institutional mediation and arbitration.
Source: Fibre2Fashion
The Central Board of Indirect Taxes and Customs (CBIC) will issue certificates of appreciation to honour contributions of tax payers on the success of four years of the goods and service tax (GST) regime, even as the government reaffirmed its commitment to continuous improvement in taxpayer services. “On the eve of completion of 4 years of the GST, it has been decided to honour the tax payers who have been a part of the GST success story… this step marks the first effort by the government to directly ommunicate to the GST taxpayers for their contribution,” the Board said in a statement Wednesday. “A data analytics exercise was hence undertaken by CBIC to identify taxpayers who have made substantial contribution in payment of GST in cash along with timely filing of returns, as a result 54,439 taxpayers have been identified,” it added. More than 88% of the taxpayers are from the MSME sectors. About 36% from micro industries, 41% from small and 11% from medium scale enterprises, representing a wide spectrum sectors involved in the supply of goods and services spread across all states. CBIC will issue certificates of appreciation to these taxpayers. Goods and Services Tax Network (GSTN) will be sending out the certificates of appreciation to individual tax payers by e-mail. The taxpayers will be able to print and display these certificates. GST was introduced on July 1, 2017 as a nationwide tax reform which subsumed 17 local levies like excise duty, service tax and value added tax. Over the years there has been a reduction in the tax rates, simplification of procedures and a growing economy has also led to an exponential increase in the tax base. However, industry has continued to seek improvements in the GST network system besides fewer compliances and better legislation and administration that can provide ease of doing business. “The government is committed to continuous improvement of taxpayer services and seeks the cooperation of all taxpayers for their voluntary compliance and contributing to national development for a strong and resilient India,” the Board said Wednesday. Prime Minister Narendra Modi said on the eve of GST Day on July 1, that GST has been a milestone in the economic landscape of India.“It has decreased the number of taxes, compliance burden and overall tax burden on common man while significantly increasing transparency, compliance and overall collection,” he said. GST revenues have steadily grown and have been above the Rs 1 lakh-crore mark for eight consecutive months in a row despite the Covid second wave. Data for June month is expected on Thursday. Stay connected with us on social media platform for instant update click here to join our Twitter, & Facebook.
Source: Economic Times
Companies have to take licenses to avail the benefits to government schemes such as advance authorisation and export promotion for capital goods (EPCG), among others. The indirect tax department has started demanding goods and services tax (GST) on licence fees paid by companies to the government for availing certain benefits, people aware of the development said. Companies have to take licences to avail the benefits to government schemes such as Advance Authorisation and Export Promotion for Capital Goods (EPCG) among others. In most these cases, the tax department is asking companies and exporters to cough up the GST on the licence amount, industry experts said. Many companies claim that these fees are essentially statutory levies and should be outside the gamut of taxation. The tax department is arguing that these are licences and hence should be taxable under the GST. Under Advance Authorisation, a company can import raw materials without paying duties on that if it can demonstrate that these raw materials are to be used in a final product that will eventually be exported. EPCG is a similar scheme, but it has certain different conditions to be fulfilled by the companies. “There is a clear distinction between supply of service and the sovereign function of the government. When various such payments are made, there is no ‘quid pro quo’ and hence no applicability of GST,” said Abhishek A Rastogi, partner at law firm Khaitan NSE 0.26 % & Co, who is advising some of the companies on the issue. Legal experts said this could lead to additional litigation. Directorate of Revenue Intelligence (DRI), the investigative agency for customs law matters, had begun issuing notices to exporters for GST exemptions where exports preceded imports. Some companies have approached the Gujarat High Court in this regard. Tax demands on some other licences and schemes are also under litigation, people in the know said. The indirect tax department had started questioning several importers on a few transactions and is looking to put additional duty on certain imports that were done under some schemes that were prevalent in the erstwhile tax regime. This comes at a time when the government is facing some flak from the World Trade Organisation (WTO) and the US for promoting these schemes for improving its exports. The government has brought in a new scheme, Remission of Duties or Taxes on Export Products (RoDTEP) to replace some old export promotion schemes such as Advance Authorisation following a dispute with the US at WTO. Many companies and exporters had sought that the government extend some of the existing scheme till there is more clarity around RoDTEP.
Source: Economic Times
MoS Mansukh Mandaviya inaugurated the first voyage under the service, which is operated by Mumbai-based Round the Coast Pvt Ltd. The Ministry of Ports, Shipping and Waterways Wednesday launched the maiden voyage under the Green Freight Corridor-2, a coastal shipping service, from Cochin port to Beypore and Azhikkal ports located in northern Kerala. The ministry plans to improve the connectivity and synergies between the major and nonmajor ports by promoting such coastal trading. This move is also aimed at creating intermodal and sustainable customer solutions, improving use of waterways, cutting road and rail traffic and logistical expenditures. MoS Mansukh Mandaviya inaugurated the first voyage under the service, which is operated by Mumbai-based Round the Coast Pvt Ltd. The newly launched service will connect Cochin with Beypore-Azhikkal and later Kollam ports in Kerala. Vessels shall ferry load from Cochin to Beypore and Azhikkal twice a week. Commodities like rice, wheat, salt, construction material, cement and others will be sent from Gujarat to Cochin port, from where further transportation using waterways will be carried to other Kerala ports. On its return voyage, commodities like plywood, textiles, coffee, footwear will be ferried. Both Cochin port and Kerala government have offered operational incentives so that a larger number of containers are shipped via waterways.
Source: Indian Express
The Commerce Ministry is ready to kick-off its consultation process for the free trade agreements (FTAs), which it proposes to enter into with the EU and the UK, with all stakeholders including the industry and other Ministries. “The consultation process for the FTAs with the UK and the EU will begin shortly in July. The government needs to strategise well for both the FTA negotiations as there will be ambitious demands for opening up various sectors,” an official tracking the matter told BusinessLine. A careful balance of the country's offensive and defensive interests is called for to ensure that the talks do not get stalled, the official added. The Commerce Ministry is expected to ask various export promotion councils to identify items that are sensitive and need to be protected and also the ones for which greater market access in the EU or the UK is needed. Apart from the export promotion council, various industry bodies such as CII, FICCI and FIEO, will also be asked to give their inputs, the official added.
Restarting the talks
India's free trade talks with the EU had started way back in 2007 but got suspended in 2013 over key market access issues in sectors such as automobiles, wines and spirits and financial services and also over visa for professionals. It was at the India-EU Leaders' meet earlier this year, attended by Prime Minister Narendra Modi and leaders from EU countries, where it was decided to re-start the talks. As the UK is no more a part of the EU following Brexit, it has been discussing the need to get into an FTA with India for some time and also formally agreed to launch negotiations this year. British Trade Secretary Liz Truss has already started the process of consulting stakeholders in her country for the proposed FTA with India. The EU is India’s third largest trading partner, accounting for €62.8 billion worth of trade in goods in 2020 or 11.1 per cent of total Indian trade, after China (12 per cent) and the US (11.7 per cent), as per figures shared by the European Commission. Among European countries, the UK was in the top five list accounting for bilateral trade worth $12.29 billion with India in 2020-21. The Commerce Ministry will also consult with other Ministries and Departments, especially those such as textiles and automobiles which have a considerable stake in the talks. “The Textile Ministry, for instance, has a huge interest in both the FTAs as it sees a lot of scope for expansion in both the UK and other EU countries. Since competing countries such as Bangladesh and Vietnam get preferential access in these markets, it feels that lowering of duties will give a major push to export to the region,” the official said. While in the case of UK, the Commerce Ministry is likely to start the consultations from scratch, a lot of ground has already been covered in the case of the EU. “We already know what the areas of interest are on both sides and also what the red lines are. We have to see where all there is space to compromise and push,” the official said.
Source: The Hindu
Minister of Railways, Commerce & Industry, Consumer Affairs and Food & Public Distribution Shri Piyush Goyal today said that India will be playing a much greater role in the post pandemic world in creating resilient supply chains. Speaking at the India Global forum today, he said that we are looking at a greater degree of engagement with countries that are democratic in their political system with which we can relate& trust as a partner. He added that India is working towards greater engagement with countries with which we have a shared ecosystem, countries which believe in transparent rules based trading mechanisms. He said that India is talking to UK, Australia, Canada and EU for trade related matters, and is keen to speed them up. Shri Goyal said that our trusted partners can look for a greater role for India, and we are opening our doors wider. The Minister said that we are looking at investments, technology, high quality goods, equipment, machinery. “We will be looking at providing high quality technology support to our services & IT sector”. Shri Goyal said that India has tried in WTO to promote a waiver on TRIPS so that vaccines & other medicines can be available to everyone across the world. He said that it is unfortunate that some European countries are not supporting the initiative and have preferred profit over prudence. Shri Goyal said that we are confident that India will continue to maintain precautions & COVID protocols. He said that we are going to maintain our safeguards & masks. The Minister highlighted that despite being a developing nation, India has already crossed about 340 million vaccines. “We are currently doing 5 million a day which we hope to ramp up further in the days to come. We are happy to share our learnings with other countries. Our COWIN app through which we have done the vaccination programme has been a remarkable success & now large parts of the world are asking us for the COWIN app to be implemented in their countries.” Shri Goyal said that India has done a record growth in exports in our first quarter despite the second wave of COVID. Similarly, the Railway freight from April-June 2021 is the highest ever in the history of Indian Railways.
Source: PIB
MSMEs must be recognised for their job-creation potential than for their efficiency A major problem MSMEs in India face is their very definition. More than 95% are not legally identifiable as SMEs and that prevents proper allocation of institutional support. Since MSMEs are not registered separately under statutes such as the Companies Act, there is no mechanism to distinguish them from other corporate entities. This fails to acknowledge the heterogeneity among enterprises. With Atmanirbhar Bharat, the Centre has taken several steps—redefining MSMEs, credit access, subordinate debt, preference in government tenders—towards ‘energising the MSME sector’. It has also launched the MSME Udyam portal for registration, though this is not mandatory. Information asymmetry on government schemes and incentives on registration must be addressed. Some other gaps remain, needing urgent attention: – A primary one is the regulatory framework for SMEs that prevents a growth-oriented mindset. – The concessions awarded to SMEs in terms of tax-breaks and low interest rates must be extended beyond what is currently provided if they are to target higher growth rate. – Credit access to SMEs as well as the mechanism to seek payment from buyers needs bettering to ensure financially viable. – The present redressal system on recovery of payments, particularly from organisations with influence such as PSUs, may discourage SMEs from pursuing formal action against defaulters. – SMEs may find it difficult to choose grievance redressal over building business relationships with large buyers who may falter on timely payments. – Priority ought to be given to scaling up economies with state support as the gains from such support in generating employment and overall economic prosperity outweigh the economic costs. With SMEs’ operational challenges exacerbated by Covid-19, it is all the more important to focus on this sector. A recently conducted survey finds that production in SMEs has fallen from an average of 75% to 13%. With 110 million employed by Indian SMEs, it is crucial to ensure adequate institutional support, failing which we might see an even larger impact on livelihoods. SMEs also account for a third of India’s GDP, 45% of manufacturing output and 48% of exports and hence are crucial to manufacturing and export competitiveness. SMEs will be vital in absorbing a significant proportion of the 600 million entrants to the labour market in EMEs by 2030. With a large proportion of these entrants bound to be from India, it is imperative that the Union and state governments ensure financial and institutional support for SMEs. In terms of location, SMEs are relatively evenly distributed in comparison to larger organisations. Rural areas account for 45%, while the remaining are in urban areas. Hence, SMEs are well-poised to address poverty in both the cities and villages. Although the proportion of urban poverty has declined over the years, it has increased in absolute terms. In 2018, Kolkata, Delhi, and Mumbai had anywhere between 42-55% of their population living in slums. This number is certain to have increased in the pandemic. By providing employment and income, SMEs can raise income, living standards and consumer spending. SMEs can aiding the atmanirbharta vision, especially in the manufacturing sector. This pattern is observed in countries with strong manufacturing sectors such as Germany and China. China’s pattern is more relevant to India due to a similarity in size and population as well as its recency. SMEs make up over 99% of all enterprises in China today, with an output value of at least 60% of its GDP; they generate more than 82% of employment opportunities. As per China’s national economic census, manufacturing SMEs accounted for nearly 53% of its total incorporated SMEs and 65% of the total employment in SMEs. With global manufacturing moving out of China, our SMEs can play a key role in sustaining the manufacturing that is shifted to India.
Source: Financial Express
There is a massive potential for Indian apparel exporters to increase their presence in the Polish supermarkets and hypermarkets, said SK Ray, Chargé d'Affaires, Embassy of India to Poland (Warsaw). Addressing a large gathering of Polish buyers and Indian apparel exporters at a virtual B2B meeting on ‘India-Poland Synergies in Apparel & Textiles’, jointly organized by Apparel Export Promotion Council (AEPC) and the Indian Embassy in Poland, Ray highlighted the significance of the textile sector in Poland. Saying that Poland serves as a textile hub for export to other European Union countries, Ray said, “Indian exporters should keep in mind that Polish consumers are not very brand loyal. They don’t stick to a particular brand. They often tend to switch brands and also, they prefer to do shopping in hypermarkets and supermarkets. Though price is a deciding factor, now they are more conscious about design, quality and style. “Fashion and style are main factors and there is reduced concern about the price tags. There is another growing trend that the clothing has to be sustainable and eco-friendly. Indian exporters should focus more on the latest textile technology and research,” he added. Further, the envoy said, “There is a huge potential for enhancing our engagements in the textile sector. Poland can serve as a major hub for textiles and Indian companies can supply in a large way to the Polish supermarkets and hypermarkets.” AEPC Chairman Dr A Sakthivel said, “India is focusing on high value and specialized products like MMF apparels, medical textiles and technical textiles. Foreign investors can set up a manufacturing base in India directly or through JVs. Come and partner with us in building R&D, design, innovation and incubation centres in India. Foreign brands can expand in Indian retail market also. Top brands like Zara, H&M, Mango, GAP, Marks & Spencer, Uniqlo and Calvin Klein are already sourcing from India.” Sudhir Sekhri, Chairman, Export Promotion Sub Committee, AEPC, said, “Key advantages of buying from India or for Polish manufacturers setting up manufacturing base in India are lower labour cost, increased ease of doing business, stable economy and the slew of economic measures being taken up by the government – not only for sourcing but also as a manufacturing hub. “There are large manufacturing companies in India who have the potential to collaborate with Polish companies that wish to set up manufacturing bases in India. India also has the capability to execute smaller orders of any kind of fabric. Besides, India has strong, innovative and creative design capabilities which are amongst the best in the world.”
Source: KNN India
South Africa's clothing industry has not escaped the impact of the Covid-19 pandemic on heavily burdened consumers, with retail sales in the SA clothing and textile industry reaching the worst decline ever recorded in 2020. But, say local manufacturers, they are pulling out all the stops to snatch back market share from imports, as they continue to face supply chain disruptions brought on by the pandemic. Graham Choice, managing director of merchandise supply chain at clothing retailer TFG (formerly The Foschini Group), says some of the country's leading apparel retailers have tried to tackle the problem by localising and shortening lead times. But, he says, there has been little on offer from the local manufacturing sector, which he describes as "decimated". "Overall, the local CTFL [clothing, textile, footwear and leather] value chain in SA has come under extreme pressure as the Covid-19 pandemic significantly constrained demand for retail goods," says Choice. "Retail sales in the SA clothing and textile industry fell 6.9% overall during 2020. This is the worst decline ever recorded and the only year of contraction apart from 2009 at the height of the global financial crisis when sales declined 3.2%, according to StatsSA." There have long been calls to revitalise garment manufacturing in South Africa, which has battled to compete with China and other cheap importers. The Retail Clothing, Textile, Footwear and Leather Master Plan, which was signed by government and local retailers in 2019, is also expected to give local manufacturers a leg up. But the CTFL sector has seen several plant closures and associated job losses in the past year, reducing local capacity to produce. And, in the meantime, retailers continue to face logistical hurdles. "Retailers continue to face a range of operational challenges, most notably supply chain disruptions causing huge delays and further losses due to shipping challenges, port congestion and rising logistical costs. "This pressure on local retail demand has had a trickle-down effect on local suppliers where contracting order books placed significant strain on cash flow and financial sustainability of many businesses in the local supply chain," says Choice. According to Choice, TFG responded with a "quick response" retail model that would allow for popular clothing items to be made or adjusted quickly, in-season. But that doesn't solve the problem of local manufacturing capacity. This is where the Retail CTFL masterplan comes in. Its implementation kicked off in 2020, and it aims to increase the proportion of locally manufactured products sold instore from 44% (in 2018) to 65% by 2030. The plan also aims to create jobs. Thandi Phele, acting deputy director-general of the division for industrial competitiveness and growth of the Department of Trade, Industry and Competition (dtic) says the masterplan was based on extensive consultation with stakeholders including including government, representative associations, large retailers, manufacturers and the organised labour. According to Phele, manufacturers have committed to ramp up productivity and invest in production, while organised labour has agreed to adaptable working hours. "Even though the industry was under pressure, clothing imports took bigger hit than locally manufactured clothing as retailers are buying goods more locally and local manufacturers are benefiting from this. "[I]t is important to keep working on this to make sure factories are ready and tooled when demand increases again," explains Etienne Vlok, national industrial policy officer of the Southern African Clothing and Textile Workers' Union (SACTWU). "Government has also committed to creating an enabling environment for investment in the South African clothing, textile, footwear and leather industry, through strategic tariff support, appropriate manufacturing incentives, and clamping down on illegal imports," Phele adds. Meanwhile, the SA Revenue Service – which has vowed to crack down on illicit trade – has its hands full levelling the playing field as part of the masterplan. Phele explains: "Often CTFL goods imported to South Africa are declared at a much lower value than their production value at source. This has the impact of reducing tax receipts for the fiscus and unfairly pricing imported goods below the local production cost, thereby driving out the local industry." It is estimated that in 2019, clothing with an export value of R35.9 billion was imported into South Africa at a declared cost of R27.8 billion - an under-declaration of 23%.
Source: News24
The UK government yesterday unveiled proposals to make the businesses rates system in England fairer and more streamlined with more frequent property revaluations. Under the plans, revaluations of non-domestic properties would take place every three years instead of the current system of five, ensuring they better reflect changing economic conditions. The proposals were set out in a government consultation that will form one part of its Fundamental Review of Business Rates, which will be published later this Autumn. “Proposals set out in this consultation would mean that valuations more quickly reflect how the economy is performing, making the business rates system more accurate and responsive, while balancing the burden for ratepayers,” financial secretary to the treasury Jesse Norman was quoted as saying in a government press release. Hailing the announcement, the British Retail Consortium (BRC) said as retail emerges from the pandemic, a return to ‘business rates-as-usual’ could derail the industry’s recovery, with unnecessary shop closures and job losses the result. “It is vital that the Government builds on this first step on the road to reform and stands by its commitment to reduce the overall rates burden on businesses and ensures there are no further delays to the outcome of the fundamental review,” BRC chief executive Helen Dickinson said in a statement. The Local Government Finance Act 1988 introduced 5-yearly revaluations. The first modern revaluation was implemented in 1990. The revaluations since then have been implemented in 1995, 2000, 2005, 2010, and 2017. The British government had previously undertaken to move to more frequent revaluations, having introduced legislation to bring forward the next revaluations to 2021, based on 2019 property values. Due to the pandemic and to help reduce uncertainty for firms, this was delayed, with the next revaluation set to take effect in 2023, based on 2021 values. The Fundamental Review of Business rates, launched in July 2020, conducted a call for evidence which found more frequent revaluations to be a priority for respondents. The government has therefore set out specific proposals through this consultation on how a sustainable system of revaluations every 3-years might be achieved.
Source: Fibre2Fashion
Global foreign direct investment (FDI) flows fell by 35 per cent in 2020 to $1 trillion from $1.5 trillion the previous year, according to the World Investment Report 2021 by the United Nations Conference on Trade and Development (UNCTAD), which recently said pandemic-induced lockdowns around the world slowed down existing investment projects, and the prospects of a recession led multinational firms to re-assess fresh projects. The fall was heavily skewed towards developed economies, where FDI fell by 58 per cent, in part due to corporate restructuring and intrafirm financial flows. FDI in developing economies decreased by 8 per cent, primarily because of resilient flows in Asia. As a result, developing economies accounted for two thirds of global FDI, up from just under half in 2019. FDI patterns contrasted sharply with those in new project activity, where developing countries are bearing the brunt of the investment downturn. In those countries, the number of newly announced greenfield projects fell by 42 per cent and the number of international project finance deals–important for infrastructure–by 14 per cent. This compares to a 19 per cent decline in greenfield investment and an 8 per cent increase in international project finance in developed economies. Greenfield and project finance investments are crucial for productive capacity and infrastructure development, and thus for sustainable recovery prospects, the UNCTAD report said. All components of FDI were down. The overall contraction in new project activity, combined with a slowdown in cross-border mergers and acquisitions (M&As), led to a drop in equity investment flows of more than 50 per cent. With profits of multinational corporations down by 36 per cent on an average, reinvested earnings of foreign affiliates– an important part of FDI in normal years–were also down. The impact of the pandemic on global FDI was concentrated in the first half of 2020. In the second half, cross-border M&As and international project finance deals largely recovered. But greenfield investment–more important for developing countries– continued its negative trend throughout 2020 and into the first quarter of 2021. Developing economies weathered the storm better than developed ones. However, in developing regions and transition economies, FDI inflows were relatively more affected by the impact of the pandemic on investment in tourism and resource-based activities. Asymmetries in fiscal space available for the rollout of economic support measures also drove regional differences, the UNCTAD report said. The fall in FDI flows across developing regions was uneven, at minus 45 per cent in Latin America and the Caribbean, and minus 16 per cent in Africa. In contrast, flows to Asia rose by 4 per cent, leaving the region accounting for half of global FDI in 2020. FDI to the transition economies plunged by 58 per cent. The pandemic further deteriorated FDI in structurally weak and vulnerable economies. Although inflows in the least developed countries (LDCs) remained stable, greenfield announcements fell by half and international project finance deals by one third. FDI flows to small island developing States (SIDS) also fell, by 40 per cent, as did those to landlocked developing countries (LLDCs), by 31 per cent. FDI flows to Europe dropped by 80 per cent while those to North America fell less sharply (minus 42 per cent). The United States remained the largest host country for FDI, followed by China.
Source: Fibre2Fashion
