The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 14 DECEMBER, 2015

NATIONAL

INTERNATIONAL

Gangwar launches e-auction of NTC yarn

As part of its efforts for greater transparency, efficiency and better price discovery, the National Textile Corporation (NTC) has commenced e-auction of yarn. The first e-auction of NTC yarn was launched by Textiles Minister Santosh Kumar Gangwar, in his office on December 10, a Textiles Ministry statement said The decision to adopt e-auctions has been taken in order to give maximum opportunity to dealers for lifting of NTC stock and thereby reduce inventory and improve cash flow. The transparent electronic bidding process is also expected to result in better price discovery of the yarn stock. Initially, three mills of NTC - Vijamohini Mill, Kerala Lakshmi Mill and Rajnagar mill have been selected for selling of its produce through e-auction. NSEiT, a National Stock Exchange subsidiary that has been conducting e-auctions for various PSUs, has been roped in to conduct the e-auction of yarn. The e-auction route has been made open for all registered dealers of NTC. Each dealer has been provided a unique ID and password, and trained by way of mock e-auctions and practice sessions. In future, e-auction shall be extended to the open market as well (after registering the dealers). Base prices will be fixed on Wednesday every week and e-auction will take place on Thursday from 3:30 PM to 4:00 PM. The sale shall be completed and material will be allotted as per the highest bid and quantity, as the case may be. There may be more than one winner for one count of yarn. Currently, yarn is sold through dealers, registered mill-wise with NTC as per due procedure. Prices are fixed every Wednesday and the yarn is sold to dealers on the YPC rates for the entire week (unless there is a mid-week change). The stock at the fixed / agreed price is then made available to the registered dealers/agents, who lift the material; payment is made as per NTC rules. At present, 4-6 dealers are registered with each mill. If the material is not sold, the same remains unsold and stock piles up. The e-auction mechanism provides an opportunity to circumvent this problem, leading to higher stock up-take, reduced inventory and improved cash flow.

SOURCE: Fibre2fashion

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Dyeing industry’s wait for effluent plant gets longer

The dyeing industry’s wait for a Common Effluent Treatment Plant (CETP) at Tajpur Road seems to be never ending. Now, the textile ministry has sent a communication to the Punjab Dyeing Association saying the industry would get the subsidy only when it would deposit its share in the bank account. The amount to be deposited by the industry stands at Rs 19.50 crore. The dyeing industry is setting up the CETP by seeking financial help from the Central and state governments. Fifty per cent amount is to be given by the Centre while the remaining will be contributed by the state government and the industry. Bobby Jindal, general secretary of the association, said they were yet to collect the money. “Now that the letter from the ministry has arrived, they have decided that 15 per cent of the amount will be arranged by the association members while the remaining 10 per cent will be taken in the form of loan from the bank,” he said. The cost for setting up the plant will be Rs 130 crore. A member of the association said they were expecting the subsidy to start the work. “With the communication from the ministry, the entire focus has been shifted on money collection. We will take loan and get it deposited in the bank as soon as possible so that the subsidy arrives and the work on the CETP gets started,” he said. Officials of the Punjab Pollution Control Board visited the project site and reviewed work. The department officials asked the members of Punjab Dyeing Association to deposit their share of amount as soon as possible so that the subsidy was released from the Central government.

SOURCE: The Tribune India

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Meet discusses setting up of CETP

The District Collector V. Sampath held a meeting to discuss the issue of setting up common effluent treatment plant (CETP) with zero liquid discharge here recently. The officials of Tamil Nadu Pollution Control Board, Handloom and Textiles, revenue and the representatives of the dyeing units participated in the meeting. Speaking on the occasion, the Collector said that the Chief Minister announced the setting up of a common treatment plant with zero liquid discharge under Rule 110 at an outlay of Rs. 700 crore. The government directed the Tamil Nadu Water Investment Company to do a detailed survey in the districts of Salem, Karur, Erode and Namakkal for this project and present a report. The Chief Minister announced the setting up of the common treatment plant to prevent the discharge of dyeing wastes into wells, rivers, tanks and other water bodies. The Tamil Nadu Water Investment Company will collect details on textile processing units, their size, volume of effluent discharged, the practice adopted at present for effluent treatment etc. As per the established norms, the CETP should be established 5 km away from any water body. About 15 acres of land will be required for the setting up of a CETP with 10 lakh litre treatment capacity. It has been estimated that a sum of Rs. 15 crore will be needed for setting up a CETP. The dyeing units and textile processing unit owners, the stake holders, will have to contribute 25 per cent of the project cost. The Centre will allocate 50 per the project cost and the State Government the rest 25 per cent. Only those running the dyeing units at present, and who had abandoned the units within five years alone were eligible to use the CETP. The dyeing and textile processing units which failed to enrol as members at present, will not be allowed to become members in future. People will not be allowed to run the dyeing units with treatment plant, Mr. Sampath said. Rangasamy, Divisional Engineer, Tamil Nadu Pollution Control Board (TNPCB), Periasamy, Deputy Director, Handloom and Textiles, Revenue Divisional Officers C. Vijay Babu (Salem) and C. Paul Princy Rajkumar (Sankagiri) and other officials participated in the meeting.

SOURCE: The Hindu

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Indian rupee hits 2-year low to end at 66.88 vs US dollar

The Indian rupee fell back sharply after a strong overnight rally and ended with a 17 paise loss at 66.88 against the US dollar, the lowest level in more than two years in the face of strong demand for greenback. Fresh dollar demand from importers drive by heavy capital outflows and a steep fall in local equities largely weighed on the rupee value. Some caution ahead of the key economic data – industrial production numbers for October – which is due later in the day also impacted the trade. Market sentiments remained jittery with an imminent higher interest rate environment arising out of the US Federal Reserve’s action next week. Weak dollar overseas, however, limited the fall. The home currency opened lower at 66.80 per dollar compared to Thursday’s close of 66.71 at the Interbank Foreign Exchange market on fresh dollar demand from banks and importers. Later, it recovered some lost ground and moved erratically in a range of 66.74 and 66.90 in afternoon trade before concluding at 66.88, revealing a fall of 17 paise, or 0.25 per cent. The Indian rupee had appreciated by 12 paise to end at 66.71. Market participants are highly cautious at this juncture ahead of the much awaited Fed rate hike decision next week and the potential impact on the country’s currency as India will not be immune if global volatility increases, a forex dealer said. In worldwide trade, the dollar traded little changed against other major currencies ahead of US retail data despite robust US jobs data overnight.

China’s yuan dropped to its lowest level against the dollar in over four years impacted by economic slowdown and hefty capital outflows even as the central bank steadily guides the currency lower. Meanwhile, the Bank of England (BoE) decided to keep the benchmark rate unchanged at 0.50 per cent as expected in the wake of slight deterioration in the outlook for the global economy and inflationary pressure. The dollar index, which tracks the world’s reserve currency against a basket of its peers, is down 0.14 per cent at 97.78. Crude oil extended weakness for the fifth consecutive day with the Brent contract closing below the USD 40/bbl for the first time since August 2004. The stock market flagship index Sensex plummeted over 208 points to end at 25,044.43 after overnight relief rally faltered on renewed worries about global growth woes amid falling oil prices.

SOURCE: The Financial Express

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Cultivating fiscal pain

For a state that boasts of the country’s top entrepreneurial talent—the owners of top Indian firms like Hero and Bharti Airtel are from Punjab—and has been the country’s granary for decades, having its finances in tatters comes as a rude shock. Things are so bad, a Times of India (ToI) report says the government is reduced to raising funds by mortgaging its jails and widow homes—that, in turn, will only make its fiscal situation worse since the higher debt will need to be serviced. The ToI report says that the Gandhi Vanita Ashram for widows in Jalandhar and the state jails at Bathinda, Amritsar and Goindwal are among the dozen official parcels of real estate which have been mortgaged to raise R2,100 crore of loans. Over 17% of the state’s revenue expenditure in FY15 was budgeted for paying interest on loans as compared to a figure of 11% for all non-special category states—the number for industrial states like Karnataka is 8.8% and 11.6% for Tamil Nadu. While Punjab boasts of its fiscal deficit being within the 3% limit set by the Finance Commission, what’s more important is the state ran a budgeted revenue deficit of 1.2% in FY15 versus, in the case of Gujarat, a surplus of 0.8% of GDP. Naturally, then, Punjab’s development expenditure in FY15 was budgeted at a low 8.9% of GDP versus 13% for all non-special category states.

Punjab’s problem, in a nutshell, is that it has not graduated from the jugaad and basic farming that looked attractive several decades ago. As a result, it does not have the industrial base to collect taxes, nor has it been able to diversify its agriculture to a more modern, value-added business which could yield high taxes. Which is why its tax base, already low in comparison to other states, has been falling, from 7.9% of its state GDP in FY13, this fell to a budgeted 7.8% in FY15—to put this in perspective, the budgeted numbers were 9.3% in FY14 but ended up at 8.3%. Industrial states like Tamil Nadu have tax revenues of 9.4% and Karnataka 10.2%. Punjab’s own non-tax-revenue was budgeted at a mere 0.8% of state GDP in FY15 versus 1.4% for all non-special category states.

Apart from not being able to diversify its once-famed agricultural base to more value-added produce, Punjab is now reduced to heavily subsidising its farmers by not charging for either water or electricity—while dramatic over-use of water has led to a situation in which very large parts of the state has soil which is too saline to cultivate, the state’s power subsidy for farmers is likely to be around 9% of this year’s budget—while it spent R4,778 crore for free power in FY15, the number is expected to go up to R5,484 crore in FY16; amazingly, in the last budget, the finance minister said he would reduce power tariffs for the allied farming sector from R7.75 per unit to R4.57. While the state needs to reduce this expenditure to get back in the black, doing so will mean farmers will be in the red.

SOURCE: The Financial Express

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RBI ready to tackle any impact of Fed rate hike, says Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan on Friday tried to allay the Street’s fears about the impending rate increase by the US Federal Reserve, saying the central bank was ready to counter any effect of it. According to Rajan’s estimates, the rate hike will not be more than 25 basis points (bps). “There is a 70-75 per cent chance of a Fed rate hike and I also feel that Fed has prepared the way very carefully for an increase and they are likely to go ahead,” Rajan said after RBI’s board meeting here. Earlier, in response to a query on the global outlook, Deputy Governor Urijit Patel said the markets have factored in the possibility of a rate hike which would cause some changes in the financial flow. “Our expectation is that the US Fed is almost certain to increase rates, The anticipated changes have been factored in by the markets. So there will not be much of an effect; important will be to analyse the language used by the Fed,” Patel said. The US Federal Reserve will meet on December 15-16 to decide on the rates. A rate hike is much anticipated as US jobs data has shown a positive growth. Earlier this month, Federal Reserve Chair Janet Yellen had strongly indicated to the Congress that Federal Reserve policy makers are likely to vote to raise US interest rates in two weeks — barring any major shocks to the global economy. The RBI governor also said that the central bank was taking a close look at the various provisions given to the banks to recover bad loans. “Having given those powers, we are now looking at how those powers are implemented and as we learn how they are used we will obviously have a dialogue with the banks,” Rajan said.

In the face of a rising number of stalled projects giving rise to bad loans RBI had brought in provisions like strategic debt restructuring (SDR) and the 5/25 mechanism to give tooth to banks' power of recovering bad debt.  So far, since SDR was introduced in June, it has been invoked by banks in nine cases, with at least one other due. But none of these cases have seen banks swap debt for equity, take control or significantly cut debt, raising doubts whether the banks are using the provisions to hide bad loans. Rajan, though, disputed this saying , “In many cases the banks have attempted to take action, there have been many impediments. The ability to impede action has been fairly strong in the hands of large promoters. Over time, we need to increase the power of the banks so that they can recover the money,” he said. Rajan said the central bank was open to more bond purchases maintain adequate liquidity in the system. “As and when we get the sense that more long-term liquidity is needed, appropriately we will do an open market purchase of securities,” he said. Regarding the change in the guidelines for calculation of base rate, Rajan said RBI had discussed with the banks and their views had been taken into account. “We have made adjustments and the final structure will not be a difficulty for them.” On requirement of capital by nationalised banks, he said it would depend on the profits, growth in assets and the extent of dilution of government stake in them, he said. “The exact requirement will depend on what assumptions one is making,” Rajan said. Regarding Friday's board meeting, Rajan said discussions were held on global and domestic economic concerns as well as financial literacy. He said RBI's intention was to supply the market with plenty of liquidity. “All instruments are available with RBI for short-term, medium-term and long-term liquidity,”he said.

SOURCE: The Business Standard

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Global Crude oil price of Indian Basket was US$ 35.72 per bbl on 11.12.2015

The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 35.72 per barrel (bbl) on 11.12.2015. This was lower than the price of US$ 36.65 per bbl on previous publishing day of 10.12.2015.

In rupee terms, the price of Indian Basket decreased to Rs 2385.54 per bbl on 11.12.2015 as compared to Rs 2447.95 per bbl on 10.12.2015. Rupee-dollar exchange rate remained unchanged at Rs 66.79 per US$ on 11.12.2015 as compared to 10.12.2015. The table below gives details in this regard: 

Particulars

Unit

Price on December 11, 2015 (Previous trading day i.e. 10.12.2015)

Pricing Fortnight for 01.12.2015

(Nov 11 to Nov 26, 2015)

Crude Oil (Indian Basket)

($/bbl)

35.72             (36.65)

41.17

(Rs/bbl

2385.54         (2447.95)

2725.87

Exchange Rate

(Rs/$)

66.79             (66.79)

66.21

SOURCE: http://pib.nic.in/

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Govt seeks to spend Rs 18,000 cr more this fiscal

The Centre sought Parliament’s approval on Friday to increase the FY16 Budget spending by R18,195 crore, with a large part earmarked for the creation of capital assets, which officials said won’t hurt the fiscal consolidation plan. This is the second supplementary demand for grants after the Centre got a R25,500 additional spending nod in August. Officials said the additional spending won’t result in wider fiscal deficit. The full-year budgeted spending is estimated at R17.7 lakh crore, up 8% over the actuals last fiscal. In recent years, the Budget sizes turned out to be less than what was envisaged in the Budgets, as the government overestimated revenue growth and had to cut down expenditure to keep the fiscal targets.

SOURCE: The Financial Express

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India, Japan sign agreement to avoid double taxation

On a day of Japanese prime minister Sinzo Abe's India visit, the two sides signed an agreement to amend the convention for double taxation avoidance and prevention of evasion of income tax on Friday. The existing convention was signed way back in 1989. The protocol was signed by Revenue Secretary Hasmukh Adhia and Ambassador of Japan Kenji Hiramatsu. The pact provides for internationally-accepted standards for effective exchange of information on tax matters, including bank information, the finance ministry said in a statement. It further provides that the information received from Japan in respect of an Indian resident can be shared with other law enforcement agencies with authorisation of the competent authority of Japan and vice versa. It is envisaged that both India and Japan will lend assistance to each other on collection of revenue claims.

SOURCE: The Business Standard

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India wants WTO to honour Bali commitments: Nirmala Sitharaman

The 10th Ministerial Conference of WTO at Nairobi is expected to take up many contentious issues that were promised at Bali in 2013 but not implemented. Speaking to Bloomberg TV, Commerce and Industry Minister Nirmala Sitharaman says while the overall draft for Nairobi meet is “neutral”, issues like food security need to be addressed. Public stock holding is a sovereign right for the government and that right cannot be taken away by the WTO, she said.

What is the key stance that India is going to take at the WTO, especially on issues like food security?

I will put it this way. The last ministerial was held in Bali in 2013. WTO is a multilateral body and since 2001, it has been talking about a lot of developmental issues and not just trade. Now, when you are talking about development issues, it takes care of many of the concerns of emerging economies, many of the concerns of LDCs, issues related to adjustments such as trade facilitation, which is one of the elements in Bali, whereby efficiency at the ports, efficiency in keeping data about export-import, your customs being available for 24x7 services and ships turnaround from sea ports in a better way, all of which are crucial for better trade. It is an important thing, for which many countries would say — all right, we have a good standard already, international standard. But, there could be many other countries that will not be able to move an inch forward and a lot of assistance and hand holding have to be done for them. This is one of the elements agreed in Bali. The other elements, which were agreed to and the important one was food security.

India and many countries will be allowed to hold public stock holding in the sense the government can hold certain quantity of grains, one or two or several of them in the interest of giving an opportunity of the poorest of farmers to sell at a rate, which is important for their subsistence. Otherwise, they will not be able to receive what would be available in the free market. So, you would be giving them a support price, which is necessary for them and it is necessary for the government to procure — one, in order to support these farmers; and two, that grain is not released in the market and is not held as a stock pile to distort rate but to help some poorest of the poor consumers who are not able to afford grains at the market price will be given subsidised grains from the public distribution system (PDS).

So, you procure to save some poor farmers and holding the stock pile to distribute through PDS. It has a larger objective for which the Centre is duty-bound to its citizens. Now, do we have a right to hold it? If you are here to just talk about trade and free trade, no, you don’t have a business because it will be seen as trade distorting. You have to hold this and for holding this, you have to prove it is not trade distorting. You have to state how many such grains you do, not just wheat and rice but also corn and many others, then you would also say to what extent are you going to subsidised, what is your minimum support price and what quantum are you going to procure. Is it that every wheat which is produced in the country is going to be obtained by you in the name of PDS or is it only 10 per cent of the production. So, in other words, your public stock holding is a sovereign right for the government and that right cannot be taken away by the WTO.

So, can the Nairobi ministerial achieve a breakthrough for the permanent solution on food security, which is clearly vital for India?

It is not something which is new. In Bali, a permanent solution for public stock holding was agreed to. But, last year, there was this sense that the work plan with a certain timeline was not available for public stock holding and a permanent solution for it, whereas on trade facilitation, things were moving faster. WTO works on the principle of all happening at the same time and everything that has been agreed has to be agreed together. You cannot have one element pulled out such as trade facilitation, and say that we finish this and will keep rest on the side. So, last year, after this government came to power in 2014, we realised there is no work plan for a permanent solution. Therefore, what we obtained was a peace clause for perpetuity, which gives us the assurance that we can go on to opt for the subsidised trade and it is not going to be considered trade distorting and we are not going to be pulled to the WTO court. Now, when we are going to Nairobi, we want the WTO to honour everything that was committed in Bali.

Is there an expectation that it will happen because in the run-up, we have not seen any positive statements from the developed world on this? There doesn’t seem to be any ceding of grounds that is at least emanating in pre-ministerial briefing?

But, here is where I want to underline the fact that it is not a new demand. Ideally, the ministerial declaration should put all this and reaffirm WTO’s commitment that it will honour everything that was said in Bali.

Are you getting those signals or hints? Has any pre-ministerial draft been shared with the ministry?

The pre-ministerial draft, which is the ministerial declaration’s first draft, has already been submitted with a rider. That rider is that three facilitators have been asked to draft it. They have not been mandated to add issues into it nor have they been mandated to influence the language of the text. Therefore, it is something on which you can work. And to be fair to them, we cannot accuse them of having a draft that doesn’t say much.

In simpler words, is that something that is in India’s favour? Is it neutral for us or is it a negative?

It is neutral. Overall, the draft is neutral not only in the context of food security.

On Special Safeguard Mechanism, what can we expect from the Nairobi ministerial?

For instance, WTO has given every country a level up to which you can impose import duty. Assume there is a commodity in India which you grow, for instance, apples. There is a surge of apples coming from various countries. Now, our apple growers suddenly feel they don’t find a market because subsidised apples are coming into the market from abroad, which are cheaper. The WTO has given us a mechanism wherein I can impose an import duty on all apples coming into the country to make them more expensive so our fellows do not lose out. So, for most of the agricultural commodities, you have a boundary after which you cannot increase the import duty. In the case of apples, we have reached the boundary but still the imported apples are cheap and our apples do not stand up to the competition. Now, what to do? Therefore, I need a Special Safeguard Mechanism through which I will be able to protect my apple growers.

This is not just for India as there are many countries in a similar situation as us. What can be expected on this issue?

On this, my negotiations will have to take me forward. I should be able to convince during my negotiations that this is absolutely critical for economies like in India.

Are you hopeful that there will be a breakthrough?

I am very hopeful. There is a lot of symbolism attached to this meet. It is the 10th Ministerial meaning 20 years after the WTO has been formed, countries have invested a lot of trust in this organisation. It is the only body where every country is treated at par and decision making is done on consensus basis. So, everything is transparent. And, therefore, it is critically important for us to keep it alive. For the first time in WTO’s history, it is being held in Africa. This is symbolic. We cannot have decisions here which are not going to help the institution in the future.

Have you had the occasion to speak to other commerce and trade ministers of like-minded countries in the run-up to the ministerial?

We had a meeting in Turkey when we had gone for the G20 meet. Subsequently, during the RCEP, we met again. Telephonic conversations have also happened.

What could, therefore, be the meeting points and your wish-list at Nairobi?

My wish list for Nairobi would be food security. On “no go” or “reject” area, there is an attempt of late to differentiate between developing countries and emerging economies. That differentiation is unacceptable to me. That is based on some countries within the emerging markets growing at a faster rate like India, whose growth rate is 7.5 per cent. So, they want India to step up its commitment and treat us differently from the rest of the members. My growth rate is 7.5 per cent but my per capita is nowhere in comparison with other emerging markets. If you look at the landscape of India, the difference between one region and another, some parts are so backward and have no basic infrastructure. So, my developmental goals or parameters are not evenly spread across my own country. So, how can just by saying 7.5 per cent GDP growth, you are different from the rest of the LDCs. I am certainly not a LDC, I agree, but from among the emerging economies, I cannot be removed just because I am growing at 7.5 per cent. So, that differentiated treatment I reject.

SOURCE: The Hindu Business Line

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Canadian companies explore investment scope in urban areas

A delegation from 18 Canadian infrastructure companies today held extensive discussions with Urban Development Minister M Venkaiah Naidu and senior ministry officials on investment opportunities in various urban sector initiatives launched over the last one year. The companies, which were part of the delegation, are involved in construction of high performance buildings, providing intelligent LED-based lighting solutions, low power and cost effective embedded hardware and software technologies, sanitation solutions, solid waste management technologies, water treatment technologies, development of theme parks, converting solar fuel into light, architecture, planning and engineering solutions to urban issues. Naidu informed the delegation that investment climate in urban areas of the country is improving further to launch of new initiatives like Swachh Bharat Mission, Smart City Mission and Atal Mission for Rejuvenation and Urban Transformation ( AMRUT), under which, he said, urban local bodies are rediscovering themselves.

Elaborating on this, he said urban local bodies across the country have undertaken comprehensive urban planning including identification of infrastructure deficiencies at city level and evolving strategies to overcome them. Capacity building of urban local bodies is receiving priority attention to ensure they are able to cope with the challenges, the Minister said. "The Government has taken several measures to improve the ease of doing business in urban areas by streamlining approvals for investment projects which will facilitate investment flows," Naidu said.

Giving an account on investment opportunities in urban areas, UD Secretary Madhusudhan Prasad said that the ongoing efforts to rectify deficiencies in basic urban infrastructure alone offers an investment opportunity of over USD 1,000 billion and Smart City Mission offers even more. He urged the Canadian companies to participate in special purpose vehicles to be floated under various new urban missions besides investing in projects. The delegation interacted with the senior officials of the Ministry for over hour seeking information and clarifications on various aspects of new urban schemes and their implementation processes. Robert McCubbing, Counsellor (Commercial), High Commission of Canada, said that his country which is a leader in PPP model of investments was keen that Canadian companies make use of the huge investment opportunities in urban India. The delegation comprised of representatives of companies viz., Clearford, AB Embedded Systems, Premier Tech Aqua, NMC Ontario, Forrec, LED Roadway Lighting, Air Canada Cargo, Bomardier Transportation, IBI Group, Ovivo, Sentinel Waste, R.V.Anderson Associates Ltd., RWDI, International Road Dynamics, Arcop, Palmex, Challenger Manufacturing and World Council on City Data (WCCD).

SOURCE: The Economic Times

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Dubai, Japan firms sign MoU to explore business in India

An Indian-owned business house here has signed an MoU with a Japanese company to form a joint venture for exploring business opportunities in the logistics sector within the Indian subcontinent apart from Middle East and Japan. Transworld Group and Yokohama-based Suzue Corporation have signed a Memorandum of Understanding for the formation of a joint venture company which will capitalise in providing services like international freight forwarding, customs clearance, warehousing services, land transport services and other related logistic services. "The agreement assumes importance due to the enhanced trade ties between Japan and India strengthened by the visit of Prime Minister Narendra Modi to Japan in September 2015 and the impending visit of Prime Minister Shinzo Abe to India this month," said Strategy and Planning Director of Transworld Group, Ritesh S Ramakrishnan. "We will utilise our experience and expertise in the Middle East to extend the services in this region too. With the possibility of the introduction of shinkansen technology in India, enhanced defence ties and negotiations for a civil nuclear cooperation agreement that would pave the way for exporting Japanese reactors to India, the two-way trade is expected to grow manifold and we hope to play a key role in that space," said Ramakrishnan. While Transworld Group's logistics arm in the Middle East, Transworld Logistics FZE, will handle operations in the United Arab Emirates and Middle East, Shreyas Shipping and Logistics Limited, part of Transworld Group, will manage the business in the Indian Sub-continent and Suzue Corporation will oversee the Japan end.

SOURCE: The Economic Times

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Yuan closes at four-and-a-half-year low

China's yuan closed at its lowest level in nearly four and 1/2 years on Friday, raising questions over how far Beijing will let the currency weaken. The yuan CNY=CFXS fell 0.3 percent on the day, taking its losses this year to nearly 4 percent, but there were no signs of broader global market panic like that which China triggered in mid-August when it surprisingly devalued the currency. Friday's lowest point for the yuan was 6.4564 to the dollar, in the late afternoon, before it closed at 6.4553. For the week, the yuan fell 0.8 percent, its biggest loss since the devaluation and a sixth straight week of declines - the longest such streak since December 2005, according to Thomson Reuters data.

After the currency on Friday morning breached a low hit in August after Beijing's devaluation, major state banks were suspected of entering the market to help stabilize for the People's Bank of China, traders said. The central bank has been conspicuously absent from markets in recent sessions, leading many traders to believe it is content to let the currency to depreciate gradually in the face of the U.S. dollar's relentless rise. "The PBOC will move more aggressively from a managed float to a more market based FX policy, meaning little to no intervention which should lead to further weakness," predicted Stephen Innes, senior trader at OANDA in Singapore. A senior trader at a Chinese commercial bank in Shanghai said the government "has internal targets for the yuan, though we're not certain of the ranges. But the market generally agrees 6.50 may be the upper limit the central bank is willing to permit this year."

NO PANIC THIS TIME

August's depreciation sparked strong PBOC intervention to support the currency, even though it said the devaluation was part of moves to let the yuan trade more freely. Unlike in August, when they were stunned by devaluation, traders in China were calm about the yuan's recent slide. "Trading was quite normal, unlike a flurry of sales in August," said a dealer at a European bank in Shanghai. "The yuan is weakening all this week, but the market was less panic than in mid-August, leaving the central bank in no hurry to take action." Prior to Friday's market opening, the PBOC set its official yuan midpoint rate CNY=SAEC t 6.4358 per dollar, its weakest level since Aug. 5, 2011. The weak yuan was one factor hurting Chinese stock markets on Friday. "If the yuan continues to depreciate, that's negative to stocks as well, because it means investors are not confident about China's economic restructuring," said Linus Yip, chief strategist at First Shanghai Securities.

LINK WITH SDR MOVE?

The yuan started weakening a few days after the International Monetary Fund's Nov. 30 announcement that the currency would enter its Special Drawing Rights (SDR) basket, a milestone in China's integration into global finance. Hours after the announcement, the PBOC said there was no basis for the yuan to continue to devalue, and made clear China would keep the currency basically stable as it would intervene when there were abnormal movements. Markets were rife with speculation that Beijing would let the yuan depreciate after the SDR inclusion, and the performance this week appears to justify that view, some traders said. However, other traders suspect the PBOC is increasing the volatility of yuan trading, letting it depreciate before the Federal Reserve's U.S. rate decision next week, and will then guide it to appreciate afterwards. Speculators have been burnt many times by the PBOC's temporary tolerance of sharp yuan movements in one direction, followed by a hard strike back in the opposite direction. "If the PBOC intervenes to defend the yuan's value, the lower limit is likely to be 6.4 per dollar, leaving the yuan to move in a wide range of 1,000 pips," said a dealer at another Chinese commercial bank in Shanghai. In the offshore market, the yuan CNH=D3 was quoted at 6.5356 per dollar, having lost 1.4 percent so far this week. The spread between onshore and offshore yuan widened to more than 800 pips.

SOURCE: The Reuters

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Oil slides to new seven-year low as IEA warns of worse glut

Crude oil prices hit fresh seven-year lows on Friday as the International Energy Agency (IEA) warned global oversupply could worsen in the new year. Brent slipped below $39 per barrel for the first time since December 2008 as the IEA, which advises developed nations on energy, warned that demand growth was starting to slow. "The technicals and the fundamentals are singing from the same hymn sheet," said Tamas Varga, oil analyst with PVM Associates. "We will not see support until we hit the lows of 2008." Brent crude futures were down 60 cents at $39.13 a barrel at 1058 GMT, bouncing slightly from a session low of $38.90. West Texas Intermediate (WTI) U.S. crude futures were at $36.26 per barrel, down 50 cents after touching $36.12, their lowest since February 2009. Varga said there was room to fall further, with little support likely until oil reached the 2008 lows of $36.20 per barrel for Brent and $32.40 per barrel for WTI.

Prices have tumbled this month after OPEC failed to impose a ceiling on output. OPEC producers pumped more oil in November than in any month since late 2008, some 31.7 million barrels per day. "Consumption is likely to have peaked in the third quarter and demand growth is expected to slow to a still-healthy 1.2 million bpd in 2016, as support from sharply falling oil prices begins to fade," the IEA said in its monthly report. Should sanctions on Iran be lifted, its exports could rise, adding to the market's oversupply. "The next quarter is going to be particularly tough as we go from a high-demand to a low-demand quarter," said Richard Gorry, director of consultancy JBC Energy Asia. "Can you rule out $20 per barrel? No, you can't," he said, although adding that prices would not likely fall that far. Still, the IEA said the pace of stock-building should roughly halve next year and that it was very unlikely that global storage capacity would be filled. "Concerns about reaching storage capacity limits appear to be overblown," it said. The IEA said it expects a decline in non-OPEC production in 2016, as U.S. light tight oil shifts into contraction, and it that further spending cuts could spur deeper output declines. "There is evidence the Saudi-led strategy is starting to work," the IEA said, referring to the producer group's decision to maintain high output to safeguard market share. U.S. shale oil production, the main driver of non-OPEC supply growth, is expected to fall for a ninth consecutive month in January, a forecast from the U.S. Energy Information Administration showed this week.

SOURCE: The Business Standard

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US seeks new group for China, India at WTO

At the World Trade Organisation (WTO) headquarters in Geneva, there have been voices — largely from the US — suggesting that a new category of countries be created apart from the three main groups — developed, developing and least developed countries. It has been suggested that the new group should comprise the rapidly growing economies, such as China and India, which have gained considerable mass in recent years. Although there has not been an explicit demand to create a new group of emerging countries, there have been discussions behind closed doors that have raised eyebrows in the Capital. After all, this move has the potential to change the way global talks have taken place in the past and the impact may be felt beyond trade. "It has strategic implications that go beyond just WTO. If the demand finds merit then other negotiations, including the climate talks, may be impacted," said a source based in Geneva.

At the WTO, it would push China, India and others, which fall into the same category of advanced developing countries, to go for sharper duty cuts and adjust their rules related to, say, trade facilitation, more quickly than developing countries.Economists, however, believe that the demand may be a little premature given that there is huge disparity between the developed countries and those in the second group, such as China and India. "Size of China's economy is same as US, but China's per capita income is 22per cent of the US per capita income because China has four-and-half times more people. It makes Chinese per capita income like where US income was in late 1920s or mid-1930s," former US treasury secretary Larry Summers had pointed out in a recent interview to TOI. Currently, Chinese per capita income is around 14per cent of the US level.
India fares even worse. It's per capita GDP is less than half of Indonesia's level and around one-fifth of China's. In fact, on several human development indicators, India can be compared with the poorest countries. But the noise has certainly made the government wake up and take note. "We will certainly say no to differentiated treatment, where you want to differentiate between developing countries with high and low growth rates... India may have avery high growth rate but the development indicators are not well spread," commerce and industry minister Nirmala Sitharaman said, pointing out that even basic infrastructure is missing in some parts of the country.

SOURCE: The Economic Times

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Italy to boost trade links with Ethiopia

Italian Vice Minister for Economic Development Carlo Calenda accompanied by under secretary Foreign Affairs and President of ICE, the Italian Trade Agency and higher official are on their official visit to Ethiopia endeavoring at boosting trade links between the two countries on December 10, 2015. Italy’s Trade Agency in Addis Ababa said that visit would also identify new possible areas for collaboration from which mutual gain will be obtained for the two nations. The Agency specifically wants to bring Italy’s experience in mechanical engineering related to sectors like textiles and clothing, leather and tannery, chemical and pharmaceutical products, to Ethiopia. The mission also plans to officially open Italian Trade Agency’s Addis Ababa office, which will be in charge for facilitating the bilateral trade between the two nations, as well as Italy and other nine African countries. It is also looking ahead to sign a MoU agreement between Ethiopian Textile Industry Development Institute and Association of Italian Textile Machinery Manufacturers to set up Technological Center in Addis Ababa.

SOURCE: Yarns&Fibers

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China's stabilising growth removes US Fed rate hurdle

China's latest round of data showed fresh evidence of stabilisation in the world's second-largest economy, clearing a potential hurdle for higher borrowing costs in the biggest as US Federal Reserve Chair Janet Yellen and her colleagues meet this week. Bloomberg's monthly China gross domestic product tracker picked up to a 6.85 per cent estimated growth pace for November, the best reading since June, after reports on Saturday on industrial production, retail sales and fixed-asset investment all exceeded forecasts. Unexpected strength in China's old growth drivers and renewed vigour in new ones help clear the way for the first US interest-rate rise since 2006. China has already cut rates to a record low and boosted fiscal spending - at the cost of adding to an already record amount of leverage that's weighing over long-term prospects. "China's real economy is stabilising tentatively at low levels," Wang Tao, chief China economist at UBS Group AG in Hong Kong, wrote in a note to clients after the data release. "The intensification of growth support already delivered and to come (both infrastructure and non-infrastructure related) should underpin near-term economic growth momentum."

Yuan basket

After six rate cuts since late last year failed to spur a faster expansion and exports posted a fifth-straight monthly drop, the People's Bank of China is also changing tack. A unit of the central bank signalled Friday that it would reduce the yuan's link to the dollar and instead value the yuan by tracking it against a broad range of currencies. Lending gave another sign of stabilisation last week as PBOC data showed new yuan loans rose to 708.9 billion yuan in November, up from a 15-month low, while China's broadest measure of new credit rebounded to 1.02 trillion yuan ($158 billion) for the month. Saturday's reports showed industrial output climbed 6.2 per cent in November from a year earlier, compared with a 5.7 per cent median estimate of economists surveyed by Bloomberg. Retail sales gained 11.2 per cent for the best reading of 2015, while fixed-asset investment increased 10.2 per cent in the first 11 months of the year. "The risk of a hard landing remains low," Louis Kuijs, head of Asia economics at Oxford Economics Ltd in Hong Kong, wrote in a note. "The macro-policy easing measures taken earlier this year have had a favourable impact on growth." Policy makers have added stimulus as growth slowed from 7.3 per cent last year to 7 per cent in the first half and to 6.9 per cent in the third quarter.

Saturday's releases followed others last week showing the year-long slide in imports is moderating and that consumer inflation is picking up. Policy makers have added stimulus to help maintain medium to high-speed growth while shifting to a more balanced, services and consumption-led economy and away from manufacturing and infrastructure spending. "Stimulus is gaining traction in stabilising growth," Bloomberg Intelligence economists Fielding Chen and Tom Orlik wrote in a report on Saturday. "Resilient numbers from China clear a potential obstacle to Fed lift-off in the week ahead. Stabilising growth reduces the urgency for China's policy makers to add to their own stimulus." Fed policy makers will gather in Washington on December 15-16 for their last policy meeting of 2015. Officials put off a rate increase in September because of growing risks, mainly from China, to their outlook for economic growth and inflation even as they continued to say they were on track to raise the target later this year, meeting minutes show.

Weaker yuan

As speculation US rates will rise boosted the dollar, the PBOC last week allowed more yuan weakness. On Friday, the central bank's China Foreign Exchange Trade System (CFETS) unit spurred speculation that policy makers want to reduce the currency's link to the dollar and let it weaken further. The new yuan index will be composed of 13 currencies to "help bring about a shift in how the public and the market observe RMB exchange rate movements," CFETS said in a statement released late Friday. Loosening the link to the dollar, which has climbed to the highest in more than a decade against major peers, would help support trade for China's export-dependent economy. The change "could end up being a significant shift in currency policy," Mark Williams, the chief China economist at Capital Economics Ltd. in London, wrote in a note. "The timing of this announcement is significant, on the cusp of tightening by the Fed, which could feed further dollar strength."

SOURCE: The Business Standard

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