The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 29 JULY, 2021

NATIONAL

INTERNATIONAL

Pre-pack scheme: Lok Sabha clears Bill to replace Insolvency and Bankruptcy Code ordinance

 The Ordinance was promulgated on April 4, days after the government lifted a one-year suspension of insolvency proceedings against Covid-related defaults. The Lok Sabha on Wednesday approved the Insolvency and Bankruptcy Code (amendment) Bill, which will replace an Ordinance that was promulgated in April to introduce a so-called pre-pack resolution scheme for micro, small and medium enterprises (MSMEs). The scheme allows only the debtor to trigger its own bankruptcy process with the approval of financial creditors having at least 66% of voting power. It will yield resolution faster than the extant corporate insolvency resolution process (CIRP) and cut costs, analysts reckon. If lenders wish to trigger insolvency against MSMEs, they can still do so but under the usual CIRP. Amid din in the Lok Sabha, the Bill was passed without a proper discussion. Minister of state for finance Bhagwat Kishanrao Karad said the IBC has improved ease of doing business in the country since its inception five years ago. The latest amendments are necessary due to the prevailing situation arising out of the unprecedented pandemic. The Ordinance was promulgated on April 4, days after the government lifted a one-year suspension of insolvency proceedings against Covid-related defaults. Given that cash-starved MSMEs have limited wherewithal to go through a long and rigourous insolvency process, the time-limit for resolution has been drastically reduced. Pre-pack resolution plans have to be submitted in only 90 days and the NCLT will have another 30 days to approve them. The IBC currently stipulates a maximum of 270 days for the completion of the entire CIRP. Under the pre-pack arrangement, honest promoters will be allowed to submit the base plan for resolution, which will then be put to competitive bidding through Swiss challenge. However, in cases where operational creditors are not required to take a haircut, the promoter’s plan, backed by financial creditors with at least 66% of voting power, can be presented before the National Company Law Tribunal (NCLT) for clearance. Also, promoters will continue to run the MSMEs, unlike in the CIRP where the resolution professional gets to run the affairs with guidance from financial creditors. Since MSMEs typically account for the largest chunk of insolvency cases, the pre-pack scheme will help them resolve stress better and faster, analysts say. As part of its measures to soften the Covid-19 blow, the government had last year proposed to bring in a special framework for these small businesses. The scheme is based on the report of a panel headed by Insolvency and Bankruptcy Board of India (IBBI) chairman MS Sahoo.

Source: Financial Express

Back to top

Govt seeks stakeholder inputs on IPR issues in trade pact with UK

 The Department for Promotion of Industry and Internal Trade (DPIIT) said that IPR plays a critical role and this agreement would be of significant importance to IP intensive industries, both creative and technology driven. The government on Wednesday sought suggestions from stakeholders and industry bodies on intellectual property rights (IPR) issues in the proposed IndiaUK Enhanced Trade Partnership. The Department for Promotion of Industry and Internal Trade (DPIIT) said that IPR plays a critical role and this agreement would be of significant importance to IP intensive industries, both creative and technology driven. “In this context, the department is carrying out consultations on future trade negotiations between India and UK, which will last for a period of one month,” DPIIT said, asking the stakeholders to submit the details latest by August 10, 2021. The department has asked stakeholders to furnish details on the IPR areas which are of “prime considerations” such as patent, trademark, copyright, design, geographical indications, enforcement, commercialization and technology transfer, and regulatory approval. As per the proforma issued by the DPIIT, they also have to provide areas of concern such as filing, registration, enforcement or commercialization of stakeholders’IP rights in the UK, and the level at which the challenges were observed such as IP offices, enforcement agencies or any other government or regulatory agency besides the focus areas for the government in its collaborative efforts with the UK.

Source: Economic Times

Back to top

Govt seeks stakeholder inputs on IPR issues in trade pact with UK

 The Department for Promotion of Industry and Internal Trade (DPIIT) said that IPR plays a critical role and this agreement would be of significant importance to IP intensive industries, both creative and technology driven. The government on Wednesday sought suggestions from stakeholders and industry bodies on intellectual property rights (IPR) issues in the proposed IndiaUK Enhanced Trade Partnership. The Department for Promotion of Industry and Internal Trade (DPIIT) said that IPR plays a critical role and this agreement would be of significant importance to IP intensive industries, both creative and technology driven. “In this context, the department is carrying out consultations on future trade negotiations between India and UK, which will last for a period of one month,” DPIIT said, asking the stakeholders to submit the details latest by August 10, 2021. The department has asked stakeholders to furnish details on the IPR areas which are of “prime considerations” such as patent, trademark, copyright, design, geographical indications, enforcement, commercialization and technology transfer, and regulatory approval. As per the proforma issued by the DPIIT, they also have to provide areas of concern such as filing, registration, enforcement or commercialization of stakeholders’IP rights in the UK, and the level at which the challenges were observed such as IP offices, enforcement agencies or any other government or regulatory agency besides the focus areas for the government in its collaborative efforts with the UK.

Source: Economic Times

Back to top

India’s GDP growth lower than Bangladesh’s, inappropriate to compare two economies: Govt to Parliament

 “India has been registering a fair GDP growth rate(at constant prices)…Though the growth rates are less than those of Bangladesh during 2017 to 2020, such comparison of economies of significantly different sizes may not be appropriate,” Rao Inderjit Singh said in a written reply. Minister of State (independent charge) for statistics and programme implementation Rao Inderjit Singh told Lok Sabha that though the gross domestic growth (GDP) growth rates of India’s economy are less than those of Bangladesh during 2017-2020, such comparison of economies of significantly different sizes may not be appropriate. “India has been registering a fair GDP growth rate(at constant prices)…Though the growth rates are less than those of Bangladesh during 2017 to 2020, such comparison of economies of significantly different sizes may not be appropriate,” he said in a written reply. India’s economy grew 8.3%, 6.8%, 6.5%, 4.0% and -7.3% in FY17, FY18, FY19, FY20 and FY21, respectively. “Year 2020-21 GDP growth witnessed a decline due to Covid-19 pandemic,” Singh said. GDP growth rates of Bangladesh (at constant price) are 7.1%, 7.3%, 7.9%, 8.2% and 2.4% for the years 2016 to 2020 respectively as per the world bank database. In a separate reply, Singh said that the government released Rs 1,107.5 crore under the Members of Parliament Local Area Development Scheme (MPLADS) fund against the pending instalments of 2019-20 and previous years in 2020-21 to clear. The government has also decided to release all pending instalments of 2019-20 in respect of Members of Parliament of Lok Sabha and Rajya Sabha during 2021-22, subject to the fulfilment of eligibility criteria and submission of eligible documents by district Authorities, as per the MPLADS guidelines. Singh said that there are no proposals under consideration of the government for restoration of MPLADS funds for 2020- 21 and 2021-22 and to increase the MPLADS allocation to Rs 10 crore from Rs 5 crore.

Source: Economic Times

Back to top

Government launches digital tools to improve logistics efficiency, sustainability

 “These digital initiatives have been launched to fill the gap areas where no action has yet been taken either by private players or any of the line ministries,” the commerce and industry minister said in a release. The government has launched the Secured Logistics Document Exchange (SLDE) along with a Calculator for Green House Gas Emission to improve ease of doing business, logistics efficiency, reduce logistics cost, and promote multi-modality and sustainability. “These digital initiatives have been launched to fill the gap areas where no action has yet been taken either by private players or any of the line ministries,” the commerce and industry minister said in a release. The SLDE platform is a solution to replace the present manual process of generation, exchange and compliance of logistics documents with a digitized, secure and seamless document exchange system. It will enable generation, storage and interchange of logistics-related documents digitally using Aadhaar and blockchain-based security protocols for data security and authentication, provide a complete audit trail of document transfer, faster execution of transaction, lower cost of shipping and overall carbon footprint, along with easy verification of authenticity of documents. “The proof of concept of the platform has been developed and executed with banks (ICICI, Axis Bank, NSE 0.49 % and HDFC Bank) and stakeholders including freight forwarders, exporters, importers and vessel operators,” the ministry said. GHG emissions for choosing sustainable and right mode of transport for freight movement aim to fill the gap areas where no action has yet been taken either by private players or any of the line ministries.

Source: Economic Times

Back to top

Textile cos rally as Street bets on gains from US-China tiff

About 30 textiles stocks rallied between 5% and 20% Wednesday, with most of them locked in the upper circuit. KPR Mills, Welspun India, Vardhman Textiles, Arvind Fashion, and Siyaram Silk have gained between 30% and 50% in the last month. The Nifty index has declined 1% in this period. Shares of textile makers extended their run-up in an otherwise subdued market as investors bet the local industry would be one of the top beneficiaries of the escalating tensions between Washington and Beijing. Indications of strong demand from the US and European countries also aided sentiment. About 30 textiles stocks rallied between 5% and 20% Wednesday, with most of them locked in the upper circuit. KPR Mills, Welspun India, NSE 0.99 % , Arvind Fashion,……………….

Source: Economic Times

Back to top

India expected to see 7 per cent growth next fiscal: Chief Economic Adviser K V Subramanian

 The International Monetary Fund (IMF) on Tuesday cut its economic growth forecast for India to 9.5 per cent for the fiscal year to March 31, 2022 as the onset of a severe second COVID wave cut into recovery momentum. This forecast for 2021-22 is lower than the 12.5 per cent growth that IMF projected in April before the second wave. Chief Economic Adviser K V Subramanian on Wednesday said India is expected to hit a growth rate of 6.5-7 per cent in 2022-23 and accelerate further to 8 per cent in the subsequent years on the back of reforms undertaken by the government. He also said the government is expected to meet the fiscal deficit target of 6.8 per cent in the current fiscal despite pressure on revenue collections. "Our projection is that from FY'23, we should be hitting a growth of 6.5-7 per cent... accelerating from there onwards hitting between 7.5 and 8 per cent as the impact of all these reforms is felt both on the investment rate, which will start touching 40 per cent, and the incremental capital output ratio, basically productivity, which will also improve," he said. IMF has projected a growth rate 8.5 per cent for the next financial year, he said while addressing a virtual event organised by BASE University. The International Monetary Fund (IMF) on Tuesday cut its economic growth forecast for India to 9.5 per cent for the fiscal year to March 31, 2022 as the onset of a severe second COVID wave cut into recovery momentum. This forecast for 2021-22 is lower than the 12.5 per cent growth that IMF projected in April before the second wave. For 2022-23, IMF expects economic growth of 8.5 per cent, higher than 6.9 per cent it had projected in April. Besides, he said, linking of reforms to additional funding by the Centre to States would encourage them to undertake reforms that will push growth. The Economic Survey 2020- 21, released in January this year, had projected a GDP growth of 11 per cent in the financial year ending March 2022. The Survey had said growth will be supported by supply-side push from reforms and easing of regulations, push for infrastructural investments, boost to manufacturing sector through the Production-Linked Incentive (PLI) schemes, recovery of pent-up demand, increase in discretionary consumption subsequent to rollout of vaccines and pick up in credit given adequate liquidity and low interest rates.

Source: Economic Times

Back to top

Indian govt needs to do more to convince banks, NBFCs to lend to MSMEs: AIIB senior economist

The Indian government needs to take more steps to encourage banks and nonbanking financial companies (NBFCs) to lend more to MSMEs, according to Asian Infrastructure Investment Bank (AIIB) Senior Economist Abhijit Sengupta. He said the Emergency Credit Line Guarantee Scheme (ECLGS) launched by the government last year was a step in the right direction in ensuring credit flow to micro, small and medium enterprises (MSMEs). Under the scheme, collateral-free loans are given to MSMEs. "I think the government has to do more in terms of convincing banks and NBFCs to come out of their risk aversion to lend to MSMEs, especially when the economy is not doing well," Sengupta said at a virtual session on World Trade Day 2021, organized by World Trade Center Mumbai. He said the key issues that MSMEs face in interest rate transmission are the high cost of supervision and due diligence. Sengupta further said over the last one-and-a-half years, a lot of progress have been made on digitisation, and these channels can be used to ease the supervision of MSMEs for banks. It will make it easier for banks to be able to get adequate information on MSMEs and to disburse loans, he said. Globally, it is seen that the lower interest rate does not always translate to cheap funds for MSMEs due to several other factors affecting the transmission channel, he pointed out. "Given that there are a lot of other rigidities in the transmission channel, especially in emerging economies... the policy rates have not always translated into cheap assets for MSMEs," Sengupta added. He said over the last one-and-a-half years, the imposition of trade restriction measures between countries has increased. The whole world is turning more protectionist and it is going to have long-term impact on the global recovery, he emphasised. AIIB has also proposed a USD 500 million program for India, called 'Creating a Coordinated and Responsive Indian Social Protection System' (CCRISP), to modernize social protection systems for informal and migrant workers. This program is proposed under the COVID-19 Crisis Recovery Facility of AIIB and is cofinanced by the World Bank.

Source: Economic Times

Back to top

Renegotiating FTAs: India and the European Union

There is a significant untapped potential to expand India-EU bilateral trade relation through an FTA After limited economic gains from its FTAs with Asian partners, India is reassessing its FTA options. While a good beginning has been made with the UK, India must also renegotiate with the EU—the bloc is very important for India as far as trade relations are concerned, and an FTA with the EU is, thus, based on sound reasoning. But economic theory tells us that FTAs are not always sure-win strategies because these create as well as divert trade. FTAs need to be designed in a manner that they enhance complementarities amongst partners and overcome regulatory hurdles that inhibit trade. A few examples will help explain this. Textiles, leather and apparels are a dominant sector of exports from India to the EU, accounting for about one-fourth of our total exports in this sector. Although India benefits from the EU’s Generalised System of Preferences (GSP), the current list of graduated products for India includes textiles. Through the FTA, we can aim to achieve a better or at least the same preferential treatment in key products of our export interests. Regulatory provisions regarding labour and environment that the EU has been demanding will need to be watched for, to realise this potential. Turning to services, the Europa website indicates that the EU imports around 7.45% of its total telecommunication, computer and information services from India. Similarly, in ‘other business services’ (which include professional services and management consulting services), India accounts for 3.6% of the total EU imports, and almost half of the EU’s services imports are from India. The FTA should deliver on enhancing India’s market access in these key services. For this to happen, regulatory barriers in cross-border supply as well as provision of services through temporary movement of professionals will need to be addressed. It has been reported that the FTA will be remodelled into three separate deals—trade, investment and geographical indications (GIs). While the investment deal is seen as a standalone agreement, the one on GIs could be integrated with the trade deal. Investment is often a prerequisite for trade in services, and is complementary to goods trade, and several comprehensive trade agreements include an investment chapter. It appears the EU is keen on a standalone investment agreement due to the uncertainty regarding conclusion of a trade deal, which has been plagued with many issues in the past. Also, since India unilaterally terminated bilateral investment treaties (BIT), including those with the EU member states, the EU appears to be keen to conclude an ambitious investment deal that includes Investor-State Dispute Settlement (ISDS) provisions. We will need to see how this fits in our new model BIT architecture. It is also perplexing to see as to why GIs should be separated. FTAs usually contain a chapter on intellectual property issues. It may be in our interest to ensure that all the three negotiations move in parallel and feed into each other. The FTA negotiations had earlier hit a roadblock in 2013. Issues such as a certain degree of tariff liberalisation in goods especially related to automobiles, wines and spirits, and dairy; services liberalisation; issues related to temporary movement of professionals; data adequacy status; public procurement and competition; intellectual property particularly pharmaceuticals; and sustainable development are understood to have been the major areas of concern for us then. Clearly, we are in a better position today as we know the problem areas to work out the path ahead in terms of realistic and pragmatic landing zones on each of them. The FTAs concluded by the EU since 2013 (with Canada, Singapore and Vietnam) can also be a learning ground for us to understand the nuanced position of the EU in areas important to India. The UK was a key market in the EU, and with the Brexit the gains from the FTA get reduced to that extent. There is no gainsaying that there is a significant untapped potential to expand this bilateral trade relation through an FTA. India and the EU will, however, need to see that the deal is a win-win for both. Preparing in advance is the stepping stone towards a favourable outcome.

Source: Financial Express

Back to top

Why has the world not warmed up to Make in India?

 Weak infrastructure, lack of products of international standards are among a host of issues that bog down India’s manufacturing sector The government launched its ‘Make in India’ initiative in September 2014 as part of India’s renewed focus on manufacturing. The singular objective behind this was to promote India as the preferred destination for global manufacturing, and a slew of reforms were taken to boost manufacturing, design, innovation, and startups in India. The ‘Atmanirbhar Bharat” campaign announced last year was intended to further boost local manufacturing under its stated goal of making India economically self-sufficient. How far has Indian manufacturing progressed under these initiatives? Many types of evaluation criteria – including incremental changes in India’s exports – have been applied to gauge the impact of these initiatives. In my opinion, perhaps the most appropriate appraisal criteria is to answer the question: how seriously does rest of the world consider India as a global sourcing market?

A scattered success story There are certainly a handful of domains where India has carved a position of manufacturing leadership over the years. Apparel and accessories, textiles, drugs and pharmaceuticals, petroleum products and motor vehicles are on top of this list. However, we still have a long way to go before our manufacturing can match the success of our services exports, and one of the biggest issues is around certification. Corporations around the world increasingly prefer to source goods from factories that are ISO or BSI certified. In China, across most product categories, a huge majority of factories are ISO or BSI certified, but finding similar operations in India can prove to be an uphill task. We faced this challenge firsthand while looking for mask manufacturers last year. In India, CE and FDA certified manufacturers can perhaps be counted on one hand. Majority of them do not even meet any basic inspection standards. In comparison, China had hundreds of mask factories with CE and FDA certification. In most cases, practical issues like these are enough to discourage serious international buyers from considering India as a sourcing destination. Still, this is a problem that can and must be addressed at the manufacturers’ end. On the other hand, there is no end to the systemic issues plaguing Indian manufacturing. While we explore some of the critical issues below, we also find it saddening that our country is missing out on yet another global opportunity offered by the pandemic, as global corporations seek alternate manufacturing or sourcing bases to hedge their dependence on China. Why cannot India be their preferred choice?

The Tiger and the Dragon

While India and China have historically been seen as prominent manufacturing bases in Asia, both countries have very different manufacturing capabilities today. They also have a hugely contrasting socio-economic and political environment. At about $3 trillion, China’s manufacturing sector is ten times bigger than India. It is also currently in the midst of a 10-year transformational campaign, named ‘Made in China 2025’, which aims to move the country beyond labour-intensive manufacturing and into cutting-edge sectors like robotics and aerospace. India in contrast is still aiming to bring old-school, labour-intensive manufacturing to an economy that desperately needs to create millions of new jobs. Even this low-end goal has been hit by a faltering economy over the last two years.

Can India sell ‘Make in India’ India’s

weak infrastructure continues to be a fatal flaw for the manufacturing sector. Our country uses only 3% of its GDP for infrastructure construction each year, as compared to China’s 20% of its GDP. Even today, India’s surface transportation systems simply cannot meet the expectations of modern high-speed logistics – the backbone of efficient manufacturing. This point becomes clearer with the following illustrations. In China, it takes us just one hour by train to reach factories in Hangzhou, 200 km from Shanghai, with trains departing every 30 minutes from Shanghai. This journey used to take three hours until 2003. In comparison, the Mumbai-Pune journey with the same distance still takes 3.5 hours in the fastest train available. Poor and erratic electricity supply is yet another drawback that puts the country’s manufacturers at a distinct disadvantage. India’s annual power gap is more than 10% and it has among the lowest per capita power consumption around the world. To summarise, if infrastructure development has been at the centre of China’s manufacturing growth, India has completely missed this train.

What’s next for Indian manufacturers ?

For Make in India to bear meaningful success, we ought to demarcate ad hoc protectionist actions taken amidst a raging pandemic from holistic and thoughtful decisions, policies and practices for the post-pandemic age. As another case in point, cutting-edge manufacturing facilities of the future will require a greater number of physicists and chemical engineers – can India’s education policy incentivise enough students to take these specialisations so that we will not have talent shortages in future? Until we start to think and act on these lines, our dream of building a Aatmanirbhar Bharat will be difficult to realise.

Source: The Hindu Businessline

Back to top

China’s Growing Ties With Indonesian Provinces

Getting close to Indonesian provinces is a key goal of Chinese diplomacy and crucial for the implementation of the Belt and Road Initiative. In the midst of growing ties between China and Indonesia, one facet has been largely overlooked: the increasing partnership between both countries’ provinces. As a trading partner and export destination as well as the second largest investor in Indonesia, China has begun to look at the economic potential in a number of provinces in the archipelago. This month, for example, the Central Sulawesi provincial government signed a cooperation deal with China in the agricultural sector, especially the cultivation of soybeans in the region. Under the agreement, Beijing is expected to provide assistance for soybean seeds and agricultural technology. It is, however, important to note that China’s ties with Indonesian provinces are not a new development. Rather, China has been cultivating such relationships for several years, especially since the Belt and Road Initiative began to be implemented in Indonesia. For instance, China has also shown a great deal of interest in West Kalimantan. During a webinar entitled “Exploring the Economic Potential of China-West Kalimantan Post Pandemic” early this year, it was shown that the ties have been going on for some time. The deputy governor of West Kalimantan, Ria Norsan, said that there are 10 leading West Kalimantan export commodities sent to China, including mining goods, fishery products, and crude vegetable oil. Both sides are also reportedly planning to expand their ties in the furniture sector. Some provinces have additionally established sister province cooperation with their counterparts in China. Besides Jakarta’s relationship with Beijing, West Java province has established sister province ties with Guangxi, Chongqing, Sichuan, Henan, and Heilongjiang. These agreements have resulted in closer ties in the fields of agricultural culture, tourism, and manufacturing industry. In September 2019, the Chinese province of Shandong started cooperation with the Riau Islands in the development of Special Economic Zones (SEZs) in Bintan, namely in Galang Batang. In the same year, Lumajang District of East Java Province also discussed ties with Tianjin in the fields of investments, tourism, and exports. Bengkulu is another province that has forged its own ties to China. China has helped with the construction of Bengkulu’s Electric Steam Power Plant (PLTU), which will have an impact on the economic growth of the province. Further, in 2019, representatives from Bengkulu and China met to discuss the possibility of future cooperation, especially in the agricultural sector, with coffee commodities as the focus. Not far from Bengkulu, China has also sought to cooperate with South Sumatra and Lampung provinces. With Lampung, for instance, China has partnered with the Lampung Agricultural Technology Study Center (BPTP) on the monitoring and evaluation of hybrid rice development cooperation activities since 2013. The partnership also includes training researchers and other relevant stakeholders and the development of laboratories and other supporting facilities. Moreover, Bali has also been in cooperation with Yunnan Province in the economic and tourism fields since 2013. In 2019, there was a plan for the two provinces to open a direct flight to pave the way for more expansive business and people-to-people exchanges. East Java has also cultivated ties with Chinese provinces, especially Shanghai, Tianjin, Guangxi, Shandong, Zhejiang, and Jiangxi. Many Chinese companies have also made investments in East Java. While a Chinese consulate has been established in East Java’s capital, Surabaya, the province has also founded the Center for Exchange and Cooperation in Tianjin, with various activities being organized such as a Chinese Cultural Knowledge Competition. In addition, parliamentary representatives from East Java frequently exchange working visits with their Chinese counterparts. North Sumatra has also cooperated with China in recent years. This is particularly apparent with the presence of Chinese investments in the province, such as China Harbor Engineering Co. Ltd., which invested in the Medan-Kualanamu Airport toll road project. In addition, Shanghai Electric Power Construction Co. Ltd. invested in the 2×150 power plant project in the Medan Industrial Estate, and Guangdong Power Engineering invested in the first phase of the 2×150 MW Pangkalan Susu power plant project. Not only that, ties have also expanded into the fields of trade and education, so that the provincial government agreed to open direct flights to Guangzhou, Xiamen, and Chengdu in China. Another Indonesian province that has strong ties with China is West Nusa Tenggara (NTB). The ties began in 2004 after Beijing established a consulate in Bali. Cooperation mainly takes place in the fields of fisheries, animal husbandry, tourism, and the geothermal development plan. Investments have also been on the agenda, such as the cultivation of sisal on Sumbawa Island. Sisal is a plant widely used in making rope and certain textiles; Chinese investors are taking advantage of the potential for growing the crop on Sumbawa Island. It is also noteworthy that NTB has close ties with China’s Ningxia Province, particularly in the education, tourism, and halal product sectors, given the significant number of Muslims in the two provinces. Other provinces that have established ties with China include North Sulawesi on the development of Bitung as a Special Economic Zone; Pekanbaru on infrastructure development; Central Java and West Sulawesi on investments in infrastructures, electricity, solar plants, and tourism. The above developments show that China, in its ties with Indonesia, is not only engaging with the central government in Jakarta. In Beijing’s view, getting closer with Indonesian provinces is not only crucial for the implementation of the BRI; rather, it is a key goal of Chinese diplomacy. China wants to establish cultural links by encouraging people-to people and cultural exchanges at the local level. With China’s ties with Indonesia expanding, we can expect more provinces in Indonesia cooperating with China.

Source: The Diplomat

Back to top

French Parliament passes law to apply 'carbon labels' to garments

The French Parliament recently approved a climate bill that will introduce mandatory ‘carbon labels’ for goods and services, including clothing and textiles. The wider motive is to inform consumers about the environmental impact of their purchasing decisions. France banned brands from destroying leftover stock under an ‘anti-waste’ law last year. The legislation follows devastating floods that ripped through parts of Europe, submerging towns, killing nearly 200 and intensifying concerns over the effects of global warming. In 2018, the French Agency for Environment and Energy Management (ADEME) rolled out a labeling system that grades garments from A to E, with A being the most sustainable and E the least. According to a timeline from the ministry of ecological transition, a similar scheme is poised to become mandatory by 2023, according to European media reports. The country has a decade-old Extended Producer Responsibility Law, under which businesses are required to provide or manage the recycling of their clothing, textiles and footwear products at the end of their lives. Around 624,000 metric tonnes of textiles— equivalent to 2.6 billion pieces of clothing, household linens and shoes—are placed on the market in France every year, ADEME estimates. French shoemaker Veja reportedly has so far tallied the carbon burdens of some of its popular styles, ranging from 5.63 kg of carbon dioxide equivalent for the Nova High Canvas to 21.5 kilograms of carbon dioxide equivalent for the Esplar Leather.

Source: Fibre 2 Fashion

Back to top

Delay expected as deadline looms for AfCFTA rules of origin talks

When countries officially started trading under the AfCFTA in January this year, officials said that phase 1 negotiations covering trade in goods and services would be fully wrapped up by July. As reported by Reuters at the start of the year, Silver Ojakol, chief of staff at the AfCFTA secretariat, said nearly 90% of the rules of origin had been agreed by that stage and that the remaining 10% would be completed by this month. Rules of origin are crucial, and will have a material impact on how African companies trade with counterparts across the continent. There are thousands of tariff lines, and these rules will specify for each whether a product can be categorised as “Africa made” and eligible for tariff concessions. However, the deadline for finalising the criteria is fast approaching and analysts say will likely be missed with countries still at odds over rules of origin on dozens of goods. Stefano Inama, a trade and customs expert at the United Nations Conference on Trade and Development (UNCTAD), tells GTR that there is some disagreement between governments over rules of origin for products in a few “sensitive sectors”. Pointing to countries such as Egypt and South Africa, Inama says that certain governments harbour concerns that lax rules of origin could ravage their domestic manufacturing sectors, including textiles, clothing and automotives. One fear is that companies will undercut their domestic industries by importing cheap parts or materials from abroad. “With less stringent rules of origin, they are afraid that other countries will buy inputs from third countries such as China, carry out some manufacturing, then export to South Africa and Egypt, creating problems for their industries,” he notes. Overly stringent? With tariffs expected to be reduced or slashed altogether on 90% of goods traded in Africa by 2030, the African FTA is expected to drive up historically low levels of intra-African trade. According to the World Bank, if successfully implemented, the deal could boost regional income by 7% or US$450bn by 2035. Experts suggest that overly stringent rules of origin requirements may also be a hindrance to countries and their companies and lessen the impact of the FTA. Although UNCTAD is yet to carry out full analysis on rules of origin under the AfCFTA, Inama says that the rules of origin agreed so far appear to be stricter than those used by countries through their regional economic agreements, or in economic partnership agreements with the European Union. As such, in terms of preferential tariffs and rules of origin, African companies may in fact find it cheaper and easier to export to third markets such as the EU. Companies in Zimbabwe or Madagascar could well prefer to trade with counterparts in Europe over other firms in Africa, for instance, given their access to the EU market through a trade deal struck between the Eastern and Southern Africa bloc and Brussels. Inama suggests that too-stringent rules of origin may also deter local and foreign direct investment, which in turn could limit the expected growth of Africa’s manufacturing and agri-processing under the AfCFTA. “The big gain to be borne from the FTA is that foreign companies may invest in local industries and export into Africa. But if you have a more stringent rules of origin based in Africa, and you have a free trade agreement with a regional bloc on the continent, you’d likely remain in Europe and export from there.” According to the United Nations Economic Commission for Africa, negotiations on the second and third phases of the AfCFTA, which focus on investment, intellectual property, competition and e-commerce, are expected to commence later this year.

Source: Gtreview

Back to top