Textile Raw Material Price 2015-12-17
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
990.73 |
USD/Ton |
0% |
12/17/2015 |
|
VSF |
2092.74 |
USD/Ton |
-0.95% |
12/17/2015 |
|
ASF |
1928.14 |
USD/Ton |
0% |
12/17/2015 |
|
Polyester POY |
927.36 |
USD/Ton |
-1.64% |
12/17/2015 |
|
Nylon FDY |
2364.77 |
USD/Ton |
0% |
12/17/2015 |
|
40D Spandex |
4945.92 |
USD/Ton |
0% |
12/17/2015 |
|
Nylon DTY |
2612.06 |
USD/Ton |
0% |
12/17/2015 |
|
Viscose Long Filament |
5758.91 |
USD/Ton |
0% |
12/17/2015 |
|
Polyester DTY |
1174.66 |
USD/Ton |
-2.56% |
12/17/2015 |
|
Nylon POY |
2179.30 |
USD/Ton |
0% |
12/17/2015 |
|
Acrylic Top 3D |
2113.61 |
USD/Ton |
0% |
12/17/2015 |
|
Polyester FDY |
1004.64 |
USD/Ton |
-1.52% |
12/17/2015 |
|
10S OE Cotton Yarn |
1808.35 |
USD/Ton |
0% |
12/17/2015 |
|
32S Cotton Carded Yarn |
2983.01 |
USD/Ton |
0% |
12/17/2015 |
|
40S Cotton Combed Yarn |
3693.98 |
USD/Ton |
0% |
12/17/2015 |
|
30S Spun Rayon Yarn |
2782.08 |
USD/Ton |
0% |
12/17/2015 |
|
32S Polyester Yarn |
1576.51 |
USD/Ton |
0% |
12/17/2015 |
|
45S T/C Yarn |
2550.24 |
USD/Ton |
-0.60% |
12/17/2015 |
|
45S Polyester Yarn |
1746.53 |
USD/Ton |
-0.88% |
12/17/2015 |
|
T/C Yarn 65/35 32S |
2194.75 |
USD/Ton |
0% |
12/17/2015 |
|
40S Rayon Yarn |
2936.64 |
USD/Ton |
0% |
12/17/2015 |
|
T/R Yarn 65/35 32S |
2503.87 |
USD/Ton |
0% |
12/17/2015 |
|
10S Denim Fabric |
1.08 |
USD/Meter |
0% |
12/17/2015 |
|
32S Twill Fabric |
0.91 |
USD/Meter |
0% |
12/17/2015 |
|
40S Combed Poplin |
0.99 |
USD/Meter |
0% |
12/17/2015 |
|
30S Rayon Fabric |
0.73 |
USD/Meter |
0% |
12/17/2015 |
|
45S T/C Fabric |
0.74 |
USD/Meter |
0% |
12/17/2015 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.15456 USD dtd.18/12/2015)
The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The Goods and Services Tax (GST) is seen as key to facilitating industrial growth and improving business climate in the country. A constitutional amendment measure, the GST Bill needs to be passed by a two third majority in both houses of parliament and by the legislatures of half of the states in the country to become law. This will enable the GST to be introduced across the country. Following this, parliament and state legislatures will need to pass the GST bills that impose central and state GSTs. The Government is mulling the next target of implementing the GST around June 2016. The government earlier wanted to implement the new GST from April 2016.
According to V Lakshmikumaran, Managing Partner, Lakshmikumaran and Sridharan, introduction of this duty will boost Indian textile exports to a great extent easing the prices and making this industry internationally competitive. Hence, integrated companies should consider GST as a positive opportunity as the taxes will spur the textile sector with major capital investments bringing the cost of capital goods down for expansion of textile units, as it will be available as a creditor gain. With the implementation of the much-awaited bill, an input credit will lead to lowered input costs and reduced prices of the finished synthetic textile at the consumer level. On the contrary, for the natural fibers namely cotton and wool which are tax-exempt because naturally produced goods, any tax imposed now under the GST regime will be an extra cost to the companies and the ultimate consumers. On Indian textile export, that is one of the vibrant exports to all over the world. And as of now, all these things became cost and therefore, claiming the drawback or any other exemption became so cumbersome with the introduction of GST, the export market will open up, product will become cheaper, it will be internationally competitive and therefore, India can actually increase its share of the export market as far as textiles are concerned.
SOURCE: Yarns&Fibers
The midterm assessment of Maharashtra Textile Policy 2011-17 launched during the previous Congress-NCP regime revealed a grim situation both on revenue and employment fronts. The policy had stipulated generation of 11 lakh jobs and investment worth Rs40,000 crore in five years. The aim was to utilise 45 lakh surplus cotton bales produced in the state. As many as 967 projects worth Rs9,749 crore were approved in the state, which were to generate employment for 57,000 people – 5 percent of the total target of 11 lakh jobs of which only 112 projects, worth Rs3,300 crore, have been completed till now, creating 27,700 jobs, according to the data obtained from the Maharashtra textile department. This means, only 2.5 percent of jobs and nearly 8.25 percent of the projected investment have come into existence, as the policy crosses the halfway mark.While the figures highlight skewed response by the investors, the huge mismatch between the projected targets of revenue and employment also indicate the government's flawed approach, when it comes to crucial calculations.
According to a textile expert, it is impossible to create 11 lakh jobs with Rs40,000 crore investment. This could be due to ignorance or an errant approach while correlating investment and employment. Interestingly, half of the jobs in the second-largest sector will be created through smaller projects, worth Rs10 crore or lesser each. Over 840 projects in this category are expected to give jobs to 27,000 people. On the other hand, 18 projects worth Rs100 crore each will generate only 4,846 new jobs. The statistics also cast aspersions over the functioning of the BJP-Sena government, which is in power for the last one year. According to the sources, the new government has virtually junked the policy.
According to sources, the BJP leaders, however, hope things will improve once the government starts implementing some of the provisions of the new policy, as the existing one can't be abolished. As the Fadnavis government constituted a committee to formulate a new textile policy under BJP MLA from Ichalkaranaji, Suresh Halwankar, within two months of it taking over. The committee submitted its report in January. Now a fresh policy based on Halwankar committee report will be presented in the winter Assembly. Textile minister Chandrakant Patil said that they have already announced several measures to boost the textile sector. This includes realigning the policy as 'fibre to fashion' by setting up a mega textile hub in cotton-growing areas of Vidarbha. This will reduce the input cost, boosting investors' confidence. They would be able to compete in the international market.
SOURCE: Yarns&Fibers
Coimbatore textile mills having faced the hit in operations due to long hours of power cut have taken steps towards energy conservation as technology is available for every activity to bring down the electricity consumed in the mills, said M. Senthil Kumar, chairman of Southern India Mills’ Association. Be it the spinning mills or the humidification plants, machinery come with energy saving upgrades. At present, only two percent to three percent of the mills have gone in for LEDs. There is still much that can be done by the mills for saving energy in operations. Foundries and engineering units have started looking at ways to have better power supply, bring down the energy bill, and save on the power consumed. Though power cuts are not an issue here now, the units have tremendous scope for energy conservation.
According to Prabhu Damodaran, Secretary of Indian Texpreneurs Federation, the mills have scope for seven percent to 11 percent energy saving in a year if they take the required steps. The efforts should be two-pronged - monitoring and studying areas that need attention and taking the remedial measures. Since energy conservation requires investment, he said that they have asked the mills to prioritize areas that need to be addressed. In the case of power loom units, one option for bringing down the power consumed is by going in for solar panels. However, the investments are high and hence the units have sought subsidy from the central and State Governments.While according to J. James, president of Tamil Nadu Association of Cottage and Tiny Enterprises, micro units have not done much towards energy conservation. The rate that the micro units get for the job work they do for larger industries is not much and hence, these units are unable to invest in energy saving tools. Moreover, the micro units focus is more on day to day operations and not many units have the resources to take up energy conservation. However, it is an area that needs attention by the industry.
The Southern India Engineering Manufacturers’ Association plans to select a few foundries and pump set units for a study on energy. It has focused on energy conservation for the last two years. Though the level of awareness is high and there is a necessity to save energy consumed, the units are reluctant to invest because of the current market conditions. Also pumpset manufacturers who make Bureau of Energy Efficiency (BEE)-labelled products need to be encouraged by the Central and State Governments by making these products mandatory. It will bring more manufacturers into manufacture of energy efficient pumpsets for the agricultural sector.
SOURCE: Yarns&Fibers
In a bid to force lenders to effectively pass on policy rate cuts, the Reserve Bank of India (RBI) on Thursday said from April 1, 2016, banks must review their lending rates frequently, and reflect changes in their cost of borrowing. But customers taking loans at any given point cannot reset the terms before a specified period agreed upon at the time of the contract, usually a quarter or a year. The new lending rates, named Marginal Cost of Funds-based Lending Rate (MCLR), will be computed based on banks' marginal cost of borrowing, or incremental cost of funds, rather than the average cost of funds that banks have used so far. This means, that if a bank's cost of borrowing is eight per cent now but tomorrow the incremental cost of funds becomes 7.5 per cent, the marginal cost of borrowing for the computation purpose will be 7.5 per cent, rather than the average of the two. The reason for introducing this system is to force banks to pass on rate benefits to customers. Since January 2015, the central bank has lowered its policy rate by 125 basis points, but banks lowered their lending rates by only about 60 basis points. On the other hand, deposit rates have been slashed by more than 100 basis points, indicating that the incremental cost of funds has actually fallen more than what banks have passed on to their customers.
Bankers said the new norms will soften the blow on balance sheets since old loans would get repriced over period. Welcoming the new norms for loan pricing, Arundhati Bhattacharya, chairman, State Bank of India, said sufficient time has been given to banks to switch over to the new regime of Marginal Cost of Funds-based Lending Rate as it becomes effective from April 1, 2016. "With marginal cost of funds including tenure premium we have moved closer to international manner of benchmark rates," she added. "While these guidelines will benefit the new customers, existing customers will also have an option to shift to the new regime with some conditions," she also said. Existing borrowers can move to MCLR regime on mutually agreed terms. Such transition will not be treated as a foreclosure of existing loans. From April the effect of the new regime would begin to be felt in cash credit and bill-discounting, both of which have short tenure and home loans. "Together these constitute 50-60 per cent of bank loan books," Vibha Batra, co-head, financial sector rating, ICRA, said.
With the MCLR regime in place, a fall in deposit rates will be quickly reflected in the fall of lending rates. Similarly, when the deposit rates rise, lending rates will go up quickly too. To arrive at the final lending rate, a couple of expenses will be added to the cost of funds and then a spread, depending on the risk profile of the customer, will determine the final lending rate. A tenure premium, operating costs and a negative carry on account of cash reserve ratio would be added. The spread above this should be board approved and should remain fixed unless the risk profile of the borrower deteriorates. "Actual lending rates will be determined by adding the components of spread to the MCLR. Accordingly, there will be no lending below the MCLR of a particular maturity for all loans linked to that benchmark," the Reserve Bank of India said in its guidelines on MCLR. Banks will have to publish at least five MCLRs - overnight, one month, three months, six months and a year. They can also publish MCLRs of any longer maturity. Banks will be required to review and publish their MCLR of different maturities every month on a pre-announced date. However, the MCLR "prevailing on the day the loan is sanctioned will be applicable till the next reset date, irrespective of the changes in the benchmark during the interim," the central bank said, adding the periodicity of reset shall be one year or lower, or as agreed as per the terms of the loan contract.This means even as the bank's MCLR changes in between, a customer cannot change the interest rate before the reset date.
Ananda Bhoumik, managing director and chief analytical officer, India Ratings said, "The new rules will drive banks hard to match tenure (assets and funds) for protecting margins. Over a period of time, reset may become frequent. However, more clarity was needed in the rules for benefit of implementing them." Existing loans and credit limits linked to the base rate would continue till repayment or renewal, and banks will have to continue to review and publish base rate. But existing borrowers will have the option to move to the new MCLR linked loan, without being treated as a foreclosure of existing facility. This methodology of pricing base rates will be beneficial to borrowers in a falling interest rate scenario. But when interest rates go up, then the increase in rates also will be passed on to borrowers very fast, said S K V Srinivasan, executive director, IDBI bank.
SOURCE: The Business Standard
The government may look at cutting down excise duty on petrol and diesel to ease the burden on consumers as and when global crude oil prices start rising again from the current 11-year low levels, said Petroleum Minister Dharmendra Pradhan. He also said the government will protect its interest and the interest of ONGC in its ongoing gas row with RIL. “In case we feel there is a price burden on consumers, we may opt for excise duty cuts. The price of crude in the global market follows a cycle. Today, it is a downward trend. Prices may go up in future. Our priority is to give continuous relief to consumers,” said Pradhan, on the sidelines of an event on energy security organised by the Confederation of Indian Industry. Global crude oil prices have slumped to less than $35 per barrel, the lowest in the past 11 years, from a high of $116 per barrel in June 2014. Pradhan’s statement comes a day after the government raised excise duty on petrol by Rs 0.30 per litre and by Rs 1.17 a litre on diesel to make use of slump in oil prices to garner an additional Rs 2,500 crore in the remaining of the current financial year, ending March 2016. Basic excise duty on unbranded petrol was increased from Rs 7.06 per litre to Rs 7.36 and the same on unbranded diesel from Rs 4.66 to Rs 5.83 per litre. Oil marketing companies had on Tuesday cut retail prices of petrol by only 50 paise per litre and diesel rates by 46 paise, while the huge slide in crude prices in the last fortnight warranted a higher cut. Wednesday’s increase in excise duty was the second such hike in less than six weeks. The government had on November 7 raised excise duty on petrol by Rs 1.60 per litre and on diesel by 30 paise a litre. The government had mopped up Rs 3,200 crore through the excise duty hike.
Prior to the two hikes since November, the government had, in four instalments, raised excise duty on petrol by Rs 7.75 per litre and diesel by Rs 6.50 per litre between November 2014 and January 2015. The four hikes gave the government an additional Rs 2,000 crore last financial year. The Centre’s total collection from excise duty in the petroleum sector stood at Rs 99,000 crore last financial year and Rs 33,000 crore in the first quarter of the current financial year. Pradhan also said the view that consumers are not getting benefited as a result of the crude price decline is wrong. He argued petrol prices have been reduced as much as 20 times in the past year, leading to a reduction of more than Rs 13 per litre. Diesel prices have similarly been reduced 16 times by around the same quantum of Rs 13 per litre since June 2014. “India is a welfare state. From where would the funds come for investments in rural roads, health and water infrastructure? This is why state governments have raised value added tax rates and the Centre has raised excise duty,” he said. Pradhan also informed the single-member judicial commission, headed by former Delhi High Court Chief Justice A P Shah to look into the gas dispute between Reliance Industries and ONGC, will suggest ways to ensure such incidents do not recur, and the panel was constituted to “understand the financial implications and to protect the interest of the government and government companies”. He said the panel will look at the role and responsibilities to be assigned to all the parties involved in the case.
THE BIG DROP
Oil minister says the govt may look at cutting down excise duty on petrol and diesel to ease consumers’ burden. While global oil prices have slumped from $110 per barrel in June 2014 to $36 per barrel currently, petrol and diesel prices have not come down by the same amount. Reason: Six excise duty hikes since November 2014, including four in 2014-15, which helped the Centre mop up an additional Rs 22,000 crore in FY15. The two duty hikes in FY16 would provide Rs 5,700 crore. Dharmendra Pradhan (pictured) rejected the view consumers are losing the benefit of the crude price decline as petrol prices have been reduced 20 times and diesel 16 times in over a year. The minister said the Shah panel on RIL-ONGC gas row would probe ways of compensation for gas migration and help fix responsibility of the parties involved
SOURCE: The Business Standard
The gains India has been making on its import bill due to a steep fall in crude prices may be partially offset if the dollar strengthens more after the US Federal Reserve raised key rates after nine years, and indicated there would be more such increases in the future. Analysts said that a lot of the dollar appreciation is already factored into the commodity market, but they would be carefully watching the future rate actions of the Fed. "We are not worried on the dollar-rupee front. Crude is one of the biggest components of our imports, followed by gold. Capital will still come in, but some exporters could face some headwinds on account of weak demand. We feel most macro numbers are favourable to India rather than adverse," said SK Ghosh, chief economic advisor, State Bank of India. Crude oil prices have nosedived in the past year and a half and despite some intermittent recovery in between, the trend continues to be downwards. For India, lower prices mean lower import bill and more cash with public sector oil companies to make investments. But if the dollar strengthens against the rupee, the landing cost for crude imports may rise and wipe off some gains made by India, sector experts said. "Fed action was already factored into the currency and commodity market. Going ahead, though we will have to see how the dollar moves and if it adversely impacts the price of crude oil. If that happens, then India will not be hurt as the impact of rupee weakening would be offset by cheaper crude," said Debashish Mishra, senior directorconsulting at Deloitte Touche Tohmatsu India. Crude prices have plummeted to below $40 a barrel from $100 in July-August 2014. Currently, for every $1 decrease in crude prices, India saves Rs 6,500 crore on its import bill and another Rs 900 crore on subsidy burden. Crude prices are consistently falling due to worries of oversupply in the market. Iran has been scaling up output after international sanctions were lifted.
SOURCE: The Economic Times
With the US Federal Reserve raising interest rates for the first time in almost a decade, senior government officials on Thursday said the move will have minimal impact on India and won’t lead to any large-scale capital outflows. “As far as India is concerned, we are really well cushioned. Inflation is coming down, fiscal deficit situation is very good, external situation is also robust. So, I think for all these reasons impact on India would be very minimal,” chief economic adviser Arvind Subramanian said. The Fed raised interest rates by 25 basis point late Wednesday night with chair Janet Yellen saying would be followed by “gradual” tightening as officials watch for evidence of higher inflation. “What is very good is that the Fed chief has talked about the sustained nature of US revival, which I think is a good news for countries like India, which export a lot of IT and services to US,” economic affairs secretary Shaktikanta Das said. He also ruled out capital outflows from India under the current circumstances. While the move was widely expected, there were concerns that the Fed rate hike could result in foreign funds outflow from emerging markets like India.
Indian markets shrugged off any negative impact and the benchmark BSE Sensex index gained over 309 points in Thursday’s trade, which analysts attributed to the markets having already factored in the Fed rate hike. A spectacular rally by the rupee further supported the sentiment. The rupee climbed to a two-week high of 66.51 against the US dollar following heavy dollar unwinding after the Fed’s decision. Some analysts say the rate hike was more symbolic and was aimed at displaying the belief that the US economy has largely overcome the wounds of the 2007-2009 financial crisis. “It is very difficult to be sure that this is going to be the beginning of a rate cycle, because it is clear from the Fed statement that they are going to be very cautious going forward,” Subramanian said.
India not immune to rate hike jitters: Fitch
India is not immune to potential market jitters on account of interest rate hike by the US Fed, but favourable economic growth outlook makes it attractive for foreign investors, Fitch Ratings on Thursday said. The country’s lower dependence on exports and improved external balances make it better placed than many of its peers, it said. Thomas Rookmaaker, director, Sovereign Ratings, Fitch Ratings, said, “The Reserve Bank’s focus during the upcoming monetary policy reviews will increasingly shift to domestic parameters, critical being the growth-inflation rhetoric.”
‘India better placed on capital volatility’
The uncertainty over transition of the US monetary policy to normalcy could set off volatility in capital flows to emerging economies, but India is better-positioned to weather these challenges, Moody’s Investors Service said on Thursday. Moody’s Investors Service VP and senior research Analyst Rahul Ghosh said that besides the Fed rate action, a slowdown in the Chinese economy and falling commodity prices are other major global developments that could impact emerging markets.
SOURCE: The Financial Express
The government would soon roll out a final draft of the goods and services tax (GST) bill and drastically prune central exemptions, a senior finance ministry official said on Thursday. "The government will roll out the final GST draft paper in the public domain very soon," said Rashmi Verma, special secretary in the department of revenue, at a conference organised by the PHD Chamber of Commerce. Verma added the government would drastically prune the list of exemptions, now being enjoyed by business. The Centre's excise duty exemption list of around 300 items will be reduced to 90 items, in line with exemptions allowed by states from value-added tax. States exempt unprocessed goods and those consumed by the poor like fruit, vegetables, salt, grain and coarse fabric. The list of services exempt from levy will be reduced to include only essential services like health and education. Reduction in exemptions would result in a seamless flow of GST and substantially arrest its cascading effect, Verma said. Najib Shah, chairman, Central Board of Excise and Customs (CBEC), also said tax exemptions extended to business for expansion and diversification would have to go with the GST legislation becoming a reality.
The Congress has blocked passage of the Constitution amendment Bill for GST in the Rajya Sabha over key demands, including scrapping of the one per cent additional tax on interstate sales and incorporation of an 18 per cent peak tax rate within the Bill. The GST rollout is expected to be delayed beyond its target date of April 1, 2016. "The journey towards GST has been long. We will have to see whether it (the Bill) is passed in this session or in the coming Budget session. But, I can say with full confidence that GST is going to be a reality very soon," Verma said. "GST will subsume all indirect taxes like excise duty, sales tax and service tax. We have set the goal of rolling out GST in 2016," Verma added. Finance Minister Arun Jaitley on Wednesday, in an address to business representatives, hinted at accepting the Congress demand of scrapping the one per cent additional tax for interstate sales, but stood firm on not incorporating the ceiling tax rate in the Constitution amendment Bill. He added the standard rate under GST, which would apply to a majority of goods, would be less than 18 per cent. Chief Economic Advisor Arvind Subramanian has recommended a low GST rate of 12 per cent, a standard rate of 17-18 per cent, and a high rate of 40 for demerit goods like aerated drinks, luxury cars and tobacco.
A CUT ABOVE
The Centre's excise duty exemption list of around 300 items will be reduced to 90 items, in line with exemptions allowed by states from VAT. States exempt unprocessed goods and those consumed by the poor like fruit, vegetables, salt, grain and coarse fabric. The list of services exempt from levy will be reduced to include only essential services like health and education. Reduction in exemptions would result in a seamless flow of GST and substantially arrest its cascading effect
SOURCE: The Business Standard
The 25-basis point rate hike by the US Fed on December 16 was more or less a given, what with the upward revision of its Q3 GDP growth rate to 2.2 per cent from the earlier estimate of 1.5 per cent, and a decent non-farm payroll data. This is likely to be followed up by another 75 basis points in 2016. Besides, more hikes are expected in the future. If that happens, it will see the US dollar (USD) further strengthening against currencies of most emerging economies, especially the yuan. At the moment, yuan has a de facto peg with USD. If China continues to peg the yuan to USD, the cost of maintaining the peg will be huge.
Why?
Chinese exports decline by 3.7 per cent in November, its fifth consecutive decline. Producer price index (PPI) went down 5.9 per cent (y-o-y). Faced with excess capacities and sluggish demand, Chinese companies slashed prices for the 45th month in a row, and need cheaper yuan to help. After its inclusion in IMF currency basket, market expects People’s Bank of China (PBoC) to let yuan float; the currency is estimated to be overvalued by at least 15 per cent in trade-weighted terms. Hence, in all likelihood, Chinese policy-makers will tolerate yuan going down further. In November, China witnessed capital outflows of $87 billion. Its accumulated forex reserves are now down to $3.44 trillion. Analysts predict that total capital outflows from China can hit $1 trillion by year-end. All these developments indicate that trouble for Chinese currency is far from over. Many people would like to think that yuan’s inclusion in IMF basket of reserve currency will increase its demand and check its slide. However, most traded goods and services are priced in USD, and not Special Drawing Rights (SDRs). Thus, inclusion of Chinese yuan will not make much difference to the demand for Chinese currency, at least, in the short term. Hence, the down side risk to yuan remains, and it may go down further to 7 yuans a dollar. If that happens, it will seriously complicate things for Indian businesses and policy-makers.
Implications for India
Given the strong trade linkage of China with other major economies — Asean, Australia, Brazil, Russia, South Korea and South Africa, in particular — weakening yuan will put pressure on their currencies to either depreciate or face lose market share. Thus India will have to face — increased imports and increased competition from these countries in third country export markets more so when Indian rupee remains relative overvalued. Rupee has depreciated a modest 6 per cent so far this year, and that follows a strong performance in 2014 that saw rupee losing less than 2 per cent against USD. To be specific, a weakened yuan means that India's exports of cotton yarn, copper, mineral fuels and organic chemicals, plastics and mechanical appliances to China will become expensive if rupee doesn’t decline to match yuan’s decline against USD.
India and China compete in almost all major export markets including the EU and the US for selling apparels, steel, gems and jewellery and organic chemicals. Hence, any slide in yuan against dollar will worsen India's export competitiveness vis-à-vis China. As a result, India's merchandise exports, which have been declining for the past 11 months, may have to take further beating. India will see not only pressure on its exports, but also increased imports of flat rolled products of aluminium and steel, power equipment, synthetic fabrics and apparels, chemicals, fertilisers and radial tyres coming from China. That in turn would mean a further squeeze on the domestic sales and operating margins of several Indian companies. Steel and tyre manufacturers will feel maximum pinch as Chinese prices are substantially lower than those of India. India's import of finished steel went up by 71 per cent to 9.3 million tonnes in FY 2014-15 with China, Japan, Korea and Russia being the top suppliers. Things are not much different in the first six months of the current fiscal.
Chinese production capacity in steel is 800 million tonnes a year. Even a 10 per cent fall in domestic demand would mean 80 million tonnes of surplus for exports. Faced with excess capacity, global steel glut and increasing imports from China, Indian steel companies have been clamouring for duty hikes for quite some time. The government responded by increasing import duty on steel products first in June and then by another 2.5 per cent in August. However, these hikes won’t apply to India's FTA partners such as Japan and Korea, while Chinese and Russian steel exporters are being helped by weaker currencies. India’s import of tyres from China grew by 55.6 per cent while that flat rolled aluminium products by 46.4 per cent in FY 2014-15 over previous year. Further weakening of yuan will make it worse. And add to this, China’s export tax cuts may exacerbate global oversupply of basic materials starting from steel to chemicals, and may lead to price crash. However, not all will be lost for Indian corporate sector. Companies dependent upon Chinese imports of mobile handsets, power equipment and active pharmaceutical ingredient (API) will benefit from excess capacities and expected yuan slide.
On the other hand, if rupee does not hold ground, and slide further which does look like a possibility — given its overvalued status, declining merchandise exports and likely impact of Fed-rate-hike on capital outflows — it will benefit net exporting sectors such as pharma, IT and textiles. However, net importing sectors will be hit hard from if rupee weakens. Though, commodity importing companies will get some respite from continued low prices. In sum, weakening yuan will have differential impact on different sectors but heightened currency volatility is going to be something that India Inc. should look forward to next year, in addition to continued sluggish demand. Indian firms having sales in rupees and debt in USD will see their rupee cost of debt servicing climbing up sharply especially when a more than half of their forex exposure as a whole remains unhedged.
Policy dilemma
That will put further pressure on rupee, leaving policy makers with a really difficult choice – either to let rupee sink (for pushing exports and safeguarding domestic market from cheaper imports), or raise interest rate to defend the rupee. Sinking rupee will increase the rupee cost of import bill and corporate debt servicing. Interest rate hikes will stifle India’s growth momentum. That remains India’s yuan dilemma.
SOURCE: The Hindu Business Line
Just a day before the end of the WTO Ministerial conference, trade ministers of India and the US are expected to meet today to discuss issues related with the ongoing meeting of the multi-lateral body. The meeting of Commerce and Industry Minister Nirmala Sitharaman and the US Trade Representative Michael Froman assumes significance as no consensus has been reached on issues such as special safeguard mechanism (SSM), conclusion of Doha Round, permanent solution for public stockholding for food security purposes and export competition. Differences have also widened on the draft text on agriculture and Ministerial Declaration. India has raised serious objections over the language of both the drafts as they have not mentioned about the key issues of India in a proper manner. India has said that the language is not balanced. Developed countries do not want to move ahead on the pending issues of the long stalled Doha Round and wants to push new issues such as investments and government procurement. In the opening Plenary Session of the 10th Ministerial Conference of the World Trade Organisation, Froman said: "New rules on critical 21st century issues, such as e-commerce and the digital economy, are emerging.The result is a growing gap - stalemate within Doha and progress outside it - which has led many to question whether the WTO's role in trade negotiations will long endure".
SOURCE: The Economic Times
India has retaliated against the efforts of the developed countries' attempts to pull the plug on the development issues in the WTO, junking two draft texts with an obvious tilt in favour of the developed countries. New Delhi is now working on new texts with a language suitable to the developing countries in which it will insist on a permanent solution for food security, special safeguard mechanism (SSM) for protecting domestic industry besides vehemently opposing the inclusion of new issues in the WTO mandate. This looks like a repeat of the Bali ministerial two years ago. India is fighting to secure its interest in Nairobi but the only difference is that this time it is not isolated. "A surprise has sprung on us...We are submitting a draft ministerial text with a language suitable for India. There will be no new issues unless the Doha agenda is fulfilled. We will insist and wait for a permanent solution for food security," commerce and industry minister Nirmala Sitharaman said a couple of hours after the Nairobi ministerial declaration was unofficially circulated. The six page draft ministerial text clearly states that the WTO should have the ability to take any trade related issues deemed for it to stay relevant on an "exploratory basis". Early in the day, India was got a rude shock when the first draft of the WTO's committee on agriculture did not reiterate 2017 as the deadline for a permanent solution for food security concerns and linked SSM with the broader context of agricultural market access — the latter being demanded by Brazil. India has asserted that it has not given up on the public stockholding issue and wants it to be included in the preamble of the Nairobi declaration. It also wants an SSM delinked from market access.
SOURCE: The Economic Times
US Customs and Border Protection (CBP) has announced another milestone toward fulfilling the agency's initiative to enhance industry-specific collaboration. The debut of the Apparel, Footwear and Textiles (AFT) Centre of Excellence and Expertise is now CBP's hub for more than 67,000 importers of clothing, shoes, and raw materials, it said in a press release. Based in San Francisco, the centre's responsibilities include a majority of import and revenue-related activities for its industry. The centre is the fourth to make its debut as part of the change in the way CBP processes trade in the 21st century. “The expansion of the AFT Centre – and the selection of Eric Batt as its director – is a significant step forward for this important industry and for CBP,” said CBP Commissioner R. Gil Kerlikowske. “The Centres reflect the true spirit of collaboration between CBP and our trade stakeholders, reducing transactional costs, increasing consistency and predictability, and enhancing our ability to identify high-risk commercial importations.”
By leveraging new technology, CBP personnel in key locations throughout the US will be assigned virtually to the AFT Centre, where they will increase consistency of practices across more than 300 American ports of entry, resolve trade compliance issues nationwide and become a single point of contact for trade actions. CBP's Centres of Excellence and Expertise assist the agency's ability to accomplish its trade mission and to increase efforts to protect the health and safety of the American public while playing a role in strengthening the country's economy, the release said.
SOURCE: Fibre2fashion
Describing the resumption of Indo-Pak comprehensive dialogue as a "significant" move, the US hoped that it would result in increased trade between the two neighbours. "The recent upturn in relations between India and Pakistan is quite significant," Richard Olson, Special US Representative for Afghanistan and Pakistan, told lawmakers during a hearing on Pakistan convened by the House Foreign Affairs Committee. "The National Security Advisers (of India and Pakistan) met in Bangkok and then Foreign (sic) Minister (Sushma) Swaraj attended the Heart of Asia Conference and extended a hand of friendship to Pakistan, and that was very well received," he said. "They have agreed to launch a comprehensive dialogue which will hopefully improve the relationship," said Olson who was also present in Islamabad to attend the Heart of Asia conference. "One of the emphasises that we have placed in our assistance programmes has been to build regional connectivity, and so the re-launch of a comprehensive dialogue will hopefully, lead to the possibility of increased trade, for instance, between India and Pakistan," Olson said. This would be beneficial to both sides, and particularly help Pakistan, the US official said adding that it could do more than the US assistance programmes to raise the level of prosperity and stability. Olson was responding to a question from Congressman Ami Bera, the only Indian-American lawmaker in the current Congress. "As an Indian-American and the only Indian American member of Congress the stability of the region is incredibly important to me. And it's one that I've spent a lot of time thinking about, and very much interconnected when you think about India, Pakistan and Afghanistan," Bera said. On the counter-terrorism side post-Mumbai in 2008, India demonstrated incredible restraints in its approach to Pakistan. "The fact that I would have expected Pakistan to have a much more robust crackdown on terrorist threats, on the LET and the Haqqani network and others," he said.
SOURCE: The Economic Times
Federal Minister for Industries and Production Ghulam Murtaza Khan Jatoi welcoming the Italian Trade Commissioner Riccardo Monti, who is on a two day visit to Pakistan said that Pakistan is a safe country for investors and investments as it has dedicated National Industrial Parks and Export Processing Zone with special Tax concession where Italian companies can set up their units and also have opportunity to establish their independent units to avail the same facilities. The Minister further added that visit of Italian Trade Commission to Pakistan reflects his country's interest to expand its trade and business relationship with Pakistan.
Highlighting the initiative of the present government to promote trade and investment in the country, the Minister said that Pakistan has become an investor friendly state where import of raw material has been declared duty free and upto 80% of the finished products could be exported to other countries. The Federal Minister also apprised Mr. Monti that the present Government has taken special measure to provide security to the investors. Historic tax concessions and attractive investment opportunities are being offered which are unparallel in the whole region.
While discussing the potential areas to enhance cooperation in various sectors between two countries, the Minister highlighted that in Pakistan there is the large potential to invest in textile machinery and agriculture, auto mobile sector, power plant erections and re-fabrications. Mr. Monti commending on the quality of Pakistan's textile product, showed interest to expand co-operation and investment in textile products and machinery, auto spare parts and components, leather goods, and agriculture machinery.
SOURCE: Yarns&Fibers
