The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 09 AUGUST, 2021

NATIONAL

INTERNATIONAL

SRTEPC Chief pledges to achieve MMF export targets of US $ 6.12 billion

MUMBAI, AUG. 08— The MMF textile fraternity and Synthetic & Rayon Textile Export Promotion Council (SRTEPC) will leave no stone unturned to achieve the export target of US$ 6.12 billion for 2021-22 pertaining to the MMF and MMF blended textiles viz,. Manmade fibre, MMF yarn, MMF fabrics and MMF made-ups. The above assurance was given by Mr. Dhiraj Raichand Shah, Chairman SRTECP, in a press communique, while responding to the Prime Minister Narendra Modi calls for achieving greater export heights. He informed that Covid pandemic has turmoiled both production and exports. The precovid pandemic exports during 2019-20 were US$ 5.9 billion. During the peak covid pandemic period of 2020-21 exports have declined around 21% to US$ 4.644 billion. However, the prevailing scenario shows some sign of improvement in exports. As compared to the pre-covid level during April-June 2020 exports have increased around 11% only in April-June 2021, Mr. Shah informed. In order to help the MMF textile segment achieve the abovementioned export target, SRTEPC Chairman appeal for urgent policy-initiatives/ measures such as Announce the RoDTEP rates as early as possible and include entire MMF textile value chain under the Scheme, Timely refund the IGST and DBK benefits, Release the MEIS rewards to the exporters, facilitate affordable logistics including availability of containers and bring down the Skyrocketing freight charges. Mr. Shah also urged the government to rectify the inverted duty structure existing in the MMF textile Segment, Entire MMF textile value chain to be covered under the PLI Scheme and threshold limit of the PLI Scheme be fixed at 20% and include entire MMF textile value chain under the Scheme, Consider Extending the Interest Equalisation Scheme through the new FTP 2021-26 and extend the benefit of the Scheme to the Yarn Segment also, Double weightage to be given for the smaller exporters while considering merits for status as Star Export Houses, LC discounting by bank for post shipment and pre acceptance in order to reduce the cost. Most of the banks including SBI is not discounting the LCs which are even advised through them and sending the LCs for collection. This is creating huge cash flow challenge for exporters, Banks are charging hefty interest rates and bank margins during the forex transaction and government can bring some discipline and transparency, conclude the potential FTAs with EU and the UK, etc, he said.

Source : Tecoya Trend

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SRTEPC welcomed the Meeting with Prime Minister on achieving Export Target of US$ 400 billion as encouraging

Mumbai: In a maiden initiative of its kind, the Hon’ble Prime Minister Shri Narendra Modi interacted with stakeholders of the trade & commerce sector and Heads of Indian Missions abroad through video conference. The Hon’ble Commerce and Industry Minister Shri Piyush Goyal and Hon’ble External Affairs Minister Dr. Subrahmanyam Jaishankar were also present during the interaction. Besides the members of the Export Promotion Councils, the virtual meeting was also attended by Secretaries of various departments, state government officials, and Chambers of Commerce. Under the mentorship of Shri Dhiraj Raichand Shah, Chairman, SRTEPC participated in the virtual meeting with Hon’ble Prime Minister from two Centres viz., Mumbai and Surat, Gujarat. At the Mumbai Centre which was organised at Ambassador hotel, was presided over by Shri Bhadresh Dodhia, Vice-Chairman wherein around 40 member - exporters attended. The Surat centre of SRTEPC was at Le Meridian Hotel and it was presided over by Shri Dhiraj Raichand Shah, Chairman, SRTEPC wherein around 60 memberexporters attended. While addressing the virtual meeting with the industry stakeholders, heads of Indian Missions and others, the Hon’ble Prime Minister informed that this is the time for Azadi ka Amrit Mahotsav. Along with celebrating the 75th festival of independence, this is an opportunity to build a clear vision and roadmap for future India and Export Ambitions for which all the stakeholders play a major role. The Prime Minister lauded the stakeholders for this initiative and commended the enthusiasm, optimism and commitment shown by all of them to achieve our ambitious goals regarding exports. He reminded that one of the major reasons, India had the highest share in the global economy in the past was its strong trade and exports. He stressed on the importance of strengthening our exports in regaining our old share in the global economy. The SRTEPC Chairman, Shri Dhiraj Raichand Shah, welcome the Hon’ble Prime Minister Shri Narendra Modi on behalf of the manmade fibre textile fraternity, and congratulated for the initiative to interact with the textile stake holders including the MMF textile fraternity. He informed that Covid pandemic has turmoiled both production and exports. The pre-covid pandemic exports during 2019-20 were US$ 5.9 billion. During the peak covid pandemic period of 2020-21exports have declined around 21% to US$ 4.644 billion. However, the prevailing scenario shows some sign of improvement in exports. As compared to the pre-covid level during April-June 2020 exports have increased around 11% only in AprilJune 2021, Shri Dhiraj Raichand Shah, Chairman SRTEPC informed. As per the communication from the Department of Commerce, Ministry of Commerce and Industry, export targets for the MMF textiles falling under the purview of this Council is US$ 6.12 billion for 2021-22. As suggested by the Hon’ble Prime.Minister, the MMF textile fraternity and SRTEPC will try to achieve the export target pertaining to the MMF and MMF blended textiles viz,. Manmade fibre, MMF yarn, MMF fabrics and MMF madeups, Shri Dhiraj Raichand Shah, mentioned. In order to help the MMF textile segment achieve the above-mentioned export t a r g e t , S R T E P C H e a d informed that the MMF textile fraternity would like to appeal for urgent policy-initiatives/ measures such as Announce the RoDTEP rates as early as possible and include entire MMF textile value chain under the Scheme, Timely refund the IGST and DBK benefits, Release the MEIS rewards to the exporters, Facilitate affordable logistics including availability of containers and bring down the Skyrocketing freight charges, Rectify the Inverted Duty Structure existing in the MMF textile Segment, Entire MMF textile value chain to be covered under the PLI Scheme and threshold limit of the PLI Scheme be fixed at 20% and include entire MMF textile value chain under the Scheme, Consider Extending the Interest Equalisation Scheme through the new FTP 2021-26 and extend the benefit of the Scheme to the Yarn Segment also, Double weightage to be given for the smaller exporters while considering merits for status as Star Export Houses, LC discounting by bank for post shipment and pre acceptance in order to reduce the cost. Most of the banks including SBI is not discounting the LCs which are even advised through them and sending the LCs for collection. This is creating huge cash flow challenge for exporters, Banks are charging hefty interest rates and bank margins during the forex transaction and government can bring some discipline and transparency, conclude the potential FTAs with EU and the UK, etc.

Source: Global Textiles

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I-T department issues 3 email IDs for registering grievances under faceless assessment scheme

The department issued a message on its official Twitter handle saying: "In a move aimed to further improve taxpayer services in alignment with the Taxpayers' Charter, the Income Tax Department creates dedicated e-mail ids for registering grievances in respect of pending cases under the Faceless Scheme. The Income Tax (I-T) department on Saturday notified three official email IDs for taxpayers to register grievances under the faceless or e-assessment scheme. The department issued a message on its official Twitter handle saying: "In a move aimed to further improve taxpayer services in alignment with the Taxpayers' Charter, the Income Tax Department creates dedicated e-mail ids for registering grievances in respect of pending cases under the Faceless Scheme. It said grievances can be furnished under three separate email IDs created for the purpose "For faceless assessments: samadhan.faceless.assessment@incometax.gov.in; For faceless penalty: samadhan.faceless.penalty@incometax.gov.in; For faceless appeals: samadhan.faceless.appeal@incometax.gov.in," the department said. Under the faceless assessment system, a taxpayer or an assessee is not required to visit an I-T department office or meet a department official for income tax-related businesses. A central electronic-based system picks up tax returns for scrutiny based on risk parameters and mismatches, and then allots them randomly to a team of IT officers in any city. The scrutiny by these officers is stated to be reviewed by officers at another randomly selected location. The scheme was launched by the Union government in 2019.

Source: Economic Times

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Govt must ask exporters how diplomats can help

The External Affairs Ministry and the Commerce Ministry should interact with the exporters and find out what they actually need from our diplomats abroad and try to meet their specific requirements On Friday, the Prime Minister interacted with the heads of Indian Missions abroad and urged them to understand the needs of the country/region where they are posted very well so that they can act as a bridge for the commerce and industry in India. He asked the Commerce Ministry to put in place a system for regular communication between our exporters and our Missions. He listened patiently to the inputs and suggestions of the heads of Indian Missions regarding setting sector/region specific trade targets, the need to focus on value addition, quality standards of products, supply chain.

Source: Business Standard

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'Addressing container shortage, high shipping freights to help exports hit USD 400 bn this fiscal'

Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said, "Container shortage issue is the most serious one and it will affect manufacturing, as goods will pile up in factories". Addressing acute shortage of containers, controlling high shipping freights and ensuring timely refund of pending dues are crucial to take the country's overall exports to USD 400 billion by the end of this fiscal, according to exporters. The other factors that could help in increasing shipments include ensuring that negotiations for various free-trade agreements (FTAs) lead to greater market access for Indian goods; attracting exportoriented foreign direct investment, credit to exporters at international rates; and investing in dedicated R&D and design centres for focused products in each state. Leading leather exporter and Farida Group Chairman Rafeeq Ahmed said exporters are facing huge problems with regard to container shortage, and this issue needs to be resolved immediately. Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said, "Container shortage issue is the most serious one and it will affect manufacturing, as goods will pile up in factories". Sharing a similar view, Ludhiana Hand Tools Association President S C Ralhan said that along with shortage, high shipping freights are impacting domestic exporters and both these matters need attention of the government as "we are targeting USD 400 billion exports" in the current financial year. Exports during AprilJuly 2021 jumped 73.86 per cent to USD 130.56 billion, against USD 75.10 billion in the year-ago period. FIEO former president S K Saraf suggested exporters to do aggressive marketing by looking at new market options; investing in technology to improve quality and productivity, and doubling of existing capacities. From the government side, Saraf suggested amending land laws so that exporters can buy land and get all clearances in a month's time; allowing bank finance at international price; and paying off pending dues within a month by all government departments. Current FIEO President A Sakthivel also recommended the Centre for augmenting cash flow to exporters; and providing freight subsidy to adjust abnormal hike of shipping rates. He also urged the government to release pending claims of exporters under different schemes like MEIS (Merchandise Exports from India Scheme). Mohit Singla, founder chairman of Trade Promotion Council of India (TPCI), said that to achieve the USD 400-billion target, there is a need for marketing support for focused products; national authority for meeting compliance and standards, and streamlining of payment mechanisms with banks for exporters. Further, International Chamber of Commerce (ICC Paris-India) President Vikramjit S Sahney suggested setting up of an institutional mechanism for global market intelligence; enhanced role of Indian missions; and massive campaigns in key markets for brand building of traditional Indian exports. "We also have to ensure that negotiations under various FTAs lead to greater market access for the Indian industry in partner countries. India should also focus more on attracting export-oriented FDI," he said. FIEO Vice-President (Western Region) Khalid Khan stated that exporters should now explore key markets in Latin America and Africa, as both these regions hold huge export potential. "Besides, they have to start exporting high value-added goods. Huge potential is there in developing countries for such goods and this is the time when we have to push for that," Khan said. Plastics Export Promotion Council of India (Plexconcil) Chairman Arvind Goenka said sea freight rates have increased making the export goods uncompetitive with local manufacturers in respective countries. "If the government regulates port charges and inland haulage charges in such a way that burden of increased sea freight is reduced, it can allow Indian exporters to pass on the benefit in their export price," he added. He also asked exporters to invest regularly in research and development to ensure that they can produce desirable quality at the lowest cost.

Source: Economic Times

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Global Economic Challenge and its Impact on Indian Textiles Industry

 Indian domestic textile and apparel market has been estimated at US$ 75 billion in the financial year 2020-21. The market fell 30 percent from US$ 106 billion in the financial year 2019-20. The world economy displayed a sign of sluggish growth even before the pandemic struck. Covid-19 acted as a powerful catalyst in this process whereby the economy was nearly crushed. The ripple effects of this global economic challenge have been felt across geographies, sectors, and industries. Indian textile industry was one of the industries which felt the pinch. There is great historical significance attached to this industry in terms of its role in boosting the economy, expanding global integration, and making the Indian craft and talent reach the world. In the recent phase of India occupying the position of an emerging economy, the textile industry has contributed significantly to national output, employment, and exports. The World Trade Organisation (WTO) rightly remarked, "In no other category of manufactured goods do developing countries enjoy such a large net exporting position as they do in the textile sector” The following statistics not only prove the importance of textile industries but also reflect its massive potential to accelerate economic growth: India’s textile industry adds about 14 percent to industrial production; 4 percent to the country’s gross domestic product (GDP); 17 percent to its export earnings; and is a source of employment for over 35 million people. It is the second-largest employment generator after agriculture. While 2020 arrived as a year with promising growth, it quickly turned into a nightmare for the economies worldwide. The whole world came to a standstill, with lockdowns and curfews being imposed everywhere. Economic activity had to halt in order to prevent the spread of the virus and the loss of lives. This had a devastating effect on aggregate consumer demand as well as supply chains. ndian domestic textile and apparel market has been estimated at US$ 75 billion in the financial year 2020-21. The market fell 30 percent from US$ 106 billion in the financial year 2019-20. The exports have fallen by roughly 15 percent and the imports have declined by approximately 35 percent. The calamity has indeed made sure that its presence is felt every step of the way.

Major Challenges The reasons for this decrease are explored below

Demand Side: The Indian textile sector which was already dealing with issues like obsolete technology, slow pace of upgrades, lack of infrastructure, distributed industry structure, etc also received a blow from a drastic fall in exports because of Global Financial Crisis and increased competition from emerging countries such as Vietnam, Bangladesh, etc. Restrictions on trade since 2020 have to lead to an unforeseen rise in inventories. Even as economies open up with the advent of vaccinations, the fear of new variants looms large, engulfing major economies like the US and the UK in an ongoing crisis. This has severely affected the Indian textile’s exporting volume. The nationwide closure of markets, shopping complexes and a strict halt of everyday activity lead to a crumbling fall in consumer demand domestically as well.

Supply Side: Government mandates lead to the closure of several manufacturing outlets and factories as these didn’t classify as essential services. Despite the initiation of nationwide unlocking, the textile industry hasn’t been able to recover due to disruptions in supply chains at various levels. Procuring raw material from other nations like China have been affected by trade restrictions, manufacturing activity along with social distancing norms has proved to be difficult. Everything from procurement of raw material from other nations to sustaining factories in absence of domestic and global demand is contributing to the heap of difficulties for this sector

The Way Ahead

 It is quite evident how the sector has been negatively impacted on various fronts. This impact is not limited to statistics and a fall in revenue but has significantly impacted a multitude of livelihoods that are deeply involved in the Indian textile industry. While the government has announced welfare packages and schemes, there is a need to make them more comprehensive. Tax concessions, relaxation of customs, and duties for exporters are some of the ways through which the blow of the hardships can be softened. Amidst this crisis, an opportunity has also presented itself which should be welcomed with rigor. With world players strictly focusing on the domestic market and recovery, India has a chance to emerge as a manufacturing hub. Turning this vision into reality will need active support and participation from the government and citizens alike.

Source: Indian Retailer

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Will explore possibility of Ponduru cluster: FM Nirmala Sitharaman

On the occasion of National Handloom Day, Union Finance Minister Nirmal Sitharaman visited Ponduru in Srikakulam district, famous for its Khadi. Union Finance Minister Nirmala Sitharaman on Saturday said the Centre will explore the possibilities of setting up a mega textile cluster in Ponduru and talks will be held with the Textiles Minister for further course of action. She urged the district officials to increase the number of artisans in and around Ponduru area to set up the mega cluster. On the eve of the National Handloom Day, Sitharaman visited the Andhra Fine Khadi Karmikabhivrudhi Sangam (AFKKS) at Ponduru along with AP Speaker Tammineni Sitaram, Deputy Chief Minister Dharmana Krishana Das, Finance minister B Rajendranath Reddy and others. On the occasion, she laid the foundation stone for the khadi workshed on the AFKKS premises and participated in a plantation programme. The Union Home Minister spent a few minutes with weavers and interacted with artisans about the present state of production, challenges and market potential and marketing strategies. Later, she participated in the National Handloom Day celebrations organised at Ponduru market yard. Referring to a TDP MP, a State minister and a Union minister from the BJP sharing the dias, she stressed that united efforts by political parties will help in the revival of the khadi industry.

Source: New Indian Express

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Save lives of weavers in Telangana: Joint Action Committee to CJI NV Ramana

The JAC chairman Dasu Suresh called on the Chief Justice and explained to him that due to the unethical practices of some textile manufacturers, traditional weavers were losing their livelihood. Providing the details of 360 suicides of weavers after the formation of Telangana, the National Weavers United JAC made an appeal to the Chief Justice NV Ramana to intervene and help strengthen the Handloom Reservation Act 1985, so that fake handloom manufacturers are brought to the book. The JAC chairman Dasu Suresh called on the Chief Justice in New Delhi on Sunday and explained to him that due to the unethical practices of some textile manufacturers, industrialists and marketers, the traditional weavers were losing their livelihood. The Handloom Reservation Act, 1985, enacted by Parliament, prohibits the weaving of 11 types of handloom products on power looms. By violating the Act, the manufacturers were selling material claiming to be handloom. This was causing distress and forcing handloom workers to resort to the extreme step of committing suicide. Many families are suffering because of this, they said. Dasu Suresh presented the details of the 360 weavers who had committed suicide during the last seven years in Telangana to the Chief Justice, who assured him that he would look into the matter.

Source : New Indian Express

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Retrospective Tax Law: Good riddance to a bad taxation approach

 The move to defang the 2012 retrospective tax law will boost investor sentiment Sovereignty’s manifestation, especially in contemporary civilisation, is shaped by pragmatism and due process. Bill of rights, constitutionalism, an independent judiciary, R etc, within the domestic context, coupled with international law principles and extensive treaty framework, regiment the limits and exercise of sovereignty. This is no different when it comes to tax. Subscribing to international treaties governing taxation rights and limits of tax, such as those under the bilateral double taxation treaties or WTO agreements—in vogue for decades now—or the more recent Multilateral Instrument reflects the contemporary scenario where exclusive national sovereignty is replaced with pooled exercise of taxation powers by treaty partners. In such a paradigm, asserting unbridled tax sovereignty is, at the very least, incongruent with the progressive international outlook that our nation portrays. The FM, on August 5, introduced a Bill to amend the provisions of the Income Tax Act, 1961, as amended by the Finance Act 2012 to reverse the Supreme Court’s landmark decision in Vodafone. The SC had inter alia impressed upon the lawmakers the need for legal certainty to promote FDI, thereby scuttling an ominous tax demand enforced retrospectively upon offshore reorganisation of Indian corporate structures and assets. The government of the day, even though it was wise and open to review the omnibus antiavoidance provisions (GAAR), did not relent and continued to claim its sovereign entitlement to employ tax measures with retrospective effect. As was expected, the 2012 law drew the ire of investors as well as global taxpayer fraternity. Be it the solemn assurance of the former FM in Parliament, declaring off-limits any future retrospective legislation, or the 2014 administrative curtailment of tax-officer’s discretion to reopen past cases and effectively scuttle them, or the 2016 settlement scheme proposing to close disputes upon payment of principal tax dues alone, investors were not impressed by half-baked amelioration measures. Constitutional challenges were raised in courts and international fora alike, spreading thin the Centre’s resources in defending its tax policy and the 2012 law. In particular, the flurry of precipitate action initiated in other countries by Cairn to enforce the Hague Tribunal award it secured by invoking Bilateral Investment Treaty invited bad press for the nation, with international media characterising the government as unkind and arrogant—despite its otherwise decent, if not impressive, record of tax reforms (GST etc). The Centre has, in the ‘object’ statement appended to the 2021 Bill, acknowledged that the tax demand arising out of the retrospective tax policy “continues to be a sore point with potential investors” whereas “quick recovery of the economy after the COVID-19 pandemic is the need of the hour and foreign investment has an important role to play in promoting faster economic growth and employment.” The 2021 Bill proposes to (a) “provide that no tax demand shall be raised in future on the basis of the said retrospective amendment”, (b) nullify the demand in pending cases, and (c) refund the tax already collected. This Bill, if passed by Parliament, won’t result in withdrawal of the 2012 amendment, and would instead only limit the latter’s application in cases where the taxpayer agrees to withdraw all claims and undertakes to refrain from any recovery action in future. The 2012 law would continue to remain but sans its harshness, and prospective application, unless the concerned taxpayer does not wish to settle. A key question is, if the government is indeed magnanimous, then why are case-specific conditions attached to the application of the new proposal, and instead, why not withdraw the retrospective law wholesale. Mere reversal of the 2012 law would imply a one-sided concession by the government where it foregoes its claims whereas the private parties can continue to litigate and press for restitution measures. With the conditionalities, the government would ensure that there is no windfall or undue favour to any party, and that the issue stands resolved only when the taxpayer is aligned with the objective of giving a complete quietus to the dispute. What next? First, the withdrawal will soothe investors’ nerves, especially those that are keen on India’s growth story, but have been dithering, citing lack of investor protection. This move is likely to boost investor sentiment, coupled with 15% corporate tax rate for manufacturing, exemption of income for investments by sovereign wealth and pension funds, etc, besides the major clean-up due to settlement of tax disputes. Second, the 2012 law has been applied retrospectively only in 17 cases, Vodafone and Cairn being the most prominent. It is obvious that their complexities and stakes were such that they could not be settled under Vivad-se-Vishwas or other amnesty schemes. Also, the refund obligation may result in outflow of Rs 80 billion. This is a small price to pay considering the funds required for economic recovery. Third, by reversing the retrospective application, the government has now got an upper-hand in economic diplomacy generally and particularly in the ongoing negotiations for larger economic partnerships with the EU and the UK, considering both Vodafone and Cairn are from these jurisdictions. The move will give a fillip to FDI, Gift-City, Sovereign-Wealth Funds, Pension Funds, and other prominent investments avenues. Notwithstanding the delay in the change of stance, there appears to be no perceivable downside, and it is certainly a harbinger of economic activity and growth.

Source: Financial Express

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Flipkart partners with Himachal Pradesh local artisans, weavers

E-commerce marketplace Flipkart has signed a memorandum of understanding with Himachal Pradesh State Handicrafts and Handloom Corporation Ltd (HPSHHCL) to bring local artisans, weavers, handicraft and handloom makers into the e-commerce fold. The partnership comes as National Handloom's Day is observed on Saturday to celebrate and honour India's rich community of handloom weavers. Under the Flipkart Samarth programme, the partnership will enable Himachal Pradesh's master craftsmen, weavers, and artisans to showcase their hallmark products and provide them with market access training and support. Himachal Pradesh is known for its traditional crafts work such as Kullu/Kinnauri shawl weaving, carpet weaving, Chamba and suni embroidery, thanka paintings, wood carving, metal and stone crafts among many others. Rajneesh Kumar, Chief Corporate Affairs Officer at Flipkart Group, said Flipkart Samarth seeks to break entry barriers for these under-served communities and will extend incubation support and benefits in the form of seamless onboarding, cataloging, marketing, account management, business insights and warehousing support. "This will create avenues to increase business and trade inclusion opportunities for these very important segments of society and give a boost to Indian art and heritage," he said in a statement. Flipkart works with three lakh sellers on its marketplace platform who are able to unlock the true potential of technology to reach their end consumers. The Flipkart platform has mastered innovations like voice and vernacular meticulously to solve both the sellers' and consumers' needs. Consumers on Flipkart can shop in 11 Indian languages and the marketplace sellers can cater to their unique and localised needs as they aim to bring the next 200 million consumers to the digital commerce fold.

Source: Economic Times

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Pakistani exports to UK up 33pc

 Pakistan’s exports to the United Kingdom posted a 33 per cent growth when it reached $2.025 billion in the fiscal year 2021 (FY21) against $1.522bn over FY20, mainly led by textile products. It is pertinent to mention here that the UK has emerged Pakistan’s third largest export destination, second largest source of foreign direct investment (FDI) and third largest source of remittances after Saudi Arabia and United Arab Emirates (UAE). As a result, total bilateral trade between the two countries has reached over $2.648bn during FY21 against $2.122bn in the previous year, reflecting an increase of 25pc. The top export products to the UK in FY21 was home textile, which grew 42pc to $648 million from $456m in the previous year, followed by an increase of 57pc in apparel and clothing knitted or crocheted to $625m from $397m over the previous year, and increase of 5pc in apparel and clothing not knitted or crocheted to $304m against $2.88m in previous year. Contrary to this, Pakistan’s imports from the UK increased by 4pc to $623m in FY21 against $600m in FY20. During 2020-21, remittances from the UK to Pakistan increased by 58 from $2.569bn in FY20 to $4.067bn. The remittances from the UK to Pakistan during this financial year have seen a robust increase, which is a good sign for the economy.

Source: Pakistan Today

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Covid surge in Vietnam hits global supply chains

Manufacturers for Nike and Adidas forced to close factories as infections rise A record surge of Covid-19 infections has forced factories to shut in southern Vietnam, hitting one of the world’s busiest manufacturing centres for clothing and footwear and sending global brands looking for back-up suppliers. The supply chain disruption is a blow to a country that had largely tamed local transmissions of the virus in 2020. Vietnam was one of few Asian economies that grew and attracted new foreign investment last year despite the pandemic. Vietnam’s daily new cases have been trending between 7,000 and 8,000 and nearly all of the country’s more than 200,000 infections have been recorded since the beginning of July. Ho Chi Minh City, Vietnam’s largest city, has been hit hardest. It imposed strict socialdistancing measures on July 9, including rules on worker transport and housing, and the deployment of staff on factory floors. Two big footwear suppliers — Taiwan’s Pou Chen, which makes shoes for Adidas and Nike, and South Korea’s Changshin, which also supplies the US company — suspended operations last month. Pou Chen stopped production at a Ho Chi Minh City factory, its largest in the country, on July 14, and said the plant would remain closed until at least August 9. The company’s other Vietnamese plants were forced to scale down operations. “Local government requirements have affected workers’ ability to come to work, and that has led to a drop in capacity utilisation,” the company said. Pou Chen shipped 244m pairs of shoes last year, 44 per cent of which came from Vietnam. Adidas warned last week that supply chain constraints could cost it as much as €500m in sales by the end of the year. Feng Tay, another Taiwanese sports footwear manufacturer, closed several of its factories last month. The company makes shoes accounting for one-sixth of Nike’s annual sales, according to its website. The Vietnam Textile and Apparel Association said recently that more than 30 cent of the country’s garment and textile factories were closed. A report in state-run Vietnam News quoted the chair of the association as saying the vaccination rate among workers in the industry was “still very low”. Vietnam has been hampered by a stuttering vaccine programme after the government was slow to procure jabs. Only about 1 per cent of the country’s roughly 98m population has been fully vaccinated. Coronavirus cases have been reported across Vietnam and disrupted other sectors, including electronics. “With all provinces in Vietnam being hit by Covid, the situation is so unprecedentedly uncertain that buyers have to adopt a Plan B or C, including offshoring production to another country,” said Vu Ngoc Khiem of Global Sources, an ecommerce platform that links Asian suppliers with overseas buyers. Samsung, one of Vietnam’s biggest employers, has suffered disruptions to its smartphone manufacturing over recent months after a critical supplier of injection moulding equipment stopped operations. The issue has been resolved but the tech group’s appliance factories near Ho Chi Minh City are running at about half capacity. Operations are expected to “normalise” this month, the company said. Eurasia Group, the consultancy, said in a research note last week that there were concerns the outbreak in Vietnam “could harm production ahead of peak end-year/holiday season demand”. However, health officials have said in recent days that Covid cases in Ho Chi Minh City were “plateauing”, in a possible indication that the worst of the current wave of infections had passed. Vietnam has lured new investments and supply contracts from global electronics, apparel and other companies seeking to diversify their operations away from China, Asia’s premier manufacturing centre, at a time of worsening Sino-US trade tensions. Additional reporting by Edward White and Song Jung-a in Seoul.

Source: Financial Times

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China export growth slows in July as global risks cloud outlook

China’s export growth slowed in July, adding to concerns the economy’s recovery will face fresh pressure in the second half of the year. Exports grew 19.3% in dollar terms in July from a year earlier, while imports rose 28.1%, the customs administration said Saturday. That left a trade surplus of $56.58 billion for the month. Economists had forecast that exports would increase by 20% while imports would climb 33.3%. China’s exports remained resilient in the first half, with the gradual easing of lockdown measures around the world helping to support global demand. Trade risks have increased in recent months though as the delta variant of the coronavirus spreads across Asia, threatening to snarl supply chains across the region. Extreme weather conditions and local Covid outbreaks have disrupted production and shipping in parts of China, and record-high freight costs squeezed exporters’ profits. Surging commodity prices prompted authorities to suspend some exports and consider imposing more tariffs to ensure domestic supplies. The latest purchasing managers surveys show a contraction in manufacturers’ export orders for a third consecutive month in July. Officials have also warned of a slowdown in trade growth in the second half, with a higher base of comparison from a year ago also a likely factor. Growth in imports remained robust in the month, supported by the ongoing recovery in domestic demand and high commodity prices. In the face of rising growth risks, China’s top leaders have signaled more targeted support for the economy. Authorities will likely take more steps to help struggling small businesses, boost fiscal spending and possibly reduce the reserve requirement ratio for banks again, economists said after a meeting of the Chinese Communist Party’s elite Politburo chaired by President Xi Jinping last month.

Source: Economic Times

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Bangladesh: RMG export to US rises by 26.81pc in Jan-June

Bangladesh’s readymade garment export to the United States in January-June of 2021 witnessed a strong rebound with a 26.81-per cent growth, thanks to an increased demand for the apparel items in the market after a massive vaccination programme in the US to prevent the Covid pandemic. Apparel import from Bangladesh by the US in the first half of 2021 increased by $662 million to $3.13 billion from $2.45 billion in the same period of 2020, according to the US Department of Commerce’s Office of Textiles and Apparel data. Exporters said that both the export orders and the inquiries from the US buyers had increased in recent months as the country opened its business after massive Covid vaccination. The OTEXA data showed that in terms of value, Bangladesh’s apparel export to the US market in June 2021 grew by 139 per while it increased by 133 per cent in volume compared with that in the same month of the past year. Apparel export to the US, the largest export destination for Bangladesh, in June 2021 grew by $317.28 million to $545.21 million from $227.93 million in June 2020. India gained more share in the US market as its RMG export to the destination increased by 32.28 per cent to $2.03 billion in January-June of 2021 from $1.53 billion in the same period of 2020. ‘The demand for apparel products has increased in the US market for the last few months as the US government withdrew Covid restrictions on business and movement after a massive vaccination programme,’ Mahmud Hasan Khan Babu, managing director of Rising Group, told New Age. He said that the massive vaccination curbed the infection rate in the US and people started buying their necessary cloths after a long time. In view of the increased demand from the consumers, the US buyers increased their volume of orders in Bangladesh and inquiries as well, Mahmud Hasan said. Mahmud Hasan, also a former vice-president of the Bangladesh Garment Manufacturers and Exporters Association, said that India would be the main competitor for Bangladesh in the US market in future as the country (India) would grab a portion of US orders that would be shifted from China. ‘It’s true we are getting an increased number of orders and inquiries from the US but it is important to manage the orders properly to sustain the export growth in the market,’ he said. The data showed that the total apparel imports by the US from different countries in the first half of 2021 increased by 26.92 per cent to $35.37 billion from $27.87 billion in the same period of the previous year. The US apparel import from China in January-June of 2021 grew by 26.77 per cent to $7.31 billion from $5.77 billion in the same period of the previous year. Vietnam’s RMG export to the US in the first half of 2021 grew by 20.45 per cent to $6.81 billion from $5.65 billion in the same period of 2020. RMG import by the US from Cambodia in January-June of 2021 increased by 13.85 per cent to $1.42 billion from $1.24 billion in the same period of the previous year, the data showed.

Source: New age

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China seeks to replace weakening global cotton industry body BCI

Chinese cotton industry seeks to replace BCI Chinese cotton industry is moving ahead with plans to form a fairer and more transparent international industry standard-setting platform to replace the Better Cotton Initiative (BCI), a Switzerland-based nongovernmental organization, as the latter failed to facilitate the positive and sound development of the global cotton supply chain, Chinese industry experts said on Sunday. The BCI, which had been the leader in the global cotton industry, has been under heavy fire both in China and abroad for its baseless "force labor" claims against cotton from Northwest China's Xinjiang Uygur Autonomous Region and is losing membership and leadership in the global industry. In the latest development, US brand Levi Strauss was standing down from the BCI's leadership amid debate over the group's response to "alleged human rights abuses" in Xinjiang's cotton industry, the Wall Street Journal reported on Friday, citing people familiar with the matter. There has been no more information about Levi's on the board of directors on the BCI's website on Sunday. Both Levi's and the BCI could not be reached for comment as of press time. The US firm's reported move came after the BCI and H&M sparked widespread anger in China over their baseless claims against Xinjiang cotton. Meanwhile, several other large international fashion brands, including FILA and MUJI, expressed their strong support for Xinjiang cotton in defiance of BCI's claim. Chinese industry experts said Levi's move is in line with expectation since the BCI's illusion over Xinjiang cotton not only damaged its own industry reputation but also bring about risks of uncertainty to the global textile supply chain, in which Xinjiang cotton holds a significant share. The weakened BCI has created an opportunity for the Chinese industry to establish a new coalition for quality evaluation, according to experts. Wang Wenkui, an executive at the China Cotton Industry Alliance (CCIA), an organization under the Institute of Cotton Research of Chinese Academy of Agricultural Sciences, told the Global Times on Sunday that the domestic industry has already been doing the ground work for a new coalition and that some of CCIA's experts have also been invited to formulate Chinese cotton standards. "The standards of BCI are too general and may not suitable for cotton grow in China," said Wang, noting that the Chinese cotton standards will offer detailed cotton growing practices, including growing temperature and regulation of pesticides. "China's related organizations and departments have now started the integration of scattered cotton growers to form a sophisticated industry," said Wang, noting that China's cotton growing industry is formed mainly by individual farming units, which makes it relatively difficult to adopt a unified standard. China is now the world's largest cotton consumer and the second-largest cotton producer, with total demand of about 8 million tons per year, accounting for about one third of the global total consumption, data shows. Supported by world-leading technologies and management, China also supplies more than 80 percent of high-grade yarns and grey fabrics for the global textile supply chain. Given China's large cotton consumption market and production scale, China's cotton standards are likely to become new global cotton standards, one expert said. "I'm quite confident that our cotton growing standards will replace the BCI standards in future," said Wang.

Source: Global Times

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