The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 23 AUGUST, 2021

NATIONAL

INTERNATIONAL

 

Textile Ministry plans 5-year extension for funding scheme for clean tech

With the textiles sector identified as one of the most water-intensive sectors globally, there is pressure on industry to adopt environment-friendly practices.To help the textile industry gain greater global competitiveness by following environment-friendly processes and standards, the Centre has plans of extending by another five years an ambitious scheme for funding waste water management projects and R&D for cleaner technologies. “A draft memorandum for the Expenditure Finance Committee for continuation of the Integrated Processing Development Scheme (IPDS) for next five years has been circulated recently to all Ministries and Departments seeking their comments,” a person close to the development told BusinessLine. The IPDS was launched during the 12th Five Year Plan (2012) with a total cost of ₹500 crore to address environmental issues faced by the textile processing units such as pollution caused by the discharge of untreated effluents. It has already been extended once for three years in December 2017. “The government wants to help as many textile processing units as possible in meeting environmental standards by adopting suitable technology such as marine, riverine and Zero Liquid Discharge (ZLD),” the source said.

Eight proposals

Eight proposals have already been given an in-principle approval by the Ministry under the scheme and ₹88.82 crore has been released to the sanctioned projects, according to the Textiles Ministry Annual Report 2020-21. These include up-gradation of existing CETP to ZLD in four projects in Rajasthan and setting up of four new ZLD plants, one each in Rajasthan and Gujarat and two in Tamil Nadu. “The sanctioned projects will be continued during the five-year period of extension, between 2021 and 2026, and some new projects may also be approved,” the source said. It is important for the IPDS to continue as the textile industry is one of the most water-intensive sectors in the world, and, therefore, under growing pressure globally to adopt environment-friendly practices to lower pollution and water wastage.

Processing clusters

In India, the textile sector is one of the mainstays of the economy accounting for 11.8 per cent of total goods exports in 2019-20. The country has a share of 5 per cent of the global trade in textiles and apparel. The sector provides direct employment of over 45 million people and is a source of livelihood for over 100 million people indirectly, according to the Textiles Ministry. The scheme seeks to support new CETPs in existing processing clusters and new processing parks specifically in the area of water and waste water management as also to promote research and development for cleaner technologies in the processing sector. Once comments on the draft EFC note are received, the suggested changes may be incorporated and then the final note sent for EFC approval. On receipt of all requisite approvals, the extended scheme will be notified in the Gazette of India. Per the funding pattern existing at present, the Centre bears 50 per cent of the project cost, the State bears 25 per cent, the beneficiary bears 15 per cent while the remaining 10 per cent is provided as bank loans. The government grant (50 per cent of the total project cost) is to be released in four instalments of 15:35:30:20.

Source: Business Line

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Commerce Ministry group to prepare strategy for growth of services exports

In an effort to formulate a strategy for growth and diversification of service exports from the country as well as to assess the real growth potential, the Department of Commerce has established a steering group to coordinate with various state governments, ministries and other departments concerned with this matter. Service exporters in India have mostly done well on their own without much interest from the government. But the fact that more than 60 per cent of service exports come from information technology and related sectors indicates the huge growth potential that exists if the government focuses on diversification. We hope that the Steering Committee will come up with useful policy suggestions in this direction.

The main objective

The overall objective of the recently formed Steering Group, which includes senior officials focused on trade with specific regions and countries, is to periodically review and propose strategies to boost exports of services. This is also significant given the unofficial goal of achieving $700 billion in service exports by 2027-28. In 2020-2021, India’s service exports amounted to about $205 billion, while the value of merchandise exports was $290 billion. The group will try to build synergies in the implemented programs and schemes to increase exports of services in ministries and nodal departments, such as pharmaceuticals, agriculture, textiles and heavy industries. He was also tasked with examining nationwide initiatives on services and trying to build rapprochement with central policies. “The group should also review and propose a strategy on engagement with line ministries/departments to introduce export directives into local sectoral policies and pursue necessary regulatory reforms,” according to an office note on the composition of the steering group. The official added that the matter would take inputs from export promotion councils and other industry bodies through regular participation. While software services exports, which reached $128 billion in 2019-20, account for a large portion of India’s service exports, sectors such as tourism, e-education and medical services also have potential. In fiscal 2020, 39 million jobs were created in India’s tourism sector, accounting for 8 percent of the country’s total employment, according to data shared by the Service Export Promotion Council (SEPC). The number is expected to reach 52.3 million jobs by 2028. India’s tourism exports reach $30 billion, and a total market share of over 2.1 percent. “There is huge potential for growth in the various services sector, including information technology and software, and the government believes that this can be achieved through proper focus and coordination among the various agencies,” the official said.

Source: Business Line

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India's DGTR seeks ADD on polyester yarn from PRC, Indonesia, Vietnam

 

India’s Directorate General of Trade Remedies (DGTR) under the commerce ministry, after concluding an investigation, has recommended the imposition of anti-dumping duty (ADD) on polyester yarn from China, Indonesia and Vietnam for five years. The move is aimed at protecting domestic players in the sector against cheap imports from these countries. Polyester yarn is used in making fabric for garments and home furnishing. DGTR conducted the probe following a complaint by domestic players. DGTR concluded that yarn from these countries have been exported to India at dumped prices, which has affected the domestic industry. "The authority accordingly recommends imposition of anti-dumping duty...on all imports of goods... originating in or exported from China, Indonesia and Vietnam for a period of five years from the date of notification to be issued in this regard by the central government," the directorate said in a recent notification. The duty suggested is in the range of $4 per tonne and $281 per tonne. The finance ministry will take the final call to impose these duties. "The authority is of the view that the imposition of anti-dumping duty is necessary to offset dumping and injury," it added. In a separate notification, the directorate has recommended imposition of the duty on imports of aceto acetyl derivatives of aromatic or heterocyclic compounds, also known as arylides, from China.

Source: Fibre2 Fashion

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RoDTEP scheme is different from MEIS

Exporters of chemicals, pharmaceuticals, steel etc. are unhappy that their products have been left out of the RoDTEP scheme Last Tuesday; the Commerce Ministry notified the rates and guidelines for the Remission of Duties and Taxes on Export Products (RoDTEP) scheme. The scheme intends to refund currently un-refunded duties/taxes/levies, at the Central, State and local level, borne on the exported product, including prior stage cumulative indirect taxes on goods and services used in production of the exported product and also indirect duties/taxes/levies in respect of distribution of exported products. The scheme now covers 8555 tariff lines leaving out about 2500 lines.

Source: Business Standard

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India, US discuss ways to increase trade

"I had a very spirited exchange of views with Commerce Minister @PiyushGoyal about how #USIndia trade can and should attain the USD 500 billion vision set by @Potus . Across our 2+ hour discussion we agreed that our great democracies should work more closely to advance our mutual prosperity," US Ambassador to India Atul Keshap said. A day after Commerce and Industry Minister Piyush Goyal said hopes of an IndiaUS trade pact are off the table for now, US Ambassador to India Atul Keshap spoke to the Indian minister for over two hours, discussing trade between the two countries. While Keshap tweeted about the meeting, there were no immediate comments from the commerce ministry over the discussions that happened on Friday. "I had a very spirited exchange of views with Commerce Minister @PiyushGoyal about how #USIndia trade can and should attain the USD 500 billion vision set by @Potus . Across our 2+ hour discussion we agreed that our great democracies should work more closely to advance our mutual prosperity," Keshap said. Goyal while speaking at an industry event in Mumbai on Thursday had said hopes of an India-US trade pact are off the table for now, with the Joe Biden administration conveying to India that it is not interested in a free trade agreement. "The US as of now has kind of indicated that they are not looking for new trade agreements, but we look at working with them for more market access issues on both sides and I think that would also be a big relief and a big opportunity opener for our export sector," he had said. According to the data of the commerce ministry, in 2020-21, the bilateral trade between the US and India stood at USD 80.5 billion as compared to USD 88.9 billion in 2019-20.

Source: Economic Times

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UK and UP have a lot to do together, says British envoy

 UP has immense potential for textile and leather goods export to the United Kingdom, says British high commissioner. LUCKNOW British high commissioner to India, Alex Ellis, said that the United Kingdom and Uttar Pradesh had a lot to do together, after his meeting with chief Minister Yogi Adityanath in Lucknow on Friday. Later in the day, Ellis also met Samajwadi Party president Akhilesh Yadav. “Had a good discussion with the chief minister Yogi Adityanath on education, investment, sustainability and crafts. UK and UP have to do a lot together,” Ellis tweeted along with a picture of the meeting. “The UP government came in for huge praise from Alex Ellis, the UK high commissioner in India, for exemplary work done in controlling the second wave of Covid effectively besides registering achievements in the field of women’s empowerment, education of girls, implementation of several women welfare schemes and assistance to local artisans,” said a statement issued by the UP government. The CM explained to the British high commissioner in detail about the measures his government had taken to contain the pandemic. He also pointed out that the UP government had already administered seven crore vaccine doses and conducted six crore Covid tests, the most in the country, it said. Ellis, who called on chief minister Yogi Adityanath at the latter’s official residence, desired to work in tandem in areas related to health, defence, environment, designing and packaging, especially with regard to One District One Product (ODOP). Identifying opportunities of investment in the field of health, education, MSME, defence, food processing, animal protection and homeland security, the British high commissioner was particularly keen to have mutual cooperation to boost bilateral trade in these areas, said the UP government statement. Ellis also told Yogi Adityanath that UP had immense potential for export of textile and leather goods to the United Kingdom. Some British companies had already invested in UP and were keen to expand their presence in the state, the statement said. He also mentioned that the two countries had collaborated in making of masks and health equipment during corona times. The British envoy said the education sector was the one where both the countries could collaborate by way of curriculum, pedagogy and other aspects of the universities of the UK, added the UP government’s statement. During his day-long visit, Ellis also visited the premises of a company engaged in producing khadi textiles while protecting the environment. The envoy took keen interest in solar charkhas through which Khadi cloth is weaved. He also wanted to know if his country could promote the use of these solar charkhas among local folks in order to produce green clothing. Alex Ellis recalled his last visit to Varanasi about 25 years ago. He told the CM how he was enamoured with the spirituality and religious fervour of the ancient city. He was happy to note that Varanasi, the parliamentary constituency of Prime Minister Narendra Modi, had gone through a sea change in terms of development and systematic approach to improve civic amenities, the statement said.

Source: Hindustan Times

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Export credit: Key interest subsidy scheme to be extended

 The scheme, introduced in 2015, was initially valid up to March 2020. Its validity was then extended periodically, along with that of the foreign trade policy, up to September 2021 The government has budgeted Rs 1,900 crore for the scheme for FY22, compared with Rs 1,600 crore (revised estimate) for FY21. The government is considering a proposal to extend the validity of the interest equalisation scheme for exporters by 2-3 years from the September 30 deadline, a senior official told FE. Any such move will lend predictability to the policy regime and continue to support Covidhit exporters with cheaper credit at a time when they are striving to reap benefits of a resurgence in global demand for merchandise. Under the scheme, large manufacturing and merchant exporters get an interest subsidy of 3% on pre- and post-shipment rupee credit for the outbound shipment of 416 products (tariff lines). However, manufacturing MSMEs get a 5% subsidy on such credit to ship out any product. The government has budgeted Rs 1,900 crore for the scheme for FY22, compared with Rs 1,600 crore (revised estimate) for FY21. “The commerce ministry is in talks with the finance ministry on this issue. A Cabinet note will be floated very soon,” the official said. However, the government may reduce the subvention rates to suit current realities, given that interest rates have declined substantially from the levels when the scheme was rolled out. The scheme, introduced in 2015, was initially valid up to March 2020. Its validity was then extended periodically, along with that of the foreign trade policy, up to September 2021. The scheme has been an effective instrument for exporters, especially the small ones, struggling to cope with a cash crunch in the aftermath of the Covid-19 outbreak. Having witnessed a 7% year-on-year drop in FY21, the country’s goods exports have staged a rebound this fiscal. Exports in the first four months of this fiscal rose to $130.8 billion, recording a jump of 75% year on year and 22% from the pre-pandemic level (same period in 2019), as orders from key western markets poured in and global commodity prices remained elevated. Of course, export growth was subdued even before the pandemic – outbound shipments rose about 9% in 2018-19 but again shrank by 5% in 2019-20. So only a sustained uptick over the next 2-3 years would help recapture the lost heights. Sustained credit push will help exporters benefit from a rise in external demand. However, inadequate credit flow to exporters has been a nagging issue for the past three years before the recent pick-up. Export credit under the priority sector grew 18.3% as of June 19 from a year before, driven by a favourable base and growing demand in light of the latest surge in exports. Ajay Sahai, director-general and chief executive at apex exporters’ body FIEO, said the interest equalisation scheme has immensely benefited the exporters, especially the small ones, as it has made credit available at reasonable costs. The International Monetary Fund last month revised up its predictions of global trade volume growth by a sharp 130 basis points for 2021 to 9.7% and 50 basis points for 2022 to 7%. India is set to benefit from the expected rise in global trade prospects once its supply side gains traction. The government has already set an ambitious merchandise export target of $400 billion for FY22, against $291 billion last fiscal. Keeping up the flow of cheaper credit remains critical to materialising the target, exporters say.

Source: Financial Express

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Government focuses on ramping up trade with BRICS nations, barring China

 The government is keen to raise the level of trade with BRICS nations other than China, which already accounts for 75% of India’s trade with the group. A detailed exercise to identify market demand, ease customs rules and push forward agreements on trade technicalities is currently in progress, sources, say. The government is quickly moving to expand India’s exports to and overall trade ties with the nations in the BRICS grouping. The latest push comes as India gears up to host the 13th BRICS Summit in September. The Commerce Department is currently giving final touches to its internal reports, which pinpoint the areas where trade can be quickly ramped up between the nations of the grouping — Brazil, Russia, India, China and South Africa. This comes after a push by the Prime Minister’s Office on the issue. Barring trade with China, India’s trade with the 15-year-old grouping has not expanded nearly as much as New Delhi had hoped for. India hopes to fix this through a combination of targeted exports based on demand in these markets, and easing of customs, trade and standards rules, as well as a display of greater political will. India’s total trade with the BRICS countries stood at $110 billion in 2019-20 and rose to $113.3 billion in 2020-21, despite the COVID-19 pandemic. India’s trade figures for the grouping are heavily dictated by it’s trade with China ($86.4 billion in FY21). The latest rise was also largely due to an increase in trade with China. “However, a pick-up in ocean trade in the latter part of FY21 meant that trade with Brazil and South Africa ended the year with small increases while that with Russia contracted to a much smaller degree than anticipated. This shows there are deep business linkages already in place, which just need to be expanded,” a senior Commerce Department official said. India is currently the BRICS chair and has led efforts to maximise trade over the past year. In July, a 3-day meeting of the BRICS Contact Group on Economic and Trade Issues (CGETI) saw members deliberate on a series of proposals circulated by New Delhi. These focused on non-tariff measures (NTM) resolution mechanism, a sanitary and phytosanitary (SPS) working mechanism and more cooperation on the multilateral trading system, among others. Sources said the other nations in the bloc are expected to finalise proposals dealing with the technicalities of trade before the next BRICS Trade Ministers’ meeting, set to be held on September 3 and to be chaired by Commerce and Industry Minister Piyush Goyal. The fifth ministerial’ meet comes at a time when global trade and investment growth has significantly accelerated, with pent-up demand pushing up shipment flows more than a year and a half after the onset of the global Covid-19 pandemic.

Targeted action

The primary reason for the relatively low level of trade between India and the three BRICS nations, barring China, is due to their geographical distance, which, in turn, leads to high trade costs. Reducing this high cost is at the forefront of the government’s plans. It is seeking to raise trade volumes through more business-to-business connections and promotion of Indian products in these nations. At the same time, New Delhi is actively advocating open and free trade, and the removal of tariffs wherever possible, sources said. Also, India’s exports to both Brazil and Russia are heavily dependent on commodities, a trade that is highly volatile in nature, owing to sharp price fluctuations. For instance, India’s major exports to Brazil include chemicals (organic or otherwise), while those to Russia include large amounts of agricultural products, chemicals, plastics and rubber. However exports to South Africa, the nearer of the three, have increasingly focused on finished goods such as pharmaceutical products, automobiles and heavy machinery. Overall, India is keen to provide more hand holding to companies operating in these sectors to further raise bilateral business. However, a key part of this plan continues to be missing as sources say that an agreement signed in November 2019 among trade and investment promotion agencies of the member nations to facilitate greater trade has seen scant movement.

Source: Money control

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Taliban Takeover of Afghanistan Hits Surat Textile Industry as 100 Traders Await Payments in Crores

 The textile market shipped dress materials, shiny fabrics, soles and scarves in bulk to Chabahar via Iran and then to other Iranian ports. It was then sent by road to cities like Kabul, Kandahar and Ghazni. The restive situation in Afghanistan has hit the textile industry in Gujarat’s Surat as payments to over 100 traders have been delayed. Textiles worth Rs 1,000 to Rs 1,200 crore were being annually traded from Surat to other countries, including Iran and Afghanistan. However, after the Taliban takeover, the industry fears that trade will completely come to a stop. Prior to GST and the pandemic, 2,500 crore meters of cloth were dumped in the textile market. Then, it fell to Rs 1,500 crore meters. About 150 textile traders from different markets on the Ring Road were sending textile goods annually from Surat to Afghanistan. After the recent developments in Afghanistan, many have shut their businesses down and left the country and the cloth market in Surat has been directly impacted. The textile market shipped dress materials, shiny fabrics, soles and scarves in bulk to Chabahar via Iran and then to other Iranian ports. It was then sent by road to cities like Kabul, Kandahar and Ghazni. Besides, another trade route to Afghanistan was through Bangladesh, Dhaka and Dubai. The city’s textile industry was dealt a huge blow due to GST and the coronavirus lockdown situations had already made it worse as festivals like Onam, Akha teej didn’t prove to be lucrative. In other states too, traders have lost crores of rupees due to the lockdown. The traders are concerned that if the condition does not improve by Diwali, then the future is dark. Home  Handloom and Textiles Minister UG.

Source: News18

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Mill workers under National Textile Corporation stare at uncertain future

 Though a few mills were opened after May 2020 for a few days, they were soon closed without notice. While the state celebrates Onam as a harbinger of better times, a bunch of workers at mills under the National Textile Corporation continue to struggle as the pandemic has rendered them jobless for the past one-and-a-half years.The textile mills under NTC were shut down during the national lockdown last year. Though a few mills were opened after May 2020 for a few days, they were soon closed without notice. “Kerala has the Kannur Spinning and Weaving Mill, Alagappa Nagar Textile Mill, Kerala Reshmi Mill, Mahe Mill and Vijaya Mouli Mill, Thiruvananthapuram, under NTC. Over 1,500 labourers, many of them, permanent staff,have been rendered jobless as the mills remain closed. Though the central government urged the textile mills to provide financial support to the temporary staff, they are not getting it properly,” said M R Rajan, treasurer, Kerala State Textile Workers Federation. Around four months back, a person named Anto, who worked at the Kerala Reshmi Mills, Pullazhi, died by suicide due to debt and uncertainty over the opening of the mills. “The families of all these people too are worried as the reopening of the mills gets extended,” Rajan added.

Source: New Indian Express

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India's largest showroom for linen fabric opened in Bengaluru

Linen Vogue la classè, the flagship brand of BRFL Textiles Private Limited, opens India's largest showroom of European linen fabrics in Jayanagar, Bengaluru. The brand is expanding its retail presence in the city with a magnificent 3,400 sq ft showroom. The store was inaugurated by Shri. Tejasvi Surya, M.P. Bengaluru South and Actor & Director Ramesh Aravind in the presence of Mr. Rabindra Mohan, CEO – Linen & Giza Business, BRFL Textiles Private Limited. The LinenVogue la classè store in Jayanagar has an inexhaustible display of the finest European linen and Egyptian Giza cotton fabrics in the country. The store offers a myriad range of options including solid colours, yarn dyed stripes, checks, Jacquards, Ombreys, embroidery and printed fabrics in pure linen & linen blended fabrics for shirts, trousers, jackets, suits and ethnic wear for both men and women. The fabric is anti-allergic, anti-bacterial and has anti UV radiation and high-moisture absorption, keeping the wearer cool in summer and apt for Indian weather. LinenVogue la classè is certified by European Flax – a global standard for premium European Linen fiber. The store also showcases Giza Classé, another premium brand of BRFL Textiles Private Ltd, of Giza cotton fabrics made from the world's best Egyptian long staple cotton fiber. "We are delighted to launch the country's largest linen fabric showroom in Bengaluru. Linen aficionados will experience a wide variety of linen fabrics in the premiere shopping destination of the city at Jayanagar. BTPL's fabrics have earned the trust of our esteemed customers for its superior quality and design innovation globally. The fabrics are tenderly processed & finished at our textile mill in Tarapur by a dedicated team of experts to provide the customers with unmatched quality." states Prashant Agarwal, M.D., BRFL Textiles Pvt Ltd. "We are proud to associate with LinenVogue la classè as they use world class linen made out of the finest flax fiber hand-picked from the farms of France and Belgium certified by European Confederation of Linen and Hemp (CELC). Our state of the art 3400 sq ft showroom is a one stop destination for your entire fabric requirement, which can be woven into reality by our team of expert stylists," says Dr. Sumana Shetty, franchise owner. The store also has customized tailoring facilities for men, women and children.

Source: The hans India

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Exporters’ concerns: Pakistan

 While Pakistan has done well in exports despite the pandemic, it is seen failing on many of the fronts. Textile exporters have brought to the fore a couple of pertinent points needing government’s attention. They basically pertain to elements obstructing exports from Pakistan, including low cotton output, non-availability of cotton yarn, inflated energy bills, and in-land transportation and shipping constraints. Many of the issues can be managed if there is a coherent approach on the part of the government and the private sector, while dealing with production and facilitating irritant-free exports. While Pakistan has done well in exports despite the pandemic, it is seen failing on many of the fronts where it could excel. Exporters have pointed out that soaring energy prices make production uncompetitive on the global front. Same is the case with in-land transporters who demand an upscale logistics price owing to hike in fuel prices that raises the cost of doing business. Exporters also cry foul as they are denied availability of cotton yarn and other such raw materials imports from right across the border, and the same is shipped from faraway destinations. This makes the circle of in-bound imports, subsequent production and exports unconceivable. While the government intends to boost exports, it has to cut down on energy tariffs. The policy should be to maximise production and liberalise trade. Until and unless, the government acts as a regulator-cum-trouble shooter, vested elements will keep on exploiting mechanisms to keep Pakistan out of international business, and at the same time make its produce untenable at home. Despite obstacles, the textile sector bagged a staggering $15.4 billion during 2020-21, and this could increase manifold if raw material is available abundantly and the cost of production is curtailed. There is no harm in importing raw material from India, Iran or CARs, as Pakistan’s thrust is now on geo-economics. A preferential trade agreement with Uzbekistan is pending, and it should be synchronised with normalisation in Afghanistan. The government should prioritise foreign trade and as a cushion plough loopholes at home.

Source: Tribune

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Egypt allocates EGP 125.7 bn in FY22 to develop processing industries

Egypt has allocated EGP 125.7 billion in public investments for the processing industry sector in fiscal 2021-22, according to minister of planning and economic development Hala El-Said, who recently announced that EGP 16.6 billion of this will be directed to petroleum refining industries, while the rest will go to non-petroleum processing industries. She indicated that the plan includes increasing industrial non-petroleum production in 2021-22 by 9.9 per cent to reach EGP 1.7 trillion (in current prices) compared to the previous fiscal. The plan seeks to resume the modernisation and rehabilitation of a number of Egypt’s public sector enterprises in activities of importance as well; including textile, cotton gins, steel, aluminium, and fertilisers, she said. It also includes creating one-stop industrial clusters in the textile and wooden furniture industries to benefit from the perks of the clusters concept, in addition to furthering local manufacturing through expanding in producing intermediate inputs and linking to global supply chains, El-Said said. The plan targets increasing non-petroleum industries by a minimum of 10 per cent during this fiscal to post $26 billion, up from $23 billion in the last. The country is also aiming to raise production in non-petroleum processing industries by 11.9 per cent in this fiscal compared to the last to record EGP 808 billion (in current prices), El-Said was quoted as saying in a newspaper report in the country. “According to the plan, the construction of six industrial complexes is underway in Assiut, Qena, Aswan, Beheira, and Fayoum to establish 13 industrial complexes for small and medium-sized projects. Also, 10 million cubic metres of industrial serviced lands will be offered for investors to tap,” El-Said added. Recently, Egypt’s President Abdel-Fattah El-Sisi directed the government to hold meetings with the authorities concerned with the industrial sector to step up work to localise the industry of production tools and supplies instead of importing them.

Source: Fibre2Fashion

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Vietnam: Textile industry faces challenges in meeting export target

The textile and garment industry is forecast to face difficulties in realising its export turnover target of 39 billion USD this year due to unprecedented severe impacts caused by the COVID-19 pandemic. The textile and garment industry is forecast to face difficulties in realising its export turnover target of 39 billion USD this year due to unprecedented severe impacts caused by the COVID-19 pandemic. Hong Sheng Wen, Deputy General Director of Kwang Viet Garment Co., Ltd in the Mekong Delta province of Tien Giang, said that from July 15, 2021, the enterprise's production activities had to be suspended dueto the effects of the health crisis. According to a report of the Vietnam National Textile and Garment Group (Vinatex), since June 2021, when the pandemic broke out in southern localities, production and business activities of garment firms have been facing numerous difficulties. In just one month, over 40,000 workers, mainly in the southern region, were laid off.| Besides the burden of responsibilities for their employees, textile enterprises have also faced risks related to economic contracts with their customers. In the first 6 months of 2021, the textile and garment export value hit 15.2 billion USD, up 15 percent year-on-year. This is a good result in the context of COVID-19. However, Chairman of Vinatex Le Tien Truong said the achievements in the first half could completely be lost if creative solutions in production and business are not implemented drastically. He added that production disruptions can seriously affect supply chains and the lives of workers. Secretary General of the Vietnam Textile and Apparel Association (VITAS) Hoang Ngoc Anh said the textile industry will face many challenges in the remaining months of 2021. The social distancing order will negatively affect business results of textile companies, she said, adding that the rate of factories suspending operations has reached 35 percent, she noted. VITAS said the export turnover of the sector is predicted to reach 32-33 billion USD this year, equivalent to 84 percent the plan set, if the pandemic is under control in late August. Textile enterprises are currently receiving many orders from US and the European Union, it added.

Source: Vietnam Plus

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ASEAN Economies Are Starting to Falter Because of COVID

COVID-19 is raging across the five ASEAN countries, and the reliance on mobility suppression to control the virus is taking a toll on economic activities, from manufacturing to services. The sharp contraction and under-performance of the region’s July manufacturing activity highlights the severity of the disruption, which is likely to last longer as Vietnam, the Philippines, Indonesia and Thailand in particular lag on vaccination rates. We expect a sharp downward movement of private consumption with inadequate fiscal and monetary support. There are a few reasons for this: Firstly, monetary conditions are already loose, and domestic currencies are weaker, limiting room for central banks to deliver more easing. Secondly, their fiscal positions are deteriorating on the revenue side, and policymakers need to avoid further credit rating agencies downgrades. We have downgraded our expectations of 2021 GDP growth for the region from an average 5.2% to 3.8% in 2021. Vietnam Seeing Biggest Decline Vietnam faces the sharpest reduction — 3% of GDP — to grow at 5.2%. This is because Vietnam stands out as the country with both a reduction in domestic demand and external disruption from having the largest share of manufacturing exports to GDP of any of the countries, nearly 90%. Thailand and Malaysia’s downgrades are less severe, as they have more fiscal capacity and will likely see faster normalization, especially Malaysia with its high vaccination rates. The sharp underperformance of ASEAN countries’ manufacturing in July highlights the difficulty of the region in both controlling the virus and sustaining economic growth at the same time. The question is whether there is monetary and fiscal support to mitigate the fallout. With a weaker foreign exchange from a divergence in performance with the U.S. and North Asia, Southeast Asian central banks, particularly those with high external debt liability such as Indonesia, have limited appetite to lower rates. Even the Philippines, which had previously stated that it would cut its reserve requirement ratio, had to backtrack on that, as the peso weakened sharply recently. No Fiscal Stimulus Likely Facing an outlook downgrade and estimates of wider deficits, it is very unlikely that Indonesia’s expenditure in the region will rise enough to make up for the shortfall. This is why the government is trying to raise revenue via tax reforms, which would have a tightening impact on consumption. The Philippines, too, is likely to offer meager support, as it resists pressures on credit rating agencies on further downgrades. In other words, these current account deficit economies are likely to keep expenditure on the “prudent” side, given the revenue shortfall from weaker economic output due to suppression. Even places that announced cash handout measures such as Malaysia, Thailand and Singapore have not been able to offset the relative decline in their economic activity. Malaysia, for example, is disbursing 10 billion in Malaysian ringgit ($2.3 billion) in cash handouts to people, and Thailand approved an additional $4.5 billion or 0.9% of its GDP in the form of cash handouts and rebates to mitigate suppression measures. In Vietnam, the government is mulling a $1 billion support package in discretionary measures (reducing tax and fees for businesses). With domestic demand weakened because of reduced mobility and limited policy support, exports are even more key. So far in the first half (H1) of 2021, shipments have done well thanks to a resurgence of demand in the U.S., Europe and China. The rise of exports is also reflected in higher investment growth of the region in H1 2021. Manufacturing Challenges Will Impact Exports While demand is expected to hold up in the U.S. as well as China, albeit with a deceleration, a slowdown in exports in ASEAN, especially in manufacturing, is still expected due to onshore production challenges. As such, this time around, the economies with a higher share of labor-intensive manufacturing that requires in-person contact will be disproportionately affected by social distancing measures. Additionally, for manufacturers, higher raw material prices are raising input price costs while domestic demand leaves limited space to pass on the costs to consumers. Vietnam has the highest share of manufacturing as a share of GDP, followed by Malaysia and Thailand. The Philippines has the least manufacturing export exposure in value, and we are starting to see a slowdown of exports in Vietnam, as growth in July decelerated. We expect that to continue into August and beyond if Vietnam continues to rely on suppression measures to tame the virus and the vaccination rates remain low. The key difference between 2020 and 2021 exports is that the suppression is affecting ASEAN-5 economies, while final goods destinations such as the U.S. and Europe remain open. In other words, most of the hiccups to exports are driven by onshore challenges, and so the length of the disruption depends on these economies normalizing their industrial activities or limiting the fallout of suppression measures. For Vietnam’s case, the government is prioritizing industrial sectors, such as electronics, and has asked firms to create “bubbles” and give priority for vaccines, but it has yet to be able to do this across all sectors. The impact of disruption cannot be fully mitigated as other sectors, such as textile and footwear firms, must close as they have less resources to cope with the surge of the Delta variant. However even with a lower 5.2% growth rate in 2021, Vietnam is still outperforming its ASEAN-5 peers due to its unique growth rate in 2020 when others fell. Even with faster growth rates in 2022, Indonesia, Malaysia, the Philippines and Thailand will not return to 2019’s output level.

Source: Brink News

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Time to diversify exports to US

 While touring Las Vegas recently, Commerce Minister Tipu Munshi expressed Bangladesh government's willingness to scale up trade with the United States. He was talking to attendees at the Men's Apparel Guild In California (MAGIC), the biggest fashion marketplace in the US, showcasing apparel, footwear and accessories and sourcing resources from all around the world. The Export Promotion Bureau (EPB) of Bangladesh has been patronising local mid-sized apparel manufacturers to participate in this fair for long. That is one laudable but small step in the way of boosting trade between the two countries. What big steps have we taken to foster the nine-billion-dollar trade further? How Vietnam, with zero export to the US in 1993, has nearly eighty-billion-dollar export earnings? Did we compete intelligently, make smart use of our resources but still fell behind or swayed, carried away and gave up? Could things be done differently?

A TALE OF TWO NATIONS In the early nineties, Vietnam did not have anything to sell! Instead, it bought from the US. It took the country till 1994 to send the first shipment, whereas we were sitting on $1 billion export and $1.3 billion in total trade that year. Twenty-six years later, Vietnam has registered an 11-fold growth than us in total trade and 13-fold in export only. Braving the pandemic, Vietnam lifted its trade with the US to $89.63 billion in 2020, covering 2.38 per cent of America's $3.76 trillion total trade volume. With China and Mexico retaining the top two positions, Vietnam made its way to the top 10. We were 46th with $7.92 billion, enjoying a not-so-significant 0.21 per cent market share. The US Census Bureau has published data till the end of June, and it is apparent that total trade will exceed the $4-trillion mark. Among the top 10 players, China is down two spots, and Vietnam is up two notches! Bangladesh continues to hold the 46th position with a $4.78 billion trade.

EXPORT BASKET

That we need to diversify our export basket is fashionably told by all quarters: government, business, and academia. Perhaps this is one of the rare areas where we have a national consensus! Indeed, we have diversified. EPB statistics showed that in the fiscal year of 2020-21, our export to the US was $6.97 billion, composed of 68 kinds of products. Only two items – knitwear and woven garments – captured 85.26 per cent of the pie. If we add other textile products to that, it will go past 90 per cent. In sharp contrast, Vietnam spearheads with cell phone-related equipment, furniture parts, seats (excluding barber and dental), and Portland, aluminous and slag cement. These were bigger than its $12.57-billion apparel export. Vietnam carefully crafted its exportable for the US. We probably developed such market research neither at the public nor at the private level. The top five US imports consistently have been oil, passenger vehicles, computers, cell phone equipment, and medicines in individual dosages for many years. Vietnam struck two of them very well. Back home, the recent focus on leather and non-leather shoes by both producers and regulators is visible. Our mainstream media emphatically covered that footwear export to the US from Bangladesh posted a 73.13 per cent growth in the fiscal year of 2020-21 to reach $230.2 million, up from $132.96 million in FY20. Alongside, we can also put together all our power behind furniture, insulated wire, toys, children's bicycles, refrigerators, freezers, and air conditioning machines - all on America's rising demand list.

US BANGLADESH BUSINESS COUNCIL

After a series of talks between the Prime Minister's Office, the Ministry of Commerce, the United States Trade Representative, and the US Chamber of Commerce, a US Bangladesh Business Council was launched in Washington on April 6, 2021. During the launch, it was said the council would serve as a platform for American businesses to engage both governments to promote opportunities for businesses to drive mutually beneficial economic growth. We would like to view this as a big leap forward. Heavyweights like Chevron, GE, Visa, MetLife, or Facebook are sitting on the board of the USBBC. One can also keenly see the developments in May through July. Google, Amazon, Facebook, and Microsoft, the four American tech giants, obtained Business Identification Number (BIN) as nonresidents and have started submitting VAT returns.

LAST WORD

With $754 million in trade in June, Bangladesh has made its way to the top five of the US's "Fastest Growing Top 50 Trade Partners". One might argue that these rankings vary widely from month to month. But registering a spot in the top five out of 212 countries and territories with an astounding 82.43 per cent rise is worth cherishing. This suggests that total trade will hit $10 billion this year. But, that is an altitude we are scaling after 50 years of independence with over 100 million working people. It is time we changed our habits a bit! Let us not concentrate only on the cash cow RMG rather eye on other products that the US has a lasting need for. This will require policy and monetary support and adjustments in physical and financial infrastructure. Let us do it! We might have lost the battle, but we can still win the war! The author is member of the Pacific Council on International Policy, and a former commercial counsellor of the Los Angeles Consulate.

Source: The Daily Star

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