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MARKET WATCH 13 OCT, 2021

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INTERNATIONAL

Commerce and Industry minister Goyal reiterates call for IPR waiver at WTO

The TRIPS agreement came into effect in January 1995 Commerce and Industry MInister Piyush Goyal on Tuesday called for waiver of Intellectual Property Rights (IPR) in World Trade Organisation (WTO) and dismantling new trade barriers in the global fight against the Covid-19 pandemic. In October 2020, India and South Africa had submitted the first proposal, suggesting a waiver for all WTO members on the implementation of certain provisions of the TradeRelated Aspects of Intellectual Property Rights (TRIPs) in relation to the prevention, containment or treatment of Covid-19. In May, a revised proposal was submitted by 62 co-sponsors, including India, South Africa, and Indonesia. The TRIPS agreement came into effect in January 1995. “Our response to the pandemic needs to ensure equitable access to vaccines and other COVID-19 related health products by ensuring quick resolution of the supply side constraints. One of the ways to demonstrate this is by accepting the TRIPS waiver proposal,” Goyal said, in his address to the G20 Trade and Investment Ministerial Meeting in Naples, Italy.

Source: Business Standard

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FM Sitharaman highlights significant reforms in meeting with institutional investors in US

 Finance Minister Nirmala Sitharaman on Tuesday highlighted "significant reforms" undertaken by the government including National Monetisation Pipeline (NMP) and National Infrastructure Pipeline (NIP) as she met institutional investors here. Sitharaman arrived in the US on Monday for a weeklong trip to attend the annual meet of the World Bank and IMF in Washingon as well as G20 Finance Ministers and Central Bank Governors (FMCBG) meeting. During the official visit to the US, Sitharaman is expected to meet US Treasury Secretary Janet Yellen. After arriving in New York, Sitharaman travelled to Boston where she met investors during a roundtable hosted by FICCI and US-India Strategic Partnership Forum (USISPF). The roundtable on Tuesday was attended by institutional investors from across a wide spectrum of sectors including software, consulting, financial advisory, insurance, telecom hardware and investment management. "The FM highlighted significant reforms including the setting up of #IFSC at #GiftCity, #NIP and #NMP. The US companies welcomed the reforms and initiatives undertaken by the Government of India and committed to work with it to increase foreign investments in India," the Finance Ministry said in a tweet. Following the roundtable, Sitharaman held one-on-one discussions with top executives. Advent International Corporation Chairman and Managing Partner David Mussafer, after his meeting with Sitharaman, said that the reforms that have happened in India "are a great step forward." "For international investors like ourselves, we are always looking for opportunities to take friction out of the system. The opportunity to invest more in India really rests upon some of the reforms that have been made," Mussafer said. He added that some of the insolvency provisions that create opportunity for companies to invest in and breathe life into new opportunities that have struggled "are critical to the type of things that we look for and so we're incredibly excited about some of the reforms that have happened." PTI YAS ZH ZH.

Source: Economic Times

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India may consider higher GST and fewer rates

A panel on goods and services tax, headed by Finance Minister Nirmala Sitharaman, will likely meet in December to consider the overhaul from the current four-rate system. India may look at increasing tax on some goods and services in a step toward moving to a simpler structure with fewer rates, according to people familiar with the matter. A panel on goods and services tax, headed by Finance Minister Nirmala Sitharaman, will likely meet in December to consider the overhaul from the current four-rate system, the people said, asking not to be identified as the discussions are private. India currently taxes good and services produced in the country at 5%, 12%, 18% and 28%, with some essentials such as food items attracting the lowest rate and sin and luxury goods ending up with the highest levy. The two lowest rates could be raised by a percentage point each to 6% and 13%, respectively, the people said. While the rates would eventually be pared to three as part of a phased reduction plan, a group of state finance ministers is expected to submit proposals by the end of next month, they said. A finance ministry spokesman didn’t immediately respond to a call seeking comments. The plan to raise GST rates comes at a time when key Indian states are heading for polls early next year, possibly making it an unpopular move in a nation only just recovering from the devastation caused by the coronavirus pandemic.

Source: Economic Times

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Indo-Japan trade increases to $ 18 bn in 2019: Exim Bank study

However, despite having a Comprehensive Economic Partnership Agreement (CEPA) with Japan, India has been running a persistent trade deficit with Japan, which has more than doubled during the decade, to almost US$ 8 billion in 2019. India Exim Bank’s study titled “ Prospects for Enhancing India Japan Trade Relations”has noted that over the past decade, India’s total trade with Japan has increased from $ 10 billion to almost $ 18 billion, with exports valued at US$ 5 billion and imports $ 13 billion in 2019. However, despite having a Comprehensive Economic Partnership Agreement (CEPA) with Japan, India has been running a persistent trade deficit with Japan, which has more than doubled during the decade, to almost US$ 8 billion in 2019. The Study, through the trade complementarity analysis, recommends suitable product categories in which India has a latent advantage in exports. The study suggests that there is significant potential for India’s exports in categories such as mineral fuels and oils, electrical machinery and equipment, machinery and mechanical appliances, optical, photographic equipment, pharmaceutical products, articles of apparel and clothing, etc. The study also highlights that India’s exports face both tariff and non-tariff barriers in Japan and suggests that in the subsequent CEPA review negotiations India could deliberate upon these issues. Further, the study observes that the potential for IndiaJapan relations extend beyond the sphere of bilateral trade. India and Japan have aimed at coordinating India’s "Act East" policy and Japan’s vision of a free and open IndoPacific. This policy coordination had given birth to the idea of Asia-Africa Growth Corridor (AAGC), which is a megaregional program aimed at improving ties between Asia and Africa. Releasing the study last week Harsha Bangari, Managing Director, India Exim Bank in her address highlighted that India and Japan have been enjoying a strong and cordial relationship.

Source: Economic Times

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IIP rises past pre-Covid level; grows 11.9 per cent in August

Double-digit growth in industrial output can be attributed to the impact of a low base Industrial output not only grew at a faster clip at 11.9 per cent in August, compared to 11.5 per cent a month ago, it also rose 3.9 per cent, compared to pre-pandemic levels, revealed the data released by the Ministry of Statistics and Programme Implementation on Tuesday. However, double-digit growth in industrial production can be attributed largely to the impact of a low base. Factory output in volume terms - measured by the Index of Industrial Production (IIP) - contracted 7.1 per cent in August last year due to disruption caused by the Covid-19 pandemic. Cumulative growth in April-August (2021-22) was 28.6 per cent, compared to a contraction of 25 per cent in the same period a year ago. “As expected, the IIP expansion recorded mild improvement to 11.9 per cent in August, from 11.5 per cent in the previous month, driven by the positive impact of a subdued rainfall on mining and electricity, even as manufacturing growth moderated,” said Aditi Nayar, chief economist, ICRA. Manufacturing sector output, which accounts for more than 77 per cent of the entire index, grew 9.7 per cent year-on-year (YoY) in August, compared to a contraction of 7.6 per cent last year. On a sequential basis, it contracted moderately at 0.5 per cent. Growth in electricity generation stood at 16 per cent YoY in August, compared to 1.8 per cent contraction a year ago, but witnessed 2.2 per cent growth sequentially. Mining activity, which accounts for over 14 per cent of the entire index, grew 23.6 per cent YoY, compared to a contraction of 8.7 per cent, but witnessed degrowth of 0.8 per cent sequentially. “Encouragingly, the IIP rose 3.9 per cent in August, relative to the pre-pandemic levels of August 2019, led by all categories, except consumer durables, highlighting the enduring impact of the pandemic on big-ticket demand,” added Nayar. Consumer durables output witnessed 8 per cent growth in August, compared to a contraction of 10.2 per cent during the same period last year. Consumer non-durables output witnessed degrowth of 5.2 per cent in August, compared to a contraction of 3 per cent last year. Capital goods output - reflective of the private-sector investment scenario - grew 19.9 per cent, compared to 14.4 per cent contraction last year. Nayar, however, warned that with excess rainfall affecting mining, electricity, and construction activities, and the non-availability of semiconductors impinging upon automobile (auto) output, IIP growth may dip sharply to 3-5 per cent in September. “Subsequently, a healthy goods and services tax e-way bill generation for early October suggests inventory build-up ahead of the festival season. This augurs well for the IIP print for the current month, even as continued constraints in the auto sector and the looming concerns on availability of coal and power pose risks,” she added.

Source: Business Standard

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IMF keeps its India economic growth projection for FY22 unchanged at 9.5%

Says India will be the fastest-growing major economy in the world again The International Monetary Fund (IMF) has retained its projection for India’s economic growth in the current financial year at 9.5 per cent, even as it has moderately scaled down its forecast for the world economy during 2021 by 10 basis points to 5.9 per cent in view of worsening Covid dynamics and supply disruptions. In its World Economic Outlook (WEO), the IMF has maintained India's gross domestic product (GDP) estimates for next financial year at 8.5 per cent, unchanged from its July projections. The WEO, titled ‘Recovery During a Pandemic Health Concerns, Supply Disruptions, and Price Pressures’, has forecast world economic growth at 4.9 per cent for 2022, the same as earlier. Meanwhile, the IMF has cut its China GDP growth projections for 2021 and 2022 by 10 basis points each – to eight and 5.6 per cent, respectively. With this, India will again get the tag of the fastest-growing large economy in the world, both in FY22 and FY23. In 2020, China’s was the only major economy that had registered growth. While it had grown 2.3 per cent last year, India's had contracted by 7.3 per cent. The Fund has also projected India’s consumer price index-based inflation rate to stand at 5.6 per cent during the current financial year from 6.2 per cent last year. For the next financial year, it has forecast a further decline to 4.9 per cent. Earlier, two other bodies – the monetary policy committee (MPC) of the Reserve Bank of India and Standard and Poor's (S&P) – had retained India's growth projections for FY22 at 9.5 per cent. In its policy review last week, the MPC had also reduced its retail inflation projection for FY22 to 5.3 per cent from its earlier prediction of 5.7 per cent. Also last week, the World Bank (WB) had kept its projection for India’s economic growth in 2021-22 at 8.3 per cent. However, Fitch Ratings had lowered its projection to 8.7 per cent from its earlier forecast of 10 per cent in view of the impact of the second Covid-19 wave in the country. Outside of China and India, emerging and developing Asia has been downgraded slightly, as the pandemic has picked up, the IMF has said. The IMF has also said that the current account balance of India will slip into a deficit of one per cent of GDP this financial year, as against a surplus of 0.9 per cent last year. The deficit will further widen to 1.4 per cent next financial year. On global economic growth, the IMF has said the downward revision for 2021 reflects a downgrade for advanced economies — in part due to supply disruptions — and for lowincome developing countries, largely due to worsening pandemic dynamics. It has said that employment is generally expected to continue lagging the recovery in output. The Fund has also said that headline inflation rates have increased rapidly in the US and in some emerging-market and developing economies. In most cases, rising inflation reflects pandemic-related supply-demand mismatches and higher commodity prices when compared with their low base from a year ago. It said added that the balance of risks for growth is tilted to the downside, while inflation risks are skewed to the upside. IMF Chief Economist Gita Gopinath said recent developments had made it abundantly clear that the pandemic was not over anywhere until it was over everywhere. "If Covid-19 were to have a prolonged impact into the medium term, it could reduce global GDP by a cumulative $5.3 trillion over the next five years relative to our current projections. It does not have to be this way," she said. The global community must step up efforts to ensure equitable vaccine access for every country, overcome vaccine hesitancy where there was adequate supply, and secure better economic prospects for all, Gopinath said. The IMF highlighted that grants from the Indian government to vaccine producers had encouraged the development of Covid-19 vaccines. The Fund has cautioned that rapid spread of the Delta variant of coronavirus and the threat of new variants have increased uncertainty about how quickly the pandemic can be overcome. It has said policy choices have become more difficult, confronting multidimensional challenges — subdued employment growth, rising inflation, food insecurity, the setback to human capital accumulation, and climate change — with limited room to manoeuvre.

Source: Business Standard

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India will have to scrap "digital permanent establishment" rules post global tax deal

If India wants to accept OECD’s tax deal, all unilateral measures like equalisation levy, and SEP must go, as countries can’t have it both ways,” said Amit Singhania, a partner at law firm Shardul Amarchand Mangaldas. India will have to abolish special economic presence (SEP) or “digital permanent establishment” rules introduced in May if the Organisation of Economic Cooperation and Development (OECD) tax deal comes through since unilateral measures, such as SEP and equalisation levy, can’t exist in the proposed tax regime. Finance ministers of G-20 countries are scheduled to meet on October 13 in Washington to finalise the deal. SEP rules were introduced this year to target large e-commerce companies, multinationals and unicorn start-ups that have a substantial user base or revenues in India but escape paying domestic taxes. OECD had on Friday brought together 136 countries to accept a deal to ensure that large multinationals pay a minimum tax of 15% on their global incomes from 2023 and those with profits above a threshold will have to pay taxes in the markets where they conduct business. OECD, however, wants countries such as India to withdraw any other unilateral measures aimed at multinationals before it accepts the global tax deal. “The wordings of 'other relevant similar measures’ of the OECD statement would cover SEP as well considering its far reaching implications and potential conflict with the two pillar mechanism,” said Rahul Garg, managing partner of tax and regulatory consultants Asire Consulting. “If India wants to accept OECD’s tax deal, all unilateral measures like equalisation levy, and SEP must go, as countries can’t have it both ways,” said Amit Singhania, a partner at law firm Shardul Amarchand Mangaldas. While SEP doesn’t impact companies and entities investing in India through treaty countries, tax experts say, the revenue department has in the past challenged the applicability of the tax treaties in several cases by questioning the identity of the ultimate beneficiary. “While SEP was essentially targeted towards companies coming from non-tax treaty countries, often interpretation and eligibility of tax treaties is debatable. Also, India cannot target any of the 136 countries that have signed OECD’s global tax deal even if they do not have a bilateral tax treaty with India,” said Singhania. The government had first come out with SEP regulations in 2018, but the threshold — that would determine who will come under the taxman’s net — was announced only in May, but applicable from April. As per SEP rules, the government can tax multinationals or entities that do not have a presence in India and if they do transactions of Rs 2 crore or more a year here or have at least 3 lakh users. If a company meets these criteria, it would create a “digital permanent establishment” in India. A permanent establishment is a concept in taxation that determines which country has the first right to tax a company. SEP, however, is in conflict with OECD’s global tax framework, experts say. OECD calls it pillar 1 and pillar 2. Under pillar 1, OECD will estimate the quantum of additional profits that escape taxes and which country or jurisdiction has the right to tax it. Pillar 2 consists of a minimum tax rate – 15% – that these technology companies will have to pay in these jurisdictions.

Source: Economic Times

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UNEP India, NIFT join hands to offer sustainable fashion course module

United Nations Environment Programme and the National Institute of Fashion Technology have joined hands to offer a general elective course on ''Design Innovation for Sustainable Fashion'' to all students of the institute. More than 20 batches of this elective course are currently running across 17 NIFT campuses in India, a release stated. Addressing a webinar, UNEP India Country Office Head Atul Bagai said UNEP India is working on several initiatives on sustainability in the textiles sector. "We are helping the (Textiles) Ministry to develop a roadmap for a sustainable textile hub in Surat for assisting sustainability and circularity in this sector. We are also working on a study on sustainability in the Indian Handlooms and UNEP has been working with Lakme Fashion Week on the Circular Design Challenge,” he said. Speaking at the webinar, Textiles Secretary Upendra Prasad Singh said sustainability has to be practised in the entire value chain of textiles, not just in the production but also in the consumption of textiles. “Looking at the overwhelming response, we may make ''Design Innovation for Sustainable Fashion'' a mandatory course for students or even a certificate or diploma course in the future because sustainable fashion and sustainable development is the need of the hour,” said NIFT Director General Shantmanu. The textile industry is one of the largest global industries, with a market value of approximately USD 3.3 trillion, accounting for 2 per cent of the global GDP; one in six people in the world working in a fashion-related industry.

Source: Outlook India

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Reliance Retail close to signing up as Gap Franchisee in India

Arvind Fashions failed to turn Gap's business in India profitable even after closing and pruning store sizes and increasing local sourcing for the brand in India. Reliance Retail is closing in as the new India franchisee of US fashion brand Gap Inc., two people familiar with the development, said. Reliance has been in talks with Gap for months and had lately merged the front-runner to clinch the deal ahead of Myntra that was also in talks with the American fashion apparel brand. One of the persons quoted earlier said Reliance Retail has been able to extract huge concession of manufacturing 100% of all Gap products to be sold in India - up from about 70% that previous franchisee NSE 0.95 % was allowed to source locally. A spokesperson for Gap in the US said the company cannot comment on "rumours or speculation." Reliance Retail did not respond to an email seeking comment. Gap has been scouting for an India partner for about a year after it snapped its ties with Arvind Fashions last year. Arvind Fashions failed to turn Gap's business in India profitable even after closing and pruning store sizes and increasing local sourcing for the brand in India. Analysts said intense competition from global rivals, including Zara, H&M and lately Japan's Uniqlo, have impacted Gap's business in India like in many parts of the world. "Gap is a has-been brand and is anyway a daily-brand in the US. Who in India will pay a premium for an American brand to wear their khaki, blue jeans and white shirts and Polo T-shirts?" asked Harminder Sahni, co-founder of retail consultancy Wazir Advisors. "There are enough brands that are doing business here in India including H&Ms, Zaras and the Uniqlos of the world that have taken the market from Gap even in the US." Then a wrenching Covid-19 pandemic forced retailers to close their outlets for months altogether in 2020 as India observed lockdown to curb the spread of the virulent virus. Arving and Gap has cited the pandemic as a reason to call off their partnership. Arvind said Gap contributed about 4.7% to Arvind Fashions' consolidated turnover, or ₹182 crore, in the fiscal year ended March 2020, with a loss of ₹34 crore before taxes. Reliance Retail-owned online fashion platform Ajio already sells almost the entire collection for men, women and kids from Gap and is one of the largest stockists on Ajio.

Source: Economic Times

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Uttar Pradesh to push apparel sector to meet export target

To increase UP’s exports to Rs 3 lakh crore within the next five years, the state government has identified apparels as a crucial sector which has a massive potential for growth. In a study carried out by PricewaterhouseCoopers at the behest of Invest UP, it was found that due to differences in tariff regulations among various countries, India in general and UP in particular, is losing out to countries like Bangladesh, Turkey, and Cambodia. A slew of measures have been proposed to increase UP’s presence in apparel export. These include attempts to renegotiate trade deals with USA, UK, European Union, Canada and Australia. “When several foreign companies were shifting base out of China during Covid pandemic in 2020, Chief Minister Yogi Adityanath saw a growth opportunity and proposed improvement in UP’s exports,” he said. “We appointed PWC to study UP’s export pattern in 15 sectors, covering 100 products. A report giving suggestions on way ahead is now ready to help UP’s exports to leapfrog from the current Rs 1.21 lakh crore to Rs 3 lakh crore by 2025-26,” he said. In the apparel sector, for which Gautam Budh Nagar and Kanpur are hubs, PWC has said that there is at least a 10% difference in tariff rates between India and countries like Bangladesh, Turkey, Cambodia etc which make it unfavourable for India to compete with these countries. Due to unfavourable tariff structures, UP loses out to Turkey, UK and Italy, which impose no tariff in export of house coats and similar synthetic fibre clothes to countries like Germany and UK. Similarly, UP’s export of cotton T-shirts to countries like USA, Germany, UK, France and Spain loses out to exports from Honduras, Nicaragua, El Salvador, Bangladesh, Turkey, Portugal etc, which have zero tariff. PWC has proposed infrastructural interventions in Gautam Budh Nagar and Kanpur. The measures include setting up of an apparel park in Gautam Budh Nagar, common facility centres, laboratories by testing agencies, design labs and apparel manufacturing training centres, raw material depots and sourcing hubs. “UP already has a ‘Handloom, Powerloom, Silk, Textile and Garmenting Policy of 2017’ which is being used to provide incentives to manufacturers but needs to be publicised more. We are also looking at technology transfer for upgradation of automation in manufacture of raw material and apparel. There is also a need to encourage manufacturers to diversify,” Singh said.

Source: Times of India

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Textile sector seeks duty-free yarn import

 Exporters reluctant to finalise export orders due to cotton yarn shortage Value-added garment and home textile exporters have urged the government to abolish customs and regulatory duties on the import of cotton yarn as they are facing shortage of this vital input. “The government must allow import of cotton yarn from across the world as it is a major raw material of value-added textile export industry,” Pakistan Hosiery Manufacturers and Exporters Association Central Chairman Shahzad Azam Khan said, adding that the available cotton yarn was of substandard quality. Exporters were reluctant to finalise export orders due to the prevailing cotton yarn crisis, he said. “In this scenario, such export orders will be diverted to other regional countries.” Despite a huge demand for cotton yarn in the local value-added industry, yarn manufacturers and spinners were seen exporting the raw material to regional countries. “Yarn manufacturers are depriving the value-added textile sector of the main input and in the meantime passing the subsidy benefit, given by the government, on to regional competitors,” he alleged. In comments to The Express Tribune, Topline Securities analyst Saad Ziker termed these claims a true picture of the current situation in the industry. “There is a massive need for cotton in the industry,” he said, adding that the value-added textile sector wanted to fulfill maximum export orders but they could not due to cotton shortage. He underlined that their demand for cotton import from around the world was drawing a lot of criticism in the market, as textile was the largest contributor to overall exports from the country. Other regional countries such as India and Bangladesh were also recovering from the Covid-19 pandemic and trying to capture their lost share in orders. “The government needs to pay attention to their demands and address their queries as soon as possible, which will ultimately help Pakistan in the long run,” he added. AHL analyst Arsalan Hanif was of the view that textile manufacturers’ demand to eliminate customs and regulatory duties and allow import of cotton yarn would not only resolve supply-side issues but would also reduce cotton prices in the local market. However, this could have negative repercussions, as farmers would feel insecure and demotivated if they did not receive the expected price, he added. While exporters were demanding duty-free cotton yarn imports, some sources said it was unnecessary and would burden the country. “There is no shortage of cotton yarn in the country,” said an industry source requesting anonymity. “If you compare cotton yarn production with its exports, you will realise that only 11% of the cotton yarn produced has been exported,” he said, adding that the issue was with the rising cotton cost around the globe. “How exports of value-added textile products increased, if there was a shortage of cotton yarn,” he asked.

Source: Tribune

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Sri Lanka encourages South Indian weavers to invest in Sri Lanka

Sri Lanka Deputy High Commission in Chennai in collaboration with Tamil Nadu Powerlooms Federation organized a trade and investment delegation at the Mission premises on 06 October 2021. The objective of the meeting was to make the fabric manufacturers aware of the trade and investment opportunities available in Sri Lanka and business conducive environment for the apparel sector players. Making his remarks the Deputy High Commissioner of Sri Lanka to Chennai D. Venkateshwaran stressed that India is Sri Lanka’s closest neighbor and 2nd largest trading partner; tremendous trade and investment opportunities are available in Sri Lanka which are mutually beneficial to both countries. Further, he added, that the international traders in both countries can indulge the benefits of enhanced trade as a result of lower transportation cost and low shipping duration due to exclusive proximity of Sri Lanka to India, duty concessions being given under the Indo Sri Lanka Free Trade Agreement (ISFTA) & preferential trade Pacts (SAFTA & APTA) and substantial sops and concessions being furnished by the Board of Investment, Sri Lanka (BOI). President of the Tamil Nadu Powerloom Federation Mathivanan emphasized the importance of doing business in Sri Lanka due to the ultimate facilities being provided and its high quality production processes. Adding more to his remarks he expressed their interest to explore more opportunities in Sri Lanka for South Indian apparel manufacturers and establishing a textile & management institution in Sri Lanka which would provide technical know-how and expertise knowledge about contemporary textile industry. During the open interaction session, the Sri Lankan envoy was raised queries regarding the forming of joint ventures, business collaborations and other facilities given to the international investors. While successfully addressing these questions, the Deputy High Commissioner invited the delegation to pay an official visit to Sri Lanka to explore the investment opportunities in Eravur fabric processing park and experience the humongous facilities given to apparel manufacturers. Concluding the meeting Deputy High Commissioner D. Venkateshwaran, commended the keen interest shown by the delegates to doing business in Sri Lanka and given the impulse to submit individual proposals upon their area of interests. Further, he proposed forming the Tamilnadu-Sri Lanka Powerloom Federation soon which would bolster the fabric industry in both countries.

Source: Colombo Page

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Govt delays textile policy approval

Decision deferred due to disagreement over quantum of subsidies on gas, electricity The government on Monday again deferred approval of the textile policy, at least for the fifth time in less than a year, due to disagreement over the quantum of subsidies on gas and electricity amid sacred fiscal and natural resources. “The Economic Coordination Committee (ECC) of the cabinet constituted a subcommittee to review and present an updated policy before it in a couple of weeks,” said a statement issued by the Ministry of Finance. The sub-committee will comprise representatives of the Ministry of Commerce, Finance Division, Ministry of Industries and Production, Power and Petroleum Divisions, Federal Board of Revenue and State Bank of Pakistan. Before departing to Washington on almost a two-week-long visit, Finance Minister Shaukat Tarin had convened a special meeting of the ECC to give nod to the textile and apparel policy (2020-25). However, the ECC was unable to build consensus due to objections made by Energy Minister Hammad Azhar and the finance minister. It was also the last ECC meeting chaired by Tarin during his six-month short constitutional stint as finance minister which is set to end on coming Friday. The government could not get him elected as senator during the given time frame despite Tarin’s repeated remarks that he had trust in Prime Minister Imran Khan’s promise. The Ministry of Commerce had proposed to supply electricity and gas to the exportoriented textile sector at “regionally competitive” rates. The proposal was different from the lapsed policy of providing electricity at 9 cents per unit and RLNG at $6.5 per mmbtu. Committee members were of the view that due to increasing prices of crude oil and RLNG in the international market, it would not be wise to comment on supply of both the resources at regionally competitive prices, according to the officials. Hammad Azhar also raised the issue of shortage of gas and lack of fiscal space to provide electricity and gas at prices which were far less than the original rates. There was also an issue of provision of electricity and gas to all the industries in the name of exports. In the last meeting of the Cabinet Committee on Energy, the finance minister had expressed the desire to disconnect the gas connections of all captive power plants on an immediate basis as the industries had failed to live up to their promises. The minister only wanted the exporters to be given these resources at subsidised rates. During the ECC meeting, the finance minister also showed dissatisfaction over the proposed export target of $20 billion for the textile sector for the current fiscal year and $25 billion for the next fiscal year. The minister was of the view that these targets were not in line with the kind of fiscal incentives that had been proposed for the textile sector. According to the original textile policy draft, the government wanted to extend fiscal incentives of Rs838 billion for five years but the number would change after the Ministry of Commerce proposed regionally competitive energy prices. Fertiliser production The ECC approved provision of gas to Pakarab Fertilisers and Fauji Fertiliser Bin Qasim Limited (FFBL) to meet demand for urea during the Rabi season 2021-22. The ECC approved maximum provision of gas to Pakarab Fertilisers at 58 mmcfd and Fauji Fertiliser Bin Qasim at 63 mmcfd to ensure that the estimated demand for urea fertiliser was met through domestic production. The decision will stabilise prices of urea and ensure its smooth supply throughout the country during the Rabi season 2021-22, according to the Ministry of Finance. The decision will help produce an additional 175,000 tons of urea during the Rabi season, which will ensure its supplies at relatively affordable prices, according to an official of the Ministry of Industries. Compared with the imported urea price of Rs7,000 per 50kg bag, the domestic gas-based production will ensure the production cost of around Rs1,800. Farmers are already exposed to the highest DAP fertiliser price of around Rs7,000 per bag, up from around Rs3,800 last year, which could adversely affect the sowing of wheat crop.

Source: Tribune

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Technical textiles a promising sector

Says a study by German development agency GIZ Bangladesh has a significant opportunity to expand its hold on the global technical textile and personal protective equipment (PPE) markets once local manufacturers find reliable raw material sources and upgrade their operations, according to a study published yesterday. The international technical textile market is projected to grow from $179.2 billion in 2020 to $224.4 billion by 2025 with an annual average growth rate of about 4.2 per cent, it said. The study, styled "Feasibility Study on Upscaling the Production of TT/PPE in Bangladesh", was carried out by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) with help from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). Similarly, the global PPE market is projected to pass $93 billion by the end of 2025. The EU currently leads the charts for medical textile imports while the demand from North American countries is growing in a trend which is expected to continue. And although the Covid-19 pandemic has jump started the interest in medical textile products, the world of technical textiles and their end-use products is endless. Bangladesh also benefits from the EU's Everything but Arms scheme which allows for duty-free imports from least developed countries. This feasibility report is intended to broaden awareness on what is required to develop the sub-sector in technical textiles and PPE in Bangladesh, the study said. The potential of technical textiles and its PPE sub-sector will inevitably hinge on Bangladesh's well-established reputation as a leading supplier of apparel made from traditional textiles. Most apparel manufacturers in Bangladesh tend to be medium-sized companies. Even large apparel groups are not known by international procurement agencies for technical textile products. The sourcing supply channel for medical PPE is far more complex than that of apparel. Comprehensive details regarding performance, testing and certification requirements for the EU and the US are provided in the report. Since the Bangladesh technical textile and PPE supply chain is still in its earliest stage, the study was unable to evaluate unit selling costs, manufacturing losses, order lead time, or the impact of current environmental and social standard practices. Most manufacturers are aware that compared to the fashion industry, with its strong tieups with well-known international buyers, access to the technical textile marketplace will be difficult due to the complexity of material sourcing and testing, certification standards. The overall finding reveal a local industry aware of the global market realities but is reluctant to react to the challenges presented by those realities. The German development agency GIZ along with the BGMEA shared these findings during a virtual programme. "We are proud to share the results, particularly critical gaps, key actions and an overall strategy to support Bangladesh in entering this new market and, most importantly, in succeeding there in a sustainable and compliant way," Werner Lange, textile cluster coordinator of GIZ Bangladesh, said in his welcome remarks. Achim Tröster, Germany's ambassador to Bangladesh; Angelika Fleddermann, country director of GIZ Bangladesh; Faruque Hassan, president of the BGMEA; and Shahidullah Azim and Miran Ali, BGMEA vice presidents, also spoke at the event.

Source: The daily Star

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