The decisions taken at the meeting also include the consideration of standalone embroidery machines with effect from inception of the ATUFS. Union Minister Piyush Goyal has reviewed the Amended Technology Up-gradation Fund Scheme (ATUFS) to boost the Indian textile industry by enabling the ease of doing business, bolstering exports and fuelling employment, the textile ministry said on Sunday. Textile Minister Goyal and Minister for State for Textiles Darshana Jardosh reviewed the scheme with various ministries, departments, textiles industry associations and banks at the 5th Inter Ministerial Steering Committee meeting organised by the textile ministry. “They reviewed the Amended Technology Upgradation Fund Scheme to boost the Indian textile industry by enabling the ease of doing business, bolstering exports and fuelling employment,” according to an official statement. Apart from fixing the timeline for conduct of IMSC meeting quarterly, some significant decisions to resolve pending issues include reducing the compliance burden by accepting only single certificate from the concerned bank instead of multiple documents regarding evidence of payment for claimed machineries. The decisions taken at the meeting also include the consideration of standalone embroidery machines with effect from inception of the ATUFS. The Ministry of Textiles will simplify the procedure for joint inspection using a calibrated approach to linking joint inspect to subsidy support size by reducing burden on bracket lower than Rs 50 lakh instead of the current 100 per cent, it stated. Addressing the meeting, Goyal said that despite the hindrances during the COVID-19 pandemic, the ministry and the office of textile commissioner have put serious efforts in resolving the policy constraints and settling of the claims. He mentioned that a special measure was introduced to ease liquidity flow in the industry by introducing an option for getting part subsidy released against the bank guarantee. Goyal noted that out of the total settlements under ATUFS since inception, about 61 per cent of claims have been settled during the peak of pandemic period i.e., in FY 2020-21, the ministry stated. The minister also suggested that the ministry and the textile commissioner should rework the physical verification mechanism to automated verifications through video-conferencing mode. He said provision for self-certification of machinery by units and random verification by office of the textile commissioner may be considered in place of the current physical inspection. The textiles ministry had introduced the Technology Upgradation Fund Scheme in 1999 as a credit-linked subsidy scheme intended for modernisation and technology up-gradation of the Indian textile industry, promoting ease of doing business, generating employment and promoting exports. Since then, the scheme has been implemented in various versions. The ongoing ATUFS was approved in 2016 and implemented through web-based iTUFS platform. Under the scheme, the capital investment subsidy is provided to benchmarked machinery installed by the industry after physical verification. ATUFS was approved for a period from 2015-16 to 2021-22 with an allocation of Rs 17,822 crore (Rs 12,671 crore for committed liability of previous versions of TUFS and Rs 5,151 crore for new cases under ATUFS)
Source: Financial Express
Textiles Minister Piyush Goyal has asked the domestic industry to get into innovative partnerships for developing 100 textile machinery champions Commerce and Textiles Minister Piyush Goyal has asked the domestic industry to get into innovative partnerships for developing 100 textile machinery champions, which can to be recognised across the world. Interacting with manufacturers, the minister urged them to get out of the command-andcontrol mindset and work through plug and play mode to make the textile sector vibrant. He asked them to focus on speed, skill and scale in order to develop 100 champions and bring the textile sector out of inertia. The government has set target of $100 billion for textiles and garment exports over next five years and the textile sector has an important part to play in achieving it, Mr Goyal added. He further said that India should be aiming at becoming a global player in producing textiles machinery, producing at scale, quality as well as quantity, the kind of machinery which is required at global levels. The minister said that the Centre is not averse to imports but there is a need to reduce import dependency of textile machinery in India through concerted efforts of both the textile engineering industry as well as the government in order to capture bigger markets.
Source: NDTV
The union minister emphasized on the need to focus on increasing efficiencies by reducing costs. Union trade and textiles minister Piyush Goyal has urged the textile industry to develop 100 Indian textile machinery champions recognized across the world to reduce the import dependency of the textile machinery. Goyal was interacting with the textile machinery manufacturers in a video conference on ‘Technology Gap and Way Forward for Textiles Machinery Manufactures’. The minister also asked the textile machinery manufacturers to get out of command-andcontrol mindset and work through plug-and-play to make the textile sector vibrant in name and sprit. “India should be looking to become a global player in producing textiles machinery, producing at scale, producing with quality and quantity the machinery of choice that the world requires. We are not averse to imports but we must reduce the import dependency of the textile machinery in India by concerted effort between textile engineering industry and government together. Focus on quality will help to capture bigger markets and higher productivity," he added. Goyal expressed hope that a modern and upgraded textile machinery ecosystem would have a cascading impact on unorganized Indian textile industry. “This would set the momentum for continuous advancement and innovation, resulting into ever-evolving and enhancing competitive capabilities along the value chain. The machinery manufacturing facility would change the inertia of the status quo, augment the dynamics along value chain and enhance the domestic consumption and further boost the export of higher value goods while gradually reducing the import dependency. For this it is important to synergize the efforts of (various) arms of the government (such as) ministry of textiles, ministry of heavy industries, digital innovation/adaptation possibilities in our quest of increasing efficiencies by reducing costs across manufacturing value chain," he said. The minister informed that heavy industries capital goods scheme is a pilot scheme designed to support the industry to modernize domestic technologies. “National Capital Goods Policy is a manufacturing sector policy devised by the government of India aimed at increasing the production of capital goods from the 2014-15 value of approximately $31 billion to $101 billion by 2025," he added.
Source: Live Mint
"Reaching $100 billion in five years will be a very steep goal. Hence, India could emulate the best-in-class exports growth seen over the past 10 years (9-10% by Vietnam in 2011- 2015) and target a realistic goal of $65 billion in five years," the report said, adding that India will be able to expand its share of global exports to 6.6% from 4.5%. India should target a "realistic" goal of $65 billion worth of textile exports in the next five years, industry body CII and global management consulting firm Kearney have said in a report, adding the government's aim of $100 billion of exports is a "very steep goal". The report also said India should ink trade pacts with the EU, the UK, Australia, Canada, Bangladesh and Vietnam. India exported textiles worth $36 billion in 2019. The report, titled Creating a competitive advantage for India in the global textile and apparel industry, also suggested the government to tweak the productionlinked incentive (PLI) scheme for technical textiles and manmade fibres, and expand it to fabric and garments made of natural products, saying the selected companies may struggle to reach the threshold investments set in the scheme. Reaching $100 billion in five years will be a very steep goal. Hence, India could emulate the best-in-class exports growth seen over the past 10 years (9-10% by Vietnam in 2011- 2015) and target a realistic goal of $65 billion in five years," the report said, adding that India will be able to expand its share of global exports to 6.6% from 4.5%. Expediting the implementation of key legislations such as the adoption of fixed-term employment across states, and policies to encourage indigenous textile machinery manufacturing in India, are the other suggestions made in the report. This assumes significance as commerce and industry minister Piyush Goyal has called for developing 100 Indian textile machinery champions that are recognized across the world. On the recently-approved Rs 10,683-crore PLI for manmade fibre (MMF) apparel and fabrics, and technical textiles, CII. and Kearney suggested "select tweaks" though the "boldness" is reflected in the scheme design where a starting revenue of Rs 200 crore indicates steady-state revenue of around Rs 490 crore (after four more years), which indicates investment of about Rs 140 crore. While this scheme allows manufacturers to start availing benefits any year (starting from the third year) in the sevenyear window scheme, they said select garmenters may struggle to reach the Rs 200 crore threshold in the third year and therefore may not be able to avail the benefit offered for the entire five years but only for a curtailed period. "Hence, as a refinement, the government may look to tweak this framework to ensure that the benefits are provided for the full duration to such garmenters. Based on feedback from initial implementation, the government must explore expanding this scheme to fabric and garments made of natural products as well to support overall fabric and apparel growth," CII and Kearney said. Covid-19 has triggered the redistribution of global trade shares and a recalibration of sourcing patterns through "China plus one" sourcing, according to the report. FTA, FDI As per the report, India must renegotiate free-trade agreements (FTA) and preferential trade agreements (PTA) with key markets such as the EU, the UK, Australia, and Canada, and key fabric-exporting Asian markets such as Bangladesh and Vietnam. This is crucial as exports declined 3% during 2015-19 and 18.7% in 2020 while other low-cost countries such as Bangladesh and Vietnam have gained share. In apparel, they have asked to create FTAs with large importers such as the EU, the UK, and other moderately-sized markets such as Australia, Canada and Japan. India should strive for lower duties in Indonesia, currently at 4% duty, in MMF as Jakarta gets about 42% of its imports from China at zero duty.
Source: Economic Times
The government and industry needs to act as a combined force to build Brand India in the textiles and apparel sector, according to a report The government and industry needs to act as a combined force to build Brand India in the textiles and apparel sector, according to a report. The CII-Kearney joint report suggested that the government should focus on putting in place key enablers to attract investments in the domestic textiles sector and optimise operations like improved market access and cost-competitiveness while creating an enabling business environment. The report also underscored the need for industry players to adopt global best practices in terms of manufacturing competitiveness, enhancement of service levels, capabilities in design, innovation and need for more investments in sustainability and traceability. It also highlighted that achieving the USD 65-billion exports target up from USD 36 billion in 2019 will require India to carefully strategise actions in five key areas, including apparel, fabric, home textiles, man-made fibre and yarn and technical textiles. The report calls for targeting a USD 16 billion increase by riding the China Plus One sentiment. India is suitably positioned on this, thanks to its relatively large strategic depth compared with Vietnam or Bangladesh. Besides, it recommends a USD 4-billion jump by positioning India as a regional fabric hub, starting with cotton wovens and then extending to other sub-categories. The report also suggests setting a target of USD 4 billion increase by building on existing advantages to expand the global customer base, and targeting a USD 2.5 billion-USD 3 billion jump with a focus on gaining share in MMF (man-made fiber) products. Confederation of Indian Industry (CII) Director-General Chandrajit Banerjee said, "The Indian textile industry is one of the largest manufacturing sectors by employment. To realise its full potential in the global market, strengthening of the textile industry value chain and broader market access is a must.
Source: Business Standard
Redesigning the supply chain induced with green technology will help adapt to climate change mitigation measures The recent IPCC report has established the inadequacy of efforts being made to keep the global rise in temperature to a permissible limit of 1.5o C. As we move closer to COP26 to discuss further the pathway to accelerate climate action, it is important to develop a common consensus and streamline our efforts towards the broader decarbonization objective. One can’t deny the need to join the race to zero by all sectors of society, with pledges from companies, cities, states, and regions. Decarbonizing supply chains is a major opportunity for nations to put commitments into practice, as it offers a gamechanging opportunity (Net-Zero Challenge: The supply chain opportunity, 2021). According to Cushman & Wakefield’s (Global Manufacturing Risk Index – 2021), India has emerged as the second most preferred manufacturing destination over other countries, including the U.S and Asia-Pacific region. Redesigning the supply chain induced with green technology will help adapt to climate change mitigation measures. The industrial sector in India, being the most energy-intensive sector with its share of 42.7% (MoSPI, 2019) towards total energy consumption, holds the second highest potential for decarbonization. Furthermore, within industries, the textile industry, which is a significant contributor to economic growth and jobs, holds significant potential for decarbonization through the implementation of energy efficiency and clean technology measures. India is the world’s second-largest producer of textiles and garments, also the fifth-largest exporter of textiles and is expected to grow at a CAGR of 12% in future (IBEF, 2021). After agriculture, the sector adds a considerable 4% to the country’s GDP and is the second-largest employment generator with around 45 million direct workers (Trends in Textile Engineering & Fashion Technology, 2018). The textiles industry in India covers the entire manufacturing value chain from fibre to apparels, constituted by players of all sizes, from large corporates to MSMEs and spread across clusters throughout the country. The Indian government has taken a firm step towards dominance in the global textile market by recently introducing the Production Linked Incentive Scheme. This growth can be modernized and accelerated while improving livelihoods for millions, by usage of decentralized renewable energy. However, the textile industry, including the production of all clothes which people wear, contributes to around 10% of global greenhouse gas emissions due to its long supply chains and energy-intensive production (World Bank, 2019). Clean technology interventions in the sector will help in driving climate change mitigation and help industries improve their overall profitability, thereby ensuring long-term sustainability. Decarbonised garment manufacturing could deliver 90 million tonnes of GHG emissions savings (Comparative study of energy assessment from apparel industries, 2006). While the large textile industries have raced ahead by implementing clean technology interventions due to their access to PAT scheme and net-zero commitments, the MSMEs (micro, small and medium enterprises) still face technical, financial, institutional, and social barriers. To address the challenges, a range of initiatives involving capacitybuilding, awareness programs, and financial subsidies organised and supported by bilateral and multilateral institutions. However, some of the challenges continue to persist and hinder the large-scale energy transition in this sector due to barriers to accessing finance, inadequate policy incentives as well as lack of technical awareness. Improvements in energy efficiency and a transition from fossil fuels to renewable-energy sources could deliver about 1 billion metric tons of emission abatement in 2030 across the textile value chain. (Fashion on Climate, 2020). Thus, there is an imminent need for holistic scalable solutions and ecosystem-based comprehensive approaches that leverage multi-stakeholder partnerships in order to combat the multitude of obstacles plaguing the energy transformation of the sector.
Paving the Way Forward: Potential Opportunities & Approaches Potential technological options to decarbonize the textile sector are energy-efficient boilers, waste heat recovery systems, air to fuel ratio controllers, energy-efficient motors, and compressors. However, the large-scale adoption of these possible solutions requires the following interventions: • Adoption of a holistic approach for achieving large-scale transition, which ensures inclusion of aspects related to sustainability and scalability of interventions. • Enabling and strengthening local ecosystems by ensuring skilled technology suppliers, technical assistance, and training to build a skilled workforce focused on gender empowerment. • Policy interventions to create a conducive environment for achieving energy efficiency and clean technology adoption at scale. • Collaboration & Green Partnerships: Coherent aligned efforts from all stakeholders is bringing in accelerated transformation. Brands are actively engaging with manufacturers in their value chain to roll out cleantech interventions at scale. Likewise, SMEs across industry clusters are accessing technical assistance and demonstration support for torch-lights’ wider sectoral adoption. Such collaboration measures can be further enhanced with green partnerships that bring in a cross-section of players from technology, financing and energy together. • Innovations in Business Models – demand aggregation, market transformation, and ESCO-financing based approaches addressing barriers related to higher cost and upfront investment. • Program interventions involving the suggested approaches could help the country achieve its Nationally determined contributions and Net-zero ambitions while making the industries more sustainable and resilient. Transitioning to a clean energy-based system can bear risks and weather tomorrow’s crises, which is one of the main challenges to be addressed by the industry and government today.
Source: Financial Express
The policy is expected to take into account the jobs estimated to be created under the production-linked incentive (PLI) scheme across a dozen sectors besides the rising number of gig workforce and platform workers in the country. The government will soon set up a committee to frame India's first National Employment Policy with an aim to significantly push up employment generation in the country. Work has begun to identify the members of the committee that is expected to have representatives from stakeholder ministries, academia, experts and representatives of employers and trade unions, a senior government official told ET. "The new committee will be notified soon. We hope to put in place the first draft by next fiscal," the official said, adding that the policy will be based on the data that emerges from employment surveys currently under way The policy is expected to take into account the jobs estimated to be created under the production-linked incentive (PLI) scheme across a dozen sectors besides the rising number of gig workforce and platform workers in the country. Last year, a group of ministers led by then social justice & empowerment minister Thawar Chand Gehlot, had suggested that the National Employment Policy should lay out a sectoral roadmap with incentives for employment generation. According to the official, the policy will have twin objectives of creating an enabling environment for attracting new enterprises and industries to generate employment opportunities while improving the skill sets of the existing workforce to make it employable and competent enough to match global standards with special emphasis on increasing the headcount of female w Even after 19 months since the pandemic first hit India in March 2020, the country's overall employment is lower than pre-pandemic levels while at least five million youth are added to the country's 450-million workforce every year. The proposal to bring in a dedicated National Employment Policy was first mooted in 2008. An inter-ministerial group during the United Progressive Alliance regime had examined the proposal but nothing concrete emerged. The idea finally took some shape at the first meeting of the BRICS employment working group in 2016, following which the NDA government started work on it. However, even that could not progress much.
Source: Economic Times
Both the sides started formal negotiations for a comprehensive economic partnership agreement (CEPA), as the FTA is formally called, in New Delhi from September 23. They aim to wrap up talks by December and sign a deal by March 2022. India is in talks with its third-largest export destination, the UAE, for duty-free market access in products ranging from gems & jewellery and textiles & garments to certain engineering goods like steel under a proposed free trade agreement (FTA), sources told FE. It would be the first FTA to be signed by India in just over a decade. To prevent any misuse of the FTA benefits and curb potential illegal inflows of Chinese goods through a key transit hub like Dubai, New Delhi will likely insist on strict rules of origin. It may either stipulate a 35% value addition at the UAE for all products to be eligible for duty concession under the FTA or impose similar conditions on select products where it sees the maximum scope for abuse, said one of the sources. Both the sides started formal negotiations for a comprehensive economic partnership agreement (CEPA), as the FTA is formally called, in New Delhi from September 23. They aim to wrap up talks by December and sign a deal by March 2022. About 87% of the products that the UAE imports are currently taxed at 5%, while 11% attract zero duty; the rest see higher duty incidence or are in the prohibited or special lists of goods, said another source. While it slaps a 5% duty on textiles & garments and jewellery, certain steel products are taxed at 10%. These three segments alone made up for 34% of India’s $16.7-billion exports to the UAE last fiscal and 43% in the prepandemic year of FY20. The UAE is not keen on scrapping duties on all engineering goods but it may allow taxfree imports of certain steel products. Abu Dhabi’s applied tariff (simple average for most-favoured nations) was 4.6% in 2020, much lower than New Delhi’s 15%. The goods that are in the high-tax brackets in the UAE include alcohol (50%) and tobacco (100%). Its trade-weighted average tariff (total customs revenue as percentage of overall import value) was 3.4% in 2019, against India’s 7%. So, New Delhi’s tariff concession will be more substantial than Abu Dhabi’s. The FTA is expected to raise bilateral merchandise trade to $100 billion in five years following the signing of the pact from about $43 billion in FY21. It also aims to more than double bilateral services trade to $15 billion during this period. The negotiations with the UAE are a part of India’s broader strategy to forge “fair and balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after India pulled out of the China-dominated RCEP talks in November 2019. Balanced FTAs will also enable the country to achieve sustained growth rates in exports in the coming years. Already, India has set an ambitious merchandise export target of $400 billion for FY22, against $291 billion in FY21. The UAE was India’s second-biggest goods export market until FY20, behind only the US, before China pipped it in FY21 when the pandemic caused severe trade disruptions. The UAE is the eighth-largest investor in India, having invested $11 billion between April 2000 and March 2021, while investment by Indian firms in the UAE is estimated to be as high as $85 billion during this period. India’s major exports to the UAE include petroleum products, precious metals, stones, gems and jewellery, textiles and garments, food items, engineering goods and chemicals. Its main imports from the UAE include petroleum and petroleum products, precious metals, stones, gems and jewellery, minerals, chemicals and wood and wood products.
Source: Financial Express
Punjab has become a preferred investment destination with investments of Rs 99,000 crore in various sectors from across the globe in the past four and a half years, state Industries and Commerce Minister Gurkirat Singh said on Sunday. The sectors include bicycle, agriculture and food processing, logistics, pharmaceuticals, chemicals, textiles and alloy and steel, he said, adding that the investments are coming mainly from the US, the UK, the UAE, Denmark, Germany, France, Spain, Italy, Japan, South Korea, New Zealand, and Singapore. Singh said the state has not only witnessed global firms investing but also the existing players have expressed satisfaction and enthusiasm by expanding their presence and operations. "The investors' confidence in the growth story of Punjab even amidst the Covid-19 crisis is a testimony to the state's strong infrastructural and policy framework," he said. "We have always got required support from the Punjab government, which makes the state a nice place to live and work. Punjab is a state of young people, there is a good opportunity for auto-companies to setup their units," a statement quoted SML Isuzu Lts Director Eiichi Seto as saying. He said that they have never faced a labour shortage in the state. The state has made consistent efforts to develop an ecosystem where both the domestic and global businesses can thrive competitively, the statement said. Punjab is holding the two-day Progressive Punjab Investors' Summit from October 26.
Source: Daiji World
Vietnam has expressed the desire to increase its bilateral trade volume with Pakistan up to one billion dollars in the next two years. Talking to APP in Islamabad, Vietnam's Ambassador to Pakistan, Nguyen Tien Phong said the two countries have great potential to increase bilateral trade, which is being discussed by both sides. The Ambassador said presently, the volume of bilateral trade is about700 million dollars which is far below its potential. He said the two countries have vast potential to enhance for bilateral trade in agriculture including tea, black pepper, cashew, coffee cotton and textile, seafood and dairy items.
Source: Radio
Foreign direct investment to Bangladesh rose 6 per cent year-on-year to $2.51 billion in the last fiscal year, continuing the recent trends whereas peer countries secured a higher level of investment from external investors. The FDI flow has been far lower than expected because of strict regulations and bureaucratic complexities, according to analysts. Fresh investment, or equity capital, did not arrive as expected in 2020-21. Foreign companies operating in Bangladesh largely reinvested their earnings in the year, helping the country keep its FDI trend stable. FDI in the field of equity capital rose 12.08 per cent to $816 million, disappointing analysts as it remains less than $1 billion. Reinvestment of earnings stood at $1.58 billion, up 4.63 per cent year-on-year, data from the Bangladesh Bank showed. Intra-company loans dipped to $105 million in contrast to $1.32 billion in FY20. "Countries such as Vietnam usually mobilised $8-10 billion in FDI per year, but the situation is completely different here," said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue. He blamed red tape for the country's continuous struggle to draw a desired level of FDI. The government had targeted to attract $32 billion in FDI during the seventh five-year plan period stretching from FY16 to FY20. But, the country had managed to receive less than $10 billion. "The government should implement the one-stop service for investors in an appropriate manner so that foreign investors feel comfortable in choosing the country as their investment hub," Rahman said. In a positive development, the government has reduced the lock-in period for foreign investment to one year from three years. It means investors, who hold 10 per cent shares in a company or directorship, are not allowed to sell the stake within the stipulated period. "This will make it easier for investors to exit from Bangladesh," said the analyst. Many peer countries have set the lock-in period at six months. He said the country's rules and regulations relating to the FDI were more complex than many other countries. Per capita income in Bangladesh is on the rise, but it has not been reflected in the FDI trend. Rising income means purchasing, and consumption power is maintaining an upward trend. Bangladesh also has a large consumer base. "But, the positive indicators have failed to satisfy the foreign investors," said the analyst. Regulators still take more time in the name of scrutiny when it comes to granting approval to foreign investors, he said. In some cases, foreign investors are forced to change their plan as they have to complete the process within a certain period set by their parent companies. "If we do not avoid the red tape, there will be no scope to attract investors," said the analyst, on condition of anonymity. Md Sirazul Islam, executive chairman of the Bangladesh Investment Development Authority (Bida), the state agency responsible for promoting investment, describes the FDI flow in the last fiscal year as good considering the ongoing business slowdown brought on by the coronavirus pandemic. The entity has recently taken a set of initiatives to give a boost to the FDI inflow. "It will take three to four years to get the results from the initiatives," he said, adding that the latest inflow was the outcome of the previous steps. The Bida will organise investment summits at home and abroad to highlight positive stories about the country and the investment opportunities in Bangladesh.
Source: The Daily Star
The past two years have witnessed a love-hate rollercoaster between the central bank and the business community. First, the monetary tightening cycle of autumn 2018 led to harsh words from the industry for SBP; followed by a mad rush of monetary stimulus that earned its top management ‘messiah’ status. The tides (and tones) are changing once again, even as the central bank attempts to calms down nerves, stressing that change will be ‘gradual and measured’. As the honeymoon phase of TERF fizzles out (and markup payments come due), higher commodity prices will increase pressure on working capital requirement of manufacturing sectors. Wild growth in loans to private sector between Aug and Sep ’21 (Rs270 billion) seems to have kicked in right before monetary policy reversed gears. It doesn’t help that concessionary working capital loans extended to exporters are also rumoured to have been maxed out, with commercial bankers insisting that no increase in limit may be in sight. But considering that a current account crisis is always lurking around the corner, an argument can be made that exporting sectors can use all the help that they can get to fetch the much-needed foreign exchange. Textile lobbyists – for example – are quick to draw a correlation between the 15 percent rise in sector exports (value) during FY21, and the Rs100 billion increase in refinance limits for exporting sectors back in August 2020. (For more, read “Measuring the impact of concessionary finance to exporters’ published on October 21st, 2021) Of course, the argument can be turned on its head. One might point out that much of the $1.5 - $2 billion (depending upon base) increase in textile exports came on the back of increase in concessionary working capital, which rose by nearly twothirds in dollar terms between June-19 and June-21. It may then be logical to ask whether the central bank can afford to enhance EFS limits indefinitely to support export growth? (For more, read “Is SBP footing the bill for export growth?” published on August 13th, 2021). In this backdrop, BR Research has made a conceptual attempt to measure the cost of Export Finance Scheme for textile. The sector has been selected for the sake of simplicity and ease of comparison with sectoral export earnings (value-added segments only). Researchers may run similar exercises for other exporting sectors as well.
Before explaining the results, it is important to emphasize few caveats. The mark-up amounts calculated are only estimates, as actual data could not be found (or is unavailable). SBP’s annual financials do not disclose facility-wise markup accrual. Moreover, 6-month average of EFS outstanding has been used to estimate markup, instead of gross disbursement, due to widespread practice of pre-payment and rollover before 180 days. (For more detail regarding methodology employed, read disclaimer accompanying the infographic). Although headline numbers suggest that EFS to textile has doubled in (Pak Rupees) over the past 3.5 years, the reality is not very cut and dry. An increase in working capital requirement of exporting sectors proportionate to the massive currency devaluation witnessed during the intervening period is only natural. But more importantly, while the stock of loans extended under concessionary finance has expanded massively, the markup differential borne by the SBP (policy rate minus refinance rate) appeared to be on a decline after peaking in H2-CY19 (both in rupee and dollar terms). This indicates that while the rise in export earnings may have very well been financed by the concessionary loan schemes, incremental earnings cost less today than they did a year ago. But this may soon change. As SBP begins to raise the policy rate (albeit slowly and gradually) the differential between the policy rate and the refinance rate will rise; thus, every incremental dollar earned will cost more. (This is based on the assumption that the central bank will not increase refinance rate along with policy rate). Thus, while SBP may very well not reduce its exposure under EFS, the rising differential cost may very well factor into its decision to raise the limit, to the disappointment of exporting sectors. The million-dollar question then is: can export growth momentum continue without EFS enhancement? The global commodity price spiral may offer a temporary reprieve (as commodity prices trickle down into export unit prices). But can the volume growth persist too without an increase in concessionary credit? Let’s see who wins the next round of staring contest between SBP and exporters.
Source: B Recorder
Among exciting developments on display, visitors can expect to see holographic fibre and 3D printing With less than one per cent of all garments recycled, collaboration across a plethora of skillsets is key to a bright future for responsible and sustainable fashion, says the curator of an innovation-focused fashion showcase currently under way at the UK Pavilion. “We have hundreds of different nationalities coming through [Expo 2020],” said Dr Claire Lerpiniere, Senior Lecturer in Textile Design at De Montfort University (DMU) in the UK, when asked the benefits of displaying the ‘Future of Textiles’ – an exhibition of DMUdeveloped wonder materials and tech to resolve some of the textile industry’s biggest challenges, taking place at Expo 2020 Dubai from 22-23 October. “What’s really exciting is that when we think about the transition towards responsible and sustainable fashion, and the work that has been done everywhere, those voices and those activities are amplified when you’ve got different collaborations – it needs designers, activists, crafts people, engineers, business people, accountants, people who have expertise in AI and data-driven design, accounting, [and] blockchain. “All of these people have a role to play, and the more we can collaborate and work together the more impact our work can have collectively, rather than individually,” Lerpiniere said, adding that currently less than one per cent of all garments are recycled, with most ending up in landfill. Among exciting developments on display, visitors can expect to see holographic fibre and 3D printing, alongside other wonder materials – some created using space-age technologies or ancient materials in unexpected new ways. A DMU research team, led by Dr Lerpiniere and Jinsong Shen, Professor of Textile Chemistry and Biotechnology, have researched more sustainable methods of dyeing clothes, including biodegradable enzymes in natural fungi to add colour – avoiding the use of conventional, synthetic dyes that have harmful effects on the environment and human beings. Other methods the team are exhibiting include laser-assisted processes for textile surface coloration and patterning, enzyme biotechnology for machine-washable wool, electroforming for metallised embellishment on textiles, and the use of sustainable bast fibres (flax, hemp and nettle fibres). The ‘Future of Textiles’ forms part of ‘In the Future, What Will we Wear?’, a series of talks, exhibitions, interactive digital displays, workshops, performances and experiences at the UK Pavilion from 22-27 October that considers how the global fashion industry can evolve to address a range of challenges that were raised during recent editions of London Fashion Week.
Source: Zawya
