The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 06 DECEMBER, 2021

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PLI for textiles: Centre mulls flexible timelines

The Textile Ministry is considering the option of providing certain flexibilities to investors under the ₹10,683-crore production linked incentive (PLI) scheme for the man-made fibre (MMF) and technical textiles sectors to help them meet the strict timelines for achieving the mandatory prescribed minimum annual turnover. The idea is to ensure that the industry does not miss out on incentives due to genuine problems they may encounter in their business activities, sources have said.

No change to list

The Ministry, however, is not in favour of expanding the list of products eligible for benefits, as suggested by the industry, as the list had been finalised following a lot of consultations and would require another Cabinet approval if changed. “The Textile Ministry has had another round of interaction with the industry and made a final draft of the guidelines for the scheme which has to now be approved by the Commerce & Industry Minister before notification. An attempt has been made to address genuine problems,” the source told BusinessLine.

The PLI scheme has a budgetary outlay of ₹10,683 crore.

‘Dies Non Year’

Under the scheme, if participants fail to achieve the prescribed minimum net incremental turnover for any given year, they will not be eligible for claiming incentive for that particular year. The year the participants fail to meet the criteria will be considered as “Dies Non Year” and they will only be eligible for benefits in the remaining years of the five-year block. “There is a possibility that there may be a couple of months delay for a beneficiary in achieving the prescribed incremental turnover in a particular year because of unforeseen circumstances such as delay in shipments, payments and anything related. There may be a case for giving them some extra time under such circumstances so that they do not lose out on their incentives,” the source said. The Textile Ministry is considering accepting the proposal to allow flexible timeline to the Empowered Group of Secretaries on implementation of the PLI scheme for textiles, headed by the Cabinet Secretary. The group, which also includes the Textiles Secretary and Niti Aayog CEO, is empowered to make any changes in the modalities of the scheme and address any issues related to genuine hardship that may arise during implementation.

Two-part scheme

Benefits under the PLI scheme are to be provided for five years from 2025-26 to 2029-30 on incremental turnover achieved during 2024-25 to 2028-29. The scheme covers 40 MMF garments, 14 MMF fabric items and 10 technical textiles items. Per part one of the scheme, beneficiaries need to invest a minimum of ₹300 crore in plant, machinery, equipment etc. They will earn an incentive of 15 per cent of turnover the first year and thereafter, one per cent lower every year for the next four years on achieving minimum turnover of ₹600 crore in the first year and incremental turnover of 25 per cent in the subsequent four years. In the second part, the minimum investment limit is lower at ₹100 crore, while incentives, too, are lower, starting at 11 per cent in the first year and getting reduced by 1 per cent each year in the four subsequent years. In this category, beneficiaries need to attain a minimum turnover of ₹200 crore in the first year and an incremental turnover of 25 per cent in the following four years.

Source: Business Line

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Shri Piyush Goyal holds multi-stakeholder consultations on INDIA-UAE CEPA negotiations

Union Minister of Commerce and Industries, Consumer Affairs, Food and Public Distribution and Textiles, Shri Piyush Goyal, met the representatives of Aluminium, Copper, and Chemicals and Petrochemicals Industry here today as part of the ongoing multi-stakeholder consultations related to the India-UAE Comprehensive Economic Partnership Agreement (CEPA) negotiations. The third round of India-UAE CEPA negotiations are scheduled to be held in New Delhi on 06-10 December 2021 wherein both sides aim to conclude the negotiations. Shri Piyush Goyal apprised the representatives from the Industry about the importance of the CEPA in elevating the overall economic and commercial relations with UAE which in turn will not only benefit bilateral trade but also create new jobs and provide wider social and economic opportunities. Providing a way forward on these discussions, Shri Goyal appreciated the accommodative spirit of the Industry and urged the Industry representatives to continue to support the CEPA negotiations in the same spirit in the wider interests of the nation contributing to the holistic development of multi-sectoral economic value chains in the country. The Minister also stressed on the potential benefits from the envisaged CEPA agreement for Industries which are labour intensive in nature and also on the numerous complementary spill-over economic benefits, including increased investments, job creation and employment opportunities. Further, industry representatives were also apprised of the strategic importance of the agreement which encompasses deeper bilateral economic engagement and wider market access. The stakeholders expressed gratitude to the Minister for taking into consideration concerns of Indian Industry and provided constructive inputs on this matter with a view to ensure overall balance between market access and domestic sensitivities.

Source: PIB

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Shri Piyush Goyal calls upon the captains of Indian Industry to set ambitious targets as our economy is poised for a sustained spell of rapid growth

Union Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution and Textiles, Shri Piyush Goyal today called upon the captains of Indian Industry to set ambitious targets as our economy is poised for a sustained spell of rapid growth. Addressing the 5th Meeting of the CII National Council in New Delhi, he said the Industry has a huge role to play in the uplift of the poor and underprivileged. Shri Goyal encouraged the Industry to have a greater appetite for taking risks, to invest in Industries that may be less profitable at the start, but are labour oriented and create lakhs of jobs. He also urged the Industry to promote tribal handicraft products as part of their CSR activities. Shri Goyal said there is big scope in the expansion of labour intensive Plastics, Footwear and Textiles industry. India cannot be truly Aatmanirbhar, without empowering its poor to be Aatmanirbhar, he added. Shri Goyal conveyed his appreciation for the Industry’s positive approach in FTA consultations. “Right now we are engaged in FTA negotiations with 6/7 countries,” he said. Citing India’s foreign trade as “very, very comfortable”and seeking accommodation in trade deals, Shri Goyal said, “On our part, I believe, that it’s time that we engaged more with the world, we look at deeper engagement, - both imports and exports.” “If we (don’t) open our autos or spirits sectors, for example, it will open greater opportunities for India than the other way round,” he added. Observing that 2020 has been a year of resilience for the Indian economy, Shri Goyal said that in these unprecedented times India has emerged as the ‘World’s Trusted Partner’ and is poised to contribute significantly to global growth. Policies of the Government in the last more than seven years, under the able leadership of the Prime Minister Shri Narendra Modi, have laid a solid foundation for growth of the Indian economy, he said. Stating that all economic indices hinted at a fast growth trajectory, Shri Goyal said India has Cost advantage as well as Trust advantage. “Services is growing at a fantastic pace, exports also are, of course on Merchandise,… Similarly remittances continue to be strong, FDI is at never before levels for the 7th time in a row, but this year the growth would be even much more, the capital markets are buzzing which means FII investments also and the IPO market is also gaining a lot of traction,” he said. Shri Goyal said the way we have fast bounced back since Covid, the way Industry geared itself up, Services sector, for example, reoriented their processes, Government supported Industry adopt WFH, we met all our international commitments throughout the Covid period including the lockdown. “Not for a second did any international supply chain, dependent on India, had to suffer, particularly the Services sector and for that matter even in the Goods sector,” he said. Stressing that India is going through a sharp and strong revival, the Minister said that rising economic indicators point towards “India is shaping up for a growth decade.” “Apna time aa gya (Our time has come)! This is the time to be in India & invest in India”, Shri Goyal said, adding “If we fail our Young Generation, it will be truly a sad day for India. We are at the cusp (of history). It’s our time to grab now, we’ll probably regret if we miss this opportunity.” Shri Goyal said that the Government is doing its part by undertaking transformational reforms such as PLI, PM Gati Shakti, ODOP, Single Window, Retrospective tax amendment, National Asset Monetisation Pipeline, etc and opening up sectors like Defence, Space & Atomic Energy, Mining & Minerals, etc. The Minister urged the top 100 CII members, that could comprise 1,000 companies, to onboard the NSWS Single Window clearance system and make full use of IILB Land Bank System. Resolving to use Indian materials to make a truly Aatmanirbhar Bharat, he said this will transform the future of India by making it self-reliant, resilient & competitive and will create jobs. Shri Goyal said the Government has initiated several schemes for the benefit of the Industry and the public in general, including Power sector, One Nation, One Ration Card, world’s largest health insurance programme, - Ayushman Bharat, UPI payments transfer and Jan Dhan banking for each and every home. “Government has focussed on saturating schemes,” he said. Expressing confidence on the continuous Public-Private Partnership, Shri Goyal said the Government is always thinking of how to empower the Industry and urged the entrepreneurs to come up with new ideas in nation-building.

Source: PIB

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India-UAE economic partnership negotiations from Monday

The third round of India and the UAE's meeting on a Comprehensive Economic Partnership Agreement (CEPA) will be held here from December 6-10. Union Commerce and Industries, Consumer Affairs, Food and Public Distribution and Textiles Minister Piyush Goyal met the representatives of aluminium, copper, chemicals and petrochemicals industries on Friday as part of the ongoing multi-stakeholder consultations related to the negotiations. He appreciated the "accommodative spirit" of the industry and the representatives to continue to support in the wider interests of the nation contributing to the holistic development of multi-sectoral economic value chains. In addition, he stressed on the potential benefits from the envisaged CEPA agreement for labour-intensive industries and also on the numerous complementary spill-over economic benefits, including increased investments, job creation and employment opportunities. "The stakeholders expressed gratitude to the Minister for taking into consideration concerns of Indian Industry and provided constructive inputs on this matter with a view to ensure overall balance between market access and domestic sensitivities," a Ministry of Commerce and Industry statement said.

Source: Daiji World

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Govt expands SCALE committee, appoints 3 new members

The government has expanded the SCALE committee (Steering Committee for Advancing Local Value-Add and Exports) by adding three new members, hailing from diverse industry backgrounds, according to an industry insider. The new appointees are Panasonic India Chairman and CEO Manish Sharma, Toyota NSE 0.11 % Vice-Chairman Vikram S Kirloskar, and NSE -0.76 % co-promoter and Chairman Addverb Technologies Jalaj Dani, he said. Currently, the 14-member Steering Committee for Advancing Local Value-Add and Exports (SCALE) committee is headed by former Mahindra CEO Pawan Goenka. Besides, Invest India CEO Deepak Bagla, PI Industries CMD Salil Singhal and JSW Steel Group CFO Sehshagiri Rao are on the board of the SCALE Committee. It has representation from industry bodies such as FICCI, CII, ASSOCHAM and officials from commerce and other ministries. The SCALE Committee is formed by the Ministry of Commerce and Industry has been working closely with the Department for Promotion of Industry and Internal Trade (DPIIT) under the guidance of the ministry. It has facilitated the development of two dozen working groups to address specific issues to accelerate local manufacturing. Each working group includes at least six-seven companies' representatives from one manufacturing segment as well as liaisons with their respective ministries on effectively addressing the challenges. The SCALE committee has given impetus to the production-linked incentive (PLI) scheme, which is enabling the environment for domestic manufacturing capability in the country. The government has allocated Rs 1.97 lakh crore to 13 key sectors in the Union Budget 2021-22, which will pave the way for a game-changing shift towards Atmanirbhar Bharat. Through the PLI scheme, the minimum additional production in India over the next five years is expected to be at around Rs 37.5 lakh crore in sectors such as white goods (ACs and LEDs), auto components, pharmaceuticals drugs, specialty steel, and telecom & networking products, among others.

Source: Economic Times

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‘Consistent policies, Centre-state synergy are important for growth‘

To some extent, the emphasis on infrastructure spending in some form or the other will continue (in the Union Budget for FY23), says Nirmala Sitharaman, Union finance minister A stable tax regime, consistent policies, and reduced compliance burden for businesses down to the local body level and centre-state synergy are key to India’s growth, Union finance minister Nirmala Sitharaman said on Saturday at the Hindustan Times Leadership Summit 2021. In an interaction with Hindustan Times’ editor-in-chief R. Sukumar, she elaborated on government initiatives and how the economic recovery is being managed by front-loading various fiscal transfers to states and by supporting micro, small, and medium enterprises. Edited excerpts: The gross domestic product growth of the second quarter (8.4%) positively surprised everyone. Do you think we will be able to keep this momentum up, and do you think this year could be better than many of us expected? I like it to be better than many have expected it to be. All indicators are that it can be better. But the moment of caution for me would be how this new covid variant is going to develop. Although, at the moment, scientific evidence as much is available, gives us the feeling that while this one spreads too fast, it may not be all that worrisome. But you really cannot rely on any such information at this stage. That is why the Prime Minister reiterated the need to use masks and containment measures. The Centre has sent advisory to states to ensure protocols are followed. That sense of caution or element of uncertainty continues. Have we managed to put the effects of the pandemic behind us at the macrolevel and are we now on a steadier path of growth? To a large extent, yes. There may be many heads on which you measure the performance of the economy. But largely, out of over 40 indicators, 22 are surely clear indicators of what is happening in the economy. Out of the 22, in 19 of them, we have achieved prepandemic levels or have crossed pre-pandemic levels. It means we are now much better than the pre-pandemic level in 19 of those 22 high frequency indicators. About three of them have problems because of the nature of the sector. Tourism is one. It needs no explaining. The world is yet to completely get back to where it was in tourism sector. If 19 out of 22 high frequency indicators are showing that you have not just reached the pre-pandemic levels but have probably crossed it, and that in the last 10 months the kind of figures you are seeing, and the figures you are seeing in PMI of both services and of manufacturing, there is a consistency to this performance. Talking about having reached pre-pandemic levels is one thing, having crossed that level is the next and an even better indicator is that it is consistent. That consistency is not just for one or two months, but over several months. On growth, you can be sure. S&P only a few days ago said it has retained the growth figure of 9.5% for India this year—meaning the fastest growing economy this year. And we improve our numbers to the next year. In October, the International Monetary Fund came out with a paper which estimated long-term economic growth potential of the Indian economy and said it was 6%. Is it a fair assessment? I would think, that and a bit more, rather than just 6% or 7%. It can be a bit more of course. That will have to be enabled through several steps that the government has to keep taking. Together with consistent domestic polices, whether taxation or the ways in which we do business, and greater synergy between Centre and states, are going to be on top of the agenda for the federal mechanism to really feel the story as one. We have to brace for good, strong, and well-riveted growth and both the Centre and states must work together. What steps will increase the capacity of the Indian industry to grow at a faster rate in the long term? Compliance burden is to be reduced to the level of panchayats. The three-layered system being what it is, it is of no good if government of India tries to clean up or some states try to make it easier, it has to be consistently down to the level of panchayats. Local bodies are actually the recipients of investments in a way and if decision-making is complicated, time consuming and burdensome at that level, it cannot help. Ease of doing business and reducing compliance burden is one of the things. Second, consistency in taxation. I go back to the example you gave about corporate tax cut. Hasn’t it shown even during the pandemic that it has brought in benefits? You can see how industry is wanting to expand their capacities and invest in newer areas. That decision prior to the pandemic, nobody knew of the pandemic at that time, has actually come into play very well for our benefit. Besides, both direct taxes and indirect taxes should have a level of predictability. Frequent changes, complications or ‘ifs and buts’ can put off businesses—their planning can go for a toss. For the economy to have the benefit of better planned enterprises, we need to have these two absolutely on top of our agenda. Will we be able to meet the disinvestment target this year? We are progressing with each one of them. The Air India story itself will tell you that despite the pandemic, the extent of work that has happened and absolute transparency with which it got cleared, the same is the approach for dealing with the rest. By when will the Air India disinvestment conclude? The Dipam secretary has commented on it. Hasn’t he said that by 31 December, the handing over to the new buyer will happen? You spoke about the importance of Centre-state relations. Over the last 20 months, there has been some fiscal tension between Centre and states. Are things better now? I don’t think there is tension this year. In 2020, we did have discussions after discussions to make sure the formulation which is arrived at is acceptable to everybody (on GST compensation issue). After that the methodology through which the money has to be borrowed was also to be taken up and executed. I am glad to say that this year it ended off well. Everybody received the money as was promised, in time. This year, both the GST compensation and the devolution based on Finance Commission recommendations—tax amounts—have been devolved not just in time—but in both the cases—they have been frontloaded. That was to help states because infrastructure spending was clearly identified even in the (Union) budget as a key driver for the economy to get the right stimulus and revive. They have been given cash in hand, untied to anything. I do not see any major concerns regarding money not reaching states. There have been reports about tweaking the GST rates and moving the slabs. Do you think it makes sense when GST collection is increasing and there seems to be stability in the whole process? This was not a decision taken in the last meeting. It is was a decision taken quite some time ago probably two GST council meetings earlier. And even then, the consideration was, ‘let us not implement now.’ Now the intent is not to raise more revenue. These two particular steps you are referring to, the intent is not to raise revenue. The intent is to plug the quantum of refund which is going. We were paying more refunds, we were giving input tax credit refunds much more than the tax which is being collected in these two cases. So it was necessary at the earliest to correct this anomaly of duty inversion. If we did not correct, everything would have appeared normal, but GST council was going to go on paying without earning anything out of it. It does not make any sense. The anomaly was getting aggravated and needed correction. Even now, we said it well in advance (the tax rate rationalization in textiles sector) will be implemented from January. It is not getting implemented overnight. What is your thinking on sovereign cryptocurrency and regulating private cryptocurrencies? One luxury that the minister does not have is to answer questions of this nature when Parliament session is on. There is certainly a well-consulted bill which is coming through. Once the cabinet clears, it will certainly come into the parliament. On the floor of the house, with questions being asked by members, some answers were given, even there, I reminded members I may not be able to give details. They will have to wait for the Bill to come. I think that will be the answer I will be expected to give even outside of the House. Is there a lot of speculation on cryptocurrencies? Yes, there is a lot of speculation. That is not healthy at all. Will there be adequate safeguards to ensure that people invested in cryptocurrencies do not burn their fingers in case these are regulated? Parliament has to decide on it. What can we expect from the Union Budget for FY23? To some extent, the emphasis on infrastructure spending in some form or the other will continue.

Source: Live Mint

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Supply of Quality Raw Materials for Promotion of Handloom

Raw Material Supply Scheme is being implemented throughout the country to make available Yarn to Handloom weavers at reasonable price. Under the Scheme, freight charges are reimbursed for all types of yarn; and component of 15% price subsidy is there for cotton hank yarn, domestic silk, wool and linen yarn and blended yarn of natural fibres, with quantity caps. National Handloom Development Corporation, State Governments through Commissioner/Director of Handlooms & Textiles, Apex Societies and State Handloom Corporations under the direct control & supervision of the State Governments are implementing agencies. Dyes & Chemicals of desired quality are also made available by National Handloom Development Corporation to handloom weavers through a network of depots and warehouses. Skill upgradation is a continuous process. Need based skill up-gradation programme for handloom workers in technical areas viz. weaving, dyeing, designing etc. are conducted under SAMARTH- Capacity Building in Textile Sector including Handlooms. This information was given by The Minister of State for Textiles Smt. DarshanaJardoshin a written reply in the Rajya Sabha today.

Source: PIB

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Govt proposes to have national retail trade policy: Som Parkash

Minister of State for Commerce and Industry Som Parkash in a written reply to a query in the Rajya Sabha said a conducive environment can be created by simplifying rules and regulations. The government proposes to have a nationalretailtrade policy for creating a conducive environment to streamline the growth of all formats of such trade, and stakeholder consultations are being held for that, Parliament was informed on Friday. Minister of State for Commerce and Industry Som Parkash in a written reply to a query in the Rajya Sabha said a conducive environment can be created by simplifying rules and regulations. "The government proposes to have a national retail trade policy for creating a conducive environment for streamlining growth of all formats of retail trade, including by simplifying rules and regulations. Stakeholder consultations are being held," he said. Replying to a separate question, Commerce and Industry Minister Piyush Goyal said that the Centre has approved the inclusion of the Hyderabad Bengaluru Industrial Corridor (HBIC) under the Industrial Corridor Programme in response to a request from Andhra Pradesh. "The Government of India has also approved the development of Orvakal node under the Hyderabad-Bengaluru Industrial Corridor. "Consultant has been appointed for project development activity including preparation of detailed master plan and preliminary engineering of Orvakal node," he said.

Source: Economic Times

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Govt looking to add cryptocurrencies to tax law

Indians who trade or invest in cryptocurrencies on Indian platforms could come under the taxman's lens, as might those who hold such coin outside the country. The government is looking to amend current income tax and disclosure norms in the upcoming budget to include terms such as cryptocurrency. The government wants to capture cryptocurrency income and investments within and outside India, said people aware of the development. The government is considering amending Section 26A of the Income Tax Act and the Annual Information Regulation (AIR), which shows data on all investments made by a taxpayer and is often called a 'tax passbook'. "There is a recommendation to add the words cryptocurrency, crypto assets or digital currency in some parts of the Income Tax Act," one of the persons said. "This would mean that those filing tax returns will have to specifically disclose their income from cryptocurrency investment or trading." Cryptocurrency Framework AIR deals with disclosures of any investment of ₹2 lakh and more in fixed deposits, mutual funds, recurring deposits and jewellery. The fear is that the tax department cannot legally ask banks to reveal cryptocurrency transactions by customers, as the asset is not defined under the Income Tax Act. Once such an amendment is made, the taxman can seek details of transactions by individuals through banking channels. In most cases, Indians have been using these to deposit money made through cryptocurrency investment and trading. The government is also looking to amend foreign asset disclosure norms so that Indians will have to declare whether they hold cryptocurrencies overseas. The current regulations mandate Indians to disclose all assets they hold or any income they would have made during the year through real estate or foreign trusts. The two changes in the existing tax law are separate from the cryptocurrency framework the government is looking to introduce.

Source: Economic Times

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Delegation from South India Powerloom Federation visits Sri Lanka to enhance business ties in textiles

A delegation of South India Powerloom Federation, a confederation of weaving associations in the Southern States of India, along with their Chairman Dr. M. S. Mathivanan visited Sri Lanka to explore business opportunities. The delegation was invited by the Deputy High Commissioner of Sri Lanka in Chennai Dr. D. Venkateshwaran. In view of the historical significance of South India being the largest contributor to the Powerloom industry in India, the aim of this visit was to strengthen business links between South India and Sri Lanka as well as to seek opportunities to ‘Invest in Sri Lanka’ in the Textile Industry. According to Sri lanka’s news portal, the delegation headed by Dr. Venkateshwaran met the Minister of Finance Basil Rajapaksa, State Minister of batik, handloom, and local apparel products Dayasiri Jayasekara, State Minister of urban development Nalaka Godahewa, Governor of the Central Bank Ajith Nivad Cabral, Foreign Secretary Admiral Professor Jayanath Colombage and Chairman of the Board of Investment Sanjaya Mohottala to discuss new avenues on developing the Powerloom industry in Sri Lanka. Further, the delegation visited the National Chamber of Commerce and the Colombo Business Association together with the Urban Development Authority, to discuss trade and investment opportunities available in Sri Lanka, specifically in the recently established Eravur Fabric Park, which led to several possible investment opportunities in Textile and Apparel Industry as the outcome.

Source: KNN India

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Gartex Texprocess India 2021 hybrid editions to showcase textile, apparel and denim trends

Government programmes and efforts, according to a forecast by ratings agency Infomerics Valuation and Rating, will propel the textile sector to a growth of USD 300 billion by 2025-26, and a 300 percent increase in the next two years. Following the pandemic's difficult phase, India's clothing and textile manufacturing industry is poised to rebound and meet expanding industry demands. From the 3rd to the 5th of December 2021 in Pragati Maidan in New Delhi, Gartex Texprocess India and Screen Print India will cater to the needs of firms in the garment and textile manufacturing industries. The three-day hybrid expo features over 300 brands and over 800 goods, as well as a dedicated trend area featuring denim trends handpicked from factory waste. The platform will also debut "The Denim Pocket Story," which will showcase iconic pockets and their evolution over time. Government programmes and efforts, according to a forecast by ratings agency Infomerics Valuation and Rating, will propel the textile sector to a growth of USD 300 billion by 2025-26, and a 300 percent increase in the next two years. Gartex Texprocess India will establish a powerful business atmosphere where businesses may witness industry's latest developments, participate in hardcore networking, and discover lucrative chances for their own enterprises, as it is designed as a dedicated platform for buyers and sellers. Buyers can see live product demos of the most cutting-edge machines and solutions provided by the sellers' network of industry leaders. The show will run for three days, with over 100 brands on the showfloor, including AURA, Baba Machines, ColorJet India Ltd, Ramsons Garment Finishing Equipments Pvt Ltd, Jaysynth Dyestuff (India) Limited, and Morgan Tecnica, among others, providing innumerable business opportunities and boundless knowledge. Co-located with the Denim Show and Screen Print India are targeted product zones such as Digitex, India Laundry, Fabrics & Trims, Screen Print India, Garmenting & Apparel Machinery, and Embroidery Solutions.

Source: Zee News

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Working capital shortage makes MSMEs seek credit

Industrial units across Gujarat are battling working capital woes, amid growing costs of production and payment cycles getting longer. To make matters worse, higher freight, coal and gas costs are also making manufacturers shell out more. Manufacturers in sectors such as textiles, chemicals and dyes, metal castings, plastic packaging, engineering goods — particularly micro, small and medium enterprises (MSMEs) — are reeling from a shortage of working capital. Most are thus either downsizing production, cutting operational hours or simply keeping units shut. MSMEs which do not have large cash reserves are the worst off, say industry players. "Exporters are already battling delays in shipments due to the container shortage. In most cases, manufacturers receive payment after shipments reach their destination. With shipments delayed due to the lack of shipping containers, payments are delayed by an additional 45-60 days. This adds to the manufacturers’ working capital constraints," said Jaimin Shah, cochairman, Assocham Gujarat State Council. With higher input costs on raw materials and the industry operating on water-thin margins, MSMEs find it difficult to absorb the cost, state industry players. "Overheads such as Covid-19 related safety protocol, followed by higher fixed costs and lower utilization of capacity have added to the burden on working capital," said Milan Thakkar, CEO, Walplast.

Plastic makers operate at 65% of capacity

Plastic packaging manufacturing units across Gujarat have been operating at around 65% capacity due to a shortage of raw materials and working capital. Gujarat has an estimated 5,000 manufacturing units – mainly MSMEs – which manufacture roughly 10,000 tonnes of plastics every month. "With polymers such as high-density polyethylene, lowdensity polyethylene and polypropylene getting 25% to 40% more expensive, the cost of producing packaging materials has risen. Banks are not extending working capital loans under the Emergency Credit Line Guarantee Scheme (ECLGS), which is becoming a huge challenge in manufacturing. We need to procure raw materials at higher cost and realisation is taking time. Due to this, units have downsized production," said Shailesh Patel, former president of the Gujarat State Plastic Manufacturers’ Association. Dyes, chemicals sectors push for more credit to MSMEs. With skyrocketing raw material prices, availability of credit is a growing concern among dyes and chemical manufacturers as production is being hampered. "Raw materials have become at least 40% more expensive and costs have even doubled for some. Four to six months ago, raw materials were available on credit for up to 60 days. Now, with supply short and raw material prices increasing, manufacturers are forced to pay within a week or in some cases even immediately. Working capital needs are rising for manufacturers, particularly, MSMEs," said Natubhai Patel, managing director, Meghmani Organics. Industry players expect that the government extend benefit of the 20% additional credit top-up to MSMEs under the Atmanirbhar Bharat package. Manufacturers are facing a credit shortage and high prices of raw materials for agro-chemicals, pharma chemicals, fine chemicals and basic chemicals, industry stakeholders say.

Expensive steel, non-ferrous metals hurt engineering production

Production in engineering units across Gujarat has been hit for lack of raw materials. With the price of steel and non-ferrous metals going up by at least 50% and as high as threefold, the need for working capital has increased. "Metal castings and metals have become costlier, adding to the liquidity needs of units to sustain operations. Also, demand has slowed due to which manufacturers are unable to get realisation on their orders. As a consequence, working capital needs are increasing. The situation was better last year due to credit availability for MSMEs under Atmanirbhar Bharat package, which is not the case now. Small and mid-sized manufacturers are battling liquidity shortage and are forced to downsize production," said Rajendra Shah, former president of the Gujarat chapter of CII. 20% of foundries across Gujarat yet to reopen after Diwali At least 20% of foundries across Gujarat are yet to resume operations after Diwali, as they’re reeling from a liquidity crunch according to estimates by the Indian Institute of Foundrymen (IIF). Costlier raw materials and delayed imports are causing huge sums of working capital of foundries to be blocked. Subodh Panchal, a past president of the IIF, said, "Raw materials including ferrous alloys as well as foundry chemicals have become 50%-300% more expensive. Most of these alloys are imported and suppliers are asking for advance payments. Moreover, due to the container shortage, raw materials which earlier arrived in a month and a half now arrive in about three months. As a consequence, working capital is blocked, which is affecting production." Foundrymen also said that besides the surge in inventory cost, repayment cycles have also stretched which is adding to their woes. "Banks are also not extending credit readily, which is posing a challenge to industry operations."

Textile processors cut working hours

With prices of raw materials used for textile processing shooting through the roof, several textile processing units have cut their hours of operation as they are facing a shortage of working capital. For instance, the Ahmedabad Textile Processors’ Association (ATPA) recently released a circular stating that processing units in Narol are operating for only three days a week. Naresh Sharma, vice president, ATPA, said, "Raw material costs have increased by as much as three times in some cases. Even though the price of imported coal has reduced, it is still nearly three times higher than what it was six months ago. Coal is widely used to fire boilers at processing units. With costlier raw materials bought on advance payment, processors face a liquidity shortage." Chemicals used in processing such as caustic lye, reactive dyes, industrial urea, acetic acid and pigments and wet colours have got 50% to 300% more expensive, show ATPA estimates.

Source: Times of India

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Effective steps taken to help improve performance of textile sector: Farrukh

Federal Minister of State for Information and Broadcasting Mian Farrukh Habib has said that concrete and effective measures are being taken at the government level for the improvement of textile sector, promotion of industrial and commercial activities and provision of wide employment opportunities. He said that the role of industrialists in the development and prosperity of the country could not be forgotten. He expressed these views while addressing a luncheon hosted by Chairman FIEDMC Zafar Iqbal Sarwar at Faisalabad Industrial Estate Development and Management Comp-any (FIEDMC). Provincial Ministers Mian Khayal Ahmed Castro, Muhammad Ajmal Cheema, Member National Assembly Chaudhry Faizullah Kamuka, Members of Punjab Assembly Chaudhry Latif Nazar, Shakeel Shahid, Mian Waris Aziz, Sheikh Shahid Javed and members FIEDMC Board of Directors, Sheikh Khurram Mukhtar, Syed Zia Allamdar Hussain, Musaddiq Zulqarnain, Asif Tipu, Azizullah Goheer, Atif Munir Sheikh and others were present. The Federal Minister appreciated the services of FIEDMC for the promotion of textile sector and solution of problems. Chairman FIEDMC Zafar Iqbal Sarwar said that the development work in Allama Iqbal Industrial is in full swing, while progress has been made in the supply of electricity and gas in the light of government directives. He said that since I took over as chairman, I have convened four major meetings so far to make FIEDMC more active. He also mentioned the approval of development funds in his address and said that soon Allama Iqbal Industrial City will become a city of lights; with the help of government members of the Assembly we will fulfill the vision of Prime Minister Imran Khan. He further said that the textile policy of the government was providing relief to the exporters and the launch of one window operation would alleviate the problems of the industry owners. Javed, Sheikh Khurram Mukhtar, Atif Munir Sheikh and others are participants.

Source: Business Recorder

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China ends decades-long preferential tariff certificates to exporters

A preferential tariff treatment for Chinese companies exporting products to 32 countries, including the 27 European Union (EU) members, the United Kingdom, Canada, Turkey, Ukraine and Liechtenstein, has come to an end from December 1, as the country's export products are becoming more competitive. The move is being perceived by many as a natural development. China's general administration of customs stopped issuing certificates of origin under the generalised system of preference (GSP) for exports from December 1 to the 32 countries, which no longer offer China GSP status. The GSP system, used around the world, reduces levies on certain imports from developing countries and incentivises exports from less developed economies, promoting economic growth. The system also helps to bring down the cost of import goods for donor economies. Some companies said that the impact will be limited, compared to other problems like inflation, a Chinese government-controlled media outlet reported. "Preferential tariffs have been reduced progressively. So basically, we don't expect any impacts on our industry base in China. We have a massive inflation of raw materials, transportation costs. These are the biggest impact," said Ludovic Weber, CEO of SaintGobain Asia-Pacific, a company that mainly exports industrial materials like silicone sealant from China to America, Europe and Southeast Asia. In fact, China has not received GSP privileges from those regions for many years. The EU ceased granting the certificate back in 2015, when China was elevated to an upper-middleincome country by the World Bank. Switzerland and Canada both canceled it in 2014. China has been accorded the preferential tariff treatment by 40 nations since 1978, but currently only New Zealand, Australia and Norway still grant China GSP status. Though the GSP cancellation might not have a material impact on the overall economy, some labour-intensive, lower-margin exporters will still be affected by the move, the report added. However, experts believe that the move can be an opportunity for these exporters to upgrade themselves faster, as the cancellation of GSP will speed up companies' innovation if they want to remain competitive.

Source: Fibre2 Fashion

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2021 Vietnam trade revenue expected to hit new record high

Despite the lingering effects of the pandemic, the Vietnamese Ministry of Industry and Trade forecasts that the country’s total trade value this year may reach a new record of $640-645 billion, with a slight trade surplus. The ministry attributed the results to the great efforts of the business community in overcoming the difficulties of the Covid-19 pandemic to maintain and restore production. In particular, major industries such as textiles, garments, leather and footwear are on track to achieve their business targets earlier than expected, despite the pandemic. From now until the end of the year, all industries have an opportunity to try and regain a growth rate close to before the pandemic broke out. Industries with high exports, such as phones, electronics, machinery and components, are likely to post export growth rates of 15-25 per cent this year, it said. According to the ministry, the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) have had positive effects on the national export activities, especially in markets that did not have free trade agreements with Vietnam before. Thanks to the CPTPP, which came into effect three years ago, the exports of goods to Canada, Mexico and Peru have all grown by between 25-30 per cent per year. The EVFTA, which went into effect one year ago, is a bilateral commitment with incentives and long-lasting value. At present, 20 per cent of local enterprises have taken export tax incentives from the EVFTA with EUR.1 certificates of origin (C/O). For shipments to the EU worth less than €6,000 ($6,800), local enterprises are allowed to self-certify origin. This helps ensure smaller businesses do not have to spend time applying C/O, while still being able to enjoy tax incentives. Right now, the biggest difficulty facing local enterprises is a shortage of labour. Enterprises in southern Vietnam are facing many difficulties in facilitating a return for workers who have left the region, without which they cannot restore 100 per cent of their production capacity. Due to the impact of the Covid-19 pandemic, the cost of raw materials and logistical services is increasing across the globe. These factors will put pressure on production costs for domestic businesses. In addition, if localities do not fully comply with the Government’s Resolution 128/NQCP, which provides temporary guidance on the “Safe adaptation, flexibility and effective control of the Covid-19 pandemic”, or must facilitate pandemic prevention measures beyond what is necessary, it could cause further instability and affect the psychology of the local businesses and the confidence of investors. The ministry hopes that the pandemic prevention measures strike the right balance between ensuring people’s safety and not affecting the production and trade activities of businesses. Vietnam’s trade value surged 22.3 per cent year-on-year in the first 11 months of this year to exceed $599.1 billion, according to the General Statistics Office. The country exported commodities worth nearly $299.7 billion in the past 11 months, up 17.5 per cent from a year earlier. In the period, there were 34 commodities with export turnover of over $1 billion, accounting for 93.5 per cent of the total export value. In its latest report on November 30, Standard Chartered projected Vietnam’s export turnover to record an annual average growth of seven rent per year, hitting $535 billion by 2030. The “Future of Trade 2030: Trends and markets to watch” also forecasts that the global exports will almost double from $17.4 trillion to $29.7 trillion over the next decade. Vietnam is considered an important market contributing to the growth of the global trade, it said. It also found that 41 per cent of global businesses currently operate or plan to invest in Vietnam within the next five to 10 years. This shows that Vietnam will be one of the important motivations of global trade growth in the next 10 years. The US and China will continue to be Vietnam’s largest export markets, respectively accounting for 26 per cent and 19 per cent of the Southeast Asian country’s total export turnover by 2030. According to the study, Vietnam is an emerging manufacturing powerhouse with expanding international trading relationships.

Source: Phnom Penh Post

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Indonesia slaps safeguard duties on Bangladeshi RMG goods

The duties ranging from $1.33 to $4.34 are expected not to be a worry for Bangladesh, which exports little to the Southeast Asian country Indonesia has imposed safeguard duties ranging from $1.33 to $4.34 on imports of garments and accessories from all countries, including Bangladesh. The duties, which entered into force on 12 November, 2021, will continue for three years till November, 2024, a notification dated 17 November from the World Trade Organization (WTO). The Business Standard received a copy of the notification. It says that the safeguard duties will apply to imports of garments and accessories, except eight items of headwear and neckwear. As per the regulation, the safeguard duties will range from Rp19,260 to Rp63,000 per item for the first year and will decline gradually. Md Hafijur Rahman, director general of WTO Cell under the commerce ministry, confirmed the matter. China, Singapore and Vietnam currently enjoy duty-free access to Indonesia, whereas imported apparel from Bangladesh is already subject to duty of up to 25%. Bangladesh bought over $1.94 billion worth of goods from the Southeast Asian country and exported $57 million in the fiscal year 2018-19. Of the garment items, Bangladesh imported $187 million worth of textile articles, including $133m of fibres and exported apparels worth $30m. Safeguard duties are state levies that can be imposed on imported goods in case of an absolute or relative surge in the import of goods detrimental to similar domestic products or which could cause heavy losses to the domestic industry. Bangladesh, however, is not worried about the duties. "Indonesia is not a big market for us," Bangladesh Garment Manufacturers and Exporters Association (BGMEA) co-president Shahidullah Azim told The Business Standard. "We export very little there. They are also our competitors in the export of readymade garments. As a result, their new tariffs will not have a significant impact on our exports." Bangladesh Knitwear Manufacturers and Exporters Association Executive President Mohammad Hatem echoed Shahidullah, saying that Indonesia is not a potential market for Bangladesh so the safeguard measures will not have any major effect on exports. The introduction of the safeguard measures follows an investigation into Bangladesh's apparel exports to Indonesia for the period 2017-2019 conducted by the Indonesian Safeguards Committee (KPPI). It recommended the imposition of the tariffs, arguing that Indonesia's local industry was unable to compete with the imported goods. The Bangladesh Trade and Tariff Commission (BTTC) and the BGMEA shared their arguments and observations on the matter last year. A hearing on the matter took place in November 2020, more than one-and-a-half months after the KPPI initiated an investigation into the viability of a safeguard duty following a request from the Indonesia Textile Association. The KPPI also said developing countries, including Bangladesh with less than 3% imports share, collectively account for not more than 9% of total imports in the headwear and neckwear category, thus excluding those from the measures. The World Federation of the Sporting Goods Industry (WFSGI), an organisation based in Switzerland, also said that Indonesia had violated WTO rules to impose the safeguard measures. "Even though KPPI in its questionnaires requested interested parties to provide data for the periods January to June 2019 to June 2020, it then completely ignored the data and based its analysis on the period of 2017-2019," the WFSGI said. The findings, which were conveyed to the WTO last February and November, only cover the period 2017-2019 even though later data was available and specifically requested for, it added. WTO cell Director General and Additional Secretary of the Ministry of Commerce Hafizur Rahman told The Business Standard that Indonesia claimed it had taken the initiative to slap the duties in compliance with WTO policies to protect the interests of the domestic industry. "There is an opportunity to file a case against Indonesia's move with the WTO. However, since the amount of Bangladeshi exports to the country is not very high, it is less likely we would benefit by being the only ones to do so. Garment exports from China and Thailand are high in Indonesia. If these two countries sue, Bangladesh will consider becoming a party to it," he added.

Source: Abul Kashem & Reyad Hossain

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Uganda launches road-building in Congo to boost trade

Uganda said on Sunday it had launched a road-building project in neighbouring Democratic Republic of Congo aimed at boosting trade between the two countries. Sites for the roads were handed over to the contractor, Dott Services Limited, a Ugandan construction firm, the government said in a statement on Sunday. It added that the roads "will open the Eastern part of the country (DRC) to cross border trade with Uganda". The statement did not give a cost for the 223 km (138 miles) of roads, which will connect Uganda to the eastern Congo cities of Beni, Goma and Butembo. Uganda had announced the plans to build roads in Congo in 2019. Uganda is keen to tap the market in eastern Congo where decades of insecurity has meant local manufacturing is near non-existent and the population there depends on imports for goods ranging from textiles and construction materials to food and beverages. Better access to trade with Congo would also help Uganda make up for export revenues lost after Rwanda, formerly a big market for Ugandan goods, shut down its common border with Uganda more than two years ago. During a function to hand over the road sites, Congo's Minister for Infrastructure and Public Works, Alexi Gisaro Muvunyi said the roads would "bring jobs and interconnectedness with Uganda" the Ugandan statement said.

Source: Reuters

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Vietnam textile & garment exports at $30.659 bn in Jan-Oct '21

Vietnam earned $30.659 billion from textile and garment exports in the first ten months of 2021. Of this, yarn exports accounted for $4.564 billion while fabric and garment exports were valued at $26.091 billion, according to the preliminary data released by the customs IT & statistics department, general department of customs, Vietnam’s ministry of finance. Fabric and garment exports from the Southeast Asian nation increased by 5.5 per cent year-on-year to $26.091 billion during January-October 2021. Of this, the US accounted for a major share totalling $12.803 billion, followed by Japan and South Korea with exports to these countries valued at $2.569 billion and $2.463 billion, respectively Vietnam also exported 1,611,383 tons of yarn, registering a rise of 16.4 per cent year-onyear by volume, according to the data. This was valued at $4.564 billion, registering a surge of 55.0 per cent. Of this, China imported around 54 per cent or $2.466 billion, followed by $56.164 million by India. In 2020, Vietnam's textile and garment exports earned $33.546 billion, registering a decline of 9.35 per cent over $37.009 billion exports in the previous year. While yarn exports were down 10.5 per cent to $3.736 billion, fabric and garment exports decreased by 9.2 per cent to $29.809 billion. For 2021, Vietnam has set a target to earn $39 billion from its textiles and garments exports, according to the Vietnam Textile and Apparel Association (VITAS).

Source: Fibre2 Fashion

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