The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 21 DECEMBER 2021

NATIONAL

INTERNATIONAL

Export-oriented growth will strengthen economy: CM

Chief minister Bhupendra Patel on Monday said that export-driven growth will strengthen the Indian economy. Presiding over a pre-Vibrant Gujarat Global Summit (VGGS) event on ‘Local Goes Global’, he said exporting locally-produced goods will increase foreign exchange earnings and realize the vision of an ‘Aatmanirbhar Bharat’ through the ‘Vocal for Local’ initiative. Patel said Gujarat was at the forefront of exporting pharmaceuticals, agro-chemicals, plastic materials, textiles, gems and jewellery, organic chemicals, dyes, ceramics, etc. Gujarat has also successfully bagged GI tags for traditional products like Patola from Patan, embroidery from Kutch, furniture from Sankheda, and Bandhani from Jamnagar,among others. With facilities and assistance provided to exporters through the ‘One District One Product’ programme, Gujarat has emerged as a leading exporter with a 30 per cent contribution to India’s total exports, the CM said. An official statement said the state has 10 air freight terminals equipped to handle perishable goods meant for export, along with a well-connected network of roads, rail, waterways and airways. This has enabled Gujarat to become a gateway to global markets.

Source: Times of India

Back to top

Govt may change SEZ rules in Budget to ease compliance burden

The government could also allow entities that don't wish to avail benefits to be treated on a par with others located outside the SEZ, said two people aware of the development. The government plans to amend the SEZ Act in the upcoming Budget to reduce the compliance burden and allow companies operating within the conclaves to accept payments in Indian rupees, according to two people familiar with the development. The government could also allow entities that don't wish to avail benefits to be treated on a par with others located outside the SEZ, said two people aware of the development. Several stakeholders have raised concerns that as tax holidays come to an end, many companies will move out of SEZs due to the restrictions and these places could end up as ghost towns. "Many companies that have leased properties inside SEZs are looking to move out as there is a huge compliance burden, including that around net foreign exchange earning obligation. Although the infrastructure within SEZs is very good, for most companies, it doesn't make economic sense to continue operations," a person aware of the development said. The government is looking to make these changes in the upcoming Budget that will lead to companies not having to show import revenues or submit detailed operational information. As a corollary, the companies could continue to operate from SEZs like any other place without having to comply with all the elaborate compliance requirements. The commerce ministry is already working on such a proposal, another person aware of the development said. "If any SEZ wishes to be de-recognised, even that could be allowed. The government could also bring in a change whereby SEZs could offer additional commercial and residential holdings within their premises," the person said. Many SEZs had sought an extension of the direct tax holiday, especially on account of the Covid-19 pandemic. The primary attraction of setting up entities within an SEZ was the favourable taxation structure. Many SEZs had even approached the government to discuss the tax sops this year, but the government didn't relent. "The government representatives told us clearly that no tax sops or tax exemptions are possible this year," a person part of an industry association that met the government said. An email sent to the ministry of commerce and industry did not elicit any response till press time on Monday.

Source: Economic Times

Back to top

Central scheme likely to be rationalized

Future budgets are likely to continue to drive capital investment to support growth and may streamline central support and central sector schemes to make government spending more effective. The government budgeted 554 million rupees of capital expenditure in 2010, nearly 46% of which was spent by October. Medical expenses can see high allocations in this fixed investment push with enhanced allocations. From 2021 to 2010, the government budgeted 71,268.77 rupees for the health sector, but spent 78,866 rupees, 21.3% more than the 65,012 rupees budgeted for 2020- 21. High government spending has supported growth. The Indian economy grew 8.4% in the July-September quarter. The rationalization of the central scheme is expected to make it more effective. “CSS rationalization is necessary to bring about more efficient spending,” said government officials, saying that many plans are either beyond their objectives or too small to bring concrete benefits in the field. Added. As part of the rationalization, more than 30 schemes can be integrated or integrated with other schemes to expand focus areas, officials said. There are about 131 central schemes. According to experts, the central scheme continues to grow exponentially as ministries and agencies individually consider and formulate schemes, but their relevance has been lost over the years and resources have diminished. EY’s Chief Policy Advisor, DKSrivastava, said: Another official said rationalization was important for reforming spending. “If the scheme is important, it should be a 100% central scheme, preferably for items on the union list,” said the second source, applying to the center’s domain and considering the required area. I emphasized that I need to put it in. Focused scheme.

Source: India news Republic

Back to top

India's FTA ambitions in perspective

A protectionist tariff structure and an inability to integrate with global value chains may prove to be major challenges for India as it seeks deeper trade agreements As the second year of the pandemic draws to a close, global trade recovery continues apace with world trade in goods having attained record high levels in the third quarter of 2021 and trade growth continuing at about 1 per cent each quarter (Global Trade Update, United Nations Conference on Trade and Development, November 2021). Major trading economies, conscious of this trade momentum, have persevered with their pre-pandemic schedules of trade agreements, especially in mega regional trade agreements. The US-Mexico-Canada Agreement (USMCA) entered into force on July 1, 2020.

Source: Business Standard

Back to top

PM Narendra Modi meets leading CEOs ahead of Budget

It was part of a series of meetings being chaired by the Prime Minister for gathering suggestions, especially from the private sector, to “further the reform process” and catapult the Covid-ravaged economy on to the high-growth trajectory. Prime Minister Narendra Modi on Monday met chief executives of key companies cutting across sectors — including banking, infrastructure, automobiles, telecom, consumer goods, steel, textile, renewables, technology, electronics and health care— to seek their inputs for stimulating growth ahead of the Budget for 2022-23. The meeting was attended by commerce and industry minister Piyush Goyal. Other participants included Rajesh Gopinathan (TCS), Kenichi Ayukawa (Maruti Suzuki), TV Narendran (Tata Steel), Uday Kotak (Kotak Mahindra Bank), Dinesh Khara (SBI), Sanjiv Puri (ITC), Sumant Sinha (ReNew Power), Vineet Mittal (Avaada Group), Manu Kapoor (Samsung), Mallika Srinivasan (Tractor and Farm Equipment) and Pawan Goenka (formerly with M&M). It was part of a series of meetings being chaired by the Prime Minister for gathering suggestions, especially from the private sector, to “further the reform process” and catapult the Covid-ravaged economy on to the high-growth trajectory. On Friday, Modi huddled with private equity players and venture capitalists to draw their inputs on wooing more capital. The Budget for FY23 will be presented on February 1, in the backdrop of a nascent recovery of the economy, robustness in tax receipts and the continuing need for government spending to bolster the revival process. The Budget is expected to address critical issues of demand generation, job creation and putting the economy on a sustained path of 8%-plus growth. While private consumption has stayed subdued in the wake of Covid-induced income losses, private investments are yet to turn the corner, as investors remain wary of pandemic-related uncertainties. Separately, finance minister Nirmala Sitharaman has been holding the customary preBudget consultations with various stakeholder groups, which started on December 15.

Source: Financial Express

Back to top

Fabrics, yarn trade slows as Indian traders evaluate GST hike impact

Cotton yarn trading activities slowed down in major northern and southern Indian markets due to apprehension regarding the implications of the proposed GST hike from 5 per cent to 12 per cent on textiles and apparel from January 1. Fabrics manufacturers and traders across the country are preferring to ‘wait and watch’ until there is further clarity on GST. Fabrics trade is slowing down because of the difficulty to accommodate proposed GST hike, Purusottam Parmanandka, joint managing director of Tiruppur-based trading company Kesharinandan Knit Fabrics Private Limited told Fibre2Fashion. He said that the cloth manufacturers and traders are more worried, as they are clueless about how to adjust the tax increase in product prices. Cotton yarn and fabric trade has come down not only in Tiruppur, but also in many other markets of southern India. Besides the GST hike, cloth production is also adversely affected due to poor demand from the downstream industry. Slow trading activities of fabrics is also leading to sluggish demand for cotton and man-made yarn. In Tiruppur, 20 count carded cotton yarn is being sold at ₹280-285, 25 count carded yarn at ₹290-295 and 30 count carded yarn at ₹300- 305 per kg. The panic among textile and garment manufacturers due to GST hike is also visible in northern India. SK Shrivastava of Delhi-based Neha Fibre says that normally the trade in the yarn market remains limited in the last fortnight of December. But, this year, trading activities slowed down drastically due to the proposed GST hike. “Yarn buying also remained weak due to muted demand for fabric.” GST rate for woven fabrics; sewing thread of man-made filaments, whether or not put up for retail sale; synthetic filament yarn (other than sewing thread), not put up for retail sale, including synthetic monofilament of less than 67 decitex; artificial filament yarn (other than sewing thread), not put up for retail sale, including artificial monofilament of less than 67 decitex; knotted netting of twine, cordage or rope and other made up nets, of textile materials; pile fabrics, including long pile fabrics and terry fabrics, knitted or crocheted; blankets and travelling rugs; bed linen, table linen, toilet linen and kitchen linen; curtains (including drapes) and interior blinds; curtain or bed valances; sacks and bags, of a kind used for the packing of goods; tarpaulins, awnings and sunblinds; tents; sails for boats, sailboards or landcraft; camping goods; sets, consisting of woven fabric and yarn, whether or not with accessories, for making up into rugs, tapestries, embroidered tablecloths or serviettes, or similar textile articles, put up in packings for retail sale, etc has been increased from 5 per cent to 12 per cent. However, GST rates are unchanged on cotton and cotton yarn. But the GST rate on article of apparel of any value has been increased to 12 per cent. Earlier, the GST rate was 5 per cent for sale value up to ₹1,000 per piece. Businesses, specifically MSME manufacturers and merchants, feel that they cannot survive in the current scenario. They have requested the government to maintain status quo on the GST on textiles, including sarees, at 5 per cent. A delegation of Punjab textile merchants met Som Parkash, union minister of state for commerce and industry, in Amritsar recently on the issue. The sole agenda was the repercussions on increase in the GST from 5 to 12 per cent on textiles, including sarees, from January 1, 2022.

Source: Fibre 2 Fashion

Back to top

MSMEs strike, protest high raw material prices

10 lakh units shut for a day: association Micro, Small and Medium-scale Enterprises (MSMEs) across major industrial hubs in about 10 States downed shutters for a day on Monday protesting spiralling prices of raw materials. The strike was total in places such as Coimbatore, Belgaum, and Mysore, said R. Ramamoorthy, spokesperson for the All India Council of Association of MSMEs, which gave the call for the strike. “MSME associations in States such as Maharashtra, Karnataka, Gujarat, Punjab, Madhya Pradesh and Odisha, had extended support to the strike. We estimate that almost 10 lakh MSMEs in the country stopped production on Monday resulting in production loss of almost ₹15,000 crore,” he added. Several input materials used by MSMEs, including steel, aluminium, copper, kraft paper and plastic, have on average seen a 70% jump in prices in the last one year. In November and December, MSMEs were impacted by a slump in orders and piling up of stocks. “The market is not absorbing the high raw material cost,” he said. The units demand measures from the government to control raw material prices. While larger companies have allowed their vendors to raise prices, the increase is not commensurate with the actual rise in raw material prices. Public sector undertakings and government agencies have not effected any price increase to their suppliers. MSMEs need stability in raw material prices, Mr. Ramamoorthy said.

Source: The Hindu

Back to top

Government says revised draft ecommerce rules soon

The government is in the final stages of drafting new ecommerce rules, tweaking an earlier draft that had sought to tighten the regulations for foreign-owned marketplaces, including barring their affiliated entities from selling on the platforms and restricting flash sales. The new version will be released soon, said a senior official of the Ministry of Consumer Affairs, Food and Public Distribution who did not wish to be named. Top industry bodies representing the Tatas, Amazon, Walmart-owned Flipkart and others have opposed some of the proposed clauses in the earlier draft. Some of the key provisions have also not found favour with the finance and corporate affairs ministries, and the government's public policy think tank, Niti Aayog. Given the differences, the Department of Consumer Affairs has held discussions with several companies and industry associations on the proposed amendments, said the official.

Controlling commodity prices The Ministry of Consumer Affairs, which also looks after food and public distribution, has been using data and predictive analytics to keep the prices of pulses under control for the past three months, the official said. The department has developed a price forecasting model to predict the prices of major pulses six months ahead of a possible spike. The autoregressive integrated moving average with explanatory variable (ARIMAX) model uses estimates of domestic availability of commodities at mandis and imports, thereby predicting supplies months earlier.

Source: Economic Times

Back to top

Weavers seek withdrawal of GST hike

Weavers staged a protest in front of the Salem Collectorate on Monday demanding withdrawal of GST hike on textiles. Members of the Salem and Thiruchengode Circle Handloom Weavers’ Co-operative Societies Employees Union condemned the Centre for the steep hike in GST tax rates on textiles from 5% to 12%. They said that sale of handloom products has been affected due to COVID-19 pandemic and hike in yarn prices. They lamented that the hike in tax rates announced by Centre would severely affect the livelihood of weavers and sale of handloom goods. They said that over 10 lakh weavers are dependent on this occupation at least three lakh families would be affected if the hike in tax rates is implemented.

Source: The Hindu

Back to top

Japan’s plans to channelise investments from China to India hit supply chain roadblock

Beijing wants to set up part of supply chain in India while continuing to source sophisticated items from other countries but New Delhi not convinced Japan’s single-minded focus on high precision seems to be clashing with India’s chalta hai (we’ll make do) attitude in its efforts to persuade its manufacturers to diversify investments from China to the country. Despite India featuring prominently in the list of Asian countries promoted by Japan as an alternative destination to China through subsidies and a separate ¥1-billion fund assigned for supporting businesses in the country, there haven’t been too many takers for it so far. “India insists on the companies bringing their entire supply chains to India but Japanese companies want to move ahead step by step by sourcing highly sophisticated inputs from other countries in the beginning. Because of this many Japanese companies are moving their investments to other South Asian countries rather than coming to India,” a Japanese government official explained to BusinessLine. In order to configure supply chains for products with complex manufacturing processes, such as medical devices and batteries, at the fastest possible speed, it is necessary to have step-by-step and careful discussions for each product, based on the supply chains that are currently spread around the world, the officer pointed out. “We have been trying to explain to India that Japanese companies are not comfortable moving their entire supply chains of sophisticated products to the country all at one go as it might affect the quality of the finished products. If it is done in phases, it will work out well for both countries,” the official said. Based on the examples of other countries, a step-by-step discussion is likely to result in the fastest and most efficient growth of Indian industry, he added. Fifth largest investor Japan is the fifth largest investor in the Indian economy with cumulative FDI inflows of $34.5 billion in the April 2000 to December 2020 period accounting for 7 per cent of total FDI inflows in the same period. Some of the prominent Japanese investments in India include Maruti Suzuki, Uniqlo, Mitsubishi Group, Mitsui and Honda. In its 2020 supplemental budget, Japan allocated 23.5 billion yen to fund subsidies meant to encourage firms to partly exit China and disperse their manufacturing sites across the ASEAN region. It later extended it also for investments in Bangladesh and India. But this has not yet led to any substantial additional investments from Japan as companies initially want to keep sourcing high-precision inputs from other countries while doing the assembly in India. Japanese businesses are apprehensive about the predictability of Indian policies as the recent curbs on trade and investment flow from bordering countries including China by India has upset the production plans of several Japanese companies already manufacturing in India with inputs sourced from Beijing. “The Japanese government has decided to use the budget for supply chain resilience in the best way possible given the present scenario. We are planning to subsidise projects like visualisation/upgradation of manufacturing sector. These will help realise supply chain resilience and industrious competitiveness through digitalisation of supply chain of sectors such as automobile, appliances, medical equipment and food processing sectors,” the official said. Logistics projects to realise supply chain resilience and optimisation of logistics through establishment of system to understand logistics in real-time may also be funded. Projects to reduce time for customs clearance through establishment of systems to predict arrival timing of the freights and diversification of supply chain are also on the list.

Source: The Hindu Business Line

Back to top

OECD releases model rules for 15% global minimum tax

India’s Budget for 2022-23 likely to initiate changes in domestic legislation. The Organisation for Economic Co-operation and Development (OECD) on Monday released detailed rules for the implementation of a far-reaching global tax deal aimed at subjecting multinational enterprises (MNEs) to a 15% minimum tax from 2023. With the OECD keen that countries bring the so-called Global Anti-Base Erosion (GloBE) rules into domestic legislation in 2022, India’s Budget for 2022-23 will likely spell out India’s position and start laying the legislative framework to incorporate these rules. The minimum tax, known as Pillar Two, would discourage countries from competing to attract corporations by offering low tax rates. The new rules also let countries such as India impose an extra tax on companies not meeting a 15% effective minimum rate in another jurisdiction. Currently, an Indian MNE could set up a unit in a zero-tax jurisdiction and legitimately pay no taxes there and not distribute profits back to India. Under the OECD multilateral pact, India would get the right to tax them at the minimum rate of 15%.The Pillar Two model rules provide governments with a precise template for taking forward the two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy agreed in October 2021 by 137 countries including India and jurisdictions under the OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS).The rules define the scope and set out the mechanism for the GloBE rules, which will introduce a global minimum corporate tax rate. The minimum tax would apply to MNEs with revenue above €750 million and is estimated to generate around $150 billion in additional global tax revenues annually. “The government needs to quickly spell out its positions to allow corporates to evaluate and critique their group structure and start building compliance framework. India hopes to make gains from Pillar Two over Pillar One and have informally expressed a preference to apply STTR on base erosion payments,” said Aravind Srivatsan, Tax Leader & Partner, Nangia Andersen LLP. The GloBE rules provide for a coordinated system of taxation intended to ensure large MNE groups pay this minimum level of tax on income arising in each of the jurisdictions in which they operate. “Chapter 3 and 5 are the heart of the model rules which prescribe the determination of excess profits, adjusted covered taxes, jurisdictional top-up tax percentage for every low-tax jurisdiction, substance-based income exclusion in computing the GloBE income. These are complex rules and the principle of accounting consolidation of which parent entity would consolidate with its subsidiary or JV would now also have to carefully consider the impact on Pillar Two tax implications,” Srivatsan added. Pillar One would apply to MNEs with profitability above 10% and global turnover above €20 billion. The profit to be reallocated to markets would be calculated as 25% of the profit before tax over 10% of revenue.

Source: Financial Express

Back to top

China to lower tariffs on 954 import items from next year

China will implement lower tariffs for a host of imported commodities in 2022. As per a circular issued by the Customs Tariff Commission of the State Council, the country will lower the tariffs on close to 954 products including baby clothing from January 1 onwards. The interim rates will be lower than Most Favoured Nation (MFN) tariff rates. The country aims to support the new development pattern and promote high-quality opening by lowering tariffs provisionally. Additionally, China will raise import and export tariffs on some commodities from January 1 due to the changes in supply-demand conditions and to drive development of domestic industries. In order to open up at a higher level, the country will impose conventional tariff rates on some products from 29 nations and regions in accordance with preferential trade agreement and free trade agreements. China will also be granting preferential tariff treatments in 2022 to LDCs that have established diplomatic relations with it, as per Chinese media reports.

Source: Fibre 2 Fashion

Back to top

Pakistan: In Nov, textile exports reached a new high

According to figures issued by the Pakistan Bureau of Statistics (PBS), the country’s textile and garment exports increased by a record $1.74 billion in November 2021. Exports of textiles increased by 8% from October 2021 to October 2022. Exports of bed wear and towels increased by 9 percent and 28 percent, respectively, in the value-added textile and readymade garment sector. November’s textile exports rose by 35 percent as compared to the same month a year ago. The exports of knitwear were up by 40pc, bed wear 32pc and readymade 27pc. The report indicated that textile and garment exports increased by 28 percent to $7.8 billion in the first five months of the current fiscal year (July-November). The value-added and basic textiles, on the other hand, increased by 28 and 35 percent, respectively. If the US and European countries do not implement any restrictions in response to the spread of the Covid Omicron form, Pakistan’s textile exports are expected to reach $18 billion.

Source: Daily Times

Back to top

Egypt, IFC discuss bilateral cooperation in light of development priorities

Al-Mashat praised the fruitful cooperation with the IFC, where the current portfolio amounts to $1.26bn ania Al-Mashat, Egypt’s Minister of International Cooperation, has met with Walid Labadi, Country Director for Egypt, Yemen, and Libya at the International Finance Corporation (IFC), to discuss development cooperation programmes and areas of joint cooperation in the coming period within the framework of the country’s development priorities such as renewable energy, transportation, wastewater management, and desalination. Al-Mashat praised the fruitful cooperation with the IFC, where the current portfolio amounts to $1.26bn. IFC injected $1bn fund in several sectors in Egypt, such as financial markets, agricultural and forestry businesses, health, education, life sciences, and others, that worked to enhance integration with the government’s efforts to enhance the participation of the private sector in development. Al-Mashat indicated that, as of September 2021, the IFC`s portfolio in Egypt reached $30.2m in the areas of electrical energy, economic development of the private sector, environment, governance, gender, finance and insurance, transportation and storage, healthcare, chemicals, wholesale and retail trade, textiles, clothing and leather, collective investment vehicles, manufacturing, agribusiness, and consulting services. Al-Mashat praised that the IFC pumped development funds to the private sector during the past year, amounting to $421 m, while its total investments during the last decade amounted to about $4 bn, which pushed the efforts made by the private sector in various development projects. She pointed out that Egypt was able to withstand the Corona pandemic to achieve positive growth thanks to what is being achieved at the level of development projects through partnership between the public and private sectors. For his part, Labadi, stressed that IFC aims to create a market for renewable energy in Egypt by benefiting from the expertise and financial influence of the private sector. Labadi praised the participation of the Ministries of International Cooperation and Industry in the Sustainable Finance Forum last October, which discussed sustainable finance and how it can transform African economies by stimulating economic growth, promoting gender inclusion, and preserving the environment. Labadi pointed to the launch of a project to develop supply chains and add value for the pure textile sector in Egypt, to attract investments worth $800m, in cooperation with the IFC and the Chamber of Ready Made Garments and Textiles.

Source: Daily News Egypt

Back to top

World Bank, HSBC positive about Vietnam's economy

should get back to a gross domestic product (GDP) growth of 6.8 per cent next year, driven by a return of strong foreign direct investment (FDI), primarily in manufacturing, according to Tim Evans, chief executive officer (CEO) of HSBC Vietnam. The country’s economic conditions continued to improve, with both industrial production and retail sales registering a third month of growth, the World Bank recently said. The GDP growth would benefit the country’s exports, especially as free trade agreements that have been signed over the past two years start to bear fruit, Evans said. The continued expansion of the middle class and in particular the rising affluent sector will lead to changes in consumption as Vietnamese start spending more and more on leisure and travel, a Vietnamese newspaper reported. The World Bank said in the December edition of its Vietnam Macro Monitoring that Vietnam’s economic conditions continued to improve, with both industrial production and retail sales registering a third month of growth. Merchandise exports hit a record high of $31.9 billion, helping maintain a second consecutive month of trade surplus while FDI commitment recovered after a brief dip in October, according to the report. Inflation ticked up due to fuel price hikes, recovering non-food domestic demand and rising logistic costs while credit growth remained stable, providing amble liquidity to support the economy recovery. After two months of decrease, the consumer price index (CPI) increased by 0.3 per cent month-on-month in November. Compared to a year ago, the CPI rose by 2.1 per cent year on year, slightly higher than in October, but well below the 4 per cent target set by the State Bank of Vietnam. The government continued its contractionary fiscal stance as the budget balance posted another month of surplus, driven by strong revenue collection, the World Bank document noted. There is also clear need for fiscal policy support to boost private demand and help the domestic economy recover. Providing financial assistance to impacted workers and households would be an essential avenue to achieve this objective, according to the document.

Source: Fibre 2 Fashion

Back to top