Synopsis The scheme was launched after the national lockdown during the first Covid wave to provide support to MSMEs and has since been expanded to cover other sectors such as aviation. The government is examining a proposal to increase the validity of the Emergency Credit Line Guarantee Scheme (ECLGS), which is now set to expire in March. The scheme offers government guarantees for up to ₹4.5 lakh crore of loans, and banks have so far sanctioned about ₹2.9 lakh crore under it. The government may expand the validity of the scheme by up to a year and the overall loan cap by 10%, said a finance ministry official. The scheme was launched after the national lockdown during the first Covid wave to provide support to MSMEs and has since been expanded to cover other sectors such as aviation. As of now, about 95% of the guarantees issued are for loans sanctioned to MSMEs. "We are examining it and an announcement for extension may be made in the upcoming Budget," the official said. The government has received a representation from the Indian Banks' Association (IBA) seeking an extension and additional funding support, the official said. In September last year, the government extended the validity of the scheme till March 2022 or till guarantees for the entire ₹4.5 lakh crore were issued. Disbursement can be made till June 2022, which was earlier March. "Another year-long extension may come through," said the official, noting that deliberations were ongoing. The IBA, in its letter to the finance ministry last week, has argued that with the effects of the pandemic on economic activity continuing, a need was felt for continuing the support by government for one more year, up to March 2023. "This will help banks to continue their support to the sectors affected by the pandemic and ensure availability of liquidity support to the affected MSMEs," it said in the letter, adding that economic revival which had begun already would establish firmly resulting in copious cash flows to sustain the operations of MSMEs.
Source : Economic Times
The report said a variety of factors have contributed to India’s recent trade performance. India has factor cost disadvantages (example, power costs 30 to 40 percent more in India than it does in Bangladesh). Lack of free or preferential trade agreements with key importers, such as the European Union, United Kingdom, and Canada for apparel as well as Bangladesh for fabrics also puts pricing pressure on exporters Indian textile exports can hit $65 billion if industry majors take the right steps and there is proper execution of government schemes, a joint report by global consulting firm Kearney and The Confederation ofIndian Industry (CII) said. Exports declined by 3 percent during 2015–2019 and by 18.7 percent in 2020, the report observed and went on to add that during the same period, other low-cost countries such as Bangladesh and Vietnam have gained share. “We believe with the right actions from the industry majors and robust execution of government schemes, India can hit $65 billion in exports (implying 9-10% CAGR) by 2026. This, coupled with growth in domestic consumption, could propel domestic production to reach $160 billion. Given the labour-intensive nature of this industry, this growth could add 7.5 million direct jobs in textile manufacturing” Siddharth Jain, Partner, Kearney said in a statement. The report said a variety of factors have contributed to India’s recent trade performance. India has factor cost disadvantages (example, power costs 30 to 40 percent more in India than it does in Bangladesh). Lack of free or preferential trade agreements with key importers, such as the European Union, United Kingdom, and Canada for apparel as well as Bangladesh for fabrics also puts pricing pressure on exporters. "The high cost of capital and high reliance on imports for almost all textiles machinery makes it difficult to earn the right return on invested capital, especially given India’s slight cost disadvantage. Longer lead times than for Chinese manufacturers make India uncompetitive, especially in the fashion segment. For example, India’s lead time is 15 to 25 percent longer than the competition in fabrics. Limited presence in the global trade of man-made fiber products. The trend of nearshoring in western economies has not helped either," the report suggested. Textile products hold a key position in the global value chain, with India being the world’s fifth-largest exporter for apparel, home, and technical products. The Textile industry employs almost 45 million people in the farming and manufacturing sectors. However, the country’s recent performance in global trade has not been commensurate with its abilities. “Covid-19 has triggered the redistribution of global trade shares and a recalibration of sourcing patterns (“China plus one” sourcing), providing a golden opportunity for Indian textiles to stage a turnaround and regain a leadership position as a top exporting economy. We believe India’s textile industry should target 8 to 9 percent CAGR during 2019–2026, driven by domestic demand growth and significant growth in annual exports (reaching $65 billion by 2026)” Neelesh Hundekari, Partner and APAC Head of Lifestyle Practice at Kearney said. Achieving the $65 billion exports target up from $36 billion in 2019—will require India to double down in the five key areas - apparel, fabrics, home textiles, man-made fiber and yarn and technical textiles. The path to achieving these targets will entail both government and industry taking crucial steps. And the government seems geared up for the challenge. “The recent launches of multiple schemes such as MITRA, PLI, RoDTEP highlights the strong government focus on this sector. It will be critical for the government to follow up these launches with efficient implementation and even more critical for industry players to leverage these schemes effectively,” Jain said.
Source: Economic Times
House economists at the nation's largest lender State Bank of India (SBI) have urged the government to budget for nursing the pandemic-ravaged economy and not to focus too much on fiscal consolidation House economists at the nation's largest lender State Bank of India (SBI) have urged the government to budget for nursing the pandemic-ravaged economy and not to focus too much on fiscal consolidation as there is a need for more stabilisation measures to sustain the fledgling recovery. And one of the best way to begin the new fiscal is to complete the share sale of LIC this fiscal. This can go a long way in repairing the overstretched balance sheet which in turn will bring down fiscal deficit to a much lower 6.3 per cent in FY23 as the public coffers will be left with a cash surplus of at least Rs 3 lakh crore to begin the new fiscal, SBI chief economist Soumya Kanti Ghosh said in a pre-Budget note on Wednesday. He said the Budget should not correct the fiscal deficit by more than 30-40 bps as most sectors of the economy still need support. Pencilling in a 6-6.5 per cent fiscal deficit for FY23, down from 6.8-7.1 per cent from FY22, he said the Budget should also allow for very gradual fiscal consolidation. For FY23, the fiscal consolidation should remain limited to 30-40 bps from the current fiscal. He also cautioned against any new taxes like wealth tax or others at this point as that could do more harm than benefit. Assuming the government keeps the expenditure growth at 8 per cent over FY22 estimates at Rs 38 lakh crore in FY23 and receipts (minus borrowing and other liabilities) would grow by 10.8 per cent, it would lead to fiscal deficit of around Rs 16.5 lakh crore or 6.3 per cent of GDP in FY23. If LIC share sale passes through in FY22, the government might be ending fiscal with a large cash balance of Rs 3 lakh crore. This can come handy in supporting a large part of government fiscal deficit without taking recourse to market borrowings, as per the note. Against this background, the net market borrowings of the Centre is likely to be around Rs 8.2 lakh crore and with repayments of Rs 3.8 lakh crore, gross borrowings is expected at Rs 12 lakh crore (73 per cent of the fiscal deficit and same as in FY22 and FY21), Ghosh said. Overall gross borrowings by the Centre and states are likely to be around Rs 21 lakh crore (Rs 19.7 lakh crore in FY22) and net borrowings at around Rs 14.8 lakh crore (Rs 15 lakh crore in FY22). Ghosh also pointed out that unlike in FY22, when RBI has done OMOs of around Rs 2.6 lakh crore, helping government borrowing programme without disruptions, in FY23, such support is not likely. He specifically called for continuing support to MSMEs saying the 6.33 crore of such units contribute 29 per cent of GDP, employing over 11 crore. And one of the ways to help them is let bank lend them more by verifying their cashflows seamlessly through GST 4/ITR on real-time basis. Another step could be extending the Emergency Credit Line Guarantee Scheme (ECLGS) till end FY23 to enable completion of the entire targeted Rs 4.5 lakh crore of credit flow under it.
Source: Business Standard
The United Nations Conference on Trade and Development (UNCTAD) on Wednesday said that global foreign direct investment (FDI) flows showed a strong rebound in 2021, up 77% to an estimated $1.65 trillion, from $929 billion in 2020, surpassing their preCovid-19 level. As per the report, flows to India were 26% lower, mainly because large merger and acquisition deals recorded in 2020 were not repeated. As per the UNCTAD Investment Trends Monitor, the outlook for global FDI in 2022 is positive. “The 2021 rebound growth rate is unlikely to be repeated. The underlying trend – net of conduit flows, one-off transactions and intra-firm financial flows – will remain relatively muted, as in 2021,” it said. The Geneva-based organisation said that international project finance in infrastructure sectors will continue to provide growth momentum. “The protracted duration of the health crisis with successive new waves of the pandemic continues to be a major downside risk. The pace of vaccinations, especially in developing countries, as well as the speed of implementation of infrastructure investment stimulus, remain important factors of uncertainty,” UNCTAD said. Other important risks, including labour and supply chain bottlenecks, energy prices and inflationary pressures will also affect results, according to the agency.
Country mix
China saw a record $179 billion of inflows – a 20% increase – driven by strong services FDI. The Association of Southeast Asian Nations or ASEAN resumed its role as an engine of growth for FDI in Asia and globally, with inflows up 35% and increases across most members. Developed economies saw the biggest rise by far, with FDI reaching an estimated $777 billion in 2021 – three times the exceptionally low level in 2020, UNCTAD said. FDI flows in developing economies increased by 30% to nearly $870 billion, with a growth acceleration in East and South-East Asia (+20%), a recovery to near pre-pandemic levels in Latin America and the Caribbean, and an uptick in West Asia. Inflows in Africa also rose.
Source: Economic Times
FTA will enormously help to maximize that opportunity and make it easier for UK businesses to trade and invest there, Richard Heald Executive Chair, UK India Business Council said. India and UK formally launched talks last week for concluding FTA by early 2023. Richard Heald - Executive Chair, UK India Business Council in a wide ranging interview to ET said by making more investments, businesses in both countries stand to gain a lot. The UK is one of the world’s largest economies, home to many of the world’s greatest universities and research centers, and world class legal and regulatory institutions, Heald said, adding, FTA will enormously help to maximize that opportunity and make it easier for UK businesses to trade and invest there. How do you see India as an investment destination? India today presents a great investment destination to any international business, thanks to its large economy, huge consumer market, and abundant skills and talent. What is even more exciting though is the potential. Economists predict it will be the world’s 3rd largest economy and 3rd largest consumer market by 2030. Strengths in manufacturing, digital and IT, and across the economy are increasingly evident and as such it is an extremely exciting place to be. UK businesses are already deeply rooted in India, with 500-strong UK businesses operating in India, employing more than 400,000 people. Many of these businesses are looking to expand in India, and many UK businesses not yet invested are keen to do so when the time is right. That time is now as an FTA will enormously help to maximize that opportunity and make it easier for UK businesses to trade and invest there. What are the top areas that UKIBC wants India and the UK to focus on? What are some ofthe key recommendations from UK business? From extensive UKIBC consultations carried out last year across 20 roundtables and involving around 200 companies, it is clear that businesses in both countries, across all sectors, have high hopes for the FTA negotiations. In particular, there are three mains recommendations that businesses would like: 1. Business want to see a reduction in tariffs, for example in food and drink and healthcare. 2. They want to see a greater alignment of standards and simplified customs procedures. 3. And businesses want to see alignment of data protection rules and IP practices, so as to realize the full potential of the India-UK partnership, particularly in the innovative, R&D-intensive sectors that will drive the partnership in the years and decades to come. It was very welcoming to hear from Minister Shri Piyush Goyal at the launch on the importance that both Governments and businesses hold for data free flow, and use of data as a tool to expand digital space. That is absolutely right. International supply chains are increasingly digital and, as such, the facilitation of digital trade, which can be achieved through alignment of data protection rules and an India-UK data adequacy agreement, is thus critical. This is a trading agreement being negotiated in a completely different world to two years prior, with hundreds of millions of people around the world working from home in that time. Services like education, healthcare, shopping, and banking are increasingly done on digital platforms. So, it is more important than ever to create the frameworks that allow digital services to flourish. A final point I would like to make here is that businesses are also interested in an interim, or early harvest deal. But they want this to be a building block to a comprehensive deal that will really transform the bilateral partnership, enabling the governments to hit their target of doubling trade to £50 billion by 2030. This approach of reaching an “early harvest agreement” would: capitalize on the excellent momentum already created by the Governments; it would lock-in wins and deliver economic benefits on an ongoing basis; and it would build the trust, confidence and momentum that may be needed to overcome more difficult issues in the medium- and long-term. Itis notable that“Ease of Doing Business” has been featured as a prominent discussion area among the UK businesses. How do you see thatimproving in the future basis your discussions with DIT & GoI? Ease of doing business goes hand in hand with FTA type issues and remains a vital enabler of greater cooperation. As well as an attractive market as discussed in your previous question, business also needs regulatory certainty and a sound operating environment, namely “ease of doing business”. There are still challenges to overcome, as indeed there are in every country, but huge progress has been made in recent years, and I applaud the Government of India on the great work it has done to improve the ease of doing business to date. These reforms have received a positive reception from businesses and is key to attracting investors. Moving forwards, in all our discussions with various Ministries and Departments in both Governments, officials reiterated their continued commitment to upholding the ease of doing business and have been willing to engage with businesses, listen to their feedback and take that forward for a win-win. The better the operating environment, the greater the level of investment, put simply. Most recently, the UKIBC launched our 7th Annual Doing Business in India Report in December 2021 and presented it to both Governments. There, we describe the key challenges that businesses are facing and their reform priorities. It has been most welcome that DPIIT and others across the GoI have engaged so heartedly with us on this so the signs are positive, and we will continue to engage with both Governments in the future. The rationale of having India-UK FTA. How does it help India in having FTA with the UK? By making more investments, businesses in both countries stand to gain a lot. The UK is one of the world’s largest economies, home to many of the world’s greatest universities and research centers, and world-class legal and regulatory institutions. An Indian business interested in the UK could thus gain access to the UK’s world-class workforce, regulatory and legislative environment, and large market if it were to act upon its interest. In particular, the UK remains a leading financial center. Expertise in the STEM areas is also a great opportunity for collaboration and partnerships in engineering, manufacturing, and infrastructure, both for industry and academia and research. Not only for economic development, but these areas will also be crucial for overcoming the great issues of our time such as climate change. For consumers, a closer trading relationship will help to make more high-quality products available. There are many mutual benefits that both our countries will gain by working together.
Source: Economic Times
Budget 2022 Expectations India: Listed here are some of the expectations from Union Budget 2022 by the individuals and the business world. The Union Budget 2022-23 will be presented by Finance Minister Nirmala Sitharaman during the budget session of the Parliament on February 1, 2022. The budget is muchawaited, especially this year with the Omicron variant of COVID-19 causing the third wave of the pandemic in the country. The Union Budget 2021 had largely focussed on healthcare and stimulus packages to boost India's healthcare sector to deal with the COVID-19 pandemic more effectively and efficiently. This time, individuals especially the salaried class are waiting to see which new reforms or announcements will be made especially in relation to the income tax. FM Nirmala Sitharaman had not announced any change in the income tax slabs for individual taxpayers last year. However, senior citizens above 75 years with only pension and interest as income were exempted from income tax filing. This year hence, people are eagerly awaiting announcements concerning income tax. The individual taxpayers in India are looking forward for a budget that ensures they have more money to spend, especially in the wake of the hurdles posed by the COVID-19 pandemic. The industry is also looking forward to some tax concessions. What to Expect from Union Budget 2022: Know in 10 points 1. The individual taxpayers will be hoping for some sort of tax relief amid additional strain caused by rising expenses due to COVID-19 and work-from-home. The individuals and businesses will also be hoping for lowering of tax rates and tax slabs. 2. There are also expectations to raise basic tax exemption limit for income tax from Rs 2.5 lakh to Rs 5 lakh. Several individuals will benefit from the tax relief and liquidity if the basic tax exemption limit is raised. 3. The healthcare sector will be expecting the government to increase spending on genetic research and promote Genome Mapping projects. 4. The hospitality sector, which is one of the worst hit by the COVID-19 pandemic will be expecting some relief in form of new schemes to promote tourism and other incentives in the form of interest-free loans and subsidies and reduction in tax rates. 5. The real-estate sector, which has also taken a huge hit amid the pandemic, will be expecting incentivizing of both the rental housing market and the affordable housing sector. 6. The textile industry is expected an export duty on cotton export to check prices, as it is facing an issue of rising cotton prices due to the high level of exports. The industry has also urged the government to remove 5 percent import duty on the import of raw cotton. The government has already deferred an increase in GST rates on textiles. 7. The Micro, Small & Medium Enterprises (MSME) sector is optimistic about getting subsidies that can boost their growth. The MSMEs are looking for measures to improve their accessibility of funds and credit lending to mobilise growth. 8. The MSMEs are also expecting the introduction of some norms in the ‘Need to Trade’ policy to facilitate ease of business in the domestic as well as the international market. The previous year's budget, Union Budget 2021-22 had introduced several steps to support the MSME sector. 9. Besides this, the finance minister is expected to introduce provisions to enable economic revival, focussing more on demand generation, employment generation and boosting public healthcare and the MSME sector, which is the backbone of the economy. 10. Overall, the Union Budget 2022 is expected to focus on simplifying taxation, investment and offering further subsidies and incentives to Indian startups to generate more revenue and employment, boosting domestic growth in line with PM Modi's vision of creating an Aatmanirbhar Bharat. Background Union Finance Minister Nirmala Sitharaman had initiated bold tax reforms in her first year as Finance Minister by lowering corporate Income Tax to 25 percent and a competitive tax rate of 15 percent for new manufacturing. The COVID-19 pandemic in the last two years have left the domestic economy in a fragile state with some recovery reported after lifting of the first national lockdown in 2020. However, the destructive second wave of the pandemic did further damage to the recovering economy. The Finance Minister had held a pre-budget meeting with all the state finance ministers on December 30, 2022, as a part of a series of consultations held in the run-up to the Union Budget 2022-23.
Source: Jagran Josh
Synopsis Yadav was addressing a virtual interaction with the leaders of the unorganized workers’ unions and associations. The aim of the interaction was to understand the issues impacting unorganized workers and ensure schemes related to them are effectively implemented. The labour ministry has reactivated the 21 monitoring centres across India to mitigate the problems of migrant workers through coordination with various state governments, union labour minister Bhupender Yadav said on Wednesday. Yadav was addressing a virtual interaction with the leaders of the unorganized workers’ unions and associations. The aim of the interaction was to understand the issues impacting unorganized workers and ensure schemes related to them are effectively implemented. Government has estimated 380 million unorganized workers in India, which is 90% of the country’s estimated workforce of 420 million. The representatives of construction workers, domestic workers, textile workers, municipal workers, transport workers, street vendors, brick-kiln workers and railway malgodam workers participated in the meeting, which was attended by the top labour ministry officials.
“The government has been working relentlessly and sincerely for the welfare and upliftment of unorganised workers in particular and for the working class in general,” Yadav said. According to the statement issued by the labour ministry, Yadav assured the representatives of the unorganized workers that he and his officials would travel extensively and interact with the working class and the labour union members once the pandemic situation is eased and take their views on implementation of various welfare and social security measures. Stating that 230 million unorganized workers have registered on the e-Sham portal in just 200 days of its launch, Yadav among others. “The government has undertaken several social security schemes for the unorganized workers. Besides, the all India survey of Domestic and Migrant workers is also undertaken with full earnestness and soon the government will take meaningful and constructive action on the report, keeping in view the aspect of social security and welfare of the working class,” Yadav said. “After the survey of migrant and domestic workers, the data shall be linked to the e-Shram portal and the National Career Service portal shall also be linked to eShram,” he added. Pratibha R, president, Garments and Textile Workers Union, Ramendra Kumar, general secretary, National Platform for Domestic Workers, Ashok Agyani, national chief convener for municipal workers, Arvind Singh, national president of All India Unorganised Workers Congress, S K Mittal, chairman and Navin Kumar Gupta, resident and secretary-general of All India Motor Transport Congress, Promod Patel of Trade Union Coordination Centre for Construction Workers, Gautam Kumar, general secretary, Railway Malgodown Shramik Sangh and Sudhir Katiyar, Brick Kiln Workers Association attended the meeting.
Source : Economic Times
The microfinance sector has urged Finance Minister Nirmala Sitharaman to increase the limit of credit guarantee scheme in the budget for 2022-23. The self-regulatory body (SRO) also urged that a microfinance development fund of Rs 1000 crore be set up within NABARD to support the not-for-profit MFIs with revolving financial support. The microfinance sector has urged Finance Minister Nirmala Sitharaman to increase the limit of credit guarantee scheme in the budget for 2022-23. In the budget representation to the ministry, the self-regulatory body (SRO) of MFIs said the sector is facing a few challenges in terms of higher credit costs and access to low-cost long term funds. It urged the finance minister to extend the quantum of funds under the credit guarantee scheme to the MFIs. P Satish, executive director of Sa-Dhan, an SRO, said that the microfinance sector plays an important role in steering growth and consumption which are crucial at this juncture. According to him, the capital of the smaller MFIs has been impacted due to the pandemic and he urged the government to support them with subordinated debt with tenure ranging from five to seven years. The SRO also urged that a microfinance development fund of Rs 1000 crore be set up within NABARD to support the not-for-profit MFIs with revolving financial support. The India Microfinance Equity Fund at Sidbi/Mudra may be suitably augmented with enhanced support to MFIs, it urged.
Source: CNBCTV18
About a hundred out of the 450 power looms across the state have already started manufacturing textiles for school uniforms and 25,000 metres of textile have already been manufactured by them. The target is to produce 40 lakh metres of fabric by April- May this year. In order to boost textile manufacturing and increase scope of employment, the state administration has asked the districts to stress on setting up more powerlooms and ensure that investors are able to avail the benefits of the newly launched incentive scheme. Under the scheme, the state government provides financial help for installation of newage powerlooms to boost production of improved quality of fabrics. From 1 January 2022 to 31 December 2024, eligible MSMEs will receive a capital investment subsidy of 20 per cent on fixed capital investment in plant and machinery. Again, an interest subsidy will be given on term loans for five years based upon the plant’s location and waiver of electricity duty. This apart, if the MSME employs 50 per cent from persons registered with state employment bank then a reimbursement would be given towards Employees State Insurance and Employees Provident Fund. Those MSMEs that are interested in setting up powerlooms under the scheme will receive yarn from Tantuja. In fact, the first 2000 powerlooms would receive yarn from Tantuja and buyback support State chief secretary HK Dwivedi has asked the district magistrates to mobilise the powerlooms in fabric manufacturing. Along with this, self-help groups will be involved in the process of fabric knitting and the state panchayat department has been asked to prepare an action plan on the mechanism that is to be adopted for involving these groups within 31 January. Currently, power looms that are involved in production of textiles are located in Nadia, East Burdwan, North 24-Parganas, Howrah, South Dinajpur and West Midnapore. About a hundred out of the 450 power looms across the state have already started manufacturing textiles for school uniforms and 25,000 metres of textile have already been manufactured by them. The target is to produce 40 lakh metres of fabric by April- May this year. The state requires six crore metres of fabric to supply two sets of uniforms to students across the state. Presently the fabric is procured from other states but the state government aims to become self-reliant by 2024. Mr Dwivedi has also directed the district magistrates to identify wetlands in their respective districts so that those can be conserved on a priority basis. The state plans to conserve wetlands spanning over 10 hectares, which have the potential for tourism and religious purpose Further, he took stock of various ongoing projects including Jal Swapna, Matir Shristi, Bangla Krishi Sech Yojana, Agriculture Infrastructure Fund, Micro Irrigation Fund and others.
Source: The Statesman
Set up in 1965 by Ministry of Commerce, Government of India to focus the efforts of all stakeholders engaged in promotion of trade from the country, the Federation of Indian Export Organisations (FIEO) is the apex body of the government recognised Export Promotion Councils, Commodity Boards and Export Development Authorities in India. FIEO Director General & CEO Dr. Ajay Sahai tells Fibre2Fashion as to how the textiles industry is likely to perform in 2022.
What are your key takeaways from the textile and apparel industry developments in 2021? 2021, despite disruptions caused by the pandemic, was a watershed year for the textiles industry. Its importance for supporting the domestic economy, job creation and exports was very well recognised. The huge potential of the sector was tapped through various initiatives of the government: • The PLI scheme was introduced for man-made fibre and technical textiles sector to boost manufacturing, augment exports, and attract FDI in such sectors. • 7 Mega Textiles Parks were notified to provide state-of-the-art facility under one roof for textiles manufacturing. • Rationalisation of GST rates for man-made filament, yarn, fabrics, and garment was attempted to address inverted duty structure and encourage value addition. • RoSCTL scheme was notified for apparel and made-ups sectors to provide complete zero rating to such exports providing a level playing field to Indian exporters. • Government engaged with the UK, UAE, and Australia to finalise free trade agreements and also opened dialogue with the EU, GCC, SACU and some other regional blocks to help the textiles sector to get better market access for exports.
Does 2022 seem to be as uncertain as 2021? Which factors would you rank as of topmost concern? The global trade is expected to reach $28 trillion in 2021, showing a growth of 23 per cent over 2020. Such a growth has come with relaxation on movement, economic stimulus provided by economies, and hike in prices of commodities and metals. The uncertainties witnessed during 2021 are likely to continue in 2022 albeit with less impact. Backlog across major supply hubs that characterised 2021 could continue in 2022 as well. The logistics challenges are likely to remain unabated. Our topmost concern would be the trend in consumption pattern in 2022. We all know that consumption has shifted from services to goods in 2021 as many economies were in lockdown. With gradual opening of economies, the shift may be back to services which may affect the growth in global trade.
By when do you expect the challenges of shipping industry to ease? The challenges in shipping sector are likely to continue at least till the second quarter of 2022 as the new ships and containers may be added to the supply side thereafter to soften the hike in freight and shortage of containers. The little easing out at this point of time is primarily due to the fact that supplies for Christmas, New Year and Chinese New Year have been front loaded and were completed by October.
How pressing could be the labour issues for the textile and apparel industry? Labour issue is quite critical to the apparel and textiles sectors. Over the years, export related jobs have grown at a much faster rate than overall employment. While a chunk of these jobs has gone to persons with below secondary education, the rate of growth of these low-skilled jobs has declined. Recent estimates show that the share of unskilled jobs tied to textile and allied exports declined from 29.64 per cent in 2003-04 to 23.67 per cent in 2013-14. The share of high-skilled jobs increased from 20.91 per cent to 26.15 per cent during the same period. With the skill composition of export related jobs shifting towards high skill, we require greater investment in skill development to make sure that we do not expose the less skilled workers to the risk of offshoring.
Do you expect any significant movement in textile and apparel supply chains in 2022 due to the geo-political scenario, particularly the US-China tension? Global companies are looking for China Plus One model and India is definitely on the radar of all such companies. The tension between China and the US is forcing many companies, who were looking for expansion or set up in China, to move to India. QUAD in the West with US, Israel, and UAE and in the East with US, Japan and Australia will also push trade amongst partners. US ban on products from Xinjiang which produces 86 per cent of China’s cotton, 70 per cent of cotton yarn and 75 per cent of cotton fabric, will further push India’s apparel and textiles exports. In fact, it may compound the problem of apparel exporters as many major exporting countries dependent on supply from China are increasingly moving to India for procuring inputs thereby pushing the prices in the domestic market.
Source: Fibre 2 Fashion
, January 20, 2022) The Ambassador of Vietnam Nguyen Tien Phong has underscored the need to expedite work on Preferential Trade Agreement (PTA) between Pakistan and Vietnam which continues to lie on the table. “Talks were also going on for having Free Trade Agreement (FTA) between the two countries but we need to have PTA first. Of course, relevant meetings of joint trade committee and joint ministerial committee were held but then some of them were postponed due to COVID-19 which doesn’t mean we delay the process”, he added while exchanging views at a meeting during his visit to the Karachi Chamber of Commerce & Industry (KCCI). While highlighting the trade and investment potential, Vietnamese envoy stated that Pakistan and Vietnam were amazing countries with all four seasons, huge population, sufficient natural resources and young labor force along with immense opportunities available in many sectors including the travel and tourism sector which needs to be promoted. “We have the potential, and we have the framework, but we need to explore how trade and investment could be enhanced which have remained stagnant. Instead of just talking about potential, we need to be practical. The business associations of the two countries must come forward, identify problems, raise awareness and take practical steps for boosting the trade and investment ties”, he added. “This is year, we will be celebrating 50 years of Pakistan-Vietnam diplomatic ties and we have big plans for that but in addition to celebrations, we have to be more effective and substantive partners to further promote and strengthen the existing trade and investment ties between the two countries”, he informed. “As we are brothers and friends and we are constantly supporting each other in many aspects on several international forums yet the trade and investment was not yet meeting the potential that needs collective efforts,” said Vietnamese Envoy, “We need to understand each other, our traditions and the way of doing business in addition to building confidence between the business communities of the two countries with a view to create a mutually beneficial and a win-win situation,” he added. He informed that Vietnam has implemented an open-door policy as the country’s economy has been liberalized and integrated into global economy which yielded good results. Despite Covid-19 pandemic, Vietnam recorded a growth 2.9 percent and its total exportsimports in 2020-21 stood at $668 billion, of which exports stood at $336.5 billion while goods worth $332.5 billion were imported, indicating a surplus of $4 billion. “We have FTA with 17 countries including EU, Japan, US, China, ASEAN and trade relations with 145 countries and territories.” According to him, Pakistan-Vietnam commerce is worth $794 million, and as a result, the business community in Karachi needs to find measures to balance the trade. As long as any agreement between KCCI and any other Vietnamese CCI goes beyond just signing, we’ll help facilitate it. In his remarks to the Vietnamese Ambassador, President KCCI Muhammad Idrees said that despite a worldwide outbreak of the Covid-19 pandemic, Vietnam’s GDP grew by 2.9 percent in 2020, according to the International Monetary Fund (IMF). Even if Vietnam’s GDP slowed to 2.6 percent in 2021, according to the World Bank, it is expected to increase to 5.5 percent in 2022. “The authorities in Pakistan must study Vietnam to evaluate the key steps required to end certain woes faced by Pakistan and move the country towards a more efficient industrial and manufacturing-based economy”, he stressed. He mentioned that the trade volume was currently below the true potential as during 2020, Pakistan exported goods worth $136.67 million while the imports from Vietnam stood at $437.95 million which need to be improved through collective efforts as there was a lot of untapped potential in number of commodities including synthetic organic dyes, casing and tubing of iron or steel, Polystyrene, cuttle fish and squid, woven fabrics of cotton, Medicaments containing hormones or steroids, leather and Octopus etc. Great possibilities of cooperation exist in the seafood sector through setting up joint ventures in shrimp farming and processing. “Apart from trade in commodities, Vietnamese investors can invest in energy, electricity, textile material, vehicle component and agricultural goods processing units. Vietnam has good expertise in producing hydropower and it can cooperate with Pakistan in this field. Vietnamese investors should visit Pakistan to explore JVs and investment in CPEC”, he advised, adding that Vietnam can help Pakistan in development of its agriculture sector. Stressing the need to exchange delegations to boost bilateral engagement, President KCCI also invited Vietnamese business community to participate in My Karachi Exhibition which KCCI has been organizing since past 16 years. This mega event is scheduled from 11th till 13th February 2022 at Karachi Expo Center. First Secretary Vietnam’s Embassy Thai Duc Khai, head of Vietnam Trade Office Ms Nguyen Thi Diep Ha, SVP Abdul Rehman Naqi, vice president Qazi Zahid Hussain, chairman of KCCI’s Diplomatic Missions and Embassies Liaison Sub Committee Zia ul Arfeen, former president Majyd Aziz and KCCI Managing Committee Members attended the meeting.
Source: Fibre 2 Fashion
With the goal of attracting local and foreign investment to modernise and reopen closed textile mills, the government has called for open international tenders for four out of 16 textile mills through public-private partnerships (PPP). The move comes after the Bangladesh Textile Mills Corporation (BTMC) initiated a process of handing over two textile mills through PPP. As per an announcement from the BTMC, some factories have been lying dormant for the past 30 to 40 years. The mills were shut down after facing huge losses, according to officials of the BTMC. However, a business leader questioned the move to open the mills in such a manner, raising doubts over its sustainability. The four mills are: RR Textile Mills, Dost Textile Mills, Rajshahi Textile Mills and Magura Textile Mill. The tender process has already entered its second phase, according to a BTMC official. The BTMC will be the major partner of the PPP. The project will be distributed as per the partnership agreement and the government will only issue the land for building infrastructure. The private parties will implement the project, maintain the mills and market the textile products produced, the official said. The expected bidders or bidding consortiums have been asked to submit their proposals by March 7. The tenure of the partnership may be up to 30 years but could be renewed further. "The tenders will be offered only for textile related activities, no options to run other activities," said Kazi Feroz Hossain, project director and general manager for commerce of the BTMC. "We hope that each factory will generate around 5,000 jobs and that thousands of people will be able to benefit financially from it," he said, adding that the use of these mills will have a positive impact on the country's gross domestic product. However, Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), criticised the PPP system. "The PPP project for the state's closed textile mills is not a long-term solution because the government has imposed a complex structure and no 'real' or renowned institutions have come forward to invest here," he said. "This is because no company can do any work according to their wishes," Khokon added. Most of the mills' infrastructures have been abandoned or become obsolete and so, they could be demolished first but this contract is also contingent on the government's longterm viability. But if the government changes, the overall system may change sooner or later. He did, however, suggest that if any well-known companies or groups wanted to sign on for the partnership, they could do so. Earlier in the first phase, the first two mills -- Ahmed Bawany Textile and Quaderia Textiles -- signed deals with Tanzina Fashion Ltd and Orion Consortium respectively. In 2017, the cabinet committee on economic affairs approved the proposals of textile mills in the textiles ministry. The BTMC has 636.38 acres of land across the country that is perfect for building industrial units. On October 12, 2014, Prime Minister Sheikh Hasina issued a directive for installing machinery at the mills which were closed down while visiting the Ministry of Textiles and Jute. Of 16 textile mills, a total of 10 units are waiting for the next phase to call for tenders. One of the ongoing projects is Magura Textile Mill, which was shut down several times after failing to make profits ever since its inception in 1985. The mill authorities blamed a shortage of "running capital" and outdated machinery for the losses. Another is RR Textile Mills Ltd, which was established in 1963. Renovating the mill, as well as Rajshahi Textile Mills and Dost Textile Mills, located in Feni, is estimated to cost about Tk 1,200 crore each. The BTMC was established by Presidential Order No 27, 1972, under the Ministry of Textile and Jute, according to the BTMC website. It began with 74 nationalised mills and expanded to 12 mills under the annual development plan between 1975 and 1985, according to the BTMC website. Between 1977 and 2010, the government was forced to de-nationalize 65 mills due to globalisation and the free market economy. Currently, the BTMC operates 23 mills in various zones across the country. However, a majority of them aren't making as much money as they could. Contacted, Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, also expressed concern over the issue. "When the government expects a major share of profits [at least 51 per cent], it may discourage investors as the government is only issuing land," he said, adding that it may be costlier for investors in 30 years because of the increasing cost of infrastructural development. He also urged the government to consider small-and-medium investors instead of just giving the tenders to larger groups or consortiums, adding that the issuing phase-based textile mills may be a part of mini-economic zones or specialised areas. He also termed it as alternative industrialisation. However, Moazzem expressed concern over the fairness of tender processing, citing the previous bad history of mismanagement in this regard.
Source: The Daily Star
The global sustainable initiative Fashion for Good has launched a new consortium project called the D(r)ye Factory of the Future. Its aim is to accelerate the shift from wet to mostly dry processing as textile processing is responsible for the highest greenhouse gas emissions, significant water and chemical use in the fashion value chain. Thus, the project brings together several innovations in textile pre-treatment and colouration that have the potential to reduce emissions by up to 89 percent, and to cut water consumption by between 83 and 95 percent. “Textile processing is the largest contributor to carbon emissions in the supply chain and a shift to mostly dry processing is crucial for the path to netzero. Given the interdependencies in the processing stages, a stand-alone assessment of solutions is not sufficient. By validating a combination of technologies, we can unlock the full potential of those solutions. This is why this project is so pivotal,” said Katrin Ley, managing director at Fashion for Good. The D(r)ye Factory of the Future joins brands and innovators The D(r)ye Factory of the Future is orchestrated by Fashion for Good and partners with brands like Adidas, Kering, PVH Corp., Arvind Limited and Welspun India on the one hand who bring extensive expertise in the textiles space, and innovators like Alchemie Technologies, Deven Supercriticals, eCO2Dye, Grinp, Indigo Mill Designs, Imogo, Mtix and Stony Creek Colors on the other to bring together several novel technologies with the aim of disrupting the current processing, pre-treatment, colouration (dyeing and printing) and finishing of textiles in the fashion supply chain. “Traditional pre-treatment, colouration and finishing, which occur in Tier 2 of the supply chain (see figure below) often takes place in large tanks or baths which require vast amounts of energy, heat and water. It produces the highest amount of Greenhouse Gas (GHG) emissions, 52 percent, in addition to releasing large amounts of toxins into the water. One of the key levers to reduce impact is to move from wet processes to mostly dry processes – innovative processing technologies that require very little to no water and reduced energy,” explains Fashion for Good. Working together for greater impact Unlike a number of innovations in this area that are often explored in isolation, the D(r)ye Factory of the Future project partners several innovations together to achieve a greater impact and accelerate the shift to more sustainable practices. In addition, after the initial focus on innovations in pre-treatment and colouration, it will test solutions in combination to validate their impact and potential to scale in the fashion value chain. Concretely, the eight innovators will collaborate across five different materials; cotton, polyester, blends, denim and wool. The technologies tested include plasma and laser treatments, spray dyeing, supercritical carbon dioxide (CO2) and foam dyeing. “The results from the evaluations, as well as next steps for implementation, will be shared in a report in late 2022,” promises Fashion for Good. The initiative’s partners will help facilitate the implementation of the solutions found at selected manufacturers. For those who would like to know more, Fashion for Good has compiled an accompanying overview of the technologies and their impact potential in the report “Textile Processing Guide: pre-treatment, colouration and finishing”, which can be found on its website.
Source: The Daily Star
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