Commerce Minister Piyush Goyal assured MSMEs to develop the UDYAM registration as a single point for obtaining different licenses for trading activities. He said this while having a conversation with Confederation of All India Traders (CAIT). He urged the traders and business community to enroll themselves on UDYAM portal as it will enable the traders to avail priority sector lending from banks and financial institutions which will strengthen their business activities and make them compatible to meet any domestic or global challenges. In view of the GST on textile, he accepted the request of CAIT and to take up issue of levy of 5 per cent GST on textile under 5 per cent tax slab and assured he will soon take up this matter with Union Finance Minister Smt Nirmala Sitharaman. “The Union Government led by Prime Minister Narendra Modi is committed to structural growth of domestic trade and providing all opportunities to people who are willing to export their products,” he added. CAIT Secretary General Praveen Khandelwal lauded the assurance given by Minister Goyal on making UDYAM a one window system for traders and also to take forward the issue of textile trade in respect of GST. He requested Commerce Minister Goyal to treat levy of 5 per cent GST on footwear as well in which the tax rate has been increased to 12 per cent by GST Council. A delegation of CAIT will soon meet Commerce Minister Goyal and submit its White Paper on issues and challenges of domestic trade.
Source: KNN India
At Texport Industries' factories in India's south, thousands of mostly women workers are busy converting yarn and fabrics into T-shirts, shirts, spaghetti tops and kids' clothes for U.S. customers of Tommy Hilfiger and Kohl's Corp. After being outpaced in recent years by neighbouring Bangladesh and then hammered by the COVID-19 pandemic, India's garmentfactories are now humming near full capacity - a rare labour market bright spot for Prime Minister Narendra Modi and his ruling party as they head towards an election in 2024. "We have been so busy," said Parashuram, the head of one of the Texport factories who goes by one name, as a batch of 60 new women recruits practiced stitching. "We are constantly looking to hire workers." The company is scouting for land to add new factories around its main production base in Hindupur, about 100 km (60 miles) north of tech hub Bengaluru. Sustained success for the textile and apparel (T&A) industry, the country's biggest employer after farming, is crucial if Modi is to succeed in taming unemployment. India's jobless rate is above 7% and estimated to have exceeded the global average in five ofthe last six years - a massive problem for a country that must create millions of jobs each year just to keep pace with the young people joining the labour market. HIGHER LABOUR COSTS India is the world's fifth biggest T&A exporter with a 4% share of the $840 billion global market, while China controls more than a third of it. India's exports were on a par with closest rival Bangladesh about a decade ago but have lagged in recent years - especially on garments - partly due to higher labour costs that make Indian clothes some 20% costlier. Indian T&A companies say they are now adding new clients, selling more to old ones and raising production capacity as foreign buyers seek to diversify their supply chains. Other than China, only India has a big supply chain of everything from cotton to garments. Still, some industry leaders said that unless India signed free trade agreements with Western countries - which New Delhi says it is working on - it would not be easy to outsell Bangladesh, which also enjoys preferential export terms from many buyers as a least developed country. Indian companies such as Texport, Welspun India and Raymond - whose buyers include Western retailers Amazon, Target, Costco, Walmart Inc , Tesco and Macy's - have managed to lift sales in recent quarters. India's junior textiles minister, Darshana Jardosh, on Wednesday listed recent announcements to support the industry, such as setting up seven huge all-in-one textile parks for about $600 million to further increase employment and make it easier for foreign buyers to place orders and monitor supply chains. The government has also proposed production-linked incentives worth $1.4 billion. The American Apparel & Footwear Association (AAFA) said India's ongoing and planned investments had resulted in "more companies looking at India as a potential source of growth over the coming years", without giving specifics. Two industry sources with knowledge of the matter said both Fast Retailing's Uniqlo and Gap Inc were in talks to expand Exports, did not immediately respond to requests for comment. Shahi Exports Managing Director Harish Ahuja declined to discuss individual buyers but said demand was high from its existing customers. CAPACITY CONSTRAINTS? India's April-December T&A exports soared 52% to $30.5 billion from the year-ago period, and the government has set a full fiscal-year target of $44 billion, which would be a record. While global textile exports recorded a compounded annual growth rate of 2% between 2015 and 2019, India's shrank 0.8%, according to an industry report. Both Bangladesh and Vietnam grew at 10% or more. One factor behind the surge in sales for Indian companies to the United States and Europe in the past few quarters has been alleged rights abuses in China's main cotton growing province of Xinjiang, where the minority Muslim Uyghur community lives. U.S. President Joe Biden in late December signed into law legislation that bans imports from Xinjiang. China has rejected accusations of forced labour or any other abuses in Xinjiang. The China Cotton Association referred Reuters to a December statement that warned of "severe impact" on its cotton textile industry because of the U.S. move. Raymond, an Indian exporter of men's suits, jackets and denim, said the China factor helped it recently sign up new clients that it had long pursued. "At current capacity, we may not be able to pick up as much as the orders coming our way, as much as buyers want to ship away from China," said Narendra Goenka, chairman of the Apparel Export Promotion Council of India and a founder of family owned Texport. Goenka said his company was spending some $25 million to raise its capacity by more than a quarter over the next two years, with the addition of 8,000 jobs on top of its current workforce of more than 10,000. For 19-year-old Lopamudra Patel, from the eastern state of Odisha, whose family struggled to survive on her father's income as a part-time driver, the industry has come as a saviour. She joined Texport a few weeks ago for a monthly wage of $100. "It was very difficult at home," she said, standing next to whirring sewing machines in the training room. "I will now be able to send some money home."
Source: Economic Times
The Confederation of All India Traders on Thursday urged Union Finance Minister Nirmala Sitharaman to withdraw the proposed GST tax on textiles. In the GST Council meeting in late 2021, it was unanimously decided to defer the hike in tax rate on textiles from 5 per cent to 12 per cent and the matter was sent to the tax rate rationalisation committee which will submit its report by February. Currently, the textiles sector is being taxed at 5 per cent tax rate, the traders’ body said. In a joint statement, CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal said: “In communication to Mrs Sitharaman, we said that the proposed hike, which is in abeyance stage, should be withdrawn in the larger interest of consumers of the country as such hike will load an extra burden of 7 per cent tax rate on general consumers and will also hit the traders by blocking their capital with the department in the shape of refunds.” There was no tax on textile or fabrics for a number of years, the joint statement added. The increase in GST rates on textile will not only add to the financial burden on end users but will also affect small businessmen badly and will encourage evasion of tax and various malpractices being undertaken by habitual offenders of law, the trade body said. “Bringing the textile Industry back under the tax net itself was a big blow to the entire textile industry. The trade associations across India led by CAIT had made representations immediately after the last GST Council meeting wherein it was proposed to correct the inverted duty structure on textile.” It was requested by the trade and industry that the status quo be maintained at 5 per cent and the rate be reduced from 12 per cent to 5 per cent, wherever applicable, it said. “This view of the traders was also supported by Union Textile Minister Piyush Goyal who categorically assured a CAIT delegation that Textile Ministry is in favor of keeping the textile under tax rate of 5 per cent and the Ministry has already informed the Finance Ministry about the view, ” the statement said.
Source: Kalinga TV
The ratings agency cited that reduction in logistics issues for export demand will aid in keeping healthy demand Reduction in impact of Covid-19's third wave, as well as accelerated re-opening activities, will boost textile demand in FY23, said India Ratings and Research (Ind-Ra). The ratings agency cited that reduction in logistics issues for export demand will aid in keeping healthy demand. "Domestic demand for all the textile sub-sectors has continued to improve from 2QFY22, after a slight dip in 1QFY22. The increased demand momentum along with the supply chain issues has increased the realisations," it said. "Demand for cotton remained all-time high in 2HFY21, leading to reduced opening stock for the new cotton season. The rise in prices of cotton has led spinners to accumulate the stock." Furthermore, it said that demand for MMF (man-made fibre) has continued to increase, mainly due to the rise in cotton prices, leading to a shift of demand from cotton to MMF, to an extent. "The demand momentum sustained for home textiles in the domestic market because of improved consumer spending." In addition, the agency cited that textile exporters in the cotton yarn segment continued to witness an improvement during 7MFY22 with volumes exceeding 47 per cent YoY over FY21. "Ind-Ra expects export volumes to remain higher for FY22 over FY20 and FY21, on back of an increasing demand for Indian yarn. "The export of fabric and apparel also recovered to the Pre-Covid levels during 8MFY22 and is likely to sustain with the opening up of economies and the adoption of 'China Plus One' strategy by importing countries."
Source: Business Standard
‘Policies of successive governments have sustained the industry’ From saris and dhotis to bedspreads and kitchen towels, industries in Tamil Nadu make them all. Boasting at least one-third of the textile business in the country, with 2,032 spinning mills (total mills in India: 3,542), 5.63 lakh powerlooms (India: 24.86 lakh), 1.55 lakh handlooms (India: 23.77 lakh), and nearly 15,000 garment units (close to one lakh units nationally), Tamil Nadu is regarded as numero uno in textiles and garments. It also supplies to global brands. The journey started over a century ago when spinning mills came up in a few pockets in the State. Though cotton production has dwindled over the years, the industry has developed and the State now houses clusters of the entire textile value chain –spinning, weaving, processing, and garmenting. Policies of successive governments and spirit of entrepreneurs have sustained this industry over the years, according to Ravi Sam, chairman, Southern India Mills’ Association (SIMA). “Tamil Nadu was the first State to bring in a textile policy. It promoted the development of industries in backward districts. The continued focus by entrepreneurs, for generations, investing to upscale technology, productivity and quality, have all helped,” he said. Today, textile and clothing sector is a major employment generator . A significant stimulus A significant stimulus came when Chief Minister M.K. Stalin recently announced the removal of market committee cess on waste cotton and cotton. This decision will have long-term implications as it will make cotton cost-competitive for the consumer industry. Another decision that will provide the required impetus is bifurcation of handlooms and textiles and having separate Commissionerates for them. Dharmendra Pratap Yadav, Principal Secretary, Department of Handlooms, Handicrafts, Textiles and Khadi, said the State will also get one mega textile park, spread over 1,000 acres, under the PM Mega Integrated Textile Region and Apparel Park Scheme. “After discussions with the Agriculture Department, we have formed a committee to work out a ‘cotton mission’. We want to rework the textile policy too,” he said, indicating the State government’s proposed measures to strengthen the textile and clothing sector. M. Senthil Kumar, chairman and managing director of Palladam Hi-Tech Weaving Park, earlier said the weaving units were producing mainly two types of fabrics –grey cloth (printed or dyed) and yarn-dyed fabrics. With the increasing demand for ready-made garments, varieties of fabrics made have expanded. More number of shuttleless looms, which give consistency in quality, are installed compared to the traditional powerlooms. According to Raja M. Shanmugham, president of Tiruppur Exporters’ Association, successive governments ensured a conducive environment to promote growth of textile clusters. Almost 60% of the country’s knitwear production is from Tiruppur. Development of labour-supportive infrastructure will help this sector grow manifold, he added. SIMA vice chairman Durai Palanisamy said Tamil Nadu’s strengths are not just in cotton and cotton blended textile products, but also in man-made cellulose fibre, such as viscose. The State accounts for almost 75% of the country’s man-made cellulose yarn production. With the growing demand in casual wear for women and children, capacities are on the rise in spinning and weaving in this segment. Since weaving and processing remain weak in the value chain, the government wants to encourage powerlooms’ modernisation with incentives. On the processing front, it wants to introduce more units to make dyed yarn, Mr. Yadav added.
Source: The Hindu
It represents an almost 45% jump from 2020, and while US trade with its top 15 partners increased over the past year, the single biggest jump was with India. India retains a trade surplus in the relationship In yet another sign of the deepening economic relationship between India and the United States (US), bilateral trade in goods between the two countries crossed the $100 billion mark in 2021, making it the largest volume of goods trade in a calendar year in India-US economic history. This also represents an almost 45% jump from 2020, and while US trade with its top 15 partners increased over the past year, the single biggest jump was with India. India retains a trade surplus in the relationship. According to figures released by the US Census Bureau, India-US bilateral goods trade was worth $113.391 billion from January to December 2021. India exported goods worth over $73 billion, and imported goods worth a little over $40 billion dollars. In 2020 – an unusual year because of the pandemic and subsequent economic restrictions – trade fell to a little over $78.2 billion, from the high of $92.1 billion in 2019. India had then exported goods worth $57.8 billion and imported goods worth $34.2 billion. Placing the figures in perspective, Richard M Rossow, the Wadhwani chair in US-India Policy Studies at the Centre for Strategic and International Studies (CSIS) and the foremost expert of the bilateral economic relationship in Washington DC, said that bilateral trade has been on an upward trajectory for 20 years, and shrunk year-on-year only thrice since 2002. “While we should certainly pause to celebrate the milestone of crossing $100 billion in bilateral trade, it is not far off the overall trajectory of the trade relationship in this period.” The 45% jump, he said, was due to the “deep trough” in 2020, as both India and the US dealt with the initial onslaught of the coronavirus pandemic. Mukesh Aghi, president and chief executive officer of the US-India Strategic Partnership Forum (USISPF), said that a key reason for the spike in Indian exports to the US was the concerted increase in demand in the US market. “The US has seen consumption-driven growth in the past year. There was pent-up demand for items such as jewellery and electronics, which has got channelled in the last six months. The fact that US companies have also sought to diversify their supply chains has played a role, too. Electronic component markets have moved production to India. For instance, Apple now exports a million smart phones from India to the US every month.” The challenge, he added, was to sustain the momentum. When asked what had driven the spike, Rossow said that while the details of which products drove the record-breaking year was not clear yet, the push by the Donald Trump administration to sell American hydrocarbons to India had been a key factor in enabling greater trade. “A decade ago, the US had nearly zero exports of natural gas, coal, or crude oil to India. Today, these three are all among the 10 biggest export categories. US imports from India are more balanced, with good increases in trade among a range of categories. But a few stand out as over-performers such as furniture, aluminium and food products.” An official familiar with the bilateral relationship said that the spike in trade was also a product of the concerted Indian attempts to deepen economic ties with a range of American economic stakeholders – be it through extensive commercial engagement or facilitating business-to-business exchanges or working to get commitments by major American corporates to source material from India or proactively leveraging the sentiment in the US to diversify from China.
Source: Hindustan Times
Based on Sitharaman's statement, the finance ministry's own real GDP projection is closer to that of the Reserve Bank of India Finance Minister Nirmala Sitharaman said on Thursday that the Centre’s gross domestic product (GDP) deflator projection for 2022-23 is 3 to 3.5 per cent. This means that the government’s own real GDP growth projection for the coming fiscal year is in the range of 7.6-8.1 per cent, given that the Union Budget assumes a nominal GDP growth rate of 11.1 per cent for FY23. GDP deflator, or implicit price deflator, is a measure of inflation and is the difference between nominal GDP and real GDP. “Our GDP projection in the Budget is based on the advance estimates of the National Statistical Office. One should recall that the advance estimates were prior to the Omicron wave. In our assumptions, we have also taken the third wave into consideration. Therefore, our nominal GDP estimate is 11.1 per cent. We expect a deflator of 3 to 3.5 percent in FY23,” Sitharaman said in the Lok Sabha while replying to the debate on the Union Budget. The Budget does not give real GDP estimates. The Economic Survey 2021-22, drafted by Principal Economic Advisor Sanjeev Sanyal, projected a real GDP growth rate of 8-8.5 per cent for FY23. The Centre considers the Survey’s estimates a tad too optimistic. Based on Sitharaman’s statement, the finance ministry’s own real GDP projection is closer to that of the Reserve Bank of India. The central bank on Thursday projected real GDP growth of 7.8 per cent in FY23. Interestingly, it projected retail inflation of 4.5 per cent for next year. A deflator takes from both wholesale and retail inflation. WPI inflation has been in double digits this year. “Typically there is what is called reversion to the mean. That is, if WPI is very high this year, and higher than CPI, then it usually tends to be lower than CPI next year. It doesn't always happen. But it's a reasonable assumption. So if we have a reversion of the GDP deflator, next year it could be lower than CPI,” Finance Secretary TV Somanathan had told Business Standard last week. Speaking on other Budget-related issues in the Lok Sabha, Sitharaman said the Modi government had controlled revenue expenditure and expanded capital expenditure as the latter had a greater multiplier effect. “For every rupee you spend in revenue expenditure, the multiplier is 45 paise. For every rupee you spend in capital expenditure, the multiplier is Rs 2.45. Revenue deficit has shown a visible decline because it does not give us the multiplier that we want. It is difficult to reduce revenue expenditure, but we have shown it can be done without causing much upheaval,” she said. Sitharaman also assured that if there is demand, the Centre will provide more funds for the flagship National Rural Employment Guarantee Scheme through supplementary demand for grants.
Source: Business Standard
Finance minister Nirmala Sitharaman said on Thursday that India is the fastest growing economy despite the pandemic and asserted that the government managed the economy well. "Our recovery has been fastest and sustained among all economies...," she said, adding that the recovery momentum will continue in the coming year. She said the government had focussed on capital expenditure because of its multiplier effect on the economy and to restore growth. "The Indian economy is projected to grow at 9% in the next financial year; the US is expected to grow at 4%," she said, replying to the debate on the budget in the Lok Sabha. On divergence in growth estimates in the Economic Survey and the budget, she said the survey had used advanced estimates of the Central Statistics Office that had not taken into account the impact of the third wave of the pandemic. Sitharaman said the government thought it better to spend taxpayer money on capital expenditure, citing a Reserve Bank of India study that said every rupee so spent brought a return of ₹2.45 in the first year and ₹3.14 in the second. The finance minister observed that while the government is borrowing money for capital expenditure, it is ensuring that revenue expenditure is rationalised, which she said will grow by slightly over 3% in FY23, showing a visible deceleration. 'MGNREGA is Demand-driven' Sitharaman countered allegations that the government has curtailed allocation on social security schemes, specifically the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). "MGNREGA is a demand-driven programme. As and when there is demand, through the supplementary demand for grants, we give the additional required amount," Sitharaman added. She said banks had sanctioned loans worth ₹3.1 lakh crore under the Emergency Credit Line Guarantee Scheme for the MSME sector that was impacted by disruptions due to the pandemic. The scheme has been extended till March 2023. "Those MSMEs who still want to benefit out of it are welcome to use it...the amount of loan sanctioned under the ECLGS is ₹3.1 lakh crore and guarantee space is still ₹1.4 lakh crore," she said in her 100-minute reply.
Andhakaal and Amritkaal Hitting out at the Congress party, Sitharaman said that the UPA term was India's 'Andhakaal', citing double-digit inflation, poor management of foreign direct investment and rampant corruption. She claimed the government had managed the economic crisis better than UPA's management of the global financial crisis in 2008-09 despite Covid being one of the worst events India had faced so far. She quoted data on key macroeconomic indicators after the financial crisis of 2008 and pandemic years to highlight better management of the pandemic-induced crisis. We Managed Economy Much Better' "Today, in spite of the crisis, reduction of GDP, Consumer Price Index is well contained, we have managed the economy much better," the FM said, noting that despite disruption to the supply chain, inflation in 2020-21 was 6.2%, whereas in 2008-09, it was 9.1%. The finance minister enlisted the initiatives and schemes of the Narendra Modi government, including Jan Dhan, rural electrification and Gati Shakti, adding: "All these schemes are paving a way towards Amritkaal." Sitharaman highlighted the fact that 44 unicorns - startups with a valuation of $1 billion or more - have been identified in India between 2020 and 2021. "They have created wealth. They showcase India's talent and innovation," she said. The government, she said, had removed 25,000 compliances and repealed 1,500 laws for ease of doing business.
BSNL and Umbrella The finance minister said the revival of BSNL is due to the policies followed by the Modi government, while noncooperative measures followed by the UPA had led to the decline of BSNL's market share to 7.16% from 19% in 2015. Defending the duty hike on umbrellas, Sitharaman said around 25 million umbrellas were being imported from one country and the measure will support the domestic industry.
Source: Economic Times
Ministry of Micro Small and Medium Enterprises through its MSME-Development Institutes (DIs) situated in all States, facilitates Micro Small and Medium Enterprises (MSMEs) to export from Domestic Tariff Area (DTA) and Special Economic Zones. For this purpose, 52 Export Facilitation Centres (EFCs) have been established to provide hand-holding support to MSMEs as well as creating linkages with Export Promotion Councils, Commodity Boards, etc. To support MSMEs reach out to customers across the world, the Ministry is implementing International Cooperation Scheme (IC) facilitating participation of the MSMEs in International Exhibitions, Trade Fairs, Buyer-seller meets, etc. Further, a comprehensive B2B Portal- MSME mart.com is being operated by the National Small Industries Corporation (NSIC) as a one stop digital solution to all business needs of MSMEs and provide next generation services to MSMEs to make them competitive in global market. The Ministry has also established Enterprise Development Centres (EDCs) with the aim to build a network of entrepreneurial leaders by providing professional mentoring and handholding support services to existing as well as aspiring entrepreneurs. So far, 102 EDCs have been established all across the country. Further, various other schemes are being implemented by the Ministry to help MSMEs expand their business in the global market by providing them assistance for technology upgradation, skill development, quality certification etc. Besides, Directorate General of Foreign Trade (DGFT) is implementing schemes like Niryat Bandhu Scheme (NBS) for mentoring new and potential entrepreneurs about the intricacies of foreign trade. This information was given by Union Minister for Micro, Small and Medium Enterprises, Shri Narayan Rane in a written reply in Lok Sabha.
Source: PIB
• The limited trade deal called the “early harvest agreement’, is likely to cover a range of sectors, Goyal said India and Australia will be finalizing a mini free trade agreement (FTA) in the next 30 days, Union minister Piyush Goyal said in a post ministerial meeting address in New Delhi on Thursday. The limited trade deal called the “early harvest agreement’, is expected to cover a wide range of sectors including textiles, pharma, health, education, renewables, and gems and jewellery, said Goyal after the first day of talks with his Australian counterpart Dan Tehan. “That’s the kind of aggressive timelines we have set for our teams today. I am quite confident that we will come up with some exciting news for the businesses in both countries," said Goyal in his address. He added that it will be the fastest FTA signed by either India or Australia so far. However, the remaining issues would get covered in the final agreement, which the two sides hope to finalize over 12-18 months once the early harvest comes into operation. “The 30 days of hard work could lead to something that is truly historic," said Tehan. He pointed out that 75% of Australia’s trade is now covered by FTAs, which could go up to 90% after the trade pact with India. The FTA negotiations come against the backdrop of bilateral trade growing by 120% in April-December 2021 compared with the same period of the previous year. The growth was in line with the supply chain resilience initiative launched earlier this fiscal to counter China’s dominance in the supply chain in the Indo-Pacific region. Trade experts also attributed the sharp increase to increased industry awareness and interest in anticipation of a trade pact, especially for Indian textiles, leather, footwear, and gems and jewellery. Australia wants a phased tariffs reduction for its wines, while India is seeking greater market access for its textiles, footwear, leather, and pharmaceuticals and easier entry for its professionals. India and Australia are working towards a mutually beneficial agreement Goyal said. The minister said he had “comprehensive talks over lunch" with Tehan. India may be willing to lower tariffs on Australian wines above a certain monetary threshold, as this will not affect the low-cost Indian wine industry, persons aware of the matter said. India is also learnt to have proposed a lower tariff on bulk imports of wine. However, Australia seems to be wary of the available infrastructure to support bulk imports. India has a 150% tariff for alcoholic beverages. Australia is the sixth largest wine producer and the fourth largest wine exporter in the world. The Indian market is nascent but growing. “The core of the issue from the Australian side is access... it has benefited in its earlier trade agreements including that with China. Around 60% of wine produced in Australia is exported, hence it needs market access for it," said Arpita Mukherjee, professor, ICRIER. Australia’s demand for lower tariff on dairy was off the table from the ‘early harvest’ deal because of sensitivities on the Indian side.
Source:Live Mint
It represents an almost 45% jump from 2020, and while US trade with its top 15 partners increased over the past year, the single biggest jump was with India. India retains a trade surplus in the relationship. In yet another sign of the deepening economic relationship between India and the United States (US), bilateral trade in goods between the two countries crossed the $100 billion mark in 2021, making it the largest volume of goods trade in a calendar year in India-US economic history. This also represents an almost 45% jump from 2020, and while US trade with its top 15 partners increased over the past year, the single biggest jump was with India. India retains a trade surplus in the relationship. According to figures released by the US Census Bureau, India-US bilateral goods trade was worth $113.391 billion from January to December 2021. India exported goods worth over $73 billion, and imported goods worth a little over $40 billion dollars. In 2020 – an unusual year because of the pandemic and subsequent economic restrictions – trade fell to a little over $78.2 billion, from the high of $92.1 billion in 2019. India had then exported goods worth $57.8 billion and imported goods worth $34.2 billion. Placing the figures in perspective, Richard M Rossow, the Wadhwani chair in US-India Policy Studies at the Centre for Strategic and International Studies (CSIS) and the foremost expert of the bilateral economic relationship in Washington DC, said that bilateral trade has been on an upward trajectory for 20 years, and shrunk year-on-year only thrice since 2002. “While we should certainly pause to celebrate the milestone of crossing $100 billion in bilateral trade, it is not far off the overall trajectory of the trade relationship in this period.” The 45% jump, he said, was due to the “deep trough” in 2020, as both India and the US dealt with the initial onslaught of the coronavirus pandemic. Mukesh Aghi, president and chief executive officer of the US-India Strategic Partnership Forum (USISPF), said that a key reason for the spike in Indian exports to the US was the concerted increase in demand in the US market. “The US has seen consumption-driven growth in the past year. There was pent-up demand for items such as jewellery and electronics, which has got channelled in the last six months. The fact that US companies have also sought to diversify their supply chains has played a role, too. Electronic component markets have moved production to India. For instance, Apple now exports a million smart phones from India to the US every month.” The challenge, he added, was to sustain the momentum. When asked what had driven the spike, Rossow said that while the details of which products drove the record-breaking year was not clear yet, the push by the Donald Trump administration to sell American hydrocarbons to India had been a key factor in enabling greater trade. “A decade ago, the US had nearly zero exports of natural gas, coal, or crude oil to India. Today, these three are all among the 10 biggest export categories. US imports from India are more balanced, with good increases in trade among a range of categories. But a few stand out as over-performers such as furniture, aluminium and food products.” An official familiar with the bilateral relationship said that the spike in trade was also a product of the concerted Indian attempts to deepen economic ties with a range of American economic stakeholders – be it through extensive commercial engagement or facilitating business-to-business exchanges or working to get commitments by major American corporates to source material from India or proactively leveraging the sentiment in the US to diversify from China. A second official pointed out that the trade figures also firmly rebut the impression of India turning inwards and protectionist, and in fact, show that its outwards economic engagement, on its own terms, will only increase. While India is working with Australia, the UK, European Union, Canada and the US to push through larger trade arrangements, any major free trade agreement is unlikely, especially with the US, given the domestic political mood in Washington against trade pacts. When asked if the increase in India-US trade showed that both countries have found ways to deepen ties while circumventing established formats, Rossow said, “Trade deals are helpful to boost trade ties, but far from essential. In recent decades, nations such as Japan, [South] Korea, Taiwan, and China managed to become major global trade players without vast networks of trade deals. It does, however, feel like our nations continue to defy gravity. Both governments have taken protectionist steps in recent years, both globally and towards each other. Whether this continued growth in trade can be sustained in light of anti-trade policies remains to be seen.” ‘ROBUST BUSINESS PARTNERSHIP’ A commerce ministry spokesperson said, “The India-US Trade Policy Forum Ministerial meeting held in November after a gap of four years has given further positive momentum for enhancing bilateral trade relations. In the meeting, ministers (India’s commerce minister and the US trade representative) agreed to intensify their engagement on trade matters and take up outstanding issues for resolution in a time-bound manner. A robust business partnership between two countries is going to grow further due to the inclusion of more goods and services, and the hard work being put in by all the stake holders.” Earlier, an official working in the economic affairs ministry said, requesting anonymity, “India and the US are deeply engaged with each other, which reflects in the enhanced trade numbers and the potential is immense.” According to India’s official data, India-US trade in calendar year 2021 (Jan-December) was $112.626 billion - $71.203 billion exports to the US and $41.423 billion imports. Principle commodities exported to the US are precious and semi-precious stones, drugs and pharmaceuticals, petroleum products, cotton fabrics, garments, marine products, iron and steel products, electrical equipment and auto components. Crude oil was the biggest import from the US, worth $10,395 billion in 2021. Other items of imports are pearls, precious and semi-precious stones, petroleum products, coal, coke, organic chemicals, gold, paper and paper board. Recently, the US approved imports of mangoes and pomegranate from India and secured New Delhi’s approval to export cherries, alfalfa hay, pork and pork products to India, said a second person who wished not to be named. “This is as per a recent agreement between the Department of Agriculture and Farmers Welfare and the US Department of Agriculture for implementing ‘2 vs 2’ agri market access,” the person said. The agreement follows the 12th India-US Trade Policy Forum (TPF) meeting held on November 23, 2021.
Source: Hindustan Times
With election campaign material made of textile taking a hit due to the advent of social media, the good old saree is helping city traders cover up the losses. As the poll battle is heating up in Uttar Pradesh, the sarees — conceptualized and manufactured in Surat — are high in demand in the state. The sarees are being distributed as freebies during the campaign. Also, fashion shows have been organized to display the sarees. The age-old clothing has provided the traders with a new avenue as the demand for caps, flags, festoons, banners and other items made from textile has dropped over the years. “I sold around 30,000 sarees in UP. There are multiple designs available. Over 1 lakh sarees were sent to UP by different textile traders from Surat and more will be sent before the polling ends,” said Lalit Sharma, a textile trader from the city. “Initially, I had ordered a few sarees and they were sold immediately. Later, I placed more orders so as to make most of the first phase of the voting,” said Ashok Agarwal, a textile trader in Agra. A display of multiple designs of these sarees was also held in Mathura. The sarees have slogans of Prime Minister Narendra Modi and UP chief minister Yogi Adityanath. Also, there are sarees with the slogan ‘Jo Ram ko laye he, hum unko layenge’ (those who have brought Lord Ram, we will bring them). Initially, city traders manufactured digitally printed sarees to check their demand. After positive response, the sarees were printed like other textile products to bring down its cost as digital printing is a costly process, traders informed. “The sarees we sold had a price range of Rs 250 to Rs 300 per piece. I supplied the sarees in areas around Agra and Mathura,” added Agarwal.
Source: Times of India
Much has been said of the potential economic costs to Sri Lanka, of losing the Generalised Scheme of Preferences (GSP) Plus trade concessions to the European Union (EU). While these costs will be high, the social and human costs are likely to be even greater. Considering official statistics for 2021, available up to end November, the EU was Sri Lanka’s single largest export market for 2021, accounting for nearly a quarter (24.1%) of our total merchandise exports of US$ 11.1 billion. Given the EU’s importance to Sri Lanka, the loss of preferential tariffs for Sri Lanka’s exports to the EU through GSP+ previously, in 2010, had a substantial adverse impact on our economy. This likely led to an increase in poverty and income inequality as per academic studies (for example, Bandara and Naranpanawa, 2014). At present, given the ramifications of the pandemic, the consequences of the loss of GSP+ could be far more dire, leading to increase in unemployment, poverty, vulnerability and inequality, as well as loss of improvements achieved in female empowerment. According to the World Bank’s estimates, Sri Lanka’s poverty rate rose from 9.2% in 2019 to 11.7% in 2020, putting more than 500,000 additional people in poverty. The country’s poorest were disproportionately negatively affected. Adding to the woes stemming from the loss of income and livelihoods – especially by informal workers who account for around 70% of Sri Lanka’s labour force – the cost of living has soared in recent times. Inflation was at a 12-year high in December 2021, with food prices surging to levels that have led to fears regarding increase in malnutrition and hunger. In such a scenario, the loss of GSP+ would be highly damaging. EU is a key market for some of Sri Lanka’s largest export industries including apparel, food exports and plastic and rubber exports. These sectors employ a substantial portion of our workforce and are also characterised by the heavy presence of small and medium enterprises (SMEs). In addition, the EU has been a significant contributor to the growth of some of these exports industries – for instance rubber-based exports and seafood. For Sri Lanka’s biggest export industry, apparel, the EU is particularly critical, being the single largest market. The EU accounted for $2.2 billion or nearly half (43.6%) of the sector’s total export earnings for 2021. The apparel industry employs 350,000 workers in the country, of which nearly 80% are rural women. Female representation in the industry is more than double the national average, considering the share of women in Sri Lanka’s labour force. Therefore, if GSP+ is lost, vast improvements made in female economic empowerment and overall human capital could also be in jeopardy. SMEs and family-owned businesses are also likely to be more severely affected if GSP+ is unavailable. Many apparel SMEs tend to depend on subcontracts from larger players, which will dry up if excess orders are not available due to loss of preferential access to key export markets. Earlier, when GSP+ concessions were removed in 2010, there were reports of several SME apparel factories being closed down, which also led to unemployment. Currently, SMEs account for approximately 45% or nearly half of Sri Lanka apparel manufacturing facilities and provide employment to around 50,000 employees. Many apparel manufacturing facilities in the country are located outside urban areas and industrial zones and are crucial in generating rural employment. SMEs are particularly vital in this regard since due to their relatively smaller scale, which requires less workers, a high percentage of these factories are located in less-populated and lagging regions. Many other sectors in the country rely on the apparel industry, given its heavy presence across the island. These include logistics and transport providers, raw material suppliers as well as small-scale businesses providing food and refreshments. In addition, several cottage industries, such as producers of carpets and pillow covers, depend on apparel factories in their neighbourhoods for raw material (in the form of waste fabric). If the industry is to suffer a downturn due to loss of GSP+, this entire economic ecosystem too will suffer adverse trickle-down effects. In addition, the pandemic has led to global re-orientation of supply chains which Sri Lanka’s apparel sector is well-positioned to capitalise on. However, this requires easy access to exports markets, through trade arrangements such as GSP+. Export earnings, which generate foreign exchange, are also vital for Sri Lanka’s economic stability, as well as to meet our foreign debt obligations. Hence, given these challenges and opportunity costs, Sri Lanka needs GSP+ now, perhaps more than ever before. In discussions with the Government, the apparel industry and other export sectors have impressed upon the authorities the importance of retaining GSP+. These concerns have been met favourably by the authorities and the industry is hopeful of a positive outcome. In addition to retaining GSP+ in the immediate future, it is important that Sri Lanka engages with the EU to enjoy the benefits of the new GSP+ facility, which will commence in 2024, replacing the existing scheme. Sri Lanka needs to be prepared to align itself with the 33 conventions of the new scheme, compared with the 26 conventions of the current GSP+ regime. It is critical that the policymakers and the authorities commence these preparations now. In addition to GSP+, the apparel sector has also emphasised on the authorities the importance of low-tariff or tariff-free access to other key export destinations – such as USA, China, India (to which a quota applies for apparel exports from Sri Lanka), Japan and South Korea. The Government has responded favourably to these concerns and the industry is hopeful of a positive outcome. New Free Trade Agreements (FTAs) can provide a significant boost to expanding and diversifying Sri Lanka’s and the apparel industry’s export markets. While these are critical at present, it is important to recognise that the apparel industry does not expect GSP+ concessions to remain indefinitely. We are mindful of the fact that the country will lose its trade concessions in the future, as we gradually transition to an upper middle-income nation. With the assistance of other stakeholders, including the Sri Lankan Government, the apparel sector has commenced a series of concerted initiatives to prepare the industry for the potential loss of trade concessions in the future. These efforts are also aimed at transforming Sri Lanka into a global apparel hub, increase the sector’s competitiveness and diversify its export markets. The foundation has already been laid in this regard. For instance, Sri Lanka has positioned itself as a leader in sustainable apparel manufacturing. Sri Lankan apparel producers have invested significantly in manufacturing facilities that incorporate the latest environmentally-friendly features – minimising wastage, energy, and emissions. The apparel sector has also made progress in further strengthening human resource practices. Through the ‘Garments without Guilt’ initiative, many Sri Lankan factories voluntarily submitted themselves to independent audits of working conditions. In December 2021, the apparel industry also signed a historic agreement with trade unions, paving the way for greater transparency in employee control over dispute resolution and grievance handling. In the long run, these initiatives can strengthen Sri Lanka’s apparel industry significantly and, by extension, the country’s export sector, reducing the need for trade concessions. However, if these concessions are removed now, the social and human costs are likely to be dire. Given the pandemic’s unprecedented impact, GSP+ to the EU is critical for Sri Lanka and its export sectors at present. (Felix A. Fernando is the CEO of Alpha Apparels Ltd. and Sirio Ltd., and a Group Director of Omega Line, which ranks among Sri Lanka’s five largest apparel exporters. He holds a MBA from the Post Graduate Institute of Management (USJ), in addition to being a Fellow member of the Chartered Institute of Management Accountants, U.K. He has received extensive Executive Education at Harvard, The Wharton School, National University of Singapore and AOTS, Japan. Fernando is also the Deputy Chairman of the Joint Apparel Association Forum Sri Lanka and a Past Chairman of the Sri Lanka Apparel Exporters’ Association.
Source: Island
China's commerce minister Wang Wentao and Ecuador's minister for production, foreign trade, investment and fisheries Julio Prado recently signed a memorandum of understanding (MoU) to start negotiations for a free trade agreement (FTA). In 2021, China-Ecuador bilateral trade totaled $10.95 billion, an increase of 44.5 per cent year on year. The two sides launched a feasibility study on the FTA in September last year and completed it in January, according to a Chinese news agency. China has been Ecuador's second-largest trading partner for two consecutive years. The signing of the FTA will help further tap the potential of bilateral trade and promote the sustained, stable and diversified development of bilateral trade, according to an official Chinese government statement.
Source: Fibre2 Fashion
The Peru apparel industry has backed moves by its left-wing government to impose temporary safeguard duties on clothing imports to protect the country's production of wool and alpaca fibre. The World Trade Organisation (WTO) has reported that Peru has launched an inquiry into what is considers a glut of imports that is undermining the commercial health of the Peru apparel and textile industry’s manufacturers. It comes after the country’s Commission on Dumping, Subsidies and the Elimination of Non-Tariff Trade Barriers of the National Institute for the Defence of Competition and the Protection of Intellectual Property (Indecopi) reported that clothing imports between 2016 and 2020 rose by 253.8% and they are still rising – in 2021 (January – June) they rose 8.9% year-on-year. As a result, between 2016 and 2020 clothing imports grew their share of the Peru apparel market by 13.4%, increasing it by another 2.9% year-on-year in January-June 2021. The report concludes that there is a reasonable indication of serious injury to the domestic apparel industry, including its internationally important alpaca segment. “Peru is a small market compared to China and some other Asian countries. Hence, a garment can enter Peru for much less than the value of an identical or similar product entering the United States, a market several hundred times larger than ours. Such a situation has promoted a disproportionate increase in imports from China and other Asian countries, causing severe damage to the domestic Peru apparel industry, which is why safeguards are necessary,” explained Martín Reaño, manager of Peru’s Textiles and Clothing Committee of the National Society of Industries. Indecopi highlighted China and Bangladesh suppliers as causing the most problems through increasing exports to Peru, with the objective of the safeguard duty being to give local ‘pymes’ (small-and-medium-sized enterprises) and mipymes (micro-enterprises) a fair chance to compete with clothing giants from Asia. The investigation is still open and affected parties can comment until 24 February. Nevertheless, at any time, Indecopi can recommend the application of provisional safeguard duties lasting 200 days. If that happens, a government commission comprising the economy and finance ministry (MEF), production ministry (PRODUCE), and the foreign trade and tourism ministry (MINCETUR) will examine whether to confirm the duties. They have “a relatively short period to decide whether the provisional measures are applied or not,” said Reaño. He doubted the move would be challenged at the WTO, claiming Peru has a tougher standard for imposing these tariffs than in global trade agreements. He added there was no threat to any free trade agreements that Peru has signed with its partners or the WTO. Peru signed a Free Trade Agreement (FTA) with the US in 2009 and with the European Union in 2012. The government of Peru, led by President Pedro Castillo, leader of Marxist party Free Peru, argues the country has maintained one of the lowest tariff and non-tariff restrictions for the import of clothing worldwide during the last five years, which has eased the increasing flow of garments from China and Bangladesh to the Peruvian market.
Source: Just-Style
