INTERNATIONAL
In the wage revision talks held on Wednesday between the eight trade unions and six textile associations, there has been some improvements and it looked optimistic that the wage agreement could be finalised during the next round of talks scheduled for April 6. Both the trade unions and textile associations eased their stance considerably on Wednesday to facilitate speedy signing of the new wage agreement. Trade union representatives who attended the closed door talks said they had now come down from the demand for 100 per cent hike in basic wages made in the earlier rounds of talks to 50 per cent. At the same time, textile associations too eased their positions a bit and agreed to increase dearness allowance, travel allowance, overtime allowance and compensation for workers who die in harness. However, the knitwear unit owners continued to maintain that they would give only 27 per cent increase in the basic wages over a period of four years. M. Chandran, state secretary of CITU, was optimistic that the stalemate would be over during the next round of talks on April 6 as positive signs were there all through the talks held on the day.
SOURCE: The Hindu
As India braces for talks on the 16-nation Regional Comprehensive Economic Partnership (RCEP) in April, the commerce department has asked its revenue counterpart in the finance ministry to estimate potential losses to the exchequer, should the country trim or scrap its customs duties on various products for complying with commitments to various nations under the trade negotiations. Sources told FE that the estimate of potential revenue losses was deemed necessary, as it would enable government officials to negotiate better with other countries, keeping in mind the country’s “tolerance level” for such losses and domestic realities. The exercise will be helpful for any other trade negotiations in future, as well. Such an estimate will also help negotiators gauge how good the other party’s counter-offer is against an Indian offer. For instance, India feels its offer to remove tariff barriers for Chinese goods at RCEP is much better than what China is willing to cede. Against India’s offer to remove 42.5% of tariff lines for goods imports from China, the giant neighbour has expressed its willingness to abolish only equivalent amount of tariff lines for India, despite maintaining a massive merchandise trade surplus with India (over $48 billion in 2014-15).
Sources said a key indicator of the attractiveness of a country’s offer will be the share of potential revenue losses in that country’s gross domestic product (GDP) due to concessions it’s willing to provide. Considered in this light, the Indian offer for China at RCEP will be way better than China’s offer for India, taking into account the fact that the Chinese economy is more than four times the size of India’s. The scrapping of tariff lines means import duties on specified items would be cut to zero over a mutually agreed-upon time frame. India’s customs duty collections are expected to touch `2,09,500 crore in 2015-16, compared with `1,88,016 crore a year before, representing 1.5% of its nominal GDP. At RCEP, Japan wants India to abolish 80% of tariff lines for imports of Japanese goods, as it seeks reciprocity in removing tariff barriers, while India is willing to end 65% tariff lines for Japan. India is learnt to have offered to abolish 80% of tariff lines for 10 Asean members, 65% of which will be scrapped once a deal is clinched and the rest will be cut over 10 years. Asean nations are expected to submit their offers by the end of this month. The next round of RCEP negotiations will take place in Perth, Australia from April 22. For Japan and South Korea, India is willing to abolish 65% of tariff lines, while it wants them to end 80% of their tariff lines for Indian goods. For Australia and New Zealand, India is offering to remove tariff lines to tune of 80% and 65%, respectively.
SOURCE: The Financial Express
The rupee continued to rule firm for the fifth day on Thursday to close at a fresh 3-month high of 66.26, rising 11 paise on persistent selling of U.S. dollars by banks and exporters in view of sustained foreign capital inflows. Weakness of dollar in the overseas market also boosted the rupee value against the dollar, a forex dealer said. Foreign funds (FPP and FIIs) continued their buying spree as they bought shares worth Rs 1,442.47 crore yesterday as per the provisional data of stock exchanges. The rupee resumed slightly higher at 66.35 as against on Wednesday’s closing level of 66.37 at the Interbank Foreign Exchange (Forex) market here today and hovered in a range of 66.17 and 66.45 per dollar before closing at a fresh 3-month high 66.27, showing a gain of 11 paise or 0.17 per cent. It has gained 45 paise or 0.67 per cent in 5 days. The rupee had last ended at 66.14 per dollar on January 1, 2016. Meanwhile, the dollar index was down by 0.28 per cent against a basket of six currencies in the late afternoon trade. Overseas, the U.S. dollar was trading lower against its major rivals in late Asian trade as dovish comments from Federal Reserve Chair Janet Yellen continued to resonate, dampening demand for the currency. The Indian benchmark Sensex ended marginally higher by 3.28 points or 0.01 per cent to 25,341.86.
SOURCE: The Hindu
The rupee was the worst performing currency among major Asian economies over 2015-16, while bonds did a smart recovery in the last two months of the year. The rupee closed at 66.25 a dollar, down 0.14 per cent in the year. All other major Asian currencies were gainers. The yen rose 7.09 per cent and the Indonesia rupiah by 4.15 per cent. The rupee was 62.50 a dollar at end-March 2015. The currency is expected to remain volatile in the new financial year and this could be bad news for the corporate sector, as nearly half of the top 500 listed companies have a negative sensitivity to rupee depreciation, says an India Ratings report. “External shocks translating into bouts of risk aversion which usually causes rupee depreciation and, particularly, increased volatility might impact the fragile recovery in FY17,” it said. "Corporates dependent on imports and foreign currency borrowings are likely to be affected by the continued volatility in the currency market.”
Rupee worst performer among Asian peers The 10-year bond yield closed the financial year at 7.465 per cent, having closed at 7.737 per cent a year before. The yields had touched almost eight per cent in May last year, on incessant supply of bonds from both central and state governments on a global risk aversion background. The spread between the repo rate and 10-year bond yields remained frequently above 100 basis points. This is unusual and indicates high stress. However, bonds rallied after the central government said it would keep the fiscal deficit at 3.5 per cent of gross domestic product for 2016-17. Subsequently, the Reserve Bank (RBI) clarified that bonds issued under the power discom revival package, UDAY, would be kept outside the market and be placed privately. However, the short-term rate remained elevated in the year as liquidity dried in the system. The liquidity deficit crossed Rs 2 lakh crore in March as the government did not prefer to spend its cash with the RBI. The liquidity crisis pushed up short-term bond yields, even as overnight call money rates revolved around the policy rate, as RBI infused sufficient short-term liquidity and purchased a little more than Rs 60,000 crore through open market bond purchases. The central bank also frequently tapped into secondary market bonds, through the anonymous bond trading platform. Still, rates in three-month commercial paper closed at 8.68 per cent at the end of the financial year, from about 8.2 per cent at the start. According to bond dealers, the new financial year will be good for bonds. The borrowing number remained relatively less at Rs 6 lakh crore at a time when inflation is expected to fall sharply, giving scope for more rate cuts to RBI. The central bank will hold its first bi-monthly monetary policy review of 2016-17 on Tuesday, where it is expected to cut rates by at least 25 basis points.
SOURCE: The Business Standard
Indicating an uptick in factory output, which has been in the red for three months, the eight core sector industries grew 5.7 per cent in February –– a 15-month high –– with a sharp rise in production of fertiliser, cement and refinery products. However, concerns over the Centre’s financial health remained, with its February-end fiscal deficit exceeding the Budgeted target for 2015-16. The eight core industries –– cement, coal, crude oil, natural gas, refinery products, fertilisers, steel and electricity –– account for nearly 38 per cent of the Index of Industrial Production.
Cumulative growth
On a cumulative basis, the eight industries expanded 2.3 per cent between April 2015 and February 2016, against 5 per cent in the same period a year ago, according to data released on Thursday. But the pace of growth in February still remained the highest since November 2015. In the month under review, fertiliser production grew 16.3 per cent, cement rose 13.5 per cent and refinery products 8.1 per cent. However, steel production dipped 0.5 per cent, while growth in crude oil and natural gas output was negligible at 0.8 per cent and 1.2 per cent, respectively.
Despite the robust performance, calls for a rate cut by the Reserve Bank of India at its first bi-monthly monetary policy for 2016-17 on April 5 remain. Analysts warned against reading too much in the data as core sector growth has been quite volatile. “A number of core sectors have been consistently performing poorly for several months, and there is little hope of a turnaround in their fortunes. However, it does raise hope that IIP data for February 2016 will be better,” said Sunil Sinha, Principal Economist, India Ratings.
Fiscal indicators
However, another consideration for the RBI remained under stress: the fiscal deficit shot up to Rs. 5,72,872 crore by February 29, or 107.1 per cent of the revised estimate (RE) of Rs. 5,35,090 crore. Finance Minister Arun Jaitley has stressed that the fiscal deficit target of 3.9 per cent will be met in 2015-16, and his officials have maintained that it is within reach. But spending outpaced receipts till February, according to data from the Controller General of Accounts. Similarly, the revenue deficit jumped to Rs. 3,90,810 crore in the first 11 months of the fiscal –– or 114.4 per cent of the RE. While total receipts grew to Rs. 9,83,001 crore, or 78.6 per cent of the full fiscal estimate, total expenditure was Rs. 15,55,873 crore, or 87.1 per cent of the RE.
SOURCE: The Hindu Business Line
The FICCI-Confederation of MSME has hailed the new Framework by Reserve Bank of India (RBI) for revival and rehabilitation of MSMEs. “FICCI-Confederation of MSME welcomes the announcement/notification by RBI as the formation of Special Mention Account and mandatory formation of a committee at each district for Stressed Micro, Small and Medium Enterprises by the banks would enable faster resolution of stress in an MSME account at the right time, thereby reducing NPAs in MSMEs,” Sanjay Bhatia, president, FICCI-CMSME and managing director, Hindustan Tins Works Ltd said in a press release. In May 2015, the Ministry of Micro, Small and Medium Enterprises had notified a 'Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises. RBI recently announced the new framework for Revival and Rehabilitation applicable to MSMEs having loan limits up to Rs.25 crore, including accounts under consortium or multiple banking arrangement (MBA). The framework as proposed by the MSME Ministry and in line with RBI guidelines will operationalize by all the banks not later than June 30, 2016.
MSMEs, including Khadi and Village/Rural Enterprises, play a significant role in the economic growth of the country owing to their contribution to production, exports and employment. The MSME sector has slowly come into the limelight, thanks to increased focus from the government, government institutions, corporate bodies and banks. Furthermore, policy based changes; investments into the sector; globalisation and India's robust economic growth have opened up several latent business opportunities for this sector. During the past decade this sector has recorded a higher growth rate in comparison to the overall industrial average, the release said. The FICCI-Confederation of MSME underlined the challenges that MSMEs face such as lack of easy and adequate availability of credit because mainstream banks and other financial institutions have typically view MSMEs as high-risk investments. It said the Government has tried to addresses some of these issues with the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The act also stipulates debt restructuring mechanism for units in MSME sector.
SOURCE: Fibre2fashion
Last year on this day, the government of India had released the new Foreign Trade Policy (FTP), 2015-20. It was, by no means, a Fools Day prank. It laid a foolproof plan to enhance India’s trade ecosystem and competitiveness. The FTP was released amidst falling exports and imports, and with the objective of arresting, and ultimately reversing this trend. In 2013-14, India’s total export was worth $314 billion and it declined to $310 billion in 2014-15. Similarly, in 2013-14, India’s total import was $450 billion and in 2014-15 it came down to $ 448 billion. In 2013-14, India’s trade deficit was 7.1 per cent of its gross domestic product. As a result of decline in both export and import, in 2014-15, it was reduced to 6.7 per cent of its GDP. Unfortunately, the declining trend has continued in 2015-16 as well, and at a higher pace. In first nine months of 2015-16, India’s exports have fallen to $196.60 billion and its import was $295.81 billion. Some might argue that this is on account of decline in global trade, and claim that everything is just fine. Nothing could be farther from the truth. According to the latest data released by the International Monetary Fund, the total volume of global trade has fallen by 0.5 per cent in the second half of 2015 and a similar trend is expected to prevail in 2016. For the last few years, the growth in global trade is less than that in global gross domestic product. Are we seeing the demise of trade-led growth? Most importantly, the proportionate decline in India’s trade is much more than the global decline. Export of goods such as petroleum products, pearls, precious and semi-precious stones, drug formulation, gems and jewellery, readymade garments, rice, iron and steel has come down both in value and volume terms. Similarly, there is a fall in the value of import of petroleum due to a fall in global prices of that commodity.
Input market reforms
This is not to suggest that policymakers are oblivious to India’s declining trade performance. Both, Prime Minister Modi and trade minister Nirmala Sitharaman visited Brussels to participate in the 13th EU-India summit. Finance Minister Jaitley is currently in Australia for bilateral talks, which include a bilateral trade treaty. These visits are a serious indicator of India’s keenness to enhance its trade and investment profile. However, such outward focused efforts are not enough. The FTP set out a multi-pronged approach to boost country’s trade ecosystem, which was not limited to outward measures, but laid equal emphasis on domestic reforms. It is time that the government deals with structural issues, such as lack of reforms in input markets like those in land, labour, capital, logistics, which are hindering our producers to produce goods at competitive rates. The FTP emphasised the need to build adequate export infrastructure. It recommended building of primary infrastructure in terms of better multi modal transportation for improved road connectivity to ports, rail heads, airports and inland waterways, faster throughput at ports and shorter dwell time, faster movement of rakes by railways and quicker air cargo movement with all the concomitant trade facilitation measures in place.
In addition, it recommends the creation of a supportive infrastructure for exports, including more laboratories for testing, more tool rooms and plant quarantine facilities, larger trade facilitation centres and land customs stations and enhanced cold storage facilities for pharmaceutical and perishable goods. The FTP acknowledges that the movement of goods within the country, from one territory to another, is constrained by the laws, practices, regulations and taxation regimes of various states. It appeals for concerted action from relevant departments at the central and State government levels. It laments the lack of inter-agency coordination and stakeholder participation in the administration of trade procedures and, as per our commitments under the WTO Trade Facilitation Agreement, recommends the creation of the National Committee for Trade Facilitation for this role.
Exchange rate management
One of the key stakeholders in the export ecosystem is the Reserve Bank of India (RBI). It appears that India’s exports are facing difficulties because of a relatively over-valued rupee as reflected in India’s real effective exchange rate. Our exports are becoming relatively dearer, while imports are getting relatively cheaper. The RBI should let rupee finds its bottom, and true value. In a recent talk, RBI Governor Raghuram Rajan quipped, “While the RBI would not claim to know precisely what the equilibrium level of the exchange rate is at any given point in time, we intervene to moderate adjustment whenever we believe the movement is extreme, driven by sentiment, and likely to be reversed. Our intent is to prevent overshooting and undue volatility, rather than to stand in the way of the needed adjustment.” While it seems to be driven by sound rationale, RBI needs to use its discretion, and think about adjusting the value of our currency with that of our competitors. This would inspire confidence amongst other stakeholders and facilitate aligning their strategy with that of the RBI.
Capacity building of the relevant stakeholders and institutions is of utmost importance in this regard, in order to fully realise the potential of various trade agreements and foreign trade policy measures. Given the fall in world commodity prices, if we do not consider our exchange rate adjustment now, we will miss an opportunity to boost our exports. This is particularly true when our exports are supply-driven and not necessarily dependent on their demand in other countries. Thus, there is a need to look within, focus on difficult input market reforms and introduce a more trade-focused, pragmatic approach in exchange rate management to ensure long-term gains for country’s trade competitiveness. Ignoring the warning signals on trade fronts and dismissing these suggestions would be akin to living in a fool’s paradise!
SOURCE: The Hindu Business Line
India and EU have failed to made the much-awaited announcement on resumption of long stalled negotiations for a free trade agreement as many bottlenecks still remain. During the 13th India-EU Summit, held after a gap of four years and attended by Prime Minister Narendra Modi and EU leaders, both the sides, however, welcomed the re-engagement of discussions for furthering the proposed pact. "The leaders welcomed that both sides have re-engaged in discussions with a view to considering how to further the EU-India Broad-based Trade and Investment Agreement (BTIA) negotiations," a joint statement said today. It was widely expected that India and the 28-nation European Union (EU) would announce resumption of the talks, which have been held up since May 2013 as both the sides are yet to bridge substantial gaps on crucial issues, including data security status for the IT sector.
Senior officials from both the sides met twice in last two months to resolve the contentious issues so that some announcement could be made at the summit. Meanwhile, Modi has invited Martin Schulz, President of the European Parliament, to visit India. Launched in June 2007, the negotiations for the proposed BTIA have witnessed many hurdles with both sides having major differences on crucial issues like intellectual property rights, duty cut in automobile and spirits, and liberal visa regime. The pact is aimed at reducing or significantly eliminating tariffs on goods, facilitate trade in services and boost investments between the two sides. The two-way commerce in goods between India and the EU stood at $98.5 billion in 2014-15. Meanwhile the two leaders reaffirmed their shared commitment to oppose protectionism and to work in favour of a fair, transparent and rules-based trade and investment environment.
SOURCE: The Economic Times
India and the European Union (EU) have endorsed the 'EU-India Agenda for Action 2020' as a common road map for the strategic partnership in the next five years, the European Commission (EC) said on Thursday. However, the EC remained muted on one of the major focus of the summit, negotiations on the Bilateral Trade and Investment Agreement (BTIA) - the official free trade pact which has been pending since 2007. "The leaders welcomed that both sides have re-engaged in discussions on how to further the EU-India broad-based BTIA negotiations," it said, without announcing a possible completion date for the talks. Prime Minister Narendra Modi, on a day-long trip to Brussels to attend the 13th India-EU Summit, met European Commission President Donald Tusk. The agenda will build on the joint action-plans of 2005 and 2008 and take into account cooperation in fields like climate change, trade and business, foreign policy, etc. The BTIA negotiations have remained deadlocked over growing differences regarding greater market access sought by both aides for merchandise exports. However, India's commerce ministry officials said the EU has consistently sought lower import duties on a range of commodities. This time, the EU is seeking the lowering of tariffs on automobiles and wine products. The new agenda pushes for a broad based approach to "resolve trade irritants in particular concerning goods, services and investments, and strengthen trade and investment relations".
On this note, issues related to facilitation of greater movement of professionals from one country to another, arising out of the Mode 4 provisions of the 1995 General Agreement on Trade in Services is another point of contention between the two sides. This also involves India's demands to be classified a data-safe country, which will help Indian information technology and outsourcing companies gain a foothold. Other than being India's largest trading partner and its biggest export destination, the 28-member bloc has also been New Delhi's 'strategic partner' since 2004. Although two-way commerce was $98.52 billion in 2014-15, the EU's share in India's total trade has progressively shrunk in recent years. Similarly, Indian exports to the bloc have shrunk from 21.84 per cent in 2004-05 to 16.04 per cent in 2014-15. Imports have witnessed a similar slide over the same period, going down from 17.30 per cent to 10.98 per cent. India has also signalled the establishing of a mechanism to facilitate investments of all member states of the 28-member bloc. The agenda also spoke about the "creation of favourable circumstances for investment". With an eye on addressing the import ban by the EU against more than 700 generic drugs clinically tested by Hyderabad-based GVK Biosciences, the agenda has also promised regular meetings of the EU-India Joint Working Group on pharmaceuticals, biotechnology and medical devices. The European Investment Bank (EIB) signed an agreement with India to release the first tranche of €200 million of its total €450 million loan towards the construction of the Lucknow Metro's first line. The bank, which had committed to support long-term investment in infrastructure in India, also announced that its regional office for South Asia will come up in New Delhi soon.
Before the summit, EU leaders had complained of the slow progress in India regarding the trial of two Italian marines accused of killing Indian fishermen in 2012. This matter, along with that of 'fourteen Estonian and six UK Guards sentenced to prison by an Indian court', was discussed, the EU said. The adoption of the 'Joint Declaration between the EU and India on a Clean Energy and Climate Partnership' also showed India's readiness to engage other countries as part of its climate change policy. The leaders from both sides endorsed the establishment of the Common Agenda on Migration and Mobility (CAMM), aimed at organising regular migration and prevention of irregular migration and human trafficking.
SOURCE: The Business Standard
The government must have in-depth negotiations with Australia before actually signing the Comprehensive Economic Cooperation Agreement (CECA) in a bid to ensure India's interests and greater access to markets, trade body CII has said. CII Director-General Chandrajit Banerjee, who is accompanying Finance Minister Arun Jaitley to Australia as part of the Confederation of Indian Industry delegation, also said yesterday in Sydney that there was massive trade potential between the two countries which needs to be tapped.
Commenting on the ongoing talks on the Free Trade Agreement (FTA) deal, Banerjee stressed that the government should have detailed talks before signing the deal which had already passed its set deadline of December last year. "Trade talks have been on and it is important for us toreally discuss these issues much more, before we pen down and sign down rather than signing an FTA and then lamenting that our interest areas were not taken into account," he said adding," India's interest needs to be taken into account". "We are a growing economy and an emerging economy. We have our own aspirations. We need to see that we also gain access to markets and its just not letting Indian markets for access which we are open to," Banerjee said. "We need to see that FTA we henceforth sign is actually resulting in a situation where India and Indian industry can have a much stronger position," Banerjee said. "There is huge potential between the two sides. But there is a huge trade deficit which means we are taking a lot from Australia rather than what we are able to send to Australia," he said. Yesterday, CII signed an MoU with the New South Wales Business Chamber and opened its new branch in Sydney. The branch would work in close partnership with the Australia-India Business Council and would work towards enhancing the trade relationship between the two sides. "In terms of investments, there is a lot of potential for Australia to step up their investments in India," he said adding "Our purpose would be to see how we can gain market access into Australia. Its not a large market but there are certain niches we can look at". He said the opening up of the Sydney branch would also help in looking at attracting certain strategic investments from Australia into India like agro processing or in the area of smart cities or logistics and manufacturing sectors. "We are going to work in close partnership with Australia- India Business Council (AIBC)," Banerjee said.
Echoing similar sentiments, CEO of NIIT Technologies Arvind Thakur said "Its is very important that India learns from the experience of other countries and their driving policies". "Australia has already been successful in implementing GST and India is going to implement that," Thakur said adding that the CII-NSW Business Chamber MoU can help Indian industry to learn from experiences of Australia especially in the area of public private partnerships.
SOURCE: The Economic Times
BIMSTEC or Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, was formed nearly two decades ago, in 1997. In 1998, the regional group proposed entering a free trade agreement (FTA) with India and Thailand, two main partners, pushing for ‘Look East’ and ‘Look West’ programmes, respectively. Since then, the trade paradigm in the region had undergone substantial change. India has entered FTAs with Thailand as well as the ASEAN. It has preferential trade agreements with prominent BIMSTEC members like Sri Lanka and Bangladesh. But, the BIMSTEC free trade agreement remained a pipe dream. “Most large groups like ASEAN or EU started discussing trade much later. But we were at it from the word go,” the first Secretary General Sumith Nakandala told BusinessLine.
Business left out
So, what is preventing the FTA? Nakandala says that all the country leaders backed the proposal in the last BIMSTEC summit, in Nepal, in 2014. The former Sri Lankan diplomat took charge of the Dhaka-headquartered body in August 2014. Till then, it had an office-less existence, with envoys of the member nations – Bangladesh, India, Sri Lanka, Thailand, Myanmar, Bhutan and Nepal — meeting at the Thai Foreign Affairs Ministry in Bangkok, once a month. But, FTA is hardly the only hurdle before BIMSTEC to emerge as a trade block. In 2011, the group promoted BIMSTEC Chamber of Commerce under the National Chamber of Commerce of Sri Lanka to connect with trade and industry. Till date, the chamber has failed to organise a single meeting with trade and industry in the region. “I am now pushing Assocham and the National Chamber of Commerce of Sri Lanka to convene the first business meet this year. I am keen that it is organised in Kolkata so that we can connect with business in the North-East India,” he said. Nakandala is unequivocal that bringing trade and industry a part of the regional grouping initiative is one of his top priorities. “How can you tackle trade issues without the involvement of business?” he asks.
Setting priorities
So, was BIMSTEC merely a talking shop so far? Many successful groups like ASEAN had prolonged phases of fruitless discussions, the secretary general points out. The problem is BIMSTEC set too many areas of cooperation including as confusing issues as poverty alleviation. “The last summit in Nepal spoke for pruning down priorities to five. These are cooperation in trade and industry, transport and connectivity, counter-terrorism, energy trade and climate change. An ADB study identified 65 infrastructure projects to improve connectivity in the region. A study will be launched soon to find scope for electricity grid connectivity projects. Meanwhile, after nearly six years of preparation, BIMSTEC Convention on Legal Assistance on Criminal Matters is now ready to be signed in the next summit due to be held in Nepal this year.
Bare infrastructure
But, as a Dhaka-based body why BIMSTEC is not working on say, the much needed economic cooperation between political adversaries of Bangladesh and Myanmar? Theoretically, better economic engagement between the two, can open alternate land routes from India to Thiland through Bangladesh and Myanmar — bypassing the North-East. “Honestly, we didn’t think about it. I spent majority of my one-and-a-half year stay in office with only one director, deputed by Bangladesh,” he says. With Bhutan coming to aid the number has now gone upto two. India promised to fill the vacancy soon. Delhi he says is now supporting the initiative in a big way.
SOURCE: The Hindu Business Line
With the demand for synthetic fibres which includes nylon, acrylic and polyester continuing to increase in Zimbabwean market, cotton farmers are left with no choice but to brace for lower producer prices for the crop in the coming marketing season compared to the previous year. Synthetic fibres are the result of extensive research by scientists to improve on naturally occurring animal and plant fibres. In general, synthetic fibres are created by extruding fibre forming materials through spinnerets into air and water, forming a thread. Zimbabwe Farmers' Union executive director Paul Zakariya said that the little cotton that will be produced this season was likely to be met with poor producer prices as the world cotton price continues to tumble. Last year, the producer price for cotton in Zimbabwe was $0, 30. China which is both a world renowned producer as well as consumer of cotton is turning more and more to the use of synthetic fibres, he said.
Noting the economic gains by way of that substitution, cotton prices will for the foreseeable future continue to slide. Cotton consumption in China, the world's largest consumer, has declined continuously since 2009 /10 when it reached just over 10 million tonnes. In 2015 /16, cotton consumption in China is forecast at 7,1 million tonnes, down 5 percent from last season. India's cotton consumption is expected to decline by 2 percent to 5,3 million tonnes. According to the International Cotton Advisory Council, the uptake of cotton by the world's largest consumer, China would fall 5 percent. Moreover, low prices for polyester, the main competing fibre, has hurt world cotton consumption in 2015 /16.
SOURCE: Yarns&Fibers
Vietnam’s rapidly expanding textile industry has every chance of becoming the world’s leading textile producer within the foreseeable future, according to an industry insider. According to Le Tien Truong, general director of the Vietnam National Textile and Garment Group, the Vietnamese textile industry currently ranks fourth globally in terms of size, behind textile giants China, India, and Bangladesh. Truong said, however, that Vietnam is the only country that consistently maintains a two-digit growth rate in the sector, proving its competitiveness in the global textile market and reaffirming its potential to become the world’s textile production hub. In 2015, Vietnam’s textile industry exported US$27.3 billion worth of garments and employed 2.5 million workers, constituting a fifth of all new jobs created in the country. Any country that is to become the world’s textile production center, according to Truong, must be able to supply 10 percent or more of the global demand, secure sustainable development for 20 to 30 years, possess an established supply chain with 50 to 60 percent of the materials domestically sourced, have a relatively large domestic market, and have access to seaport networks convenient for the shipment of products in the shortest possible time, among others.
With reference to those qualities, Truong assessed that Vietnam possesses all of the requisite characteristics to become the center of international textile production. Elaborating on his assertion, Truong said that it is within the industry’s capability to employ five million more workers in the next 10 to 15 years. Additionally, the domestic supply chain already accounts for 35 percent of the materials for the textile industry and can reach 50 percent in the next five years, allowing Vietnam to position itself as a global leader in textile production. Vietnam’s large and growing population of over 90 million and the country’s location at the intersection of the world’s busiest shipping lanes are favorable for the transport of goods by sea, he added. However, Truong suggested that in order to realize its vision, Vietnam should increase labor productivity and domestic supply ability to 60 percent by 2020, improve the quality of human resources, and invest or call for investment to establish 10 to 15 material production and design centers to supply garment companies throughout the country. In addition, Truong addressed the urgency of an administrative reform to minimize the time of processing export-import, tax, and customs procedures.
SOURCE: The Tuoitrenews
Nordic pulp makers are developing clean ways to turn birch and pine trees into clothes or sofa covers, Reuters has reported. The move is hoped to revive their industry and meet demand from both fashion and furniture firms for alternative textiles to cotton. There has been no Nordic production of viscose, the main textile fibre from timber, since the last manufacturer stopped nearly a decade ago, while the 2011 spike in cotton prices contributed to increased global demand for viscose as well as pulp-derived lyocell. Global output of pulp for textiles is expected to grow 30% by 2020 from 4.4 million tonnes in 2015, according to Oliver Lansdell at forest products industry consultancy Hawkins Wright. Three Nordic mills export dissolving pulp, the product that can be turned into textile fibre. The industry would like to see textile fibre factories set up at home that will meet environmental rules and appeal to local brands like IKEA and H&M.
Anticipating the rise in demand, in 2011 Sodra, the Swedish association of 50 000 small forest owners, converted a paper pulp machine so they could make textile pulp. Stora Enso did the same in 2012. ‘We expect cotton output to peak while textile demand will keep growing,’ says Dag Benestad, head of dissolving pulp production at Sodra. The next step would be to set up factories at the mills, creating new jobs and saving money on energy and the cost of transporting for export. Sodra, Domsjo and Stora Enso are among those intensifying research into greener fibre production processes. Domsjo and Sodra are part of a large project looking at how best to integrate a textile factory with a mill so that the chemicals are recycled. Recycling or replacing chemicals is hailed as ‘essential’ to restarting production of textile fibre from timber in a region where the pulp industry's image suffered because of heavy pollution.
SOURCE: The Recycling International
Pakistan Textile Exporters Association (PTEA) has demanded immediate payment of outstanding refunds without any discrimination of Rs.5 million or above to get significant export growth. Huge stuck up liquidity is the major hurdle to export promotion and adversely hitting the economy, said Asghar Ali, Chairman and Arif Mahmood Qureshi, Vice Chairman PTEA. Expressing grave concern over delay of the payment of refunds, they said that massive working capital of textile exporters around 30% is still blocked in sales tax, custom duty drawback and income tax refund regime which is the major cause of export decline. PTEA Chairman Asghar Ali said that it is the right time that the government should revive 'No tax-No refund' regime for the export-oriented sectors as the cost of production has increased, resulting in decline in textile exports. He appreciated the Government's intentions to resolve the refund issue by giving assurance of payment of refunds up to Rs 5 million but most of the exporters fall in the category of refunds more than Rs 5 million/month. He urged the government to pay all outstanding refunds without any limit. He termed value added textile sector as the backbone of the economy with great potential for earning foreign exchange but around 54 percent of nation's exports and 42 percent employment are heading towards disaster because of declining trend in the exports. Concerning over continuous export decline, he said that competing countries are rapidly multiplying their exports just because of the edge they have on the cost of doing business and other incentives offered by their governments.
Pragmatic policies in consultation with stakeholders need to be formulated to reduce the cost of business by fixing rates of inputs in line with competing countries in the global market to create a level playing field, he suggested. The PTEA demanded the government to bail out textile industry and exports from financial crisis by removing hurdles and provision of necessary incentives to increase the textile exports of the country. They demanded immediate release of blocked funds in refund regime without any discrimination enabling them to retain their hard earned export markets at this time of tough competition in international markets.
SOURCE: The Business Recorder
According to a report by The New York Times, the Organization for Economic Cooperation and Development (OECD) said on Wednesday a "sluggish" global growth could present challenges for governments to pay pensions and bondholders. The OECD is now lowering its worldwide growth forecast to 3 percent this year from a prior estimate of 3.3 percent. Naturally, a weaker growth forecast implies governments collect less revenue and may find it difficult to fulfill their financial obligations. The Associated Press noted the OECD's chief economist, Catherine Mann, told reporters many countries may need to tap their respective central banks to stimulate growth. The economist also suggested that government spending and tax policies should be implemented to encourage expansion and economic overhauls. She expanded that low interest rates have failed to encourage business to invest. Finally, Mann demonstrated confidence in the revised forecast and won't have to revise its estimates lower in the next forecast which is scheduled for June.
SOURCE: The Benzinga
