The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 06 APRIL, 2022

NATIONAL

INTERNATIONAL

 

Industry leaders urge Textile Minister to come up with ECLGS-like scheme for MSMEs in knitwear sector

The industry leaders from Textile sector have urged the Union Textile Minister Piyush Goyal to launch ECLGS-like scheme for MSMEs to help units in knitwear sector to overcome liquidity crisis. A delegation comprising of chiefs of Tirupur Exporters’ Association, CITI, TEXPROCIL, AEPC and SIMA met Textile Minister Goyal in an attempt to bring the government’s attention to the struggles being faced by the Indian textile and apparel industry due to rapidly increasing raw material prices. They have also requested the government to remove the 11 per cent import duty on cotton. The Minister has assured the leaders to address the issue as they put forward their request in a form of Memorandum of Understanding (MoU). An immediate government intervention has been called by the industry leaders to protect the textile industry and also save jobs of lakhs of employees engaged with the industry. The delegation is of the view that the fortune of the textile industry is highly linked with fortune of cotton farmers and unfortunately, the game played by the cotton traders is disturbing the entire textile industry, accessories, dyes and chemical suppliers, exports and employment including banks. The garment-exporting units have to fulfil the committed export orders for the same price of garments, as buyers are not inclining to increase the prices. Moreover, the buyers have the option to source garments from our competing countries like Bangladesh, Vietnam, Cambodia, Turkey as they enjoy tariff-free advantages in the EU market. Owing to the impact of Russia-Ukraine war the knitwear-exporting units are now facing the placement of lower quantity orders from buyers compared to the corresponding period of last year.

Source: Fibre2 Fashion

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India now sets sights on free trade agreement with Gulf countries

Engagements to begin next month; UAE template to make it easier, say experts After inking trade pacts with the UAE and Australia, India is set to begin deeper engagements with the Gulf Cooperation Council (GCC) countries as early as May-June to finalise a free trade agreement (FTA) with the group of nations, people aware of the matter said. GCC is a regional, intergovernmental political economic union comprising six countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). An official said that as of now tariff and trade data has been exchanged with GCC nations to explore the possibility of a trade pact.

Source: Business Standard

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Shri Piyush Goyal begins 3-day visit to Australia, days after inking IndiaAustralia Economic Cooperation and Trade Agreement (ECTA)

Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Shri Piyush Goyal left New Delhi on a 3- day visit to Australia today. His visit comes days after India and Australia signed the Economic Cooperation and Trade Agreement (IndAus ECTA) on Saturday, 2nd April. During the visit, I will take the ECTA to people, Shri Goyal said, adding that interactions had been planned with Business leaders, Indian students, diaspora, etc. During the visit Shri Goyal will hold wide-ranging discussions with his Australian counterpart, Mr. Dan Tehan MP, Minister for Trade, Tourism and Investment, on carrying forward the ECTA. ECTA is the first trade agreement of India with a developed country after more than a decade and provides for an institutional mechanism to improve trade between the two countries. Shri Goyal will also hold talks with Mr. Tony Abbott, Australian PM’s Special Trade Envoy this evening. Shri Goyal will also be meeting Mr. Jason Wood, MP, Assistant Minister for Customs, Community Safety and Multicultural Affairs, Mr. Alex Hawke, Minister for Immigration and Multicultural Affairs, Mr. Roger Cook, MLA, Deputy Premier of Western Australia and Minister for State Development, Jobs and Trade, Tourism, Commerce and Science and Ms. Madeline King, Shadow Trade Minister. During his packed schedule, Shri Goyal will visit the University of Melbourne and Australia India Institute tomorrow. He will address a Public conversation with Minister Dan Tehan and Mr Allan Myers, Chancellor, University of Melbourne, at the Melbourne Law School in The University of Melbourne. Shri Goyal will also visit the landmark Melbourne Cricket Ground and address the Australia-India Chamber of Commerce and Austrade, along with Minister Dan Tehan, besides interacting with the Indian media. He will later visit the Shiva Vishnu Temple in Melbourne and attend a Community event with the Indian Diaspora. On Thursday, 7th April, Shri Goyal and Minister Dan Tehan will address and interact with students at the University of New South Wales in Sydney and pay tributes at the statue of Mahatma Gandhi in the University campus. Shri Goyal will later address the Emerging Diaspora Business Leaders Reception hosted by India-Australia Business and Community Awards (IABCA). Later in the evening, Shri Goyal, accompanied by Minister Dan Tehan and Minister Alex Hawke, Minister for Immigration and Multicultural Affairs, will attend a Community event at the Swaminarayan Temple in Sydney. Before leaving Sydney on Friday, 8th April, Shri Goyal will also meet Mr. Alan Joyce, CEO & MD, Qantas Airways. Shri Goyal will meet with the Australian Agricultural Producers and hold talks with Deputy Premier Roger Cook and Ms. Madeline King, Shadow Trade Minister in Perth. He will visit the Western Australia Cricket Ground (WACA) in Perth and attend a Tourism event in conjunction with Tourism Western Australia, besides holding a Press Interaction with the Indian Media Delegation. On Friday evening, Shri Goyal will address the Community Centre Indian Society of Western Australia (ISWA). Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner. The ECTA is expected to almost double the bilateral trade from $ 27.5 bn (2021) to about $ 45 to $ 50 Billion in next 5 years. ECTA is expected to create new employment opportunities, raise living standards and enhance the overall welfare of the peoples of both the countries. Additional employment generation is expected to be 10 lakhs within the next 5 years.

Source: PIB

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Free trade agreement: India, EU to resume trade talks soon

The secretary’s visit follows India’s surge in interest in “balanced” trade pacts. It signed an FTA with the UAE in February, New Delhi’s first such deal with any economy in a decade, and another “substantial trade deal” with Australia last week. India is also negotiating with the UK for an FTA. India and the EU are set to soon expedite formal negotiations for a free trade agreement (FTA), with commerce secretary BVR Subrahmanyam visiting Brussels this week to set the stage for the talks, a senior government official told FE. The secretary’s visit follows India’s surge in interest in “balanced” trade pacts. It signed an FTA with the UAE in February, New Delhi’s first such deal with any economy in a decade, and another “substantial trade deal” with Australia last week. India is also negotiating with the UK for an FTA. It has also lined up talks for a flurry of such agreements with Canada, Israel and GCC members. After 16 rounds of talks between 2007 and 2013, formal negotiations with the EU for the FTA were stuck over stark differences, as Brussels insisted that India scrap or slash hefty import duties on sensitive products such as automobiles, alcoholic beverages and cheese, among others. New Delhi’s demand included greater access to the EU market for its skilled professionals, which the bloc was reluctant to accede to. Last year, both the sides announced the resumption of formal negotiations after eight years. As both the sides prepare to resume negotiations, they could focus on “low-hanging fruit” first, before switching to contentious matters that had hampered talks earlier, according to sources. Government officials have also been studying the EU’s recent investment agreement with China and its FTA with Vietnam for meaningful negotiations. Preparatory work for the next round of negotiations is in full swing. The EU, including the UK, was India’s largest destination (as a bloc) in the pre-pandemic year of FY20, with a 17% share in the country’s overall exports. Importantly, the UK accounted for 16% of India’s $53.7-billion exports to the EU in FY20.

Source: Financial Express

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Train carrying yarn from Vapi reaches Panipat

The train was flagged off on April 2 and took 38 hours to finish its journey at Deewana terminal in Panipat, they said. The first of 22 trains to transport yarn consignment from Vapi railway station in Valsad to textile and carpet manufacturing hub of Panipat in Haryana reached the destination on Monday, railway authorities said. The train was flagged off on April 2 and took 38 hours to finish its journey at Deewana terminal in Panipat, they said. Yarn manufacturing units in Vapi and the union territory of Silvassa were sending raw materials via road that would take up to 72 hours. Along with saving time, it is estimated that transportation through trains will reduce the logistics cost by more than by 10 per cent. Valsad railway station area manager Anu Tyagi said, “Hoping for constant support from the textile industry, the railway authorities are planning to make 22 trips from Vapi to Panipat in a month.”

Source: Indian Express

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GST Council may consider strict anti-evasion measures

While a much-awaited restructuring of the goods & services tax (GST) slabs to raise the revenue-neutral rate (RNR), from a little over 11% now to 15.5% could be delayed, the GST Council will likely consider enforcing a ministerial panel’s recommendations on data analytics to tighten compliance to augment revenues. “The recommendations are about checking leakages, While a much-awaited restructuring of the goods & services tax (GST) slabs to raise the revenue-neutral rate (RNR), from a little over 11% now to 15.5% could be delayed, the GST Council will likely consider enforcing a ministerial panel’s recommendations on data analytics to tighten compliance to augment revenues. “The recommendations are about checking leakages at various points, from point of production till consumption,” a member of the panel told FE. The group of ministers (GoM) for system reforms led by Maharashtra deputy chief minister Ajit Pawar will submit its report to the Council ahead of a meeting of the body in end-April or early May, a senior official said. The GoM suggested analysis of e-way data, income tax and National Payments Corporation of India (NPCI) of taxpayers, etc, the GoM member said. “While several data analytics exercises are being undertaken by GSTN to detect cases of GST evasion and input tax credit misuse, it is expected that in future , we will see the comparative studies between the GSTN data for a specific taxpayer with the data in other databases such as income tax, forex earnings, etc. Businesses need to be prepared for such investigations by having adequate process and tax controls that highlight any data mismatches across databases in advance,“ said MS Mani, partner, Deloitte India. Another group of ministers headed by Karnataka chief minister Basavaraj Bommai is yet to have formal deliberations on GST slabs recast. The panel was constituted in September 2021.Recently, Chhattisgarh chief minister Bhupesh Baghel wrote a letter to his counterparts in 17 other states, including five states ruled by the BJP, seeking their support to convince the Centre to extend the GST compensation mechanism beyond June 2022. Many state including Tamil Nadu, Kerala and Chhattisgarh have asked the Centre should extend the mechanism for another two years. “Taking into account the current economic situation, Covid situation and the world economic situation, it is the responsibility of the Centre to look into the matter very seriously,” Kerala finance minister KN Balagopal told FE recently, adding that the Centre has curtailed taxation and financial powers after GST was rolled out in 2017. Before GST’s July 2017 lauch, an expert committee had determined the revenue-neutral rate for the new tax at 15-15.5%. While it was doubtful if the GST slabs corresponded to the RNR, economic slowdown and Covid-19 have forced the GST Council to cut rates further on a large number of mass-consumption items, further undermining GST’s revenue productivity. In the last two years, the Centre had to resort to aggregate borrowings of `2.69 trillion in order to make good the shortfall in the GST compensation pool. With the hardening of commodity prices after the Ukraine-Russia conflict, India’s wholesale price inflation (WPI) reversed it trajectory in February 2022 and increased to 13.11%, after coming in at 12.96% in January. Retail inflation (CPI) in February also rose marginally to 6.07% from 6.01% in the previous month, hovering over the upper bound of the RBI’s inflation target range of 2-6%. Under the GST compensation mechanism, which is constitutionally-guaranteed, state governments are assured 14% annual revenue growth for the first five years after the tax’s July 2017 launch.Finance minister Nirmala Sitharaman told Parliament recently that the statutory requirement was to compensate the states for GST shortfall only for the initial five years after the GST’s launch. She also pointed out that just for servicing the loan by the Centre to compensate the states for 2020-21 and 2021-22, the designated cesses will need to be in place till the end of FY26.

Source: Financial Express

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Win-win trade deal: India’s interim deal with Australia helps its economic outreach to the Indo-Pacific

Australia has much to offer a rising power like India, notably, access to raw materials needed for its growing economy. Negotiations entail a process of give and take for greater access to each other’s markets. Prime minister Narendra Modi hailed the interim trade deal—or economic cooperation and trade agreement (ECTA)—between India and Australia as a “watershed moment” as it increases the resilience of supply chains and contributes to the stability of the IndoPacific region. India’s outreach to this region, however, is still evolving on the trade and investments front. Not so long ago, it turned away from the Regional Comprehensive Economic Partnership, comprising the Association of Southeast Asian Nations together with China, Japan, South Korea, Australia and New Zealand. India also is reviewing its free trade agreements with ASEAN, Japan and South Korea. For such reasons, the lower level of ambition for the deal with Australia is perhaps entirely in order. Such agreements are for trade in a limited set of goods and services. They could be a precursor for a full-fledged FTA but only much later, if at all. Such deals typically entail tariff reductions on selected items while leaving out more sensitive areas for later discussions. From India’s point of view, one such area was dairy items that have been kept out of the deal. New Delhi has also offered only limited access in agriculture. Australia, in turn, has secured preferential access to the Indian market for raw materials such as coal, aluminium and premium wines. “This agreement opens a big door into the world’s fastestgrowing major economy for Australian farmers, manufacturers, producers and so many more,” stated Australia’s PM Scott Morrison. The ECTA’s most important takeaway is that Indian yoga instructors, chefs, students and STEM (science, technology, engineering and mathematics) graduates will have easier access to Australia. The latter has provided an annual quota for such professionals to enter as contractual service providers entitled to stay for a period up to four years. Australia has pledged greater access in about 135 sub-sectors and the most favoured nation (MFN) status in 120 sub-sectors. India has offered Australia market access in around 103 sub-sectors and MFN status in 31 sub-sectors from the 11 broad service sectors like business services, communication services, construction and related engineering services. India’s IT firms also stand to benefit as Australia has agreed to amend its domestic laws to stop taxing their offshore income, resulting in savings of $200 million every year. The upshot is that given India’s comparative advantages in services, gains from services trade offsets what it loses from deficits in goods trade. Extension of this agreement to services, especially mode 4 movement of skilled professionals, could well be a template for our forthcoming trade talks with the UK and the EU, for instance. In sharp contrast, the limited progress in services negotiations over the movement of natural persons has been a major source of frustration for India, especially in its FTA with ASEAN. Considering the stakes involved in the Indo-Pacific region, there is a warrant for a higher level of ambition to ensure that its early harvest agreement with Australia graduates into a full-fledged FTA. Australia has much to offer a rising power like India, notably, access to raw materials needed for its growing economy. Negotiations entail a process of give and take for greater access to each other’s markets. If India seeks greater market access, it must also allow partners to sell more of their goods and services. Trade thus can be a win-win situation for both partners. Greater comfort levels in implementing the ECTA can indeed provide the basis for more ambition in attempting a higher order full-fledged FTA with Australia. This would be an important step for India to recalibrate its economic outreach to the bustling Indo-Pacific region.

Source: Financial Express

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Future tense for exporters as Sri Lankan crisis deepens; $1.5 billion credit line used up

India’s lines of credit comprised $1 billion for imports of food, medicine and essential items and another $500 million for petroleum products. After the Russia-Ukraine conflict, a worsening foreign exchange crisis in Sri Lanka has stoked fresh worries for Indian exporters, who are in talks with the government to ensure their payments are not stuck. Importantly, almost the entire lines of credit of $1.5 billion that India has extended to Sri Lanka since January to help it tide over its worst financial crisis since 1948 has been used up by the neighbour to pay for its imports, a senior government official told FE. This means fresh supplies to the island nation carry heightened risks of payment defaults by Lankan importers. India’s lines of credit comprised $1 billion for imports of food, medicine and essential items and another $500 million for petroleum products. On top of these, India’s assistance also included a $400-million RBI currency swap and a deferral of a $500- million loan repayment by Sri Lanka. To beat such a crisis, the options that are being suggested by Indian exporters include a temporary mechanism under which Lankan importers may be allowed to pay up in their local currency. This can then be used by Indian importers to buy merchandise from the island nation, two trade sources said. The other option for India is to either increase the current line of (dollar) credit or extend a fresh line of credit in rupee. However, both the options involve some difficult choices for India. Sri Lanka is seeking another line of credit of $1.5 billion from India, though India is yet to decide on the fresh request. However, the problem with allowing payment in Sri Lankan rupee is that India has had a decent trade surplus with the neighbouring nation in recent years, which only widened in FY22. India shipped out goods worth $5.7 billion to Sri Lanka last fiscal, up 63% from a year before. But New Delhi’s imports from Colombo may have hit only about $1 billion in FY22, leading to its bilateral trade surplus of about $4.7 billion. Similarly, the issue with the second option is that the government has to take a call on whether to extend more credit to a country that doesn’t clearly seem to be in control of its finances anytime soon. Given that Sri Lanka’s sources of earnings are limited (the nation relies heavily on tourism for revenues), extending fresh lines of credit, either in the dollar or in the rupee, would be a tough decision to make, said one of the sources quoted above. Of course, Lankan importers haven’t yet defaulted on payments, though in some cases, payments are delayed. But large-scale defaults by Lankan importers can’t be ruled out if the forex crisis there isn’t stemmed swiftly, Indian exporters fear. According to Raja M Shanmugham, managing director of garment firm Warshaw International and president of the Tirupur Exporters’ Association, Sri Lankan importers have the ability to pay in their domestic currency. They have no problem if they are allowed, under a mechanism, to pay up in their currency. The Sri Lankan economy — which depends heavily on tourism and exports of commercial crops like tea — was battered by the pandemic, as travel restrictions hit tourism. Its GDP contracted by a record 3.6% in 2020 and its foreign exchange reserves crashed by 70% in the last two years to about $2.31 billion by February, leading to a sharp depreciation of its currency. Meanwhile, its debt has swelled to $51 billion. The island nation is staring at one crisis after another, as it has to repay debt of about $4 billion in 2022, including a $1-billion international sovereign bond that matures in July. Its new finance minister Ali Sabry has resigned less than 24 hours after assuming office and the Rajapaksa government has now lost its majority in parliament. Colombo is heavily dependent on New Delhi for the supply of a broad range of goods. These include mineral fuel, pharmaceuticals, steel, textiles (mainly fabric and yarn), food products and automobiles.

Source: Financial Express

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Tamil Nadu sets up GST advisory council on fiscal powers of state, Centre

The Tamil Nadu government has set up an advisory council on the fiscal powers of the state and the Centre with special reference to the goods and services tax (GST) The Tamil Nadu government has set up an advisory council on the fiscal powers of the state and the Centre with special reference to the goods and services tax (GST), a move that has triggered the fear of fissures between the Centre and states if others follow suit. Many of its terms of reference may undermine the GST Council, say experts. For instance, the council, chaired by senior advocate Arvind P Datar, has also been tasked to identify the problems with the institutional mechanisms that support GST, which include the independence of decision makers and constitution of the GST Tribunal. The body would also identify difficulties with respect to GST rates applied to various commodities, according to a government order released recently. The council has been asked to suggest strategies to improve GST collections and other taxes of the state. It would also study the best practices adopted in other states with respect to GST, including the use of technology and artificial intelligence to identify tax evasion. One of the terms of reference says the body would study the levy of cesses and surcharges by the Centre and its impact on the state's finances. An expert said the fact that one state is constituting a committee on various aspects of GST means that fissures between the state and the Centre in GST are now increasing. “GST reforms are done by the GST Council and groups of ministers appointed. Here we are seeing a state appointing a team to get into what should be done,” he said. Another expert said that if other states follow suit, it is going to become difficult for the GST Council to decide on the next stage of reforms. “During the VAT regime, this used to happen as VAT laws were different in each state. They were pulling in different directions. After GST came, there was some unanimity since the Council has both the Centre and the states. Now, if each state starts making its own team and its own recommendations, it is going to become very difficult for GST from a policy point of view,” he said. M S Mani, partner at Deloitte, said it was necessary to evaluate the changes required for the next half of the decade. “The involvement of external experts having domain expertise in GST and key industry stakeholders would enrich the recommendations for the next stage of GST reforms,” he said. Other members of the advisory council include Suresh Raman, vice-president and region head, TCS-services sector. The decisions in the GST Council are usually taken unanimously, barring a few instances. However, there have been instances of tussle between the Centre and the states, particularly relating to borrowing from the markets for meeting losses incurred during the Covid-19 pandemic. The Centre is yet to release Rs 53,489 crore to the states for 2021-22, according to a written reply by minister of state for finance Pankaj Chaudhary in the Lok Sabha on Monday. So far as cesses and surcharges are concerned, states have been accusing the Centre of increasingly resorting to imposing them to deprive the states of their genuine transfers. The Centre is bound to transfer 41 per cent of central taxes to the states, but cesses and surcharges are not part of this devolution. The Centre transferred 29.35 per cent of total tax receipts, including cesses and surcharges, during 2020-21. This was projected to increase slightly to 29.60 per cent during 2021-22 in the Revised Estimates and 29.61 per cent during 2022-23 in the Budget Estimates of the latest Budget.

Source: Business Standard

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Birla plans 100,000 tons of circular fibre by 2024

Circulose dissolving pulp from textile waste will be a component of Liva Reviva for fashion brands. Mumbai-headquartered Birla Cellulose, already one of the world’s largest man-made cellulosic fibre producers, has announced a commercial collaboration with Renewcell, the Swedish textile-to-textile recycling innovator. The intention is to supply up to an annual 30,000 tons of Renewcell’s Circulose in Birla’s Liva Reviva fibres to global fashion brands and the textile industry in the coming years. “Renewcell and Birla Cellulose have collaborated almost since the founding of our company,” said Patrik Lundström, CEO of Renewcell. “We have benefited from the company’s technical expertise and customer feedback throughout the development and ongoing commercialisation of Circulose. With recent trial successes, growing fashion brand demand and the upcoming commissioning of our new commercial-scale recycling plant in Sundsvall, Sweden, the time is now right to proceed to large-scale commercial collaboration. Together with Birla Cellulose we will work to make fashion circular and reduce its negative impact on climate and the environment.” “Birla Cellulose is excited to extend its partnership with Renewcell for expansion of its Liva Reviva circular fibre,” said H K Agrawal, managing director of Birla owner Grasim Industries. “We are looking forward to collaborate with innovators with an aim to scale up circular fibres production to 100,000 tons per annum by 2024. We expect this partnership with Renewcell to play an important role in providing Liva Reviva to our customers.”

Source: Innovation in Textiles

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Textile industry welcomes signing of economic agreement with Australia

The signing of trade agreements with the UAE and Australia will give a boost to Indian textile industry, according to Southern India Mills’ Association chairman Ravi Sam. Welcoming the signing of Indo-UAE and Indo-Australia trade agreements, he said the Indian textile industry would stand to gain, especially for import of high quality cotton produced by Australia and export of high value-added textiles and clothing products to Australia (seven to 10 times value addition) and thereby create new jobs. The government has permitted three lakh bales of duty-free import of cotton having staple length 28 mm and above from Australia under the India-Australia Economic Cooperation and Trade Agreement (ECTA). This will help the cotton knitwear clusters such as Tiruppur to boost its exports and also bring some stability in the cotton price that has been increasing steeply since the beginning of the cotton season, he said in a press release. In another press release, A Sakthivel, president of Federation of Indian Export Organisations, said a business delegation consisting members of various Export Promotion Councils would hold business meetings in Australia as a sequel to ECTA. All sectors of exports are likely to be benefitted, particularly apparel and textiles, leather, engineering, gems and jewellery. New opportunities will be available in Government procurements and digital economy for Indian entrepreneurs and exporters, he said.

Source: The Hindu

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In Kenya, Textiles get a Second Life

Every year, $460 billion worth of clothes that can still be worn are discarded. Not only is that a waste of material, experts say it’s also needlessly contributing to the climate crisis. The textile sector accounts for up to 8 per cent of global greenhouse gas emissions. To help extend the life of clothes, the United Nations Environment Programme (UNEP) leads the Innovative Business Practices and Economic Models in the Textile Value Chain (InTex). The three-year project is designed to improve resource efficiency and promote circularity in textiles. One of the programme’s members is Africa Collect Textiles, a Kenyan start-up that upcycles textile waste into rugs, toys, yarn and other products that can be re-introduced to the market. Through InTex and the Beat Pollution campaign, UNEP is developing innovative economic models that reduce the impact of pollution and improve human and environmental health.

Source: African Business

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RCEP is transforming trade in Asia Pacific and creating advantages for companies

The new and impactful Regional Comprehensive Economic Partnership will create new trade opportunities among Asian countries and accelerate the region’s economic recovery. The world’s largest free trade agreement (FTA), the Regional Comprehensive Economic Partnership (RCEP), went into effect January 1; and, as far as being a transformative agreement, the RCEP is a very big deal. The RCEP will create new trade opportunities among Asian countries and accelerate the region’s economic recovery, says Zoe Martinez, a Thomson Reuters global trade leader who is focused on Asia & emerging markets. For example, the agreement will eliminate tariffs on more than 90% of goods over the next 10 to 15 years and introduce rules on investment and intellectual property to promote free trade. The agreement covers about 30% of the world’s population, the global gross domestic product (GDP), and worldwide trade. It’s larger than the United States-Mexico-Canada Agreement, the European Economic Area, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (with which the RCEP overlaps.) Japan is likely to be a big winner, because the RCEP will give the country a free trade agreement with China and South Korea for the first time. Japanese companies that produce electrical good and electronic products, machinery, automobile components, and some agricultural and food products will enjoy significant tariff concessions when they export to China, Martinez says. The Japanese government expects the accord to increase its own GDP by 2.7% and create approximately 570,000 jobs. The RCEP also will strengthen China’s economic leadership in the region; and its exports to Japan — including machinery, electronic equipment, textiles, and clothing — will benefit from low or no tariffs. Countries participating in this the RCEP’s new free trade zone are China, Japan, South Korea, Australia, New Zealand, and the 10 nations in the Association of Southeast Asian Nations — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. Also, Hong Kong has applied for membership, and there is an effort underway to persuade India to join. Bolstering the region “It’s a trade deal that sets up trade in Asia, for Asia,” says Deborah Elms, executive director of the Asian Trade Centre in Singapore. “We’ve had a lot of trade in Asia, of course… [but] we don’t have as much final production that ends up in Asia,” Elms explains. “One of the reasons we don’t have that is because trade in the region, especially for finished goods, is too difficult, too expensive — tariffs in place, non-tariff challenges, etc. — so you have less trade in the region than you should have.” She admits that RCEP is not a perfect agreement, but adds that it makes it more likely that firms will create Asia-based supply chains for Asian trade. “As the agreement comes into force and becomes more meaningful for firms, then it will accelerate over time,” Elms says. Many companies have implemented a China-plus-one supply chain policy, meaning they are manufacturing in China and other countries to create stronger, more flexible supply chains, says Thomson Reuters’ Martinez, adding that if their “plus-one” countries are RCEP members, they also can benefit from the FTA. In addition to delivering significant duty savings, Martinez notes, the RCEP will standardize trade in a region previously reliant on complex and varied FTAs, which can be hard to navigate, require significant resources to manage, and feature different rules of origin and certification procedures. The RCEP, on the other hand, replaces multiple FTAs with a single agreement and provides common rules of origin across all member states, a single Certificate of Origin, faster clearance of goods through Customs, and product-specific rules that will be synchronized with the World Customs Organization Harmonized System (HS). Overcoming obstacles While the RCEP offers significant benefits, Martinez notes, there also are disadvantages: • Some RCEP duty rates will reduce gradually over time — perhaps as long as 20 years — so existing FTAs may have better rates in the short term. • Not all RCEP countries are ready for self-certification; it may take several years to fully implement. • Additional requirements for rules of origin exist in some HS codes. • China and South Korea are especially assertive about initiating audits, so it’s important for companies to be consistently compliant. This requires careful maintenance of FTA documentation as evidence for audit — particularly where self-certification is used. Unfortunately, the Customs tariff and FTA-related data that is needed to analyze supply chain scenarios and find the best options often is not housed in companies’ enterprise resource planning software and is managed manually in spreadsheets. With an automated supply chain software platform, on the other hand, corporate trade specialists can evaluate the RCEP’s savings potential, ensure they are compliant with the latest rules and regulations everywhere they operate, and make well-informed operational decisions. To get started, Martinez recommends a four-step process: 0. For duty optimization, map your supply chain to understand your trading scenario. Where do you currently manufacture? Where do you ship to? What are the products? What is their HS classification? 1. To assess which FTA will deliver the maximum benefits most efficiently, determine which FTAs are available, the savings each provides, and whether you can optimize their use. 2. Next, confirm which of your sourced raw materials and manufactured processes qualify for FTAs. This entails establishing a process to manage FTAs, connect with suppliers for FTA status and Certificates of Origin, verify that your products satisfy the rules of origin, and consider automation to maximize benefits across all FTAs. 3. To optimize landed costs, deploy an effective duty-optimization strategy that capitalizes on FTA benefits and adapts as they change. An automated process could enable strategic sourcing, eliminate repetitive manual work, minimize compliance risk, maximize FTA use, and increase cost competitiveness. Without automation, the process would be incredibly manual, requiring more time and being prone to errors.

Source: Thomson Reuters

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‘Bangladesh’s future shouldn’t be measured through Sri Lanka’s situation’

Planning Minister MA Mannan says Planning Minister MA Mannan today said that measuring and assessing the economic future of Bangladesh through Sri Lanka's ongoing financial crisis cannot be acceptable. He said this in response to a question at a press conference following the Ecnec meeting today (April 5, 2022). "The socioeconomics realities of the two countries are different. They will evaluate theirs, we will manage our economy carefully. We are doing what is needed for Bangladesh," the minister said. "However, we are looking at diverse opinions carefully," he added.

Source: The Daily Star

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Crown Princess of Denmark to address at Global Fashion Summit

Mary, the crown princess of Denmark, will present a welcome address at the Global Fashion Summit: Copenhagen Edition, which is scheduled to take place on June 7-8, 2022, in Denmark. The address by the princess, who is also the patron of Global Fashion Agenda and Global Fashion Summit, will explore the summit’s theme, ‘Alliances For a New Era’. The princess has been patron of the summit since 2009 and her patronage demonstrates continued support for promoting a sustainable and responsible fashion and textile industry. The princess’s engagement in sustainability, biodiversity and nature conservation is manifested in other ways including her work as president of WWF Denmark. The princess is also a passionate advocate for health, gender equality and the empowerment of women and girls, the organiser said in a press release. The theme – 'Alliances for a New Era' - will underly all elements of the Summit programme. In keeping with the theme, two alliances have already been developed ahead of the summit. Global Fashion Agenda’s recent partnerships with UN Climate Change secretariat (UNFCCC) and Financial Times Live will both work to elevate awareness about the urgent environmental and social issues in the fashion industry and mobilise leaders across the world to drive impact.

Source: Fibre2 Fashion

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