Fresh approvals given to Birla Fashion & Retail, RSWM, Pan Healthcare The Textile Ministry has approved the applications of three additional companies under the production-linked incentive (PLI) scheme for textiles, which includes Birla Fashion and Retail Ltd and RSWM Ltd of the Bhilwara Group, taking up the total number of selected applicants to 64. “In the approved 64 applications so far, the proposed total investment is ₹19,798 crore and projected turnover of ₹1,93,926 crore with a proposed employment of 2,45,362,” according to a Textile Ministry note. Textile Secretary UP Singh had pointed out that while 61 of the 67 applications for textiles PLI scheme, for man-mad fibre (MMF) apparel, MMF fabric and technical textiles, had been approved during the initial announcement, the remaining were put on hold as there were some issues to be addressed. He said that they would be re-considered.
Additional applications
“The selection committee met again on April 27 and approved the three additional applications,” a person tracking the matter said. Of the three fresh approvals, one application from RSWM Ltd, one of the largest yarn manufacturing companies in India, was under part 1 of the scheme. The minimum investment requirement under the first part is ₹300 crore with minimum turnover required to be achieved for getting incentive at ₹600 crore. The other two approvals, one from Birla Fashion and Retail Ltd and the other from Pan Healthcare Pvt Ltd, are under part two, with minimum investment of ₹100 crore and minimum turnover required to be achieved for incentive is ₹200 crore. This has taken up the total applications approved under part one to 14 and under part two to 60. Other companies that are investing under part one of the scheme include Trident, Shahi Exports, Kimberly Clark India Private Limited (subject to formation of a new company for investment and production under the Scheme as per existing guidelines) and Madura Industrial Textiles Ltd. Some of the other companies investing under part two of the scheme include Monte Carlo Fashions Ltd, Pearl Global Industries, Sangam (India), Toray International, Texport Industries, Kanodia Global and Lotus Hometextiles.
Second Edition soon
The Centre may next come up with a second edition of the PLI scheme, dedicated to apparels and garments, with a lower investment criteria, to ensure that the entire ₹10,683 crore of incentives allocated under the scheme gets fully utilised and relatively smaller players can also benefit. The Textile Ministry is projected to utilise a little more than ₹6,600 crore for the current investors under the scheme and has enough funds to invite a second round of applicants.
Source: The Hindu
The official said the FAQs would provide answers to questions including on benefits of the pact for the domestic industry; the tariff concessions offered by India and the UAE to each other in goods; important categories of products in the exclusion list; export opportunities for India; and definition of 'originating products' under the agreement. The commerce ministry will soon come out with detailed FAQs (frequently asked questions) on the recently implemented free trade agreement between India and the UAE to help the domestic industry understand benefits of the pact in a simple manner, an official said. The India-UAE Comprehensive Economic Partnership Agreement (CEPA), which was signed on February 18, has come into force from May 1. The official said the FAQs would provide answers to questions including on benefits of the pact for the domestic industry; the tariff concessions offered by India and the UAE to each other in goods; important categories of products in the exclusion list; export opportunities for India; and definition of 'originating products' under the agreement. Answers to these questions would help the industry easily understand the benefits for their concerned sectors. Under the agreement, India will benefit from the preferential market access provided by the UAE on over 97 per cent of its tariff lines (or products) which account for 99 per cent of Indian exports to the UAE in value terms. Labour-intensive sectors which will get major boost include gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, pharmaceuticals, medical devices, and automobiles. Further, Indian service providers will have enhanced access to around 111 sub-sectors from the 11 broad service sectors. The pact is expected to increase the total value of bilateral trade in goods to over USD 100 billion and trade in services to over USD 15 billion within five years.
Source: Economic Times
The free trade agreement between India and the UAE has come into effect on Sunday, under which domestic exporters in various sectors like textiles, agriculture, dry fruits, gems and jewellery will get duty-free access to the UAE market. In a symbolic gesture for operationalising the agreement, Commerce Secretary BVR Subrahmanyam handed over Certificates of Origin to three exporters from the gems and jewellery sector here. These consignments to Dubai will not attract any customs duty under the pact, which is officially termed as Comprehensive Economic Partnership Agreement (CEPA). The Central Board of Indirect Taxes and Customs (CBIC) and the Directorate General of Foreign Trade (DGFT) has issued relevant notifications for the operationalisation of the agreement from May 1. "Today, CEPA between India and the UAE is coming into force. Today, we are sending the first consignment from India to UAE, which will benefit from this agreement," Subrahmanyam said here. The UAE is the second or third largest trading partner of India and that country is a gateway to the middle east, North Africa, Central Asia and sub-Saharan Africa, he noted. The trade pact will help in taking the two-way trade to $100 billion in five years from the existing $60 billion. "$100 billion is just a starter. As we go along, it will become $200 billion and then $500 billion in the years to come," the secretary said, adding 99 per cent of "our exports will go to zero duty in UAE". The gems and jewellery sector contributes a substantial portion of India's exports to the UAE and is expected to benefit significantly from the tariff concessions obtained for Indian products under this pact. Overall, India will benefit from preferential market access provided by the UAE on over 97 per cent of its tariff lines (or goods), which account for 99 per cent of Indian exports to the UAE in value terms – particularly from labour-intensive sectors such as textiles, leather, footwear, sports goods, plastics, furniture, and engineering products. Underscoring the need for Indian products to be competitive in the international market, the secretary said that there was a need to build and augment domestic capacities. He also informed that India is negotiating trade agreements at a very fast pace with complementary economies, including the UK, Canada and the EU. Exports of goods and services account for about 22-23 per cent of India's GDP, Subrahmanyam noted. "Our vision is that we should take India to a point where 25-30 per cent of our GDP is (from) exports," he added. He asserted that the Department of Commerce has also been strengthening itself to be future-ready and meet the challenges of tomorrow with a focus on trade promotion. "We will recast the department. You will change in the next few monthsWe will be setting up a huge trade promotion wing," the secretary said, adding the focus would also be there on data, data analytics and market intelligence. About trade pacts, he said there are twoway deals and both sides should feel that they have got something. The UK, Canada and the EU are all developed economies and they have huge potential for the kind of stuff that "we make" like apparel, entire textiles, leather, chemicals, gems and jewellery, the secretary noted. Further, he said that the ministry is analysing a lot of trade pacts and is trying to correct them. "We are planning to summarise, simplify the agreement (with UAE for the industry) and put them in easy bundles so that everybody can know where do I have the benefit if I go through this FTA. We will do that before the end of May," he added.
Source: Onmanorama
Confidence among India’s small businesses remains high with an overwhelming majority of the SME executives expecting improvement in the second quarter of 2022 on most of the parameters including sales, capacity utilisation and hiring, according to an industry survey report released on Tuesday. As per ASSOCHAM-Dun & Bradstreet Small Business Confidence Index (SBCI), small businesses expect a strong revival in export demands. The index, which measures the level of optimism of small and medium businesses on key business parameters such as sales, employment, prices, inventory and investment, stood at 87 in the second quarter of 2022. An index value above 50 signals an improvement or increase in the forthcoming quarter compared to the same quarter in the previous year. All indicators suggest a likely expansion in economic growth during Q2 2022. “As is clear from the latest IMF World Economic Outlook, the Indian economy is projected to be the fastest-growing amongst the leading economies of the world. Our survey amongst the SMEs’ executives clearly points towards significant contributions from the small businesses” said ASSOCHAM Secretary General Deepak Sood. “An important highlight of our survey is that the small businesses have gathered enough confidence to add to their workforce,” he said. One of the primary findings of the ASSOCHAM-D&B SBCI survey is that export demand is projected to increase. The percentage of the SMEs expecting an increase in their net sales and new export orders stood at 77 and 86, respectively, suggesting export-led demand growth in Q2 2022. On the other hand, 75 per cent of SMEs expect an increase in their domestic orders, the survey report said. The high level of optimism on export orders could be a result of the Comprehensive Economic Partnership Agreement that India signed with the United Arab Emirates and the Economic Cooperation and Trade Agreement with Australia, as well as the prospects of similar agreements with the UK and Canada in 2022 and 2023, said Avinash Gupta, Managing Director, Dun & Bradstreet India. These agreements are expected to boost India’s export of agricultural products, footwear, gem & jewellery, leather, and textiles. Supply chain disruptions caused by the Russia-Ukraine crisis has improved India’s export prospects of iron ore, iron & steel products, and wheat, he said. In addition, businesses are increasingly looking for alternate suppliers to de-risk their operations since the outbreak of COVID-19. Cost competitiveness makes India an attractive destination for sourcing. These factors will lend to India’s export momentum in Q2 2022, Gupta added. On improved prospects for sales, businesses see an increase in their average capacity utilisation rate to 63 per cent in Q2 2022, up from 57 per cent in Q1 2022. An overwhelming 77 per cent of SMEs expect an increase in their new fixed capital investment, which is indicative of optimism for future demand. As many as 76 per cent of SMEs expect an increase in their workforce, even as they have to deal with the price pressure. 80 per cent of the SMEs expect raw material prices to increase, whereas 75 per cent see an upward revision in their selling prices.
Source: The Print
FTAs have not served the Indian economy and built capacities as expected. Thus, the challenge for India remains to maintain a balance between global economic integration and enhance the capacity of local markets to be able to serve as a global exporter. The ongoing COVID-19 pandemic has devastating health and economic consequences, with unprecedented disruption to people's lives, the global economy and world trade. The impact of the pandemic was opposite to the norms that drive Free Trade Agreement. On the one hand, FTA works on the principles of open and integrated economies and the other hand, the pandemic has influenced nations to close their boundaries strictly. Despite this, with the changing global landscape as a ramification of the ongoing pandemic, FTA remains a vital tool to facilitate and revamp global trade. This presents an opportunity for India to make the Indian economy export-oriented through the active bilateral and multilateral FTAs and RTAs. Recently, the Government of India has signed the Comprehensive Economic Partnership Agreement (CEPA) with UAE and AustraliaIndia Economic Cooperation and Trade Agreement aiming to give a push to bilateral trade and increase exports in the coming years. Moreover, India has shown enthusiasm and actively negotiating FTA deals with countries such as Canada, Israel, the United Kingdom and European Union. FTAs are generally agreements that often include clauses on trade facilitation and rule-making in investment, intellectual property, government procurement, technical standards and sanitary and phytosanitary issues and provide a possibility for countries to enhance trade and exports, access to new markets, trade risk diversification, enhancing innovation and competition, better integration of markets and facilitating the transfer of skills and technology. However, the feasibility of the FTAs for India’s bilateral trade and exports still remains uncertain. India has seen some notable positives from the FTAs in the recent past as data shows a significant increase in the exports to some of the countries. According to data provided by the Directorate General of Commercial Intelligence and Statistics, India’s merchandise exports to countries/regions with which India shares trade agreements such as FTAs have registered a growth of 20.75% in the last five years. Additionally, India’s export to ASEAN has witnessed an increase from $25.13 billion in 2015-16 to $31.49 billion in 2020-21. The same trend follows with other countries/regions as well, whereas India’s export to SAFTA countries has increased from $18.60 billion in 2015-16 to $22.08 billion in 2020-21 and export to South Korea has increased from $3.52 in 2015-16 to $4.68 billion in 2020-21. More importantly, data provided by the Department for Promotion of Industry and Internal Trade suggest that cumulative investment received from the countries India shares FTAs in the last five years is to the tune of $89.46 billion. One of the areas of concern for India remains the negative balance of trade with countries such as ASEAN and Japan despite the increase in exports. India has accounted for a trade deficit of $15.95 billion in 2020-21 with ASEAN countries. At the same time, the trade deficit with Japan remained $6.49 billion in 20-21. In contrast, India has achieved a rise in exports to the USA and China despite not having any FTAs with both countries. The increase in export is part of India’s increasing focus on making an export-driven economy as India achieved the highest ever exports of 37 billion US dollars in December 2021, which is 37% higher than December 2020. More importantly, India saw a slight improvement in the trade deficit with China from $52.67 billion in 2015-16 to $44.02 billion in 2020-21, despite not having any FTA with China. Thus, the data reflects that even though FTAs/RTAs give better access to new markets and facilitate exports, there is an urgent need of addressing the key issues such as reducing the trade deficit to make these FTAs/RTAs more effective. issues were flagged during India’s negotiations and then finally opting out of Regional Comprehensive Economic Partnership (RCEP). One of the major concerns highlighted by the Government of India is the impact of FTAs on local supply chains. Moreover, as data suggests, FTAs have not served the Indian economy and built capacities as expected. Thus, the challenge for India remains to maintain a balance between global economic integration and enhance the capacity of local markets to be able to serve as a global exporter. Furthermore, through FTAs with countries such as Australia and UAE, India aims to improve the balance of trade between the countries. Hence, significant steps have been taken by the Government of India to tame the shortcoming that India has faced regarding FTAs in the past. Nevertheless, as data indicates, FTAs are no panacea to all ills to economies and trade. Thus, by bringing notable changes to overcome the limitations of FTAs and by making them adaptable to an economy like India, these agreements can become a robust solution to the economic challenges that India and the world are facing.
Source: Financial Express
The ministry attributed the robust mop-up to its tightened compliance measures and a crackdown on GST evaders and fake bills. The record goods and service tax (GST) collections in April were less due to increased consumption and more due to inflation and rising imports, said a report by Ambit Capital on Monday. “The jump in GST collections should not be confused with commensurate rise in consumption as consumption in real terms is just 2 percent above pre-pandemic levels,” said the report, authored by Ambit’s research analysts Sumit Shekhar and Eashaan Nair. “Our analysis shows that the higher GST collections have been driven by high inflation which has pushed nominal GDP growth to an 11-year high, tightening of compliance by government which has led to lower tax evasion, surge in imports, and uptick in high-ticket consumption post pandemic, even as mass consumption has suffered,” the report stated. On Sunday, the Finance Ministry said that GST collection touched a record high of Rs 1.68 trillion in April, surpassing the Rs 1.5-trillion mark for the first time since the introduction of the tax regime in 2017. The mop-up was Rs 26,000 crore higher than the previous record of Rs 1.42 trillion in March, which indicated an improved economic activity. The ministry attributed the robust mop-up to its tightened compliance measures and a crackdown on GST evaders and fake bills. In its report, Ambit said that one of the key reason for record collections was the surge in imports, which rose 54 percent year-on-year in FY22 driven by higher commodity prices, and which made integrated GST on imports the largest contributor of GST growth last year. On domestic inflation, the report said that high retail and wholesale prices also pushed GST collections up. “Data suggests that nominal GDP growth and indirect tax collection have a very strong correlation. Therefore, surge in prices has been the single most important factor for higher GST collections,” it said.
Source: Business Standard
Thanks to the soaring prices of essential commodities and other industrial services and materials, the goods and services tax (GST) mop up in Gujarat touched a record high level of Rs 11,264 crore in April this year. The state’s GST collection went up 17% as compared to Rs 9,632 crore in the corresponding month of 2021, according to data released by the Union finance ministry. With this, Gujarat recorded the third highest GST mop-up pan India lagging Maharashtra (Rs 27,495 crore) and Karnataka (Rs 11,820 crore). According to state government officials, the state’s GST mop-up increased due to increase in prices of raw materials coupled with a good demand. “Inflation definitely has a role to play with consumer price inflation touching 6. 07% in February 2022. Moreover, in industrial sectors also raw material prices are high due to which the tax realisation is more. However, while industries are facing cost pressures, the overall demand has also improved to a great extent due to the ongoing festive season with Ramzan, Eid as well as Akshaya Tritiya festivals be- ing just around the corner. All these factors h ad a combined effect on GST mop-up in Gujarat,” said Milind Torwane, commissioner, state commercial tax department. Cost pressure is felt across industrial all sectors and even that for essential commodities. “Due to rise in fuel prices, rates of vegetables, essentials and other FMCG goods have increased with transportation charges going up. At the same time, industrial sectors be it textiles, chemicals or real-estate, were already reeling under price pressures. Both these factors have a huge cascading effect on the tax mopup,” said the head of an industry body. Wholesale distributors of consumer products and transporters suggested that all FMCG manufacturers including FMCG food products makers have raised prices in the range of 5-12% which also has an impact on higher tax realization.
Source: Times of India
Those accused of cheating Ahmedabad textile traders will be charged under the provisions of the PASA (Prevention of Anti-Social Activities) Act and the PMLA (Prevention of Money Laundering Act). The information was given on Monday by the officers of the special investigation team (SIT) probing the cases of fraud. Seven teams of city police will travel to West Bengal, Tamil Nadu, Karnataka, Maharashtra, Delhi, Rajasthan, Punjab, and Haryana to investigate 508 applications filed by the victims. The losses incurred by the victims amount to Rs 72 crore. Cheating cases affecting the textile business in the city are increasing and members of textiles traders’ associations along with SIT personnel visit various states to recover money of Ahmedabad-based traders. Since its formation in October 2020, the SIT has received 1,296 applications and five FIRs have been registered against the fraudsters. Traders have recovered Rs 8.08 crore with the help of the SIT, said a police officer. Gautam Parmar, the additional commissioner of police, Sector-2 of Ahmedabad, said: “We have formed seven teams to resolve the issues of textiles traders expeditiously.” He added: “Each team will have a sub-inspector and 10 other policemen. Teams will go to separate states and issue notices.” He went on to say: “If the money is not recovered after that, we will initiate legal proceedings.” Parmar said that if an accused faces two cases of cheating, the provisions of the PASA Act will be invoked against them. “If a defaulter has used an Ahmedabad trader’s money to buy property, we will act under the PMLA and report the matter to the Enforcement Directorate,” he said. A SIT team visited New Cloth Market on Monday and held a meeting with traders. Ahmedabad is the biggest cotton textile hub and traders supply fabrics across the country,” said Gaurang Bhagat, the president of Maskati Kapad Market Mahajan. “In this business, frauds are increasing and many traders do not get the money after supplying fabrics to customers. On our request, the state government formed an SIT.” He added: “We hope to recover the money fast because the SIT may use PASA Act provisions against the fraudsters.” The mahajan’s secretary, Naresh Sharma, said: “We appeal to traders to do business with genuine buyers and check the background of buyers.” He added: “The associations of other states also help us recover money from fraudsters.”
Source: Times of India
TRS working president and textiles minister KT Rama Rao on Sunday shot off a letter to BJP Telangana president Bandi Sanjay, slamming the Narendra Modi government at the Centre of pushing weavers and textiles sector into a crisis due to its inefficient policies. KTR said if either Bandi Sanjay or BJP has any commitment or affection for the weavers’ community, he or the saffron party must persuade the Centre to remove GST on textiles. In the letter to Sanjay, KTR said for the first time after Independence, the Modi government has imposed GST on textiles pushing the sector into a crisis. The Telangana government has been making representations urging the Centre to remove GST on textiles to provide much-needed support to the weavers’ community, but the Centre has not responded positively, he stated. The continuous discrimination against Telangana by the Centre and its refusal to support the state government for upliftment of weavers’ community is pushing the textiles sector into further crisis. The textiles sector is the second largest employer in the country,” KTR stated. “Even agitations, shutdowns and protests held by workers and weavers have failed to impress upon the Centre to reduce the tax rate on the sector, leave alone removing textiles from the GST regime. If you or BJP have any concern and affection left for weavers, you must persuade the Centre and get GST removed on textiles,” KTR stated in the letter. The textiles minister also charged the Centre of having removed all insurance schemes provided to weavers by the previous governments. “It is the Telangana government which is not only providing insurance coverage, but also supporting the weavers by extending a scheme Nethanna ku Cheyutha, providing subsidised yarn and other raw materials under Chenetha Mithra too,” he added. The Centre has not even responded to the state’s request for establishment of a mega powerloom cluster, a national textile research institute and an Indian Institute of Handloom Technology, he said.
Source: Times of India
While cotton prices are hovering around Rs1 lakh per candy (356kg), yarn rate revised on Monday with a ₹40 increase per kilogram has come as a blow to the garment industry. The yarn price hike is due to the limited cotton stock in the market, industry sources said. On Monday, 40s count yarn was sold at ₹434/kg, compared to ₹237 last May. Garment industry hangs by a thread as yarn price surges Though the Union government removed the import duty on cotton through a notification issued on April 13, mills in the region, which have booked cotton outside India, are awaiting the goods to be shipped. “The shipment process will take at least three months. So, the mills that are placing cotton orders now, will get the shipment delivered only after a few months,” said R K Nachimuthu, managing director of Murugan Textiles in Palladam. Until the order arrives, mill managements are forced to enforce certain strategies, considering the minimal cotton availability. by slicing production, minimising speed, peak-hour spindle stoppage and providing holiday to workers, Nachimuthu said. The yarn price hike reflects the demand and supply of cotton, said C Dhandapani, president of Tirupur Hosiery Yarn Merchants Association. “Revised rates announced on Monday noted a hike of ₹40 on all counts. Because of this condition, products like dhotis, lungis and hosiery may turn expensive. At the end of the day, the common man will suffer.” However, Raja M Shanmugham, president of Tiruppur Exporters’ Association (TEA), said he is clueless about how the rates are continuously hiked, despite there being no major change in production quantum. “There was not much difference in the quantum of cotton production compared to two years ago, which was 3.40 lakh bales annually. The logic behind this price hike needs to be analysed. Garment industry representatives are planning a meeting on Tuesday to analyse the situation, Shanmugham added. G Venkatesan, managing director of Soundar Textiles, said there is only a ‘hand-to-mouth’ amount of cotton stock in mills that will last only for a few weeks. “We are keeping our fingers crossed to see the cotton price crashing, as it happened in 2010. The per candy of cotton touched ₹60,000 within five months in 2010. But the price crashed to ₹35,000 after 35 days. Knitwear exporters will be more affected as they must stick to the price they quoted during the initial process, despite the increase in yarn rates.
Source: Times of India
The growth of the export industry has been phenomenal this year. For the first time, India is likely to clock out the current fiscal with $410 billion worth of exports, as announced by the Commerce and Industry Minister, Piyush Goyal. The seeming possibility of achieving this can be attributed to many factors, the foremost being financial incentives to the export industry. These incentives have been in the form of export subsidies, duty exemption, duty remissions, low-cost. Loans, and many such financial guarantees. Such incentives given by the Government have encouraged manufacturers to export their units/machines globally. In the recent past, the Indian Government has been encouraging exports by announcing policies and incentives that are in line with “Make in India” (aimed that transforming India into a manufacturing major) and “Atmanirbhar Bharat” (aimed at promoting self-sufficiency) programmes. These programmes have also empowered local industries and communities. Mainly because of the pandemic, there has been a massive rise in demand from the manufacturing industry, focusing on local suppliers to source materials instead of importing them. Global manufacturing companies such as Biesse India have been sourcing 64% of their raw materials/components and in turn, developing their businesses. Local suppliers identified the demand from MNCs (Multi-National Companies) and Indian companies. By recognising the market through their customers and partners, the suppliers raised their benchmarks in technology, process, and practices to their international counterparts by maintaining the quality of the product. Result? It consecutively helped boost local industries to expand their business. Such expansions also lead to an increased demand for adequate resources and the hiring of the right talent from a vast pool. Giving a chance to local communities to come forward and apply for a relevant job basis their skills and learning eventually puts the power of spending in human hands. Such scaling and diversification enable companies to innovate frequently. During the first phase of the lockdown, the majority of the sectors were not functioning although when the restrictions eased down, the same sectors saw a tremendous surge in demand which eventually supported the revival. It is safe to say that the impact has been evident to the point where today, the supply is less than the demand. When it comes to the woodworking sector, there has been a rising demand for woodworking machinery, which is largely driven by growth in Real Estate, Home & Office Furniture and Travel & Tourism. In the real estate sector, all the projects that were held up have now resumed their work and are in the process of completion. Another interesting observation has been the home furnishing segment, which has given companies a new area to explore and manufacture relevant products. With many still opting for work-fromhome, this has opened a whole new vertical for the furniture industry. People are now keen to upgrade their homes for a comfortable WFH setup. Also, rapidly increasing urbanization, a large share of the younger population and rising aspirations of middle-class society has contributed to a vibrant home furnishing market in India. The home furnishing segment has grown multi-fold as people with 15-20-year-old homes are renovating with a modern look that is serving the home-office segment. The Indian furniture market is now more customer-friendly and moving as per their preference and supplying readymade, branded furniture with low maintenance, quickly installable and customisable options. With the rapidly growing and transforming the retail sector, it is expected that large retailers will continue to expand their presence, leading to consolidation in furniture retailing in urban markets. The Indian furniture manufacturing sector mainly meets domestic demand, yet India’s imports are growing at a rapid pace as the demand is far more than the local supply. Modernization of Wood Working sector with high productivity advanced machinery & technology is bound to facilitate the muchneeded growth of this sector. The wooden working segment has also shown high employment intensity which stands at 3.59%, second only to textiles. Considering the rapidly increasing demand for furniture and the high employment generation promise that it 5/2/22, 7:29 AM Manufacturing exports gaining from India’s localisation push https://timesofindia.indiatimes.com/blogs/voices/manufacturing-exports-gainingfrom-indias-localisation-push/ 5/8 holds, is a key potential segment to be holds, is a key potential segment to be watched for.
Source: Times of India
India-Mauritius trade agreement may include safeguard mechanism related provisions to protect the domestic industry from a sudden or unusual surge in imports of goods, according to sources. The agreement between the two countries came into force on April 1, 2021. After the implementation of such pacts, provisions can be added to the agreement if both sides agree to that. The sources said a chapter on general economic cooperation is also expected to be included in the pact, which is officially termed as Comprehensive Economic Cooperation and Partnership Agreement (CECPA). The safeguard mechanism comes into play when there is a sudden increase in imports of any commodity, which can impact domestic industry and under that provision, concessional customs duty on that particular good is replaced with existing taxes, which is applicable to all nations. The mechanism also includes stricter rules of origin to prevent any routing of products from a third country. The sources said that the finalisation of both these issues - inclusion of safeguard mechanism and general economic cooperation in the pact - would require approval from the Union Cabinet. The commerce and industry ministry has sought views of different ministries on the matter, after which it would approach the Cabinet. India and Mauritius signed the CECPA, a kind of free trade pact, on February 22, 2021. Several Indian products, including textiles and chemicals, are enjoying the benefit of greater market access at concessional duties in Mauritius under the agreement. The pact covers 310 export items for India, such as food and beverages, agricultural products, textile and textile articles, base metals, electrical and electronic items, plastics and chemicals, and wood. Mauritius has benefited from preferential market access into India for its 615 products, including frozen fish, speciality sugar, biscuits, fresh fruits, juices, mineral water, beer, alcoholic drinks, soaps, bags, medical and surgical equipment and apparel. The current pact is a limited agreement, which covers trade in goods, rules of origin, trade in services, technical barriers to trade, sanitary and phytosanitary measures, dispute settlement, movement of natural persons, telecom, financial services, and customs procedures. CECPA is the first trade agreement signed by India with a country in Africa. India's exports in April-February 2021-22 to Mauritius stood at USD 666.44 million, while imports were at USD 64.83 million. There is a provision for a permanent safeguard mechanism in the India-UAE trade agreement. Similarly, in the India-Australia economic cooperation and trade agreement, there is a provision for a safeguard mechanism that includes stricter rules of origin to prevent any routing of products from a third country, and it also deals with any unusual surge in imports. It was signed on April 2 this year. India-Mauritius trade agreement may include safeguard mechanism related provisions to protect the domestic industry from a sudden or unusual surge in imports of goods.
Source: Business Standard
ASEAN-Japan Center (AJC) completed a paper on "Asean global value chain and its relationship with RCEP: Impacts of RCEP on Asean integration" in March 2022. The paper examined and compared global value chain (GVC) patterns of the Association of Southeast Asian Nations (Asean) member states with the members of the Regional Comprehensive Economic Partnership (RCEP) to identify RCEP-related opportunities and costs to Asean. The study reveals that the role of Asean in RCEP GVCs was smaller than that of Asean GVCs and that Asean connectivity, through production, was also smaller, partly because RCEP was less integrated than Asean. While Asean produced many products, these did not necessarily become inputs in exports of non-Asean RCEP members' exports. On a perindustry basis, the study showed that while the automotive and electronic GVCs were strong in Asean, they were much stronger in RCEP because of the participation of China, Japan and South Korea. Therefore, there were opportunities for Asean GVCs in these industries to expand into non-Asean RCEP member states. According to the study, Asean member states were mainly producers of apparel that were final-product exporters rather than intermediate producers — for example, of textiles — and were not much integrated into the next stage of production. Asean countries could benefit from the RCEP agreement by expanding their imports of textiles from China. Asean agribusiness and tourism were typically regional or domestic market-oriented industries that could penetrate both Asean and RCEP markets. The direct impact of RCEP on trade and investment, as measured by increases in value, was estimated at $42 billion in exports and $900 million in foreign direct investment (FDI) in the current value. These numbers corresponded to 1.8 percent and 0.3 percent of current exports and FDI flows. "Asean global value chain and its relationship with RCEP: Impacts of RCEP on Asean integration" has been available for download on AJC's website.
Source: New Indian Express
Facing uncertainties and challenges posed by the complex global environment and the sporadic resurgences of COVID-19 on the domestic front, China has scaled up support to help manufacturing firms tide over difficulties and ride the digitalization wave. The latest data showed that the purchasing managers’ index for China’s manufacturing sector came in at 47.4 in April, down from 49.5 in March, according to the National Bureau of Statistics (NBS). The resurgence of domestic COVID-19 infections has weighed on China’s factory activities and market demand, NBS senior statistician Zhao Qinghe said. On a brighter note, despite the influence of short-term factors, the stability of small and medium-sized enterprises has been firmed up as governments at various levels rolled out pro-growth policies to invigorate market entities, said Wen Tao, a researcher with China Logistics Information Center. Analysts believe that China’s sound long-term fundamentals have not changed, and the recent arrangements by authorities to smooth logistics and supply while strengthening policies to help enterprises tide over difficulties will further stabilize the market and bolster economic growth.
SCALED-UP POLICY SUPPORT
For Li Laibin, owner of a medium-sized textile company in Nantong City of Jiangsu Province, 2022 is a challenging year due to the protracted impact of COVID-19 and price hikes in raw materials. But thanks to the favorable tax treatment for manufacturing enterprises, Li’s company has so far been allowed to defer the payment of taxes worth 1.52 million yuan (about 229,687 U.S. dollars), which mobilized capital and supported production activities. The tax deferral Li’s company has received offers a glimpse into a raft of incentives the government has offered to ease the financial burden for manufacturers. Official data showed that the country’s tax authorities have provided a total of 333.5 billion yuan in tax and fee deferrals for micro, small and medium-sized manufacturing firms nationwide in the first quarter of this year. The Ministry of Finance also announced that the country’s value-added tax credit refunds will reach approximately 1.5 trillion yuan this year, with priority to be given to micro and small firms and the manufacturing industry. To help factories resume production amid COVID-19 disruptions, China established a “white list” approach to support the resumption of work for key companies in the industrial chain and minimize the impact of COVID-19 on the supply chain. Smooth logistics nationwide must be ensured, while key industrial and supply chains, key infrastructure facilities as well as designated firms responsible for market supply during the epidemic should maintain normal operation, a key meeting held earlier this week has stressed.
DIGITALIZATION DRIVE
For manufacturers, digitalization means decreased information asymmetry and increased supply chain transparency, enabling quality growth and allowing for better response to market fluctuations. China will see 70 percent of its major manufacturing firms basically digitalized and build more than 500 industry-leading smart-manufacturing demonstration plants by 2025, according to a development plan issued by the Ministry of Industry and Information Technology (MIIT) with other departments. During recent COVID-19 resurgences, the role of digitalization has become even more crucial in ensuring a dynamic and disruption-free real economy. At recent meetings, the MIIT has urged efforts to make good use of 5G, the industrial internet and other digital technologies to help enterprises resolve difficulties and stabilize industrial and supply chains. Looking ahead, efforts should be made to apply digital means to support cost reduction in financing and logistics of the manufacturing industry, and promote the steady operation and upgrade of the sector, said Zhu Minghao, a researcher with Beijing Jiaotong University. Despite the headwinds, the driving force to promote the high-quality development of the manufacturing industry is still sufficient, Zhu noted.
Source: The East African
Inside a small, dimly lit room in Uganda’s capital, unused bales of fabric stacked high behind Richard Wambuga are bright with color. But they are a testimony of the setbacks his tailoring business has come up against since the beginning of the pandemic. First, various restrictions put in place by the government in June 2020 to curb the spread of the coronavirus robbed him of his clientele. Fewer people were buying new clothes, including school children who had shifted to virtual learning and no longer needed school uniforms. Uganda’s tax reforms are dipping into the profits of local businesses Wambuga, who has imported textiles from France, Italy, and China for the last five years, hoped his business would recover once the government eased restrictions. Then in July 2021, he was hit with yet another hurdle. The government implemented new tax reforms as part of Uganda’s economic plan to reduce imports and boost local production, in part to create jobs. That had a counter effect on traders who rely on imports, including textile importers like Wambuga, who now have to pay on many textiles a duty rate of 35%—an increase from 25%—or a charge of $3 to $3.30 per kilogram (2.2 pounds), whichever is higher. The traders—who are part of Uganda’s private sector that contributes 75% of the country’s gross domestic product—have decried these tax measures, calling them counterproductive as they hurt small businesses, which have yet to recover from the economic aftershocks of the coronavirus pandemic. “Charges are almost twice what we used to pay,” Wambuga says. The tax reforms complement a series of other economic policies the Ugandan government has implemented to strengthen the country’s economic potential by bolstering local industries. They include the Buy Uganda, Build Uganda policy, a legal framework that outlines strategies to build Uganda’s economy through buying and selling local goods and services. We use tariffs to regulate imports. If we don’t, we shall remain a supermarket of imported products. These initiatives are intended to reduce the country’s wide trade deficit. Despite gains, Uganda imports twice as much as it exports. In 2020, imports were valued at $8.5 billion compared to $4.1 billion in exports, according to the International Monetary Fund. The move to boost local manufacturing isn’t a bad idea, says Issa Ssekito, spokesperson for the Kampala City Traders Association, but it shouldn’t come at the expense of import traders. Instead, he says, the government could have invested in the country’s strong economic areas, such as agriculture, which employs about 68% of the population, according to government data. “If Uganda wants to grow her economy based on industrialization, they should focus on [where] God gave us an advantage,” he says, pointing to fisheries, in addition to agricultural industries. Taxes on imports in Uganda are sometimes arbitrary The tax reforms have made a bad situation worse, Ssekito says, as import traders were already struggling with arbitrary and inconsistent tax increases at different border points. “Every other day, they tend to rise this, cut this, purposely so the government can grow the local industry,” he says. “They raise rates to frustrate importers.” As a signatory to the World Trade Organization, which deals with trade regulations between countries, Uganda should ensure that import traders are taxed based on the value on their invoice, he says. He considers the new tax measures inconsistent with this requirement. But James Makula Mukasa, senior commercial officer at the Ministry of Trade, Industry and Cooperatives, sees this as a necessary bump on the road toward protecting locally manufactured goods. “Before a woman can deliver, she has to go through labor pains,” he says. “We use tariffs to regulate imports. If we don’t, we shall remain a supermarket of imported products.” Increasing taxes to facilitate the growth of local industries has worked in the past, Mukasa says, citing a 2017 increase from 2% to 12% in verification fees on imported pharmaceuticals that allowed the local pharmaceutical industry to thrive. But pushback from traders on the tax reforms has prompted the government to respond. In August 2021, the Uganda Revenue Authority waived the higher tax for garments and fabrics that can’t be locally sourced, which accounts for 90% of imported textiles and garments. The suspension will remain until the Ministry of Trade, Industry and Cooperatives offers guidance, says Ibrahim Bbosa, assistant commissioner of public and corporate affairs for the revenue authority, the government’s collection agency. He didn’t comment on whether the agency might waive reforms affecting other import traders. Bbosa denies the allegation that import taxes have been inconsistent at different border points or that they have been increased arbitrarily, adding that Uganda follows internationally accepted valuation methods. But Jackline Busingye, who imports children’s clothes from China, says the suspension is yet to be implemented at border points. “They are still charging us highly,” she says. Wambuga adds that, despite the suspension, customs officials now charge a tax based on the weight of textiles, which means traders are still paying more. “Some fabrics when they are weighed in kilos, they are very heavy,” he says. For Mustaffa Kigundu, who used to import and sell building tiles in Kampala, the issue is moot. He no longer has a business to run and blames its failure partly on the tax reforms. When the new tax measures were introduced, he says, his late wife imported a container of tiles. Revenue officials told her to pay 4 million Ugandan shillings (about $1,112), then an extra 6 million shillings (about $1,668) as they’d undervalued her goods. The amount was almost twice what Kigundu used to pay for the same goods. A few months later, his business collapsed.
Source: Quartz Africa
The value of total trade (import plus exports) of raw materials between the European Union (EU) and the rest of the world in 2021 reached €178 billion. As exports (€71.3 billion) were lower than imports (€106.8 billion), this resulted in a trade deficit of €35.5 billion, according to Eurostat, the EU’s statistics agency. Between 2002 and 2021, EU trade in raw materials almost tripled, equivalent to average annual growth of 5.6 per cent. In this period, exports (6.5 per cent) grew faster than imports (5 per cent). The most commonly exported raw materials in 2021 included paper and textiles (33 per cent). In imports, metals, minerals and rubber (56 per cent) were also the most traded raw materials, followed by animal and vegetable raw materials (30 per cent), and by wood, paper and textiles (14 per cent). China was the main export destination of raw materials accounting for 16 per cent of all extra-EU exports in 2021, followed by the United Kingdom (15 per cent), Turkey and the United States (both 10 per cent). These top four export partners accounted for about half of all extra-EU exports. In terms of extra-EU imports, Brazil (12 per cent) and the United States (11 per cent) were the main partners, followed by Ukraine and Russia (both 7 per cent). The top four combined made up 37 per cent of all extra-EU imports.
Source: Fibre2 Fashion
Vietnam has been maintaining its position as Canada's largest trading partner in the Association of Southeast Asian Nations (ASEAN) region since 2015, Julie Dai Trang Nguyen, director of the Canada-Vietnam Society (CVS), told the standing committee on international trade under Canada’s House of Commons. Bilateral trade turnover exceeded $6 billion last year, up by 19 per cent over the 2020 figure. Trade diversification is important for the Canadian economy and drives the need for Ottawa to build strong relationships with Asian countries, she said. ASEAN is currently Canada's sixth largest trading partner. Canada-ASEAN trade reached 26.7 billion CAD in 2020, while services trade amounted to 5.8 billion CAD, she said, adding that these figures are expected to grow in the context that Canada has permanent diplomatic missions in all 10 ASEAN member countries. Nguyen affirmed that Vietnam will be an important security partner in Canada's IndoPacific strategy, as both countries are committed to multilateralism, global security and combating climate change. She suggested that Canada could consider joining Vietnam's network of free trade agreements, which currently cover 60 economies representing 90 per cent of the world's gross domestic product, a news agency reported. During the hearing on trade opportunities for Canadian businesses in the Indo-Pacific, she also reiterated the fundamental factors of the long-standing relationship between Canada and Vietnam. Both countries are members of the Francophonie community and participating in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), she said. Nguyen, also director of the Canada-Vietnam Trade Council, told the news agency that cooperation between the two countries will continue to develop in all fields, especially trade, when Canada realises the growing importance of Vietnam and the Indo-Pacific region to the supply chain, and the long-term economic growth of Canada.
Source: Fibre 2 Fashion
